THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


/.     ^Gjujc, 


IbuuJt^AA     1^. 


SELECTION   OF  CASES 


ON 


INSURANCE 


i3r 

EUGENE    WAMBAUGH,   LL.D., 
<  << 

PROFESSOR    OF     LAW     IN    HARVARD    UNIVERSITY. 


CAMBRIDGE: 

THE   HARVARD  LAW  REVIE\Y  PUBLISHING  ASSOCIATION. 

1902. 


T    ^ 


Copyrifjht,  189S,  1899,  1900,  1901,  1902, 
By  Eugene  Wambaugh. 


^nibcrsitg  IDrtss: 
John  Wilson  and  So»s,  Cambkiuge.  U.S.  A 


PREFACE. 


This  collection  has  been  prepared  for  the  purpose  of  enabling 
the  careful  student,  whether  he  be  beginner  or  practitioner,  to 
ascertain  from  the  original  sources,  by  his  own  labor,  what  are 
the  doctrines  of  Insurance ;  but  although  the  collection  assumes 
that  the  reader  has  already  mastered  the  more  elementary  branches 
of  law,  experience  as  a  teacher  of  Insurance  suggests  that  it  may 
be  well  to  give  four  pieces  of  advice  :  first,  that  Insurance  is  not, 
as  is  sometimes  hastily  assumed,  a  mere  application  of  Contracts 
and  Agency,  but  is  a  separate  subject,  having  peculiar  doctrines 
of  its  own  upon  each  of  the  topics  used  herein  as  titles  to  cliap- 
ters,  the  peculiarities  being  due  partly  to  the  special  purpose  and 
dangers  of  the  transaction  and  partly  to  the  fact  that  the  sui)jcct 
did  not  have  its  origin  in  England,  but  was  of  Continental  birth 
and  is  a  part  of  the  Law  Merchant ;  second,  that  Marine,  Fire,  and 
Life  Insurance  are  not  separate  sciences,  but  are  simply  the  chief 
applications  of  one  science,  and  that  consequently  it  is  impossible 
to  understand  one  of  these  branches  without  studying  the  others ; 
third,  that  in  deciding  Insurance  cases,  rather  more  frequently 
tlian  in  deciding  cases  on  other  subjects,  judges  have  been  prone  to 
use  inartistic  and  inaccurate  language,  and  that  consequently  it  is 
important  to  ascertain  exactly  what  was  the  problem  presented, 
and_exactly  how  it  arose,  and  to  lay  stress  upon  what  the  coui't 
did  and  not  merely  upon  what  the  judges  said ;  and  fourth,  that 
the  solution  of  the  questions  presented  in  the  reported  cases  or  in 
one's  daily  practice  may  depend  not  upon  general  principles  but 
upon  the  special  words  of  the  policy. 

The  order  of  the  chapters  has  been  determined  partly  by  theory 
and  partly  by  experience  in  teaching ;  but  an  instructor  may  find 
it  advisable  to  change  the  order  from  year  to  year,  for  an  occa- 
sional change  appears  to  bring  new  and  valuable  views  of  the 
relation  of  topics  and  of  the  essential  cohesiveness  of  the  "whole 
subject. 


671  n«8 


iv  PREFACE, 

In  reprinting  cases,  the  argnments  of  counsel  have  usually 
hecn  omitted.  All  other  departures  from  the  original  reports 
liave  heen  explained  in  the  notes,  in  order  that  the  reader  may 
see  whether  the  cases  have  heen  so  edited  as  to  diminish  their 
authority. 

The  citations  in  the  notes  are  not  exhaustive,  hut  have  been 
selected  because  of  supposed  usefulness.  Those  marked  "  ace." 
or  "  contra  "  are  intended  to  start  the  reader  towards  ascertain- 
ina:  for  himself  whether  the  doctrines  in  the  text  are  sustained 
by  the  weight  of  authority.  Those  marked  "  see "  are  believed 
to  throw  light  upon  those  doctrines  by  discussion  or  by  interest- 
ing application.  Those  marked  "  compare "  are  supposed  to 
conflict,  at  first  sight,  with  the  doctrines  in  the  text,  but  to  be 
reconcilable  with  them  by  the  taking  of  proper  distinctions. 

At  the  end  of  many  of  the  sections  will  be  found  lists  for  the 
use  of  persons  wishing  more  than  an  elementary  knowledge ;  for 
in  dealing  with  such  a  subject  as  Insurance  it  seems  proper  to 
keep  in  mind  the  wants  i)oth  of  the  specialist  and  of  the  general 
jiractitioncr,  and  in  a  book  intended  —  as  this  is  —  for  general 
use,  it  is  quite  impossible  to  print  all  the  cases  needed  by  the 
specialist. 

Parts  of  the  collection  have  appeared  from  time  to  time 
throughout  the  last  four  years ;  and  now  that  the  work  is  pub- 
lished in  final  form,  the  editor,  knowing  that  there  have  been 
many  omissions,  both  intentional  and  accidental,  is  reminded,  as 
often  in  this  long  task,  of  a  consoling  sentiment  attributed  to 
Plato:  "As  it  is  the  commendation  of  a  good  huntsman  to  find 
game  in  a  wide  wood,  so  it  is  no  imputation  if   he    hath   not 

caught  all." 

EUGENE   WAMBAUGH. 
June  23,  1902. 


TABLE    OF    SUBJECTS. 


chaptp:r  I. 


Introduction 


Page 
1 


CHAPTER   II. 

INSURABLE   INTEREST   AS   AFFECTING   THE   VALIDITY   OF 
THE   CONTRACT. 


Part  I. 


Why  an  Interest  is  Requisite 


Part  II. 
Satisfying  the  Requirement  of  an  Interest. 


Section  I.  Marine  Insurance 
Section  II.  Fire  Insurance  . 
Section  III.     Life  Insurance    . 


24 

67 

101 


CHAPTER   III. 
CONCEALMENT. 

Part  I. 


The  General  Theory 

Part  II. 
The  Application  of  the  Theory. 


Section  I. 
Section  II. 
Section  III. 


Marine  Insurance 
Fire  Insurance  . 
Life  Insurance     . 


125 


136 
169 
191 


CHAPTER   IV. 
REPRESENTATION. 


Section  I.  Marine  Insurance 
Section  II.  Fire  Insurance  . 
Section  HI.     Life  Insurance     . 


212 
247 
284 


VI 


TABLE    OF    SUBJI'X'TS. 


CHAPTER    Y. 
WARRANTY. 


Section  I.  Marine  Insurance 
Section  II.  Fire  Insurance  . 
Section  III.     Life  Insurance     . 


Page 
304 
.32.5 
389 


CHAPTER   VI. 
OTHER   CAUSES    OF   INVALIDITY. 

Section      I.     Marine  Insurance. 

(A)  Deviation       430 

(B)  Unseaworthiness 469 

(C)  Illegality  of  Voyage 498 

Section     II.     Fire  Insurance. 

(A)  Illegality  of  Business 512 

(B)  Conditions    prohibiting    the    Keeping     of 

Certain  Things 523 

(C)  Conditions  prohibiting  Incuease  of  Hazard      546 
(/>)    Conditions   prohibiting    Vacancy  and   tuk. 

like 561 

(E)  Conditions  as  to  Ownership  at  the  Incep- 

tion OF  the  Contract 579 

(F)  Conditions  prohibiting  Alienation. 

(a)  Alienation;  sale;  conveijance ;  transfer      .  599 

(b)  Sale,  transfer,  or  change  in  title  or  possession  610 

(c)  Change  in  interest,  title,  or  possession     .     .  625 
Section  III.     Life  Insurance 640 


^         CHAPTER  VII. 
THE   PERIL. 

Section      I.     Marine  Insurance. 

{A)   The  Kind  of  Pehil  insured  against  .     . 

\b)  The  Connection  between  Peril  and  Loss 
Section    II.     Fire  Insurance. 

(/I)    The  Kind  of  Peril  insured  against.     . 

(fi)  The  Connection  between  Teril  and  Loss 
Section  HI.     Life  Ins^jjiance. 

{A)    Death 

{B)    Accident 


6.59 
697 

715 

7-'9 

760 
783 


Section      I. 


CHAPTER   VIII. 

THE   AMOUNT   OF    RECOVERY. 

Marine  Insurance. 

(i4)    General     Principles,     espkcially     as     to 

Pap.tial  Losses "QS 


TABLE    07   Sl'BJKCTS. 


Vll 


Page 

(B)  Valued  Policies Sly 

(C)  Total  Losses,  Actual  and  Constructive  .  829 
Section     II.     Fire  Insurance. 

(.1)    General   Principles  as  to  Both  Open  and 

Valued  Policies 858 

(B)   Limited  Interests 884^ 

Section  III.     Life  Insuranck 9-7 


Section  I. 
Section  II. 
Section  III. 


chaptp:r  IX. 

SUBROGATION. 

Marine  Insurance 937 

Fire  Insurance 961 

Life  Insurance 992 


Section  I. 
Section  II. 
Section  III. 


CHAPTER   X. 

CONDITIONS   APPLICABLE   AFTER  LOSS. 

Marine  Insurance 

Firk  Insurance 

Life  Insurance  


996 
1001 
1023 


Section 
Section 


I. 
II. 


Section  III. 


CHAPTER   XI. 
WAIVER   AND   ESTOPPEL. 

Marine  Insurance 1027 

Fire  Insurance. 
(.1)   As  to  Conditions  applicable  after  Loss  .     1037 
(B)    As  TO  Defences  arising  before  Loss. 

(a)  The.  insurers  conduct  after  the  issuing  of 

the  policy  and  after  th^Kirisinrj  of  the 
defence 1043 

(b)  The  insurer's  conduct  after  the  issuing  of 

the  policy  and  at  or  before  the  arisimj 

of  the  defence 1064 

(c)  The  insurer's  conduct  at  or  before  the  issu- 

ing of  the  policy  and  at  or  before  the 

arising  of  the  defence 1071 

Life  Insurance 1089 


Skctiow      I. 
Section     II. 


Section  III. 


CHAPTER   XII. 

ASSIGNEES   AND   BENEFICIARIES. 

Marine  Insurance 1110 

Fire  Insurance. 

(.1)    Assignees IH-"^ 

(fi)    Beneficiaries H-^l^ 

Life  Insurance. 

{A)    Assignees 11^2 

\B)   Beneficiaries 1154 


VIU 


TABLE    OF    SUBJECTS. 


appendix, 
somp:  forms  used  in  the  united  states. 

Page 

Skction      I.     Marine  Insurance. 

(A)   A  Policy  on  Cargo 1171 

(5)   Some  Clauses  in  the  Margin  of  Policies 

ON  Vessels llli 

Section     II.     Fire  Insurance. 

(A)  The  Massachusetts  Standard  Policy  .     .     1176 

(B)  The  Standard  Fire   Insurance   Policy  of 

the  State  of  New  York. 

(a)  Policy 1179 

(b)  Forms  on  the  Back  of  the  Policy      .     .     .  1184 

(c)  Some  permissible  Clauses  or  Riders  .     .     .  1184 
Section  III.     Life  Insurance 1187 

INDEX 1195 


TABLE    OF   CASES. 


[In  addition  to  the  cases  reprinted  in  tiie  text,  this  Table  includes  the  cases  summarized 
or  quoted  in  the  foot-notes.] 


Accident  Ins.  Co.  v.  Crandal  .  .  .  786 
JEtna  F.  Ins.  Co.  v.  Tyler  ....  890 
^Etna  Ins.  Co.  v.  Grube  ....    345,  n. 

V.  People's  Bank      ....  1010,  n. 

^ma  L.  Ins.  Co.  v.  France  .  .  .  410 
Agricultural  Ins.  Co.  v.  Bemiller  .  1009,  n. 

V.  Montague 91 

Alexander  v.  Continental  Ins.  Co.  1070,  n. 
Amazon  Ins.  Co.  v.  Steamboat  Iron 

Mountain 941 

American  Central  Ins.  Co.  v.  Roth- 
child  1008,  n. 

Amicable  Society  v.  BoUand    .     .     .     760 

Amick  V.  Butler 1161 

Amory  v.  Oilman 9 

Amsinck  v.  American  Ins.  Co.     .     .      60 

Anderson  v.  Edie 101 

V.  Fitzgerald 391 

Angier  v.  Western  Assur.  Co.  .  .  558 
Armour  v.  Transatlantic  F.  Ins.  Co.  277 
Asfar  V.  Blundell  .     .     .     168,  n.,  846,  n. 

Ashley  i'.  Ashley 1142 

Atiierton  v.  Brown 1027 

Atkinson  v.  Abbott 500,  n. 

Atlantic  Ins.  Co.  v.  Storrow  .  .  .  938 
Aurora  F.  Ins.  Co.  v.  Eddy  .  .  .  358 
Austin  V.  Drewe 715 


Balow    V.    Teutonia  Farmers'  Mat. 

F.  Ins.  Co 98 

Barclay  v.  Cousins 26 

Bardwell  v.  Conway   Mut.   F.  Ins. 

Co 883,  n. 

Barker  r.  Janson 818,  n. 

Barker  v.  Phoeni.x  Ins.  Co.  .     .     .    999,  n. 

Barnard  ;•.  Faber 384 

Barnes  v.  London,  Edinburgh,  and 

Glasgow  L.  Ins.  Co.     .     .     .     .     .     123 

V.  Union  Mut.  Ins.  Co.     .     .     .     610 

Barrett  v.  Union  Mut.  F.  Ins.  Co.  .  1071 
Barry  v.  Hamburg-Bremen  F.  Ins. 

Co 618 

Batchelder  v.  Queen  Ins.  Co.  .     .  1074,  n. 

Bates  1-.  Hewitt       148 

Baxter  v.  New  England  Ins.  Co.     .    234 


Bean  v.  Stupart 307 

Beatson  v.  Ha  worth 436 

Behn  v.  Burness 324,  n. 

Bennett  v.  St.  Paul  F.  &  M.  Ins.  Co. 

1075,  n. 
Bevin  v.  Connecticut  Mut.  L.  Ins.  Co.     929 

Biccard  v.  Shepherd 488 

Bigelow  V.  Berkshire  L.  Ins.  Co.  .  .  770 
Billings  V.  Accident  Ins.  Co.    .     .    .     772 

Bize  V.  Fletcher 216 

Blaauwpot  v.  Da  Costa  ....    937,  n. 

Blackburn  v.  Vigors 161 

Blackenhagen  v.  London  Assur.  Co. 

(1  Camp.  454) 442 

V.  London  Assur.  Co.  (1  Camp. 

455,  n.) 443,  n. 

Blackhurst  i'.  Cockell 316 

Blackwell  v.  Ins.  Co 605 

Blake  v.  Exchange  Mut.  Ins.  Co.  .  1040 
Boardman  v.  Merrimack  Mut.  F.  Ins. 

Co 512 

Bondrett  v.  Hentigg 697 

Borradaile  v.  Hunter 762 

Bowden  i'.  Vaughan .     225 

Box  V.  Provincial  Ins.  Co 80,  n. 

Bradlie  v.  Maryland  Ins.  Co.  .  .  .  847 
Brady  v.  Northwestern  Ins.  Co.  .  .  747 
Braunstein  v.  Accidental  Death  Ins. 

Co. 1025,  n. 

Briggs   V.   Merchant   Traders   Ship 

Loan  and  Ins.  Assn 51 

Brinley  v.  National  Ins.  Co.  .  .  .  871 
Brown  v.  Cotton  and  Woolen  Mfrs. 

Mut.  Ins.  Co 608 

V.  Tayleur 457 

Brownlie  v.  Campbell     ....    168,  n. 

Bruce  v.  Jones 823 

Bryant  v.  Ocean  Ins.  Co 239 

Buell  I'.  Connecticut  Mut.  L.  Ins.  Co.     404 

Bufe  r.  Turner 169 

Burbank  v.  Rockingham  Mut.  F.  Ins. 

Co 635,  n. 

Burges  v.  Wickham 469.  n. 

Burgess  v.  Equitable  M.  Ins.  Co.  .  463 
Burleigh  i-.  Gebhard  F.  Ins.  Co.  .  .  378 
Burnard  v.  Rodocanachi      ....    946 


TABLE    OF   CASES. 


Page 
Burritt  r.  Saratoga  County  Mut.  F. 

Ins.  Co 178,  20y,  n..  337,  n. 

Bart  V.  Union  Central  L.  Ins.  Co.    761,  n. 
Bjrnes  v.  National  Ins.  Co.     .     .     .     807 


Campbell  i-.  Americnn  F.  Iii=.  Co     185.  n. 

^  r.Xew  Eiifilanil  Mut.  L.  Ins.  Co.     114 

Carpenter  v.  American  Ins.  Co.  .     .     2ol 

I'  Providence  Wasliington  Ins. 

915,  n. 


Co. 


Carter  i-.  Boehni 12d 

Castellain  v.  Preston 974 

Cliisliolm  V.  National  Capitol  L.  Ins. 

Co -116 

Chitty  V.  Sehvyn 4o2,  n. 

Christie  »-.  Secretan 4(39,  n. 

Cincinnati  Ins.  Co.  r.  Duffield  .  .  .  852 
Citizens'  F.  Ins.,  S.  &  L.  Co.  v.  Doll 

1030,  n. 
Citizens'  Ins.  Co  i'.  Glasgow     .     .    681,  n. 

c.  Hoffman '■^^^ 

City  F.  Ins.  Co.  v.  Corlies  ....     720 

Clapliam  v.  Cologan 318 

Clark  V.  Inhabitants  of  Blything     .     962 

I'.  Manufacturers'  Ins.  Co.    .     .     181 

Clay  F.  &  M.  Ins.  Co.  v  Huron  S.  & 

L.  Mfg.  Co 580 

Clement  v.  Insurance  Co 1 106 

Col.b  r.  In:!.  Co.  of  Nortii  America  1064 
Coffin  V.  Newbnryport  M.  Ins.  Co.      452,  n. 

Cogswell  V.  Chubb 322 

Collingridge    v.    Royal      Exchange 

Assur.  Corp ^87,  n. 

Collins  V.  Charlestown  Mut.  F.  Ins.  Co.   265 

i:  St.  Paul  F.  &  U.  Ins.  Co. .     .     596 

Columbia  Ins.  Co.  i-.  Lawrence  (10 

Pet.  507) 247 

Columbian  Ins.  Co.  i'.  Catlett  65,  n.,  452,  n. 

V.  Lawrence  (2  Pet.25)    68,  n.,  248,  n 

Commonwealth  Ins.  C.  r.  ^^ennett  .  874 
Connecticut  Mut.  L.  Ins.  Co.  v.  N.  Y. 

&  N.  H.  Railroad  Co 992 

Connecticut    Mut.    L.    Ins.    Co.   v 

Schaefer 118,  n.,  986.  n. 

Continental  Ins.  Co.  i.  Munns  .  -1129 
Converse  '•.  Citizens  Mut.  Ins.  Co.  .  70 
Copelnnd  r.  New  England   M.   Ins. 

Co 078.  n 

Cornell  r.  Hope  Ins.  Co 1009,  n. 

Cousins  v.  Nantes 5, n. 

Crnufnrd  1-.  Hunter 7,  n. 

Crce.l  c.  Stin  F.  Office 87,  n. 

Crocker  r  Peopled  .Mut.  F.  Ins.  Co      851 

Cullen  i:  Butler 667 

Cumberland  Rone  Co.  v.  Andes  Ins. 

Co 78 

Cumberland  V.  M.  P.  Co.  r.  Douglas  350,  n. 
Cummings  c.  Chesiiire  County  Mut. 

F.  Ins.  Co 1121 

Currier  r.  Continental  L  Ins.  Co.    .     122 


D.nkin  v.  Liverpool,  L.  &  G.  Ins.  Co     585 
Dftlby  V.  India  and  London  L.  Assur. 
Co. 108.932 


Page 

Darrell  v.  Tibbitts 979,  n. 

Davenport  v.  New  England  Mut.  F. 

Ins.  Co 204 

De  Costa  v.  Scandret 136 

Dellalin  v.  Hartley 314 

Dcnnison  v.  Tliomaston   Mut.   Ins. 

Co 253 

Dennistoun  v.  Lillie 230 

Depaba  v.  Ludlow 5 

Dickson  r.  Equitable  F.  Assur.  Co.  .  267 

Dixon  V.  Sadler 475 

Dobson  r.  Sotheby 523 

Dolliver  v.  St.  Joseph  F.  &  M.  Ins. 

Co.  (128  Mass.  315) 589 

1-.  St.  Joseph  F.  &  M.  Ins.  Co.  •' 

(131  Mass.  39) 370 

Dolloff  V.  German-American  Ins.  Co.  1015 

V.  Phoenix  Ins.  Co 1015 

Dupreau  v.  Hibernia  Ins.  Co.  .     .     .  594 

Dutilh  V.  Gatliff 836 


Eden  v.  Parkison 310 

Edwards  r.  Footner 224 

Elton  !'.  Brogden 431 

Equitable  F.  Ins.  Co.  v.  Quinn      .     .  877 
Excelsior  F.  Ins.  Co.  i'.  Royal  Ins. 

Co 911 


Farmers'  and  Merchants'  Ins.  Co.  v. 

Jensen 623 

Farmers'  Mut.  F.  Ins.  Co.  v.  Fogel- 

man 274 

Farmers'  Mut.  Ins.  Co.  i;.  New  Hol- 
land Turnpike  Co 96 

Faust  V.  American  F.  Ins.  Co.  .     .     .  540 

Fidelity  and  Casualty  Co.  v.  Johnson  791 

Fillis  c.  Brutton 220 

First  Congregational  Church  v.  Hol- 

yoke  Mut.  F.  Ins.  Co.  ...  552,  n. 
First  National   Bank  r.  Ins.  Co.   of 

North   America 361 

Fitzherbert  r.  Mather 221 

Fletcher  i:  Commonwealth  Ins.  Co.  170 

Fiinn  r.  Headlam 237 

i:  Tobin 2-39.  n. 

I  Fogg   i;.    Middlesex    Mut.    F.    Ins. 

Co 1119 

Foley  V.  Manufacturers  and  Builders' 

F.'ins.  Co 924 

Folsom  c.  Merchants'  Mut.  M.  Ins. 

Co 54 

Forbes  r   Aspinall 810 

c.  Wilson 470 

Forshaw  r.  Chabert 472 

Foster  v.  Wilmer 431 

Fowler  r.  ^tna  F.  Ins.  Co.  (6  Cow. 

078) 332 

r.  Mtnn  F.  Ins.  Co.  (7  Wend. 

270) 3:]3.n. 

Fox  V.  Black 432 

Franklin  F.  Ins.  Co.  v.  Vaughan  270 

Frisbie  r  Fayette  Mut.  Ins  Co.    .     .  .353 

Frost  V.  Saratoga  Mut.  Ins.  Co.    .     .  1043 

Furtado  v.  Rodgers 661 


TABLE  OF  CASES. 


XI 


Page 

Gardiner  v.  Smith »o4 

Garrett  v.  Provincial  Ins.  Co.  .  .  .  355 
Garver  v.  Hawkeye  Ins.  Co.  .  .  597,  n. 
General  Interest  Ins.  Co.  v.  Ruggles  140 
General  Mut.  Ins.  Co.  v.  Sherwood  707 
German- American  Ins.  Co.  v.  Norris 

1010,  n. 
GermaniaF.  Ins.  Co.  r.  Home  Ins.  Co.  621 
Gihb  V.  Philadelphia  F.  Ins.  Co.  .     .     629 

Gibson  v.  Small 478 

Giliigan  v.  Commercial  Ins.  Co.  1009,  n. 
Glutting  V.  Metropolitan  L.  Ins.  Co. 

409,  n. 
Goddard  v.  East  Texas  F.  Ins.  Co.   .     376 

r.  Garrett 4 

Godin  V.  London  Assur.  Co.     .     .     803,  n. 

Godsall  V.  Boldero       927 

Grant  i'.  Parkinson 818,  n. 

Gray  v.  Germania  F.  Ins.  Co.  .     .     .  1086 

Green  v.  Young 430 

Greenleaf  v.  St.  Louis  Ins.  Co.  .  .  460 
Grosvenor  v.  Atlantic  F.  Ins.  Co.      .  1134 


Hagedorn  v.  Oliverson 38 

Haigh  V.  De  la  Cour 822 

Halford  i'.  Kymer 104 

Hall  V.  Pvailroad  Companies     .     .     .     972 

Hamilton  v.  Mendes 829 

V.  Pandorf 666,  n. 

Hammond  v.  American  Mut.  L.  Ins. 

Co 641 

V.  Reid 449 

Hanco.x  v.  Fishing  Ins.  Co.  .  .  31,  n. 
Hanover  F.  Ins.  Co.  v.  Brown      .     613,  n. 

Harley  v.  Heist 1158 

Harmony  F.  &  M.  Ins.  Co.  v.  Hazle- 

hurst 244 

Harper  v.  Albany  Mut.  Ins.  Co.  .  .  530 
Harrington  v.  Fitchburg  Mutual  F. 

Ins.  Co 274,  n. 

Harris  i-.  Eagle  F.  Co 858 

Harrison  v.  Pepper 919,  n. 

Hart  V.  Citizens'  Ins.  Co 1018 

V.  Western  Railroad  Corp.    .     .     962 

Hartford  Protection  Ins.  Co.  v.  Har- 

mer 185,  n. 

Hartley  v.  Buggin 434 

Hathaway  v.  Orient  Ins.  Co.    .     .     .  1137 

V.  State  Ins.  Co 615 

Hazard  v.  New  England  Ins.  Co.  660,  n. 
Heebner  v.  Eagle  Ins.  Co.  .  .  .  852,  n. 
Henshaw  v.  Mutual  Safety  Ins.  Co.  66,  n. 
Heron  v.  Phcenix  Mut.  F.  Ins.  Co.  539,  n. 
Herrman  i'.  Adriatic  F.  Ins.  Co.  .     .     570 

V.  Merchants'  Ins.  Co.      .     .     •     568 

Heuer  v.  Nortlnvestern  Nat.  Ins.  Co. 

739,  n. 

Hibbert  v.  Martin 470,  n. 

Hide  V.  Bruce 313 

Higginson  ;;.  Dall 41 

Hill  V.  Secretan 25 

Hine  v.  Woodworth 635,  n. 

Hobbs  V.  Hannam 37 

Hoffman  v.  ^tna  F.  Ins.  Co.  .  .  .  602 
V.  Western  M.  &  F.  Ins.  Co.     .    869 


Page 

Hogg  V.  Horner 437 

Home  F.  Ins.  Co.  v.  Hammaug  .  1010,  n. 
Home  Protection  v.  Avery  ....  1008 
Hone  V.  Mutual  Safety  Ins.  Co.  .     .     896 

Hore  I'.  Whitmore 306 

Hosford  V.  Germania  F.  Ins.  Co.  .  .  381 
Howard  v.  Albany  Ins.  Co.      .     .      58,  n. 

V.  Lancashire  Ins.  Co.      ...       92 

Ho.xie  V.  Pacific  Mut.  Ins.  Co.       .     .     491 

Hubbard  v.  Glover 226 

Huguenin  c  Ray  ley 191 

Hunter  v.  Potts 666 

Hvnds  v.  Schenectady  County  Mut. 
Ins.  Co 528 


Illinois   Mut.  F.  Ins.  Co.  v.  Andes 

Ins.  Co 008 

Imperial  F.  Ins.  Co.  v.  Coos  County 

556,  n. 
Insurance  Companies  v.  Thompson       87 

Insurance  Co.  v.  Baring 53,  n. 

V.  Siinson 920 

V.  Updegraff 899 

V.  Wilkinson 1091 

Insurance  Co.  of  North  America  v. 

McDowell 273,  n. 

lonides  v.  Pender 167,  n. 

Irwin  v.  Williar 17,  n. 


.Jeffery  v.  Legender 304 

Jeffries  v.  Life  Ins.  Co 401 

Johnson  v.  American  Ins.  Co.     ,     .  1061 

i'.  Berkshire  Mut.  F.  Ins.  Co.    .     719 

V.  Phoeni.x  Ins.  Co.       ...  1009,  n. 

V.  Sutton 501 

Judge  V.  Connecticut  F.  Ins.  Co.     .    620 


Kane  v.  Hibernia  Ins.  Co 721 

Keefer  v.  Phoenix  Ins.  Co.  .     .     .    904,  n. 

Keith  v.  Quincy  Mut.  F.  Ins.  Co.     .  562 

Kelly  V.  Croton  Ins.  Co 520 

V.  Home  Ins  Co 520 

V.  Sun  Fire  Office     ....  1009,  n. 

V.  Worcester  Mut.  F.  Ins.  Co.  .  518 

Kenniston  v.  Merrimack  County  Mut. 

Ins.  Co 717 

Kent  V.  Bird 7,  n. 

Kentucky  &  Louisville  Mut.  Ins.  Co. 

V.  Southard 341 

Kenyon  v.  Berthon 310 

Kernochan  v.  New  York  Bowery  F. 

Ins.  Co 91-5,  n. 

Kettell  V.  Wiggin 446 

King  r.  State  Mut.  F.  Ins.  Co.     .     .  965 

Klein  r.  Insurance  Co 653 

Knecht  v.  Mutual  L.  Ins.  Co.     .     .  413 

Knickerbocker  Ins.  Co.  v.  Gould  .     .  1010 

Knight  V.  Mutual  L.  Ins.  Co.  .     .     .  415 

Ky  te  V.  Commercial  Union  Assur.  Co.  554 


Lampasas    Hotel   and   Park   Co.  v. 
Phoenix  Ins.  Co 635 


xu 


TABLE  OF  CASES. 


Lane  v.  Maine  Mut.  F.  Ins.  Co.  .  .  599 
Lane  r.  St.  Paul  F.  &  M.  Ins.  Co.     1010,  n. 

L;iiig  f.  Eagle  Ins.  Co 1010,  n. 

Lapliam  r.  Atlas  Ins.  Co 453 

Lappin  v.  Cliarter  Oak  F.  &  M.  Ins. 

Co 635,  n. 

Lasher  v.  St.  Joseph  F.  &  M.  Ins.  Co.     688 
Laurent  v.  Chatham  F.  Ins.  Co.    .     .     884 
Law  /•.  London  Indisputable  L.  Pol- 
icy Co 935,  n. 

Lawrence  r.  Ocean  Ins.  Co.  .  .  999,  n 
Leadbetter  v.  Etna  Ins.  Co.     .     .  1009,  n. 

LeCras  v.  Hughes 24 

Lemon  r.  Pha'nix  Mut.  L.  Ins.  Co.  .   1154 

Lenox  r.  United  Ins.  Co 990 

Lethulier's  Case 305 

Levabre  i:  Wilson 432,  n. 

Lewis  c.  Eagle  Ins.  Co 242 

I'.  Kucker 796 

Life  Ins.  Co.  v.  Terry 700 

Lilly  f.  Ewer 305,  n. 

Lindenau  r.  Dcsborough  ....  193 
Lindsey  v.  Union  Mut.  F.  Ins.  Co. 

345,  n. 
Locke  v.  North  American  Ins.  Co.  .  137 
Logan  V.  Commercial  Union  Ins.  Co. 

1009,  n. 
London  and  Lancashire  F.   Ins.  Co. 

v.  Fischer 543 

London  Assurance  v.  Manstl  .  .  .  199 
London  Assur.  Co.  r.  Sainsbury  .  962,  n. 
Loomis  t>.  Eagle  L.  &    Health  Ins. 

Co Ill 

Lord  V.  Dall 101 

Loud  v.  Citizens'  Mut.  Ins.  Co.     .     .     547 

Love  r.  Harvey 16,  n. 

Lovell  V.  McMillan 660,  n. 

Loy  r.  Home  Ins.  Co 611 

Lowry  c  Bourdieu 7,  n. 

Lucena  v.  Craufurd     .    7,  n  ,  25,  n.,  30,  n. 

Lynch  -•.  Dalzell 1115 

Lynn  (las  ami  Electric  Co.  v.  Meriden 

'F.  Ins.  Co 754 

Lvon  r.  Commercial  Ins.  Co.  .     .     .     176 


McDonald  I'.  Black 31,  n. 

Macdijwall  v.  Eraser 218 

McFarland  c.  St.  Paul  K.  &  M.  Ins. 

Co 637 

McGivney  v.  Phn-nix  F.  Ins.  Co.  .  67 
McLanahan  r.  Univc-r.sal  Ins.  Co.  470,  n. 
Mc  Masters  r.   Westchester  County 

Mut.  Ins.  Co 1037 

Magnus  »•.  Buttemer 0H5 

Manliattan  L.  Ins.  Co.  »■.  Buck  .  .  646 
Marine  Ins.  Co.  i-.  Tucker    .    .    .    431,  n. 

.Marks  /•.  Hamilton 08 

.M:is()n  »■.  Harvey 1005 

r.  Sainsbury 951 

.Matthiwson  »•.  Hoyal  Lis.  Co.  .  .  HO 
Mayer  r.  Mutual  L.  Ins.  Co.  .  .  .1102 
Mead  r.  Northwestern  Ins.  Co.  .  .  624 
.Merchants'  M.  Ins.  Co.  v.  Uumsey  .  62 
Merchants'  Mut.  Ins.  Co  r.  Sweet  679,  n. 
Merrett  i;.  Farmers'  Ins.  Co.    .     .     .     916 


Page 
Mernam  v.  Middlesex  Mut.  F.  Ins. 

Co 546 

Merry  i;.  Prince 31 

Mers  V.  Franklin  Ins.  Co 583 

Meyers  v.  Schumann 23,  n. 

Mickey  v.  Burlington  Ins.  Co.  .  .  363 
Millaudon  v.  New  Orleans  Ins.  Co.    738,  n 

Miller  v.  Amazon  Ins  Co 592 

Mitchell  V.  St.  Paul  German  F.  Ins. 

Co 878,  n. 

Moens  r.  Heyworth 167,  n. 

Montoya  v.  London  Assur.  Co.     .     .     704 

Moore  v.  Pha-nix  Ins.  Co 575 

Morrell  v.  Trenton  Mut.  L.  &  F.  Ins. 

Co 107 

Mount  V.  Larkins 453,  n. 

Mutual  L.  Ins  Co  v.  Allen  .  .  .  .1147 
V.  Simpson 424 

National  Filtering  Oil  Co.  v.  Citizens' 

Ins.  Co 93 

National  Bank  v.  Ins.  Co 365 

Nelson  i-.  Salvador 319 

Neptune  Ins.  Co.  c.  Robinson  .     .     .     146 

Newby  r.  Reed 803 

Newcastle  F.  Ins.  Co.  v.  Macmorran  325 
New  York  Bowery  F.  Ins.  Co.  v.  New 

York  F.  Ins.  Co 172 

New  York  L.  Ins.  Co.  v.  Seyms   .     .     645 

V.  Statham       645 

Niagara  F.  Ins.  Co.  v.  De  Graff  .     .     515 

Nicolet  r.  Ins.  Co 861 

Nightingale  t-.  State  Mut.  L.  Ins.  Co.  640 
North  British  Ins.  Co.  v.  Lloyd  .  167,  n. 
North  of  England  I.  S.  Ins.  Assn.  v. 

Armstrong 953,  n. 

North  of  England   Oil-Cake  Co.  v. 

Archangel  Maritime  Ins.  Co.  1113,  n. 
Northwestern    Travellers'    Assn.    v. 

London  Guar,  and  Ace.  Co.      .     797,  n. 


Oakman  r.  Dorchester  Mut.  F.  Ins. 

Co Tl 

Ocean  Ins.  Co.  I'.  Polleys  .  .  .  510,  n. 
Odiorne  v.  New  England  Mut.  M.  Ins. 

Co 1028,  n. 

Ogden  c.  East  River  Ins.  Co.  .     .     .     879 

Oliver  c  Cowley 469 

O'Niel  I'.  Buffalo  F.  Ins.  Co.     .     .     .     346 

Palmer  v.  Marshall 450 

Parmeter  i*.  Cousins 471 

Paterson  v.  Harris 689,  n. 

Pawson  I'.  Barnevelt 310 

/•.  Ewer 212 

r.  Sni-il 212 

/•   Watson 212 

Pelzer  i-.  St    Paul  F.  &  M.  Ins.  Co.    .  188 

V.  Savannah  F.  &  M.  Ins.  Co.  .  188 

Penn  Mut.  L.  Ins.  C"o.  v.  Mechanics' 

S.  B.  &T.  Co.  .  .  .•  .  .  .  .  205 
Pennsylvania  F.  Ins.  Co.  c.  Kittle  .  1060 
Perrin's  Admr.  v.  Protection  Ins.  Co.     680 


TABLE   OF   CASES. 


XUl 


Peters  v.  Phoenix  Ins.  Co.    .     .     .    678,  n. 

V.  Warren  Ins.  Co 697 

Philips  V.  Bailiie 324,  n. 

Piioenix  Ins.  Co.  v.  Asbury  .     .     .     .     623 

V.  Erie  &  Western  Trans.  Co.    .     056 

Phoenix  L.  Ins.  Co.  v.  Raddin  .  .  204,  n. 
Pitney  V.  Glens  P'alls  lus.  Co.       .  1086,  n. 

Planche'  v.  Fletcher 498 

Plumb  V.  Cattaraugus  County  Mut. 

Ins.  Co 1075' 

PoUeys  I'.  Ocean  Ins.  Co 506 

Poss  V.  Western  Assur.  Co.     .     .    566,  n. 

Potts  v.  Bell 502 

Powles  V.  Innes Ill] 

Pritchet  v.  Ins.  Co.  of  North  America  16,  n. 

Proudfoot  V.  Montefiore 156 

Providence  Washington  Ins.  Co.  v. 

Adler 693 

Provident  L.  Ins.  Co.  v.  P'ennell  .  .  299 
Putnam  v.  Mercantile  M.  Ins.  Co.     .      48 


Quebec  M.  Ins.  Co.  v.  Commercial 
Bank     .........    1036,  n. 

Raine  v.  Bell 440 

Randal  v.  Cockran 937 

liawlins  v.  Desborough 196 

Rawls  V.  American  Mut.  L.  Ins.  Co.  115,  n. 

Rayner  v.  Preston 985,  n. 

Reaper  City  Ins.  Co.  v.  Brennan  .  .  579 
Redford  i-.  Mutual  F.  Ins.  Co.      .    273,  n. 

Redman  v.  London 445 

Reed  v.  Cole 58,  n. 

Reserve  Mut.  Ins.  Co.  v.  Kane     .     .     117 

Rhind  v.  Wilkinson 47,  n. 

Rice  V.  New  England  M.  Ins.  Co.  .  235 
Richards  i'.  Protection  Ins.  Co.  .  340,  n. 
Richardson  v.  German  Ins.  Co.     .    635,  n. 

V.  Maine  F.  &  M.  Ins.  Co.    .    504,  n. 

Ritter  v.  Mutual  L.  Ins.  Co.     .     .     .     775 

Rivaz  V.  Gerussi 168,  n. 

Robert  v.  New  England  Mut.  L.  Ins. 

Co 657,  n. 

Roehner  v.   Knickerbocker  L.  Ins. 

Co 652,  n. 

Rohl  V.  Parr 659 

Rohrbach  v.  Germania  F.  Ins.  Co.    .      81 
Rombach  v.  Piedmont  and  Arling- 
ton L.  Ins.  Co 119 

Ross  V.  Bradshaw 389 

Rouniage  v.  Mechanics  F.  Ins.  Co.    1009.  n. 

Roux  V.  Salvador 840 

Ruggles   V.   General    Interest    Ins. 

Co 140,  n. 

Ruse  V.  Mutual  Benefit  L.  Ins.  Co.  .  17 
Ryan  v.  World  Mut.  L.  Ins.  Co.  .  1097 
Ryder  v.  Phoenix  Ins.  Co 810 

Sadler  v.  Dixon 477,  n. 

Sadlers'  Co.  v.  Badcock  .     .     .  5,  n.,  1118 

Sansom  v.  Ball .36 

Sawyer  v.  Coasters'  Mut.  Ins.  Co.   220,  n., 

320 


Page 
Schneider  v.  Provident  L.  Ins.  Co.  .     784 

V.  United  States  L.  Ins.  Co.     .  1167 

Schwarzbach  v.  Ohio  Valley  Protec- 
tive Union 285,  n. 

Scott  V.  Quebec  F.  Assur.  Co.      .     .    331 

V.  Thompson 438 

Scripture  v.  Lowell  Mut.  F.  Ins.  Co.  732 
Seagrave  v.  Union  M.  Ins.  Co.     .      51,  n. 

Seaman  v.  Fonereau 136 

Seller  v.  Economic  L.  Assn.     .     .     .     77'J 

Shaw  V.  ^tna  Ins.  Co 59 

Shawe  v.  Felton 815 

Sherwood  r.  Agricultural  Ins.  Co.   635,  n. 

Sibbald  t'.  Hill 227 

Sillem  V.  Thornton 34S,  n. 

Silloway  r.  Neptune  Ins.  Co.     60,  n.,  1028 

Simpson  v.  Thomson 914 

Sinclair    v.    Maritime    Passengers' 

Assur.  Co 783 

Smith  V.  Scott 665 

i:  Surridge 470,  n. 

Snyder  r.  Farmers'  Ins.  &  Loan  Co.  335 
Soye  I'.  Merchants'  Ins.  Co.     .     .     .     561 

Stackpole  v.  Simon 285 

Starbuck  v.  New  England  M.  Ins.  Co.  676 
State  Ins.  Co.  i-.  Taylor       ....     881 

Stillwell  V.  Staples 907,  n. 

Stoner  v.  Line 121,  n. 

Stout  V.  City  F.  Ins.  Co.  ...  349,  n. 
Strong  I'.  Manufacturers'  Ins.  Co.  .  889 
Stupetski   V.   Transatlantic   F.  Ins. 

Co 567 

Sun  Fire  Office  y  Clark ....  638,  n. 
Sutherland  v.  Pratt 42 

Taylor  v.  ^tna  L.  Ins.  Co.     .     .     .  1023 

V.  Dunbar 690 

Tebbetts  v.  Hamilton  Mut.  Ins.  Co.  356 
Thames  and  Mersey  M.  Ins.  Co.  v. 

Hamilton 681,  n. 

Tliebaud  v.  Great  Western  Ins.  Co.  1031 
Thompson  v.  Hopper      ....    477,  n. 

V.  Insurance  Co 652,  n. 

V.  Whitmore 663 

Thomson  v.  Weems 417 

Tidmarsh  v.  Washington  F.  «&   ]\I. 

Ins.  Co 470,  n. 

Tilton  V.  Hamilton  F.  Ins.  Co.      .     .     739 
Townsend  ;;.  Northwestern  Ins.  Co.      550 
Trade  Ins.  Co.  v.  Barrachff      .     .    918,  n. 
Traill  v.  Baring      .......     294 

Trask   v.  Hartford   &  New  Haven 

Railroad  Co 970 

Trenton  Mut.  L.  &  F.  Ins.  Co.  v. 

Johnson 22,  n. 

Trinder  v.  North  Queensland   Ins. 

Co 676,  n. 

Turley  v.  North  American  F.  Ins. 

Co 1008,  n. 


Union  Ins.  Co.  v.  Smith  ....    679,  n. 
United   States   Mut.  Ace.  Assn.  i'. 

Barry 788 

Usher  v.  Noble 8U3 


XIV 


TABLE    OF   CASES. 


Page 
Valton  V.  National   Fund  L.  Assur. 

Co.  (20  N.  Y.  32) 289 

v.  National  Loan  l-'und  Assur. 

Soc.  (1  Keyes,  21) 292 

Van  Schoick  v.  Niagara  F.  Lis.  Co.     1080 

V'ezian  r.  Grant 309 

Vicle  V.  Germania  Ins.  Co.  ...  1010 
Vivar  v.  Supreme  Lodge  ot  Knights 

of  Pythias      .      .     .    23,  u.,  300, 410,  n. 


Wainwriglit  r.  Bland 286 

Wakefield  v.  Martin 1110 

Wales  V.  New  York  Bowery  F.  Ins. 

Co 185 

Wall  V.  East  River  Mut.  Ins.  Co.     334,  n. 

Wallace  c.  Ins.  Co 865 

Walradt  v.  riioenix  Ins.  Co.  .  .  .  625 
Warnock  f.  Davis  ....  118,  n.,  1143 
Warren  r.  Davenport  F.  Ins.  Co.  72 

Wasliington  F.  Ins  Co.  r.  Kelly  631,  n. 
Washington  Mut.  Ins.  Co.  v.  Reed  .  681 
Waters  v.  Merchants'  Louisville  Ins. 

Co 671 

Waugh  V.  Beck 17,  n. 

Way  V.  Abington  Mut.  F.  Ins.  Co.  726 
Welsh  I'.  London  Assur.  Corp.  .  919,  n. 
West  ('.  Citizens'  Ins.  Co.  .  .  .  017,  n. 
Western  Commercial  Travelers'  Assn. 

V.  Smith 793 


Page 
Wheeler  v.  Traders'  Ins.  Co.  (62  N.  . 

H.326) 534 

V.  Traders'  Ins.  Co.  (62  N.  H. 

450) 535 

White  V.  Connecticut  F.  Ins.  Co.      .  1078 

V.  Relief  F.  Ins.  Co 751 

V.  Republic  F.  Ins.  Co.     .     .     .     751 

Whitney  v.  Black  River  Ins.  Co.  .  564 
Whittingham  v.  Tliornburgh  .  .  .  284 
Wilkinson  v.    Connecticut   Mut.   F. 

Ins.   Co 398 

Williams  v.  Hays 959 

V.  Niagara  F.  Ins.  Co.       .       1008,  n. 

V.  Roger  Williams  Ins.  Co.    .     .      76 

V.  Shee 443 

V.  Washington  L.  Ins.  Co.     .     .    644 

Willis  V.  Poole 390 

Wilson  r.  Conway  F.  Ins.  Co.      .    345,  n. 

V.  Hill 1118,  n. 

r.  Jones 31,  n. 

V.  Xantho 670,  n. 

Wing  V,  Harvey 1089 

Wood  V.  American  F.  Ins.  Co.      .     .     632 

y,  Hartford  F.  Ins.  Co.     .     .     .     338 

Wooldridge  v.  Boydell 432 

Woolmer  v.  Muilman 305 

Worsley  v.  Wood 1001 

Worthington  v.  Bearse 56 

Wright  V.  Poole 876 


CASES    ON    INSURANCE. 


CHAPTER   I. 
INTRODUCTION. 


Coni-entio  qua  unus  infortunium  alterius  in  se  suscipit  prelio  pericuJi  convenfo. 
Santerxa  de  Assecurationibus,^  pt.  I.,  num.  2  (1552). 

Assecuratio  describi potest  in  hcec  verba:  Assecuratio  est  alienarum  rerum  sive 
marl  sice  terra  exportandarum  periculi  susceptio  cerlo  constituto  pretio :  et  conse- 
quenter  hi  sunt  assecuratores  qui  alienarum  rerum  sive  mari  sice  terra  exportandarum 
certo  pretio  constituto  seu  recepto  periculum  suscipiunt. 

Straccha  de  Assecuralionihus,"  introd.,  num.  46  (1569). 

Asseurance  est  un  contract  par  lequel  on  promet  indemnite  des  choses  qui  sont 
iransportees  d^un  pays  en  autre,  specialement  par  la  met,  et  ce  par  le  moyen  du 
prix  convenu  a  tant  pour  cent,  entre  Vasseure  qui  fait  ou  fait  faire  le  transport,  et 
rasseureur  qui  promet  Vindemnite. 

Guidon  de  la  Mer,^  c.  i.,  art.  i.  (1556-1600). 


THE  COURT  OF  THE   COMMISSIONERS. 

St.  43  Eliz.  c.  12  (1601).* 

An  act  concerning  matters  of  assurances  used  among  merchants. 

Whereas,  it  ever  hath  been  the  polic}'  of  this  realm  b}-  all  good  means 
to  comfort  and  encourage  the  merchant,  thereb}-  to  advance  and  increase 

1  Reprinted  in  Zilettus'  Tractatus  Universi  Juris  (Venice,  1584,  —  commonly  cited 
as  Tractatus  Tractatuum),yol.'VI.,-p?iTt  1,  folio  348;  and  in  Stracchae,Aliorimqite  .  .  . 
Juris-Consultonnn,  de  Mercatura  Decisiones  et  Tractatus  (Amsterdam,  1669),  796.  See 
Levin  Goldschmidt,  "  Benevenuto  Straccha  Anconitanus  und  Petrus  Santerna  Lusita- 
nus,"  in  Zeitschrift  fur  Handehrecht,  vol.  38,  p.  1  (1890-91).  —  Ed. 

2  Keprinted  in  Tractatus  Tractatuum,  vol.  VI.,  part  1,  folio  357;  and  in  the  appen- 
dix to  Straccha  de  Mercatura.  —  Ed. 

3  Reprinted  and  annotated  by  Pardessus,  in  Collection  de  Lois  Maritimes,  vol.  2, 
p.  377.  — Ed. 

*  In  reprinting  early  English  statutes.  Pickering's  edition  of  the  Statutes  at  Large 
has  been  followed.  —  Ed. 

1 


2  THE    COURT   OF   THE   COMMISSIONERS.  [CHAP.  L 

the  general  wealtli  of  the  reahn,  her  Majesty's  customs,  ancl  the  strength 
of  shipping ;  which  consideration  is  now  the  more  requisite,  because 
trade  ancl  traffick  is  not  at  this  present  so  open  as  at  other  times  it 
hath  been :  (2)  and  whereas  it  hath  been  time  out  of  mind  an  usage 
amonii'^t  merchants,  both  of  this  realm  and  of  foreign  nations,  when 
tliev  make  any  great  adventure,  (esi)ecially  into  remote  parts)  to  give 
soino  coiisidoration  of  money  to  other  persons  (wliicli  commonly  are  in  no 
smairiinmbcr)  tojjave  from  them  assurance  made  of  their  goods,  mer- 
chalidTzcs,  ships  and  things  adventured,  or  some  part  thereof,  at  such 
rates  and  in  such  sort  as  the  parties  assurers  and  the  parties  assured 
can  a<-Tree,  whicii  course  of  dealing  is  commonly  termed  a  policy  of  as- 
surance ;  (3)  bxJliejxns  of  which  poHcies  of  assurance  it  cometh  to  pass, 
upon  the  loss  or  perishing  of  any  ship,  there  followeth  not  the  undoing 
of  anv  man,  liut  the  loss  lighleth  rather  easily  upon  many  than  heavily 
upon  few,  and  rather  upon  them  that  adventure  not  than  those  that  do 
adventure,  whereby  all  merchants,  especially  of  the  younger  sort,  are 
allureil  to  venture  more  willingly  and  more  freely  :  (4)  and  whereas 
heretofore  such  assurers  have  used  to  stand  so  justly  and  precisely  upon 
their  credits,  as  few  or  no  controversies  have  arisen  thereupon,  and  if 
any  have  grown,  the  same  !ia\ c  rnini  uiue  to  lime  Ijeen  ended  and  ordered 
bv  certain  gra\  c  and  discreet  merchants  appointed  by  the  lord  mayor  of 
the  citv  of  London,  as  men  l\v  reason  of  their  exi)erience  fittest  to 
undi:-t:inil.  aii'l  -peedily  to  decide  lliose  causes,  until  of  late  years  that 
(livers  persons  have  withdrawn  themselves  from  that  arbitrary  course, 
anTT'Tjavc  sought  to  draw  the  parties  assured  to  seek  their  monies  of 
cV^ry  "several"  assTTrcFT  by  suits  commenced  in  her  Majesty's  courts,  to 
their  great  charges' and  delays:  (o)  for  remedy  wheiepf,  be  it  enacted 
by  the~aiitT)orlty  of  this  present  parliament.  That  it  shall  and  may  be 
lawful  for  the  lord  chancellor,  or  lord  keeper  of  the  great  seal  of  Eng- 
lan<l.  for  the  time  being,  to  award  forth  under  the  great  seal  of  England, 
one  general  or  standing  commission,  to  be  renewed  yearly  at  the  least, 
nnd  « .t!ni\vi-e  s.T7)"(TVi3  iTiVlb  the  saUlord  chancellor  or  lord  keeper  shall 
see:  iiing  and  deterniinl:ig  of  causes  arjsing  and  policies 

oras>iiiau(e>,  ^ueii  :iH  now  are  or  hereafter  shall  be  entered  within  the 
oflTce  of  assurances  within  the  city  of  London,  and  whereof  no  suit  shall 
Ito  depending  the  last  day  of  this  session  of  parliauicnt,  in  any  of  her 
Majesty's  courts:  (C,)  vvhic^h  comnjjssion  shall  be  directed  to  the  judge 
of  the  admiralty  f(»r  thc^timc  being,  the  recorder  of  London  for  the  time 
TicTn^TTwo  Ttoctors  of  the  civil  law,  and  two  common  lawyers,  and  eight 
prave  aiiTl  di-ScTeet  merehants,  or  to  any  five  of  them:  (7)  which  com- 
!nisHioncFs7^ The  greater  part  of  them,  shall  sit  and  meet,  shall  have  l)}* 
virtue  of  this  present  act  full  power  and  authority  to  hear,  examine, 
order  and  decree  nil  and  every  such  cause  and  causes  concerning  policies 
of  assurances  in  a  brief  and  summary  course,  as  to  their  discretion  shall 
seem  meet,  wjthout  f<)rmalilies  of  [)leadings  or  proceedings. 

TL    And  br  it  fuilher  onncterl  by  the  authority  aforesaid.  That  it  shall 
be  lawful  for  the  s.iid  commissioners,  as  well  to  warn  any  of  the  parties 


CHAP.  I.]  THE   COURT   OF   THE   COMMISSIONERS.  3 

to  come  before  them,  as  also  to  examine  upon  oath  any  witness  that 
shall  be  produced,  and  to  commit  to  prison  without  bail  or  mainprize, 
an}-  person  that  shall  wilfully  contemn  or  disobey  their  final  orders  or 
decrees:  (2)  and  that  the  said  commissioners  shall  once  ever}-  week  at 
the  least,  meet  and  sit  upon  the  execution  of  the  said  commission  in  the 
office  of  the  assurances,  or  in  some  other  convenient  public  place  by 
them  to  be  assigned  :  (3)  and  that  no  person  by  virtue  of  this  act  may 
claim  or  exact  any  fee,  for  any  matter  or  cause  concernuig  the  execu- 
tion of  the  said  commission. 

III.  And  be  it  further  enacted  by  the  authority  aforesaid,  That  if 
any  person  shall  be  grieved  by  sentence  or  decree  of  the  said  commis- 
sioners, that  such  persons  so  grieved  may  at  any  time  within  two  months 
of  the  said  decree  so  made,  e^41)lt...bis  bill  into  the  high  court  o.f  chan- 
cer}- for  the  re-examination  of  such  decree  ;  (2)  so  as  every  person  com- 
plainant, before  he  shall  exhibit  any  such  bill,  do  either  execute  and 
satisfy  the  said  sentence  so  awarded,  or  at  the  least  lay  down  m  deposito 
with  the  said  commissioners  such  sums  of  money  as  he  shall  be  awarded 
to  pay,  and  that  upon  so  doing  the  said  complainant  shall  be  enlarged 
of  his  imprisonment :  (3)  and  that  the  lord  chancellor,  or  lord  keeper, 
for  the  time  being,  shall  have  full  power  and  autliority  by  virtue  of 
this  act,  upon  every  complaint  made  (in  order  as  aforesaid)  to  reverse 
or  affirm  every  such  sentence  or  decree,  according  to  equity  and  con- 
science :  (4)  and  that  the  said  lord  chancellor,  or  lord  keeper,  in  every 
such  suit  brought  before  him,  as  aforesaid,  by  such  assurers,  and  de- 
creed against  the  said  assurers,  shall  award  double  costs  to  the  party 
assured. 

IV.  Provided  nevertheless.  That  no  commissioner  shall  intermeddle 
in  the  execution  of  any  such  commission  in  any  cause  or  matter  of 
assurance,  where  himself  shall  be  either  a  party  assurer  or  assured  in 
the  same  assurance  which  is  brought  in  question  :  (2)  nor  that  any 
commissioner  (other  than  the  said  judge  of  the  admiralty  and  the 
recorder  of  London)  shall  deal  or  proceed  in  the  execution  of  any  such 
commission  before  he  have  taken  his  corporal  oath  before  the  lord  mayor 
and  court  of  aldermen  of  the  city  of  London,  to  proceed  uprightly  and 
indifferently  between  party  and  party.^ 

1  The  Court  of  the  Commissioners  long  ago  ceased  to  exist.  See  St.  13  &  14  Car. 
II.  c.  23  (1662)  ;  3  Bl.  Com.  74-75;  Martin's  History  of  Lloyd's,  11,  14.  — Ed. 


GODDART  V.   GARRETT.  [CHAP.  11. 


CHAPTER  II. 

INSURABLE  INTEREST   AS   AFFECTING  THE  VALIDITY 
OF  THE  CONTRACT. 


« 

PART  L 


WHY  AN  INTEREST  IS  REQUISITE. 


Principale  fundamentum  assecuralinnis  est  rii^icum,  9€u  interesse  assecuratonim, 
sine  quo  non  potest  subsistere  asseciwatio. 

Casauegis  de  Commercio,  disc.  IV.,  num.  1  (1707). 


GODDART  V.  GARRETT. 
Chancery,^  1692.     2  Vern.  269.* 

The  defendant  had  lent  monej-  on  a  bottom-iliea  bond,  but  had  no 
iijjercst  in  the  ship  or  cargo.  The  nionc\-  lent  was  £300,  and  he  in- 
sured £150  on  the  ship.  Tlie  plaintiffs  bill  was  to  have  the  policy 
delivered  up,  by  reason  the  defendant  was  not  concerned  in  point  of 
interest  as  to  the  shii)  or  cargo. 

Cur.  Take  it  that  the  law  is  settled  that,  if  a  man  has  no  interest 
and  insures,  the  insurance  is  void,  although  it  be  expressed  in  the 
policy  interested  or  not  interested ;  and  the  reason  the  law  goes 
upon  19  that  these  uisu^rances  are  made  for  the  encouragement  of 
trade,  and  not  that  persons  unconcerned  in  trade,  nor  interested  in 
the  ship,  should  profit  by  it;  and  where  one  would  have  benefit  of  the 
insurance  he  must  renounce  all  interest  in  the  ship.  And  the  reason 
why  the  law  allows  that  a  man  having  some  interest  in  the  ship  or 
cargo  may  insure  more,  or  five  times  as  much,  is  that  a  merchant  can- 
not tell  how  much  or  how  little  his  factor  may  have  in  readiness  to 
lade  on  board  his  ship.     And  it  was  said  that  the  usual  interest  allowed 

*  The  Rront  seal  was  in  commission,  the  commissioners  being  Sir  John  Trevor,  Sir 
Willi.im  Kawlinson,  and  Sir  George  Hutching.  —  Ed. 
'  B.  c,  but  not  9.  p.,  1  Eq.  Caa.  Abr.  371.  —  Ed. 


PART  I.]  DEPABA   V.   LUDLOW.  5 

on  bottom-rhea  was  £3  per  cent  per  mensem,  and  you  may  insure  at  6  or 
7  per  cent  for  the  voyage  ;  so  if  tliis  practice  might  be  allowed,  a  man 
might  be  sure  to  gain  £30  or  more  per  cent.  Per  Cuk.  I2yiiiS£Jtl;fi 
pgjicyjofjnsurance  to  be  delivered  up  to  be  cancelled.^ 

Note  that  in  this  case  notice  was  taken  in  the  policy  that  it  was  to 
insure  mone}'  on  bottom-rhea.^ 

Note,  also,  that  in  this  case  the  ship  survived  the  time  limited  in  the 
bottom-rhea  bond,  and  was  lost  within  the  time  limited  in  the  policy. 
So,  if  insurance  good,  defendant  might  be  entitled  to  the  money  on  the 
bond,  and  also  on  the  policy. 


DEPABA  V.    LUDLOW. 
Common  Pleas,  1720.     1  Corny ns,  360. 

This  was  an  action  of  assumpsit  upon  a  policy  of  insurance,  where 
the  defendant  insured  the  plaintitl',  iutt)i;est  or  no  interest^  against  all 
enemies,  pirates,  takings  at  sea,  and  all  other  damages  whatsoever. 
And  upon  the  trial  it  appeared  that  the  ship  was  taken  by  a  pirate 
of  Sweden,  and  was  in  his  possession  for  nine  days,  and  was  retaken 
by  an  English  man-of-war,  and  after  the  suit  commenced,  brought  into 
Harwich.  And  the  question  was,  whether  in  such  case  the  defendant 
was  responsible? 

And  it  was  reserved  by  tlie  Chief  Justice  for  the  opinion  of  the  court ; 
and  after  argument  by  Serjeant  Whitaker  for  the  plaintiff,  and  by  Dr. 
Hanchman  for  the  defendant,  it  was  determined  for  the  ulaintiff. 

For  though  it  was  objected  that  the  insurer  was  only  responsible 
where  the  plaintiff  had  a  property  and  that  the  term  of  insuring  interest 
or  no  interest  was  introduced  since  the  Revolution,  yet  it  was  said  that  , 

such  insurance  was  good,  and  the  impoi't  of  it  is  f|ifi.|-.  the  plaintiff  ha§    /^j£^/- 
no  occasion  to  prove  his  interest,  and  that  the  defendant  cannot  contro- 
vert  that." 

1  In  Cousins  v.  Nantes,  3  Taunt.  513,  517  (1811),  Mansfield,  C.  J.,  said:  "The 
courts  of  equity  formerly  exercised  an  odd  jurisdiction  upon  this  subject;  but  they 
could  not  have  proceeded  upon  the  ground  that  an  agreement  was  good  ou  one  side  of 
Westminster  Hall,  and  not  on  the  other."  —  Ed. 

2  A  bottomry  interest  is  now  conceded  to  be  insurable.  Glover  v.  Black,  3  Burr. 
1394,  1401  (1763);  Simonds  v.  Hodgson,  3  B.  &  Ad.  50  (1832). —  Ed. 

3  In  Sadlers'  Company  v.  Badcock,  2  Atk.  554,  556  (1743),  s.  c.  1  Wils  10,  Lord 
Hardwicke,  C,  said:  — 

"  Now  these  insurances  from  fire  have  been  introduced  in  later  times,  and  therefore 
differ  from  insurance  of  sliips,  because  there  interest  or  no  interest  is  almost  constantly 
inserted,  and  if  not  inserted  you  cannot  recover  unless  you  prove  a  property. 

"  The  insuring  of  ships  is  as  old  as  the  laws  of  Oleron  and  Rhodes,  whose  inhabitants 
were  the  great  traders  of  the  world  ;  look  into  the  books  that  treat  of  insuring  and  you 
will  find  the  term  is  aversio  jjericuli,  the  intention  of  all  insurances  being  to  avert  any 


6  THE   ACT   AS  TO   MARINE   POLICIES.  [CHAP.  II. 

And  though  the  ship  was  here  retaken,  yet  the  plaintiff  received  a 
damage,  for  his  voyage  was  interrupted  ;  and  the  question  is  not  whether 
the  plaintiff  had  his  ship  and  did  not  lose  his  property,  but  what  damage 
he  sustained. 


THE  ACT  AS  TO   MARINE  POLICIES. 

St.  19  Geo.  II.  e.  37,  §§  1-3  (1746). 

An  act  to  rer/idate  insurm^ces  on  ships  belonf/inrf  to  the  subjects  of 
Great  Britain^  and  on  merchandizes  or  effects  laden  thereon. 

WnKUEAS,  it  hath  been  found  by  experience,  that  the  making  assur- 
ancxs.  iiilLTcst  or  no  interest,  or  without  further  proof  of  interest  than 
the^  policy,  hutli  been  productive  of  many  pernicious  practices,  whereby 
gTeat  number  of  ships,  with  tlieir  cargoes,  have  either  been  fraudu- 
lently lost  and  destroyed,  or  taken  by  the  enemy  in  time  of  war ;  and 
such  assurances  have  encouraged  the  exportation  of  wooll,  and  the  carry- 
ing on  many  other  prohibited  and  clandestine  trades,  which  by  means 
of  such  assurances  have  been  concealed,  and  the  parties  concerned 
secured  from  loss,  as  well  to  the  diminution  of  the  publick  revenue,  as 
to  the  great  detriment  of  fair  traders :  and  by  introducing  a  mischiev- 
ous kind  of  gaming  or  wagering,  under  the  pretence  of  assuring  the 
risque  on  shipping,  and  fair  trade,  the  institution  and  laudable  design  of 
making  assurances,  hath  been  perverted ;  and  that  which  was  intended 
for  the  encouragement  of  trade,  and  navigation,  has  in  many  instances 
Cien  luulful  of,  and  destructive  to  the  same  :  for  remedy  whereof,  be  it 
enacted  by  the  King's  most  excellent  majesty,  by  and  with  the  advice 
and  consent  of  the  lords  spiritual  and  temporal,  and  commons,  in  this 
parliament  assembled,  and  by  the  authority  of  the  same,  That  from  and 
after  the  first  day  of  August,  one  thousand  seven  hundred  and  fort}'- 
six,  no  assurance  or  assurances  shall  be  made  b}'  any  person  or  persons, 

dam.iKc.t  or  loss  the  insiircil  might  sustain-  Upon  this  piinciple,  in  all  modern  insur- 
anros  (»f  ships  interest  <ir  no  interest  is  introilueeil,  and  Ix'twecn  the  sulijeets  of  different 
nations  for  this  reason,  l)ecauso  a  great  de.al  of  eontrahand  trade  is  carried  on,  and  I 
believe  hogan  in  the  Spanish  trade  first. 

'The  common  law  leant  strongly  against  these  policies  for  some  time,  but  being 
fonnd  lieneficial  to  merchants  they  winked  at  it. 

"  New  laws  have  been  enacted  whidi  make  it  felony  to  destroy  ships,  and  the  tempta- 
tion t'l  it  has  ari.sen  from  interest  and  no  interest  insertcMl  in  policies. 

"  No  longer  ago  than  wlien  I  first  sat  in  the  Court  of  King's  Bench  I  have  heard 
these  insurances  called  fraudulent;  but  though  inconveniences  may  have  arisen  from 
these  worils  to  the  insurance  comj)anies,  yet  some  inconvenience  too  may  arise  on  the 
other  side,  localise  if  any  person  may  insure  whether  he  has  property  or  not,  it  may 
bo  a  tempt.ation  to  burn  houses  to  receive  the  benefit  of  the  policy." 

For  the  remainder  of  Sadlers"  Company  v.  Badcock,  see  fiost,  p.  1118.  —  Ed. 


PART  l]  the    act   as    TO    MARINE    POLICIES.  7 

bodies  pc)litick-Or  COi:]K?rate^ofl ,«:'}}'  s'liPjO^'  slnp'^<  goods,  inerdiandizes, 
or  effects,  laden  or  to  be  laden  on  board  of  any  such  ship  or  ships,  in- 
terest  or  no  interest,  or  without  further  proof  of  interest  than  the  policv, 
or  by  wa}'  of  gaming  or  wagering,  or  without  benefit  of  salvage  to  tlie 
assul-ei-;  and  that  every  such  assurance  shall  be  null  and  void  to  all 
intents  and  purposes.^ 

1  In  Kent  v.  Bird,  Cowper,  583,  584  (1777),  Lord  Maxsfield,  C.  J.,  said  :  "  A  policy 
of  insurance  is,  in  the  nature  of  it,  a  contract  of  indemnity,  and  of  great  benefit  to 
trade.  But  the  use  of  it  was  perverted  by  its  being  turned  into  a  wager.  To  remedy 
this  evil,  the  Stat.  19  Geo.  II.  c.  37,  was  made." 

In  Lowry  v.  Bourdieu,  2  Doug.  468,  470  (1780),  Lord  M.vxsfield,  C.  J.,  said: 
"  Tiiere  are  two  sorts  of  policies  of  insurance,  —  mercantile  and  gaming  policies.  The 
first  sort  are  contracts  of  indemnity,  and  of  indemnity  only;  and  from  that  principle  a 
o-reat  variety  of  decisions  and  consequences  liave  followed.  The  second  sort  may  be  the 
same  in  form,  but  in  them  there  is  no  contract  of  indemnity,  l)ecause  there  is  no  interest 
upon  which  a  loss  can  accrue.  They  are  mere  games  nf  hazard,  like  the  cast  of  a  die. 
.  .  .  This  then  is  a  gaming  policy,  and  against  an  act  of  Parliaraeu^t." 

In  f>Hn|ny^^  r.  Hunter.  8  T.  R.  13,  23  (1798),  Lord  Kenyon,  C.  J.,  said :  "X.th[nk 
that  at  common  law  a  person  might  have  insured  without  having  any  interest.  And 
tills  islii  some  measure  proved  by  the  case  cited  from  2  Vernon  [Goddart  i-.  Garrett], 
since  that  was  an  application  made  to  the  Court  of  Chancery,  to  have  the  policy  de- 
livered up ;  for  that  court  sometimes  relieves,  as  was  said  by  Sir  J.  Jekyll  in  Cowper 
V.  Cowper,  2  P.  Wms.  753,  against  the  rigor  of  the  law.  .  .  .  But  the  preamble  and 
enacting  part  of  the  Stat.  19  Geo.  IL  c.  37,  remove  all  doubt  on  this  point.  It  recites 
the  mischiefs  and  inconveniences  that  had  arisen  from  the  making  of  assurances  inter- 
est or  no  interest,  and  tlien  it  enacts  (not  declaring)  that  no  such  assurance  shall  be 

made,  except  in  certain  cases.  .  .  .  This  rc.unt  is  u I,  unless  it  be  on  an  insurance 

prohibited  by  that  statute.  J3ut  that  statute  .  .  .  docs  not  extend  to  foreign  ships." 
At  p.  24,  AsHHCRST,  J.,  said :  "  The  principal  question  in  this  case  arises  on  the  fourth 
count  in  the  declaration ;  namely,  whether  or  not  it  can  be  supported  for  want  of  an 
averment  of  interest  in  tiie  plaintiffs  in  the  subject-matter  insured  ?  As  to  which  I  am 
of  opinion  that  the  declaration  is  good  witliout  such  an  averment ;  for,  in  the  first 
place,  this  does  not  seem  to  be  a  case  that  falls  within  the  purview  of  the  statute  against 
gaming  policies.  But,  without  entering  into  that,  it  does,  in  the  present  case,  appear 
to  be  sufficiently  clear  that  the  plaintiffs  were  interested."  And  at  p.  25  Grose,  J., 
said  :  "  Whoever  reads  the  Stat.  19  Geo  II.  must  see  what  the  law  was  before  the  pass- 
ing of  that  act.  ge^o.re .that  time  a  wagering  policy  was  not  illegal.  T^ie  word.s  of 
that  statute  clearly  show  that  before  that  time  any  person  might  have  insured  witliout 

'tf^i'itiiit" 

In  Lucena  v.  Craufurd,  2  B.  &  P.  N.  K.  269,  321-322  (H.  L.  1806),  J^xd-  EleiOX 
said  :  "  Lord  Kenyon,  in  Craufurd  v.  Hunter,  considered  the  19  Geo.  II.  as  a  legislative 
declaration  that  an  insurance  might  have  been  effected  before  that  statute  witliout 
interest.  It  is  with  great  deference  that  I  entertain  doubts  on  that  subject.  Ld.  Ch. 
Baron  Comyns,  in  the  case  of  Depaba  v.  Ludlnw,  Com.  360,  speaking  of  this  statute, 
says,  that  it  was  an  act  to  affect  the  form  of  the  policy ;  and  Lord  Hardwicke  has 
said  the  same  in  two  cases,  —  The  Sadlers' Company  v.  Badcoc]^,"2'"Atk.  554,  and 
Pringle  v.  Hartley,  3  Atk.  195.  In  the  latter  of  which  he  distinctly  s.ays  that  the 
words  '  interest  or  no  interest '  were  meant  only  to  dispense  with  the  proof  of  interest 
nn  th.e.tijal-  If  then  a  policy  with  the  words  '  interest  or  no  interest'  were  stated  in 
a  declaration,  and  these  words  meant  that  there  should  be  a  dispensation  with  tlie 
proof  of  interest,  there  w^ould  be  something  like  an  averment  on  the  one  part  and  an 
aiTiiiission  on  the  other  that  there  was  an  interest.  I  cannot  conceive  how  such  decrees 
could  have  been  made  in  courts  of  equity  as  were  made  there  previous  to  the  10  Geo. 
n.,  if  an  insurance  could  have  been  made  without  interest,  for  no  rnurt  of  eijulty  nmld 
relieve  against  the  effect  of  a  contract  valid  i;i  law.     But  if  the  words  '  interest  or  no 


8  THE   GAMBLING   ACT.  [CHAP.  IL 

II.  Provided  always,  and  be  it  further  enacted  by  the  authority 
aforesaid,  That  assurauoe  on  private  ships  of  war,  fitted  out  by  any  of 
his  Majesty's  subjects,  solely  to  cruize  against  his  Majesty's  enemies, 
niav  be  made  by  or  for  the  owners  tiiereof,  interest  or  no  interest,  free 
of  average,  and  without  benefit  of  salvage  to  the  assurer;  anything 
herein  contained  to  the  contrary  thereof  in  any  wise  notwithstanding. 

III.  Trovidcd  also,  and  it  is  hereby  enacted,  That  any  merchandizes 
or  effects  from  any  ports  or  places  in  Elurope  or  America,  in  the  pos- 
session of  the  crowns  of  Spain  or  Portugal,  may  be  assured  in  such 
way  and  manner,  as  if  this  act  had  not  been  made.^ 


THE  GAMBLING  ACT. 

St.  14  Geo.  III.  c.  48  (1774). 

An  act  for  regulating  insurances  upon  lives,  and /or  prohibiting  all 
such  insurances,  except  in  cases  where  the  persons  insuring  shall 
have  an  interest  in  the  life  or  death  of  the  perso7is  insured. 

"Whereas  it  hath  been  found  b}'  experience,  that  the  making  insur- 
ances on  lives,  or  other  events,  wherein  the  assured  shall  have  no  inter- 
est, hath  introduced  a  mischievous  kind  of  gaming :  For  remedy-  whereof, 
be  it  enacted  b}-  King's  most  excellent  majesty,  b}'  and  wilh  the  advice 
and  consent  of  the  lords,  spiritual  and  temporal,  and  commons,  in  this 
present  parliament  assembled,  and  by  the  authority  of  the  same,  Tiiat 
from  and  after  the  passing  of  this  act,  no  insurance  shall  be  made  by 
aii\  ■  ■  -n  f)r  poisons,  bodies  politick  or  corporate,  on  the  life  or  lives 
of  11  "I  [11  Tsons,  or  on  any  other  event  or  events  whatsoever, 

wtiticin  Lhu  person  or  persons  for  whose  use,  benefit,  or  on  whose  ac- 
count  such_iLoligy  or  policies  shall  be  made,  shall  have  no  interest,  or 
hy  way  of  gamin;^  or  wagering ;  and  that  every  assurance  made,  con- 
interest  '  amonntpfl  to  an  ap^rcement  to  dispense  with  the  proof  of  interest,  the  prin- 
ciplfs  iiiHm  whifii  those  rlccrees  proceeded  may  easily  ho  accounted  for.  If  the  insurer, 
having  admitted  an  interest,  wliich  lie  supposed  caj)al)le  of  jiroof,  afterwards  discovered 
tiiat  no  interest  existeil,  he  mi/jht  state  to  a  court  of  e(iuity  that  he  had  heen  taken  hy 
ftnrpriiie  in  his  admissic»n,  and  the  policy  would  he  ordered  to  he  delivered  up.  There  is 
some  strange  language  to  l»e  found  in  our  hooks  respecting  wagering  and  valued 
p<di(ies,  the  latter  of  which,  though  fri(|uently  in  effect  wagering  policies,  have  heen 
[H'rmittod,  liecanse  it  has  heen  snj»posed  that  the  convenience  of  them  is  greater  than 
wiiiilil  result  from  the  prohibition  of  them.  But  the  language  of  all  courts  of  justice 
h.%*  heen  extremely  careful  lest  the  jiermission  of  valued  policies  should  introduce  a 
mw.ips  f.f  gamhling  j.olicies.  With  respect  to  foreign  ships,  the  averment  of  interest 
Ins  heen  ditpcnserl  with,  not  hccanse  insurance  on  them  could  he  made  without  iuter- 
c,Mt,  hnt  on  account  of  the  difficulty  of  proof." —  fin. 

'  For  reasons  nnderlving  the  exceptions,  see  2  Bl.  Com.  460;  2  Park  on  Mar.  Ins. 
(8th  ed.)  .'.0.1:  Marsh.ill  on  Insurance  (2d  ed).  ll«.  n.(<i)\  Thellusson  r.  Fletcher, 
I  Doug.  315  (17«0) ;  Murphy  r.  Bell,  4  Bing.  567,  569-670  (1828).  — Ed. 


PAKT  I.]  AMORY  V.   GILMAN.  9 

ttavy  to  the  true  intent  and  meaning  hereof,  shall  be  null  and  void,  to 
all  intents  and  purposes  whatsoever. 

II.  And  be  it  further  enacted,  That  it  shall  not  be  lawful  to  make  any 
policy  or  policies  on  the  life  or  lives  of  any  person  or  persons,  or  other 
event  or  events,  without  insertin";  in  such  jjolicy  or  policies  the  person 
or  persons,  name. or  names  interested  therein,  or  for  whose  use,  benefit, 
oron  whose  account,  such  policy  is  so  made  or  underwrote. 

IlT.  And  be  it  further  enacted,  That  in  all  cases  where  the  insured 
hath  interest  in  such  life  or  lives,  event  or  events,  no  greater  sum  shall 
be  recovered  or  received  from  the  insurer  or  insurers  than  the  amount  or 
value  of  the  interest  of  the  insured  in  such  Ufe  or  lives,  or  other  event 
or  events.  • 

IV.  Provided  always.  That  nothing  herein  contained  shall  extend,  or 
be  construed  to  extend,  to  insurances  bona  fide  made  by  any  person  or 
persons,  on  ships,  goods,  or  merchandises ;  but  every  such  insurance 
shall  be  valid  and  effectual  in  the  law,  as  if  this  act  '.aa  not  been 
made.^ 


AMORY  V.  GILMAN. 
Supreme  Judicial  Court  of  Massachusetts,  180e.     2  Mass.  1. 

This  was  an  action  of  assumpsit  on  a  policy  of  insurance,  dated 
June  17,  1800,  wherein  the  plaintiff,  "for  whom  it  may  concern," 
caused  himself  to  be  insured  on  the  cargo  of  the  ship  "America,"  at 
and  from  Teneriffe  to  La  Vera  Cruz,  and  at  and  from  thence  to  her  port 
of  discharge  in  the  United  States,  with  liberty  to  touch  and  trade  at  the 
Havana  on  her  homeward  passage,  at  a  premium  of  twenty-eight  per 
cent.  In  the  printed  part  of  the  policy  was  a  provision,  now  usually 
inserted  in  policies  made  in  this  country,  that  "  The  subscribers  thereto 
shall  be  discharged  from  every  risk  in  case  the  same  property  shall  be 
wholly  assured  b^'  .ajiy  polic}'  or  policies  actually  prior  to  mis ;  but 
should  any  part  of  the  same  property  remain  unassured  by  such  prior 
polic}'  or  policies,  or  if  the  sum  assured  by  this  policy  sh&il  exceed  the 
true  value  of  the  property, at  risk,  then  the  first  subscriber  hereto,  and 
those  next  in  succession,  shall  be  held  to  take  and  bear  tlie  risk  of  the 
sum  written  by  each  respective!}-,  until  the  real  amount  of  the  property 

1  St.  8  &  9  Viet.  c.  109,  §  18  (1845),  provided :  "That  all  Contracts  or  Agreements, 
whether  by  Parole  or  in  Writing,  by  way  of  gaming  or  wagering,  shall  be  null  and 
void." 

St.  14  Geo.  III.  c.  48  (1774),  was  extended  to  Ireland  by  St.  29  &  30  Vict.  c.  42 
(1866).  On  the  question  wliether  insurable  interest  was  requisite  in  Ireland  indepen- 
dently of  statute,  see  Shannon  v.  Nugent,  Hayes,  5.36  (1832) ;  British  Ins.  Co.  v.  Magce, 
Coolie  &  Alcock,  182  (1834);  Scott  v.  Roose,  3  Ir.  Eq.  170  C1841J;  s.  c.  Lougfield  & 
Townsend,  54.  —  Ed. 


10  AMORY   V.   GILMAN.  [CHAP.  II. 

at  risk  shall  be  fully  assured,  and  the  subsequent  subscribers  to  this, 
and  policies  of  a  later  date,  shall  be  discharged  from  every  risk."  The 
defendant  underwrote  $1,000.  On  the  llth  of  August,  1800,  the  fol- 
lowing memorandum  was  indorsed  on  the  policy  and  subscribed  by 
the  parties,  viz.:  "The  sum  insured  on  cargo  b}- this  policy  is  war- 
ranted, by  the  assured,  free  of  average,  the  insurer  relinquishing  tlie 
benefit  of  salvage ;  and  the  parties  agree  that,  for  so  much  as  is 
insured  on  cargo,  the  policy  shall  be  deemed  sufficient  proof  of  inter- 
est, and  no  part  of  the  premium  on  the  same  to  be  returned  for  want 
of  interest." 

The  plaintiff  had  previouly  insured,  for  himself  onl^',  $3,000  on  the 
same  cargo,  and  on  the  same  terms,  in  the  office  of  the  Boston 
Marine  Insurance  Company.  On  the  9th  of  August,  1800,  a  mem- 
orandum was  indorsed  on  this  policy,  in  the  words  of  that  above 
recited ;  and  on  the  24th  of  September,  1800,  the  following  was  in- 
dorsed on  the  policy  last  described,  viz.:  "The  interest  insured  by 
this  polic}-  is  understood  to  be  derived  from  expenses  paid  at  Tenei'iffe, 
on  the  cargo  of  the  ship  '  America,'  whereby  the  assured  became  inter- 
ested in  the  adventure  to  the  amount  of  the  advance,  and  the  interest 
is  not  to  be  controverted." 

The  "America"  was  a  sliip  of  the  United  States,  but  sailed  from 
Teneriffe  under  Spanish  papers  and  colors,  and  having  on  board  a 
nominal  Spanish  master.  The  whole  expedition  was  understood  to  be 
a  covered  transaction,  and  in  contravention  of  the  commercial  regula- 
tions of  the  Spanish  government.  The  cargo  was  landed  at  La  Vera 
Cruz,  and  afterwards  seized  by  the  governor  there.  The  master  bor- 
rowed $1,000,  which  "  was  advanced  to  him  on  the  credit  of  the 
cargo,  in  the  hope  that  the  same  might  finally-  be  acquitted."  With 
this  sura  he  purcliased  a  quantity  of  logwood,  with  which  he  bal- 
lasted his  ship,  and  took  on  board  a  cargo  on  freight  for  Havana.  On 
the  passage  thither,  tlie  ship  was  captured  by  a  British  sliip  of  war, 
and  carried  to  Jamaica,  and  there  condemned  as  Spanish  propertv- 
Tlie  freight  money,  payable  at  Havana,  had  the  cargo  been  delivered 
there,  would  have  been  upwards  of  $G,000. 

On  the  5th  of  October,  1802,  the  plaintiff  received,  of  tlie  Boston 
Marine  Insurance  Company,  $495.20,  which,  by  his  receipt  therefor, 
he  acknowledges  to  be  "  the  amount  of  his  interest  in  the  cargo  on  board 
from  Vera  Cruz,  and  $450. 8G  return  premium  for  short  property  from 
Vera  Cruz  home." 

These  facts  are  all  contained  in  a  special  verdict  found  at  a  former 
term  of  this  court,  and  in  certain  documents  referred  to  and  verified  b}- 
that  verdict ;  and  upon  these  facts  the  question  of  the  plaintiff's  right 
to  recover  in  this  action  now  came  on  to  be  argued. 

For  the  plaintiff,  it  was  urged  that  the  several  stipulations  between 
the  parties  amounted  to  no  more  than  a  waiver,  on  the  part  of  tlie  un- 
derwriter, of  the  regular  and  legal  evidence  of  the  value  of  the  property 
of  the  assured  in  case  of  a  loss  ;  and  that  it  appeared  in  fact  here  that 


PART  I.]  AMORY   V.   GILMAN.  11 

the  plaintiff  was  interested  in  the  freight  money,  and  had  reall}-  sus- 
tained a  loss  b}'  the  capture  to  a  greater  amount  than  the  sum  under- 
written by  the  defendant. 

But  if  on  a  recurrence  to  all  the  circumstances  this  should  be  con- 
sictered  to  be  a  wager  policy,  it  was  contended  that  such  a  contract  was 
valid  at  common  law.  Assievedo  v.  Cambridge,  10  Mod.  77 ;  Depaba 
V.  Ludlow,  Comyns's  Rep.  3G0  ;  Dean  v.  Dicker,  2  Stra.  1250.  The 
statute  of  19  Geo.  II.  c.  37,  made  in  restraint  of  these  policies,  proves 
the  same  point.  There  has  been  no  decision  of  our  courts  adopting 
that  statute,  and,  if  it  had  been  adopted,  cases  in  the  Spanish  and 
Portuguese  trade  are  expressly  excepted  from  its  operation.  If  this 
contract  have  the  several  ingredients  which  go  to  constitute  a  valid 
transaction,  —  that  is,  if  it  is  made  bj-  persons  able  to  contract,  and  is 
founded  on  a  valuable  consideration, — it  should  be  supported,  unless 
prohibited  b}'  some  positive  regulation  of  law,  or  some  vice  is  shown  to 
be  inherent  in  it  wliich  should  deprive  it  of  legal  countenance.  Men  are 
masters  of  their  own  property,  and  the  law  does  not  inquire  minutely 
into  the  value  of  the  consideration  which  ma}'  induce  them  to  part  with 
it.  So  neither  does  it  regard  tlie  qualit}'  of  that  consideration,  unless 
especially  interdicted,  or  necessarily  so  implied  from  its  infringement 
of  some  moral  principle.  As  we  have  no  reports  of  decisions  in  our 
own  courts,  cases  cannot  be  referred  to  ;  but  traditionary  communica- 
tions are  handed  down,  that  actions  on  simple  and  innocent  wagers 
have  been  supported  in  the  courts  of  this  State. 

For  the  defendant,  it  was  observed  that,  if  the  plaintiff  has  sustained 
a  loss  on  the  freight,  this  policy  does  not  cover  it;  and  that,  having 
received  the  amount  of  his  actual  loss  on  the  cargo  from  the  under- 
writers on  a  prior  policy,  he  cannot  entitle  himself  to  a  recovery  in  this 
action,  unless  a  mere  wager  policy  is  a  valid  and  legal  contract  in  this 
State.  Xhg  English  judges,  altliough  bound  by  precedents  to  support 
actions  on  innocenF wagers,  uniformly  admit,  in  all  the  late  cases,  that 
it  would  have  been  better  to  have  decided  originally  against  them. 
Xtlicrfold  V.  Beard,  2  T.  R.  GK);  Good  v.  Elliot,  3  f.  R.  693.  And 
Marshall  (page  98)  expresses  an  opinion  that,  if  the  question  were  now 
res  mtegra,  an  action  on  a  wager  policy  could  not  be  supported.  }isis^ 
it  Js  res  inte^za.  By  the  common  law,  at  the  time  of  our  ancestors' 
emigration,  and  for  near  a  century  afterwards,  such  a  contract  was 
void.  Marshall,  99,  100,  and  the  cases  there  cited,  particularly  God- 
dart  V.  Garrett,  2  Vern.  269;  1  Eq.  Cas.  Abr.  371,  s.  c.  During  the 
last  century,  the  English  courts  began  to  sustain  actions  on  this  species 
of  contracts,  but  their  decisions  have  not  been  adopted  here.  The  an- 
cient law  of  England,  and  the  usage  of  this  country,  must  then  decide 
this  question.  The  forcible  objections  recited  in  the  preamble  to  the 
statute  19  Geo.  II.  c.  37,  receive  additional  force  from  our  morals, 
manners,  and  the  spirit  of  our  laws.  Even  at  this  time  it  is  doubtful, 
if  the  question  should  be  agitated  in  the  courts  of  Westminster  Hall, 
whether  the  sounder  reason  of  Justice  BuUer  (Good  v.  Elliot)  and  Lord 


12  AMORY   V.   OILMAN.  [CHAP.  II. 

Loughborough  (Brown  v.  Leeson,  2  H.  Bl.  44)  would  not  prevail  over 
the  precedents  found  in  the  English  reports  on  this  point. 

The  question,  whether  the  statute  of  19  Geo.  II.  has  been  adopted 
here,  is  now  before  the  court  on  another  section  of  it  (relating  to 
reassurances),  in  the  case  of  Merry  v.  Prince  [2  Mass.  176  ;  s.  c.  jjost, 
p."31],  in  which  it  was  fully  argued.  But  it  is  absurd  to  suppose  that 
our  courts  have  recognized  the  decisions  of  the  English  courts  in  the 
early  part  of  the  last  century,  involving  all  the  mischiefs  of  these  gam- 
ing policies,  and  yet  have  failed  to  adopt  this  statute  in  remedy  of  the 

evil. 

For  the  plaintiff,  in  reply.  This  is  not  a  mere  idle  wager.  The 
plaintiff  had  a  real  interest  not  created  by  the  policy,  viz.,  the  freight. 
it  is  true  it  was  not  insured  as  freight,  and  the  defendant  is  endeavor- 
ing to  avail  himself  of  this  distinction,  to  avoid  a  fair  contract  made 
upon  a  good  consideration.  But  if  this  were  a  mere  wager  policy,  in 
which,  for  sport  or  adventure  only,  the  assured  had  betted  premium 
against  loss,  and  no  decisions  of  our  courts  are  shown  which  go  to  an- 
nul such  a  contract,  will  the  court  here  determine  this  to  be  void  against 
the  whole  current  of  English  decisions?  Would  not  this  be  rather 
making  the  law  than  declaring  it? 

The  court  took  time,  and,  at  an  after  day  in  the  term,  delivered  their 
opinions  as  follows:  — 

Pauker,  J.  (After  stating  the  action  and  the  facts  as  above  recited.) 
It  appears,  then,  that  whatever  cargo  the  insured  had  on  board  the 
ship,  at  the  time  of  subscribing  the  polic^j  on  which  this  action  was 
brought,  had  been  previously  covered  by  the  policy  made  by  the  Bos- 
ton Marine  Insurance  Company.  This  fact  appearing,  it  is  clear  that, 
without  the  memorandum  on  the  policy,  the  effect  of  which  will  pres- 
ently be  considered,  there  could  be  no  pretence  for  supporting  this 
action  ;  for  the  policy  contains  within  itself  a  provision  intended  to 
defeat  any  expectation  grounded  on  sucli  a  state  of  facts.  We  are, 
therefore,  necessarily  brought  to  a  consideration  of  the  nature  and 
legal  operation  of  the  memorandum  ;  because,  if  the  i)laintifr  is  entitled 
to  recover,  it  must  be  on  the  strength  of  the  words  contained  therein. 

The  counsel  for  the  plaintiff  seem  fully  aware  of  this  position  in 
which  their  demand  is  placed ;  and  have,  therefore,  endeavored  to 
show,  — 

1.  Tliat  this  is  a  wagering  policy  ;  and, 

2.  That  as  such  it  is  valid,  and  ought  to  be  carried  into  effect  by  the 
laws  of  this  country. 

As  to  the  second  point,  viz.,  whether  a  mere  wager  policy,  without 
interest,  can  be  supported  lieie  conformal)ly  to  the  general  character 
of  our  laws,  and  to  the  principles  of  our  government,  I  apprehend  we 
need  not  now  determine  that  question  ;  though,  considering  the  great 
relucttincc  with  wliicli  that  doctrine  was  established  as  the  common  law 
by  tiio  courts  of  Engl;ind,  and  the  immediate  interference  of  Parliament 
to  nullify  such  policies,  upon  the  doctrine's  being  so  established,  we 


PART  I.]  AMORY   V.   OILMAN.  13 

may  well  be  justified  in  doubts  whether  in  this  country,  where  the  sub- 
ject is  in  a  great  measure  res  integra,  such  contracts  could  be  sup- 
ported, more  especially  when  the  temper  of  our  Legislature  respecting 
every  species  of  gaming  can  be  so  well  understood  by  a  recurrence  to 
various  statutes  upon  that  subject. 

It  would  seem  a  disgraceful  occupation  of  the  courts  of  any  country 
to  sit  in  judgment  between  two  gamblers,  in  order  to  decide  wliich  was 
the  best  calculator  of  chances,  or  which  had  the  most  cunning  of  the 
two.  There  could  be  but  one  step  of  degradation  below  this,  which  is, 
that  the  judges  should  be  the  stakeholders  of  the  parties. 

In  this  case,  however,  collecting  the  meaning  of  the  parties  from  the 
whole  of  the  transaction  appearing  on  the  record,  or  referred  to  by  it,  ^^Ji^ 
JJtUinlc  it  most  manifest  that  a  policy  on  interest,  and  not  a  wager 
policy,  was  intended.   .  .  .^ 

,A^mere  wager  policy  is  that  in  which  the  party  assured  has  no  in- 
terest in  the  thing  assured,  and  could  sustain  no  possible  loss  by  the 
event  insured  against  if  he  had  not  made  such  wager.  This  is  not  such 
a  case,  for  the  party  assured  did  expect  that  he  had  on  board  property 
to  the  amount  intended  to  be  assured,  and  actually  had  some  property 
on  board,  though  less  than  he  expected  at  the  time. 

I  therefore  consider  this  not  to  be  a  wager  policy,  but  a  policy  on 
interest, — the  memorandum  relied  upon  amounting  to  nothing  more 
than  an  agreement  that  the  usual  evidence  of  property  should  not  be 
required,  but  the  parties  always  presuming  that  such  property  was  ac- 
tually on  board.  In  this  view  of  the  subject,  the  express  condition  of 
this  policy  being  that  it  shall  cease  to  operate  upon  so  much  of  the 
property  as  may  be  found  to  be  insured  by  any  prior  policy,  —a  prior  ' 
policy  being  found  by  the  jur\',  on  which  the  plaintiff  acknowledges  Ee 
has  received  the  full  amount  of  airins  interest  in  the  cargo,  deducting 
oTpro  rain  premium,  and  also  acknowledges  that  he  had  received  a  re- 
turn premium  for  a  large  sum  over-insured,  —  it  seems  clear  to  me  th^t^ 
he  is  not  entitled,  upon  any  principle,  to  recover  in  this  action. 

Thatcher,  J.,  concurred,  for  the  same  general  reasons.  J-La^^ 

Sedgavick,  Z?    It  will  be  sufficient  to  observe  that  all  the  transac-        *-4i^y^^ 
tions  relative  to  this  voj'age  from  Teneriffo,  where  the  insurance  com-    *'^^'^^^^  ^ 
mences,  until  the  departure  of  the  ship  from  La  Vera  Cruz  for  the    (1^■♦^^.G, 
Havana,  where  she  had   liberty  to  touch  and   trade,   were  intended     ^  U* 
to  be  masked.     Although  the  whole  interest  was  American,  and  in- 
tended to  be  continued  such,  yet  it  was  to  appear  to  be  Spanish. 
Under  these  circumstances  it  was  uncertain  what,  in  fact,  would  be  the 
interest  of  the  assured ;  and  it  might  be  very  difficult  to  ascertain  its 
amount.    Thence  it  became  desirable  to  obviate  the  necessity  of  proof; 
and  this  was  probably  a  principal  motive  in  entering  into  the  agreement 
of  the  nth  of  August.     But,  in  the  view  which  I  have  taken  of  the 
subject,  it  is  not  very  important  to  ascertain  what  was  the  real  intention 

1  The  discussion  of  the  evidence  on  this  point  has  been  omitted.  —  Ed. 

2  After  stating  the  case.  —  Ed. 


14  AMORY  V.    OILMAN.  [CHAP.  II. 

of  the  parties  ;  it  either  was  their  intention,  tliat  the  policy  should, 
that  agreement  notwithstanding,  continue  as  originally  designed,  an 
insurance  upon  tlie  interest  of  the  assured,  or  that  it  should  be  con- 
verted into  a  wager  policy,  interest  or  no  interest.  If  it  be  considered 
an  insurance  upon  the  interest  of  the  insured,  it  has  already  been 
proved  that  the  plaintiff  cannot  recover,  because  his  whole  interest  in 
the  subject  of  the  insurance  had  been  covered  by  a  prior  policy,  and  he 
had  actually  received  therefor  full  satisfaction,  pf  course,  it  only  re- 
mains to  be  considered  whether,  jf  it  be  construed  a  wager  policy,  the 
plaintiff  can  recover. 

This  is  a  very  important  question,  and  now  for  the  first  time  comes 
lj£fbi:ejhis  court.  Whether  it  be  consistent  with  the  dignity  of  the  law 
to  lend  its  aid  to  give  effect  to  any  wagers  on  an  idle  question,  in  which 
tiie  parties  have  no  interest  except  that  created  by  the  wager  itself,  it 
is  not  necessary  upon  this  occasion  to  inquire.  I^ghall  confine  my 
ooinion  merely  to  wager  policies.  Had  there  been  a  course  of  judicial 
decisions,  either  in  England  before  the  settlement  of  this  country,  or 
here  since  that  time,  1  should  have  felt  myself  bound  by  them.  But 
how  is  this  fact?  Mr.  Park  says  that  the  practice  of  insuring  ideal 
risks  has  only  prevailed  since  the  Revolution, —  that  is,  long  after  the 
settlement  of  this  country.  Indeed,  in  the  year  1692  it  was  determined, 
in  the  case  of  Goddart  v.  Garrett,  2  Vern.  269,  and  it  is  there  said 
that  "  the  law  is  settled  that,  if  a  man  has  no  interest  and  insures,  the 
insurance  is  void,  although  it  be  expressed  in  the  policy  interested 
or  not  interested.  And  the  reason  the  law  goes  upon  is  that  insur- 
ances are  made  for  the  encouragement  of  trade,  and  not  that  persons 
unconcerned,  not  interested  in  the  sliip,  should  profit  by  tliem.  The 
reason  why  the  law  allows  that  a  man  having  some  interest  in  a  ship  oi 
cart^o  may  insure  more,  or  five  times  as  much,  is  that  a  merchant  can- 
not°tell  how  much  or  how  little  his  factor  may  have  in  readiness  to  lade 
on  board  his  ship."  It  was  eigliteen  or  twenty  years  after  this  before 
a  contrary  doctrine  crept  in,  and  by  means  of  which  we  have  no  infor- 
mation. Now,  I  understand  that  the  common  law,  which  our  ancestors 
imported  with  themselves,  was  composed  of  such  principles  and  max- 
im^ ;is  were  at  tliat  time  established  in  the  mother  country,  and  appli- 
cul'k'  to  tlieir  character  and  circumstances.  There  is  no  evidence  that 
wa-ri'  policies  had  been  at  that  time  enforced  in  courts  of  justice,  but, 
as  far  as  appears  from  the  case  of  Goddart  v.  Garrett,  contrary  deci- 
sions had  obtained,  and  the  practice  seems  little  consonant  to  the  cir- 
cumstances or  character  of  the  emigrants.  I  have  already  stated  that 
the  question  now  for  the  first  time  comes  before  this  court,  and,  from 
what  I  have  observed,  it  is  to  be  determined  on  general  principles. 

The  common  law  which  gives  to  the  parties  an  interest  in  contracts, 
which  courts  of  justice  are  bound  to  protect,  does  not  extend  to  such 
interests  as  are  injurious  to  the  public.  Is  it  then  for  the  public  benefit 
that  contracts  of  wager  policies  should  be. enforced?  I  think  not.  Mr. 
Park,  who  has  considered  the  subject  of  insurance  with  profound  intel- 


PART  I.]  AMOKY   V.   OILMAN.  15 

ligence,  disapproves  upon  principle  of  this  species  of  contracts.  Park, 
161.  And  Serjeant  Marshall,  wiio  in  his  treatise  displays  a  vigorous 
understanding  and  mature  judgment,  details  more  at  length  the  mis- 
chievous effects  of  this  kind  of  gambling.  He  says:  "Many  are  the 
contrivances  which  men  have  fallen  upon  for  the  gratification  of  their 
propensity  to  gaming ;  and  the  uncertain  events  of  maritime  adventure 
afford  an  obvious  and  extensive  field  for  the  calculation  of  chances  and 
tlie  decision  of  fortune.  'liie  practice  of  gaming,  by  nourishing  a  con- 
stant iiope  of  gain,  excites  in  the  mind  an  interest  which  engrosses  the. 
attention  and  withdraws  the  exertions  of  men  from  useful  pursuits.  By 
l^ointing  out  a  speedy  though  hazardous  mode  of  accumulating  wealth, 
it  produces  a  contempt  for  the  moderate  but  certain  profits  of  sober 
industry.  It  perverts  the  activity  of  the  mind,  taints  the  heart,  and 
dei^i-aves  the  affections.  By  frequent  and  great  reverses  of  fortune,  it 
becomes  not  only  the  source  of  great  private  misery,  but  suggests  con- 
stant temptations  to  fraud,  and  the  perpetration  of  atrocious  crimes." 
1  Marsh.  95. 

After  reflecting  on  these  observations,  which  every  man  of  experi- 
ence and  a  knowledge  of  the  human  character  knows  to  be  well 
founded,  there  can,  I  think,  remain  no  doubt  that  it  would  be  hostile 
to  the  welfare  of  society  that  interests  which  men  may  choose  to  create 
by  such  contracts  should  be  protected  by  judicial  authority.  Much  ad- 
ditional weight  is  given  to  the  argument  by  the  British  statute,  19  Geo. 
II.  c.  37,  prohibiting  wager  policies.  It  is  the  authority  of  a  wise  legis- 
lature of  a  nation  most  deeply  interested  in  commerce,  and  best  un- 
derstanding its  interests;  and  it  prohibits  them  because  they  are 
"productive  of  many  pernicious  practices." 

As  then  we  are  not  bound  in  this  case  by  authority,  but  are  at  lib- 
erty to  decide  on  principle,  and  as  the  plaintiff  must  recover  if  at  all 
as  on  a  wager  polic}',  I  feel  much  satisfaction  in  saying  that  judgment 
must  be  rendered  for  the  defendant.  But,  as  the  counsel  for  the  plain- 
tiff has  relied  on  the  words  that  the  insurance  was  made  "  for  whom  it 
may  concern,"  I  think  it  proper  to  observe  that  these  words  can  have 
no  effect,  because  there  is  no  evidence  that  any  one  was  concerned 
except  Mr.  Amor}'. 

Dana,  C.  J.^  It  does  not  appear  in  this  case  what  was  the  amount 
of  the  plaintiff's  property  on  board  this  ship  at  the  time  of  the  loss. 
But,  whatever  it  was,  he  acknowledges  himself  to  have  been  com- 
pletely indemnified  for  his  loss.  I  doubt  whether  either  party  consid- 
ered this  polic}',  including  the  memorandum  indorsed,  as  a  wager 
policy.  But,  it  appearing  in  fact  that  the  assured  had  no  insurable 
interest  not  covered  by  the  prior  policy,  it  must  be  so  considered  by 
the  court.  As  on  a  wager  policy,  my  present  opinion  is  that  the  plain- 
tiffcanuot  recover.  No  precedent  of  such  an  action  supported  here 
hasTeeiTproduced,  and  I  believe  none  can  be  produced.     We  must, 

1  At  the  beginning'and  the  end  of  this  opinion  a  few  sentences  have  been  omitted. 
—  Ed. 


16  AMORY   V.    GILMAN.  [CHAP.  II'. 

therefore,  decide  this  on  general  principles  of  justice  and  good  polic3\ 
The  very  forcible  reasons  set  forth  in  tiie  preamble  of  the  statute,  19 
Geo.  II.  c.  37,  to  which  I  have  before  referred,  appl}'  equally  to  this  and 
every  other  civilized  and  well-governed  commercial  country.  Whether 
that  statute  extended  to  this  country  or  not  is  a  question  not  necessary 
now  to  be  determined.  But  if  it  were,  and  we  should  find  no  prece- 
dents in  our  own  courts  to  overrule  us,  I  should  be  prepared  to  say 
that,  as  wager  policies  are  injurious  to  the  morals  of  the  citizens,  tend 
to  encourage  an  extravagant  and  peculiarly  hazardous  species  of  gam- 
ing, and  to  expose  their  property,  which  ought  to  be  reserved  for  the 
benefit  of  real  commerce,  they  ought  not  to  receive  the  countenance  of 
this  court.  .  .  . 

Costs  for  defendant.^ 

Amory,  for  the  plaintiff. 

Otis  and  C.  Jackson^  for  the  defendant. 

1  In  Pritchet  v.  Insurance  Co.  of  North  America,  3  Yeates,  458,  463  (1803),  Ship- 
pen,  C.  J.,  in  answer  to  a  contention  of  counsel  that  St.  19  Geo.  II.  c.  37,  had  not  been 
extended  to  Penn-sylvania  by  practice,  said  :  "  Certainly  the  British  act  does  not  bind 
us,  propn'o  vi(jore ;  but  the  system  of  national  policy  wliich  dictated  the  law  has  been 
adopted  by  our  courts.  We  believe  that  policies  made  1  ere,  at  least  by  the  incorpo- 
rated companies,  do  not  retain  the  words  '  interest  or  no  interest.' "  And,  at  p.  464, 
Ye.\tes,  J.,  for  the  court,  said  :  "  The  Cliief  Justice,  during  the  argument,  conveved 
the  sentiments  of  the  wiiole  court.  We  have  adopted  the  policy  and  principles  which 
gave  rise  to  the  act  of  Parliament,  both  in  courts  of  justice  and  by  commercial  usage ; 
but  we  are  not  prepared  to  say  that  every  particular  provision  or  resolution  under  it 
has  been  engrafted  into  our  system  of  law.  An  insurance  amongst  us  is  a  contract  of 
im|emn[ty.  Its_object_is  not  to  make  a  positive  gain,  but  to  avert  a  possible  loss.  A 
man  can  never  be  said  to  be  indemnified  against  a  loss  which  can  never  liappen  to  him. 
There  cannot  be  an  indemnity  without  a  loss,  nor  a  loss  without  an  interest.  A  policy/ 
therefore,  made  without  interest  is  a  wager  policy,  and  has  nothing  in  common  with 
iijsurance  but  name  and  form.  1  Marsh.  30,  97.  It  is  not  subservient  to  the  true  m- 
terests  of  fair  trade  and  commerce,  but  is  pregnant  with  as  much  mischief,  both  pub- 
lic and  private,  as  can  proceed  from  any  species  of  gaming  which  the  legislature  has 
hitherto  found  it  necessary  to  repress.  Ibid.  98.  Every  species  of  gaming  contracts 
wherein  the  insured  having  no  interest,  or  a  colorable  one  merely,  or  having  a  small 
interest  much  overvalues  it  in  a  valued  policy,  under  the  cloak  of  insurances,  are  rep- 
robated both  by  our  law  and  usage." 

In  Love  v.  Harvey,  114  Mass.  80,  82  (1873),  Gray,  C.  J.,  for  the  court,  said:  — 

"In  KiiL'laiid  and  in  New  York,  actions  on  wagers  upon  questions  in  which  the 
parties  liad  no  jirevious  interest  were  frequently  sustained,  until  the  legislature  in- 
terposed and  declared  all  wagers  to  be  void.  1  Chit.  Con.  (Uth  Am.  ed.)  735-738; 
3  Kent  Com.  277,  278.  In  Scotland,  the  courts  refused  to  entertain  such  actions. 
Bruce  v.  Ro.ss,  3  Paton,  107,  112 ;  s.  c.  cited  3  T.  R.  697,  705. 

•'  IpL  Massachusetts,  the  English  law  on  this  subject  has  never  been  adoi)ted,  used^or 
:»pproved,  and,  although  the  question  has  not  been  directly  adjudged,  it  has  long  been 
understood  that  all  wagers  are  unlawful.  Const.  Mass.  c.  6,  art.  6;  Amory  v.  Gilma'n, 
2  Mass.  1,6;  Ball  v.  Gilbert,  12  Met.  397,  399;  Sampson  v.  Shaw,  101  Mass.  145,  150; 
Met.  Con.  239.  There  are  decisions  or  opinions  to  the  same  effect  in  eacli  of  the  New 
England  States.  Lewis  v.  Littlefield,  15  Maine,  233  ;  Perkins  v.  Eaton,  3  N.  II.  152; 
Hoit  V.  Hodge,  6  N.  H.  104  ;  Collamer  i'.  Day,  2  Vt.  144  ;  West  r.  Holmes,  26  Vt.  530; 
Stoddard  v.  Martin,  1  R.  L  1,  2  ;  Wheeler  v.  Spencer,  15  Conn.  28,  30.  See  also  Edg- 
ell  V.  McLaughlin,  6  Whart.  176;  Rice  v.  Gist,  1  Strob.  82. 

"  It  is  inconsistent  alike  with  the  policy  of  our  laws,  and  with  the  performance  of 
the  duties  for  which  courts  of  justice  are  established,  that  judges  and  juries  should  be 


PART  I.]         EUSE   V.    THE    MUTUAL    BENEFIT    LIFE    INS.    CO.  17 

RUSE  V.  THE   MUTUAL  BENEFIT   LIFE  INS.   CO. 
CouKT  OF  Appeals  of  New  York,  1861.     23  N.  Y.  olG. 

Appeal  from  the  Supreme  Court.  Action  to  recover  $2,000,  insureil 
by  the  defendant,  a  corporation  chartered  b}'  the  State  of  New  Jersey, 
upon  the  life  of  one  Bugbee,  a  resident  of  Florida.  The  plaintiff,  who 
took  out  the  policy  for  his  own  benefit  and  in  his  own  name,  was  a 
resident  of  Georgia.  In  his  written  application  for  insurance  he  stated  : 
"I  have  an  interest  in  the  life  of  the  said  I.  D.  Bugbee  to  the  full 
amount  of  the  said  sum  of  two  thousand  dollars ;  and  I  hereb}'  agree 
that  this  declaration  [which  was  in  the  form  of  answers  to  various 
interrogatories  in  respect  to  the  age,  health,  habits,  etc.,  of  Bugbee] 
shall  be  the  basis  of  the  contract  between  myself  and  the  said  company." 

The  polic}'  recited  that  it  was  "  in  consideration  of  the  sum  of  ninet}'- 
seven  dollars  and  fort}-  cents  in  hand  paid  b}'  John  C.  Ruse,  and  of  the 
annual  premium  of  ninet3'-seven  dollars  and  forty  cents  to  be  paid  on  or 
before  the  tenth  daj-  of  April  in  every  year  during  the  continuance  of  this 
policy."  It  also  provided  that,  "  in  case  the  said  John  C.  Ruse  shall 
not  pa}'  the  said  annual  premiums  on  or  before  the  several  days  herein- 
before mentioned  for  the  payment  thereof,  then  and  in  every  such  case 
the  said  company  shall  not  be  liable  to  the  payment  of  the  sum  insured 
or  any  part  thereof;  and  this  policy  shall  cease  and  determine." 

Upon  the  trial  it  was  proved  that  the  premium  for  the  second  year, 
which,  by  the  terms  of  the  policy,  became  due  April  10,  1847,  was  not 

occupied  in  answering  every  frivolous  question  upon  which  idle  or  foolish  persons  may 
choose  to  lay  a  wager."  * 

In  Irwin  v.  Williar,  jjOj^^S.  490,  510  (1884),  Matthews,  J.,  for  the  court,  said: 
"Genj?rally,  in  this_countryj_,alXwa£eriiig  contracts  are  lield  to  be  illegal  and  void  as 
against  jm^iHc  policy.  Dickson's  PLxecutor  i\  Thomas,  97  Pa.  278TGregory'i'.''W^en- 
dell,  41)  Mich.  432;  Lyon  v.  Culbertsori,  83  111.  33 ;  Melchert  v.  American  Union  Tele- 
graph Co.,  3  McCrary,  521 ;  s.  c.  11  Fed.  Rep.  193  and  note;  Barnard  v.  Bockhans, 
52  \Vis.  593;  Kingsbury  v.  Kirwan,  77  N.  Y.  612;  Story  v.  Salomon,  71  K  Y.  420; 
Love  V.  Harvey,  114  Mass.  80." 

In  Waugh  v.  Beck,  114  Pa.  422,  426,  427  (1886),  Trcxket,  J.,  for  the  court,  said  : 
"  In  England,  wagers  were  not  unlawful  or  unenforceable  at  common  law,  and  there- 
fore some  of  the  decisions  in  tliat  country  upon  wagering  contracts  are  inapplicable 
where  such  contracts  are  unlawful. 

"It  has  never  been  held  in  the  highest  tribunals  of  Pennsylvania  that  a  wager  is  re- 
coverable, and  from  1803  the  uniform  current  of  authority  is  to  the  contrary.  Every 
species  of  gaming  contract,  whether  of  insurance  by  a  valued  policy  where  tlie  insured 
has  no  interest,  or  a  bet  on  the  existence  of  a  letter,  or  the  purchase  of  stocks  or  other 
commodities  without  the  intention  to  deliver  or  receive  them,  is  reprobated  by  our 
law.  Pritchet  v.  Insurance  Co.,  3  Yeates,  458;  Edgell  v.  McLaughlin,  6  Whart.  176; 
Brua's  Appeal,  55  Pa.  294.  In  the  latter  case,  Thompson,  C  J.,  remarked:  'Any- 
thing whicli  induces  men  to  risk  their  money  or  property  without  any  other  hope  of 
return  than  to  get  for  nothing  any  given  amount  irom  another,  is  gambling,  and  de- 
moralizing to  the  community.     All  gambling  is  immoral.'  " 

The  quotations  in  this  note,  with  the  exception  of  those  from  Pritchet  v.  Insurance 
Co.  of  North  America,  have  not  been  taken  from  insurance  cases.  —  Ed. 

2 


18  KUSE   V.   THE   MUTUAL  BENEFIT   LIFE   INS.   CO.       [CHAP.  IL 

then  paid.  Biigbee  died  April  13,  1847.  Within  a  day  or  two  after- 
wards, the  plaintiff  tendered  the  premium  to  the  defendant's  agent,  and 
he  declined  to  receive  it. 

The  plaintiff  proved,  under  an  exception  by  the  defendant,  that,  at 
the  time,  of  the  application  for  insurance,  the  defendant's  agent  de- 
livered to  him  a  printed  paper  of  several  pages,  entitled  a  prospectus, 
betting  forth  the  advantages  of  life  insurance  in  general,  and  the  par- 
ticular inducements  held  out  by  the  defendant.  So  much  of  this  as  is 
material  is  cited  in  the  following  opinion. 

The iJl^iutiff  gave  no  evidence  of  any  pecuniary  interest  in  the  life  of 
Bugbee  or  of  any  relationship  to  him.  The  defendant  moved  for  a  non- 
suit, on  the  ground  that  the  policy  was  forfeited  by  the  failure  to  pay 
11-.'  tlie  premium  on  the  daj'  appointed  and  that  the  plaintiff  had  shown  no 
•^  "/  interest  in  the  life  insured.  The  nonsuit  was  refused,  and  the  defendant 
took  an  exception.  The  plaintiff  had  a  verdict  and  judgment,  which 
having  been  affirmed  at  general  term  in  the  first  district,  the  defendant 
appealed  to  this  court. 

Alvin  C.  Bradley,  for  the  appellant. 

John   W.  Edmonds,  for  the  respondent. 

Selden,  J.i  .  .  .  But  assuming  that  the  prospectus  became  a  part  of 
the  policy  and  had  the  effect  to  modify  its  provisions  in  respect  to  the 
time  for  the  payment  of  the  premium,  itjs  still  insisted  that  there  could 
be  no  recovery  without  proof  that  the  plaintiff  had  an  interest  in  the  life 
of  Bugbee.  In  considering  this  point,  it  is  necessary  first  to  ascertain  by 
what  law  the  question  is  to  be  determined.  The  contract  was  actually 
made  between  the  plaintiff  and  an  agent  of  the  defendants  in  the  State 
of  Georgia ;  but  the  defendants,  as  is  to  be  inferred  from  the  case,  were 
incorporated  in  the  State  of  New  Jersey,  and  the  policy  purports  upon 
its  face  to  have  been  executed  at  the  city  of  Newark  in  that  State. 
Under  these  circumstances,  although  the  suit  is  brought  in  this  State, 
the  interpretation  and  validity  of  the  contract  cannot  depend  upon  the 
laws  of  New  York.  The  lex  fori  governs  as  to  the  remedy  or  remedies 
for  enforcing  the  contract,  but  not  as  to  its  construction  or  the  legal  rights 
arising  under  it.  These  depend  usually  upon  the  laws  of  the  place 
wiiere  the  contract  is  to  be  performed ;  although  where  there  is  any- 
thhig  in  the  circumstances  to  show  that  the  parties  had  specially  in 
view  the  law  of  the  place  where  the  contract  is  made,  tliis  law  will 
govern,  although  the  contract  is  to  be  performed  elsewhere.  I  see 
nothing  in  the  present  case  to  indicate  that  the  parties  contracted  with 
s[)ecial  reference  to  the  law  of  Georgia.  As  no  other  place  was  men- 
tjoued» -payment  was  of  course  to  be  made  in  New  Jersey,  where  the 
jM-incipal  office  of  the  company  was  located.  The  contract  was  to  be 
performed  there,  and  hence,  upon  the  general  principle  adverted  to,  the 
vnlidity  of  the  contract  and  the  rights  and  obligations  of  the  parties 
uiiikr  it  must  depend  upon  the  law  of  New  Jersey. 

1  After  stating  the  case  and  holding  that  the  prospectus  did  not  control  the  terms 
of  the  policy.  —  Ed. 


PART  I.]         RUSE    V.   THE    MUTUAL   BENEFIT   LIFE    INS.    CO.  19 

The  defendants  upon  the  trial  read  two  sections  from  the  statutes  of 
New  Jersey  as  having  some  bearing  upon  the  point  under  consideration  ; 
but  neither  of  these  can,  in  my  view,  affect  the  question.  The  only  one 
which  could  reasonabl}'  be  supposed  to  do  so  is  the  following:  "All 
promises,  agreements,  notes,  bills,  bonds,  contracts,  judgments,  mort- 
gages, or  other  securities  or  conveyances  which  shall  be  made,  given, 
granted,  drawn,  entered  into,  or  executed  by  any  person  or  persons, 
where  the  whole  or  any  part  of  the  consideration  of  such  promises, 
agreements,  notes,  bills,  bonds,  contracts,  judgments,  mortgages,  or 
other  securities  or  conveyances  shall  be  for  money,  goods,  chattels,  or 
other  vahiable  thing  or  things  whatsoever,  jxon,  laid,  or  betted,  at  cards, 
dice,  billiards,  tennis,  bowls,  shuflleboard,  or  any  other  game  or  games, 
or  at  any  cock-fighting,  or  other  sport  or  pastime,  or  for  tlie  reimbursing 
or  repaying  any  money,  ivnowingly  lent  or  advanced  at  the  time  and  place 
of  such  plav,  cock-fighling,  or  other  sport  or  pastime,  to  an}-  person  or 
persons  so  gaming,  laying,  or  betting,  or  who  shall,  at  such  time  and 
place,  so  play,  lay,  or  bet,  sJiaU  be  utterly  void  and  of  none  effect." 

'rhisjection  does  not  reach  tliis  case.  It  avoids  all  contracts  made 
for  money,  etc.,  won  or  betted  at  any  game  or  games,  or  upon  cock- 
fighting  or  other  sports.  It  is  aimed  particularly  at  games,  and  does 
not  avoid  wagers  in  gtMieral.  The  policy  in  this  case  had  nothing  to  do 
with  any  game  or  sport  of  any  sort,  and  is  not  tlierefore  within  the  pur- 
view of  the  act.  Hence  its  construction  and  effect  must  depend  upon 
the  general  laws  of  New  Jerse}',  which,  as  no  evidence  was  given  on 
the  subject,  are  presumed  to  be  the  same  as  the  common  law  of  this 
State.  Our  inquiry'  therefore  is  whether  at  common  law,  independent 
of  any  statute,  it  is  essential  to  the  validity  of  a  policy,  obtained  by 
one  person  for  his  own  benefit  upon  the  life  of  another,  that  the  party 
obtaining  the  policy  should  have  an  iuterest  in  the  life  insured^ 

A  policy,  obtained  by  a  partv  who  has  no  interest  in  the  subject  of 
insurance,  is  a  mere  wager  policy.  Wagers  in  general,  that  is,  inno- 
cent  wagers,  are,  at  common  law,  validj  but  wagers  involving  any 
iramoralit}'  or  crime,  or  in  conflict  with  any  principle  of  public  policy, 
are  void.  To  which  of  these  classes,  then,  does  a  wagering  polic}'  of 
insurance  belong? 

Aside  from  authorit}',  this  question  would  seem  to  me  of  eas}'  solu- 
tion. Such  policies,  if  valid,  not  only  afford  facilities  for  a  demoralizing 
system  of  gaming,  but  furnish  strong  temptations  to  the  party  interested 
to  bring  about,  if  possible,  the  event  insured  against.  In  respect  to  ii> 
surances  against  fire,  the  obvious  temptation  presented  b}'  a  wagering 
p^lfcy  to  tlie  commission  of  the  crime  of  arson  has  generally  led  the 
couits  to  hold  such  policies  void7even  at  common  law.  It  was_so  held 
in^igland  at  an  early  day  b}-  Lord  Chancellor  King  in  Lyncii  v.  Dalzell 
(4  BroTTTU.  431),  and  by  Lord  Hardwicke,  in  Saddlers' Compan\-  i'. 
Badcock  (2  Atk.  557)  ;  and  the  courts  in  this  country  have  generall}' 
acquiesced  in  and  approved  of  the  doctrine.  In  this  State  such  policies 
would  fall  under  the  coudemnatiou  of  our  statute  avoiding  all  wagers 


20  EUSE    0.    THE   MUTUAL   BENEFIT   LIFE   INS.   CO.       [CHAP.  IL 

and  gambling  contracts  of  every  sort;  but  the}'  would,  no  doubi,  also 
be  held  void,  independently  of  that  statute,  at  common  law.  In  Howard 
V.  The  Albany  Insurance  Company  (3  Denio,  301),  Bronson,  C.  J.,  as- 
serted the  necessity  of  an  interest  in  the  assured  in  all  such  cases,  re- 
ferring in  support  of  the  doctrine  not  to  the  statute  but  to  the  decisions 
of  the  Lord  Chancellors  King  and  Hardwicke  {supra). 

In_reg_ardi  however,  to  marine  insurances,  a  different  rule  seems  to 
have  prevailed  in  England  ;  and  the  cases  of  Clendining  v.  Church  (3 
Caines,  141),  Juhel  v.  Church  (2  Johns.  Cas.  333),  and  Buchanan  v. 
Ocean  Insurance  Company  (G  Cow.  318),  are  supposed  to  have  estab- 
lished the  same  rule  in  this  State.  No  reason,  that  I  am  aware  of,  has 
^ler^j^een  given  for  this  difference  between  fire  and  marine  policies. 
The  latter,  when  of  a  wagering  character,  are  vicious  and  evil  in  their 
tendencies  as  well  as  the  former,  and  have  been  generally  considered 
as  noxious  and  dangerous,  whenever  the  question  has  arisen.  They 
should,  therefore,  as  it  would  seem,  for  the  reasons  applied  to  policies 
against  fire,  have  been  held  void,  as  contrary  to  public  policy. 

The  distinction  between  these  two  classes  of  policies  is,  in  my  view, 
a  mere  matter  of  accident,  and  grew  out  of  the  peculiar  manner  in 
which  the  question  was  presented  in  respect  to  marine  policies.  The 
case  of  Qej,Jaba  v.  Ludlow  (Comyns,  3G1),  shows  how  the  doctrine,  that 
wagering  policies  upon  ships  are  valid,  originated.  The  defendant  there 
^d  insured  the  plaintiff,  "  interest  or  no  interest."  On  the  trial  it  was 
objected  that  the  plaintiff  could  not  recover  unless  he  had  a  property  in 
the  ship  ;  but  the  court  said  that  the  insurance  was  good,  and  that  "the 
import  of  the  clause,  "  interest  or  no  interest,"  was  that  the  plaintiff  had 
no  occasion  to  prove  his  interest.  Had  the  question  been  directly  pre- 
^nted  ]n  this  case^  whether  a  mere  wagering  policy  was  valid,  the  deci- 
^11  would,  I  think,  have  been  different.  The  case  itself  shows  tlie  court 
to  have  supposed  that  the  plaintiff  actually  had  an  interest ;  and  it  is 
apparent,  from  the  authorities,  that  it  had  always  been  previously  held, 
in  suits  upon  policies  not  containing  the  words  "interest  or  no  inter- 
est," or  other  equivalent  words,  that  the  plaintiff  must  aver  and  prove 
that  he  had  an  interest.  This  is  distinctly  asserted  by  Lord  Hard- 
wicke, in  the  case  of  Saddlers'  Company  v.  Badcock  {svpra)  ;  and  in 
the  case  of  Craufurd  v.  Hunter  (8  Term,  14),  the  counsel,  on  looking 
into  the  precedents  at  the  request  of  the  court,  found  that  it  had  been 
the  uniform  practice,  in  suits  upon  marine  policies,  to  insert  an  aver- 
ment of  interest.  To  me,  therefore,  it  seems  clear  that  the  decision  in 
Depaba  v.  Ludlow  was  made  because  the  court  failed  to  distinguish 
between  a  waiver  of  proof  at  the  trial,  which  the  defendant  was  of 
course  at  liberty  to  make,  and  a  waiver  in  the  policy  itself  by  which  it 
was  converted  into  a  mere  wager. 

In  consequence  of  this  case  and  others  which  followed  it,  Parliament 
was  forced  to  interfere,  as  it  did  by  the  act  of  George  IL  (ch.  37),  re- 
citing the  mischiefs  which  had  arisen  from  the  making  of  marine  insur- 
ances, "  interest  or  no  interest/'  and  prohibiting  them  thereafter  ;  and 


PART  I.]         RUSE    V.    THE    MUTUAL   BENEFIT    LIFE    INS.    CO.  21 

when  the  question  subsequenth'  arose  in  Craufiird  v.  Hunter  (siq)ra), 
as  to  the  validit}'  at  common  law  of  a  mere  wagering  policy  upon  a 
ship,  it  was  held  to  be  valid,  solely  upon  the  authority  of  the  recitals  in 
this  act.  It  was  in  this  indirect  wa\'  that  the  doctrine  in  question  as  to 
marine  policies  first  crept  into  the  law.  It  was  important  to  show  this, 
because  the  effect  of  what  I  consider  as  the  inadvertence  of  the  court  in 
Depaba  v.  Ludlow  was  not  confined  to  policies  upon  ships.  ^  It  must 
have  been,  I  think,  in  consequence  of  the  doctrine  initiated  by  that 
case  that  it  came  to  be  understood  in  P^ngland  that  in  insurances  upon 
lives  it  was  not  necessary  at  common  law  that  the  party  to  be  benefited 
b}'  the  policj'  should  have  any  interest  in  the  life  insured.  There  may 
not  have  been  any  direct  decision  to  that  effect ;  yet  that  such  was  the 
prevalent  impression  is  to  be  inferred  from  the  enactment  of  the  statute 
of  14  George  III.  (ch.  48),  prohibiting  insurances  upon  lives  where  the 
person  insuring  had  no  interest  in  the  life.  Angell,  in  speaking  of  this 
statute,  says:  "At  common  law  it  seemed  to  have  been  thought  un- 
necessary that  at  the  time  of  effecting  the  polic}'  the  assured  should  have 
had  any  interest  which  might  be  prejudiced  by  the  happening  of  the 
event  insured  against."  (Aug.  on  Life  and  Fire  Ins.,  §  297.)  In  New 
Jersey  the}'  have  no  such  statute  ;  and  the  question  now  to  be  decided, 
therefore,  is,  whether  the  impression  which  seems  to  have  prevailed  in 
Kngland  prior  to  the  statute  of  14  George  III.  was  well  founded. 

Tiiat  impression  does  not  appear  to  be  supported  b}'  an}'  adjudged 
case.  Life  insurance  seems  not  to  have  been  practised  to  a  great  ex- 
tent in  England  until  a  comparativel}'  modern  date,  and  the  probability 
is  tliat  as  soon  as  such  insurance  became  frequent  the  evils  of  gambling 
in  them  was  so  apparent  that  Parliament  jniterposed  upon  the  assump- 
tion that  the  same  rule  would  be  applied  to  them  as  to  insurances  upon 
ships.  I  cannut  regard  that  act  as  affording  any  ver}"  strong  evidence 
that  at  common  law  wagering  policies  upon  lives  were  valid.  It  seems 
to  me  that  were  the  naked  question  presented,  whether  such  a  policy 
comes  within  the  admitted  exception  to  the  validit}'  of  wagers  in  gen- 
eral, that  is,  whether  it  is  repugnant  to  a  sound  public  polic}-,  no  court, 
not  hampered  by  some  unfortunate  or  mistaken  precedent,  would  hesi- 
tate for  a  moment  in  holding  the  affirmative.  In  Massachusetts,  in 
Vermont,  in  Pennsylvania,  and  I  believe  other  States,  it  has  been  so 
held  in  regard  to  wager  policies  in  general.  But^^olic]esjs:it}iont  inter- 
est__upo£L  lives  are  more  pernicious  and  dangerous  than  any  other  class 
of  wa.o'er  policies  ;  liel-ause  temptations  to  tamper  with  life  are  more 
mischievous  than   iiieitenients   to  mere  pecuniary  frauds. 

Chancellor  Kent  was  evident!}'  embarrassed  by  the  position  of  this 
question  in  England.  He  commences  his  remarks  on  the  subject  by 
saying  that  ''  the  party  insuring  must  have  an  interest  in  the  life  in- 
sured," and  then  immediately  refers  to  the  English  statute  of  14  George 
III.,  chapter  48,  but  says  not  a  word  upon  the  question  whether  at 
common  law  an  interest  was  necessary.  He,  however,  concludes  in- 
saying  that  "  the  necessity  of  an  interest  in  the  life  insured,  in  order  to 


22  KUSE   V.   THE   MUTUAL   BENEFIT   LIFE   INS.   CO.       [CHAP.  II. 

support  the  polic}-,  prevails  general!}^  in  this  countr}',  because  wager 
contracts  are  almost  universally  held  to  be  unlawful,  either  in  conse- 
quence of  some  statute  prevision,  or  upon  principles  of  the  common 
law."     (3  Kent  Com.  368.) 

This  obscure  manner  of  treating  the  subject  is  plainlvto  be  attributed 
to  the  reluctance  of  the  learned  author  to  admit  (notwithstanding  the 
impression  that  appears  to  have  obtained  in  England)  that  gambling  in 
life  insurance  could  be  tolerated  at  common  law.  That  impression  has 
been  here  traced,  as  I  think,  with  justice  to  the  ver}-  questionable  doc- 
trine of  the  English  courts  in  regard  to  marine  policies.  It  has  never, 
that  I  am  aware  of,  been  recognized  and  adopted  by  any  American 
court,  and  is  so  obviously  repugnant  to  the  plainest  principles  of  pub- 
lic policy  that  it  is  somewhat  surprising  that  it  should  ever  have  existed. 
My  conclusion,  therefore,  is  that  the  statute  of  14  George  III.,  avoid- 
ing wager  policies  upon  lives,  was  simply  declaratory  of  the  common 
law,  and  that  all  such  policies  would  have  been  void  independently  of 
that  act. 

It  is  said  that  the  defendants,  by  issuing  the  policy  upon  the  repre- 
sentation of  the  plaintiff  that  he  had  an  interest,  have  admitted  his 
interest,  and  that  the  production  of  the  policy  is  at  least  priina  facie 
evidence  of  such  interest.  This  position  cannot  be  sustained.  All  the 
older  authorities  show  that  even  in  actions  upon  marine  policies  not 
containing  the  clause  "  interest  or  no  interest,"  it  was  necessary  to 
aver,  and  of  course  to  prove,  the  interest  of  the  plaintiff.  It  is  an 
indispensable  part  of  the  plaintiffs  case,  to  be  mode  out  affirmatively 
at  the  trial.  Upon  this  ground,  therefore,  as  well  as  that  before  con- 
sidered, the  judgment  of  the  Supreme  Court  must  be  reversed ;  and 
there  must  be  a  new  trial,  with  costs  to  abide  tfhe  event. 

All  the  judges,  except  Davies  and  Mason,  JJ.,  concurred  that  the 
plaintiff  must  show  an  interest  in  the  life  insurance.  On  the  question 
of  evidence  in  respect  to  the  prospectus  being  admissible  as  part  of 
the  policy  or  entering  into  the  contract,  Comstock,  C.  J.,  Daviks  and 
James,  JJ.,  dissented. 

Jxtdgment  reversed,  and  new  trial  ordered.^ 

1  See  Freeman  v.  Fnlton  F.  Ins.  Co.,  38  Barb.  247  (1862);  s.  c.  14  Abb.  Pr.  398; 
Fowler  v.  N.  Y.  Indemnity  Ins.  Co.,  26  N.  Y.  422  (1863). 

In  Trenton  Mnt.  L.  &  F.  Ins.  Co.  r.  John.son,  24  N.  J.  L.  (4  Zab.)  .576,  583-586 
(18.54),  Elmer,  J.,  for  tlie  conrt.  after  citing  St.  14  Geo.  III.  c.  48,  said  :  — 

"  No  sncti  statute  exists  in  this  State.  Whether  an  action  can  be  sustained  on  a 
policy  witiiont  interest,  which  is  therefore  in  some  respects  like  a  mere  wager  on  the  life 
of  a  third  person,  or  on  any  other  wager  relating  to  a  transaction  in  itself  legal,  does  not 
appear  to  have  been  decided  by  our  courts.  The  case  of  Mnlford  v.  Bowen,  4  HaL 
315,  was  an  action  npon  a  wager  alx)ut  the  weight  of  a  hog,  in  which  the  judgment 
W.1.S  reversed  npon  the  ground  of  variance,  no  notice  having  been  taken  by  the  court 
of  the  general  question,  although  it  was  directly  involved,  and  was  argued  by  the 
counsel.  In  the  ca.se  of  Hutchinson  v.  Targee,  2  Green,  386,  a  wager  p(dicy  depend- 
ing upon  the  resnlt  of  a  lottery  was  held  void  upon  the  special  ground  that  it  contra- 
vened the  policy  of  the  act  for  suppressing  lotteries.  Wagers  on  indifferent  questions 
are  held  good  grounds  of  action  in  England ;  and  it  was  there  held  that  at  common 


PART  I.]         RUSE   V.   THE    MUTUAL    BENEFIT   LIFE    INS.    CO.  23 

liw  wagering  policies  of  insurance  were  valid.  Craufurd  v.  Hunter,  8  Term  R.  13. 
In  New  York,  actions  on  wager  policies  and  other  wagers  were  sustained,  until  a  stat- 
ute was  passed  declaring  them  illegal.  Buchanan  v.  Ocean  Ins.  Co.,  6  Cow.  .318.  In 
several  other  States,  where  statutes  existed  prohibiting  gaming  in  such  terms  as  were 
lield  to  include  all  wagers,  wager  policies  have  been  declared  illegal.  Amory  y 
Oilman,  2  Mass.  I ;  Babcock  v.  Thompson,  3  Pick.  446 ;  Adams  v.  Penu  Ins.  Co.,  I 
Kawle,  107;  Lloyd  v.  Leisenring,  7  Watts,  294;  Collamer  v.  Day,  2  Vern.  144. 
The  American  text-writers  strongly  favor  the  doctrine  that  wager  policies  should  in 
all  cases  be  iield  bad,  upon  general  principles  of  pcMcy  and  morality.  3  Kent,  277 ; 
Duer  Ins.  92;  Angell  on  Life  and  Fire  Ins.,  s.  14,  Intr.  I  confess,  however,  that  what- 
ever might  be  my  opinion  as  to  the  expediency  of  a  statute  like  that  in  England, 
before  quoted,  I  must  agree  with  tlie  Irisli  courts  in  holding  that  such  is  not  the  law. 
Our  act  to  prevent  gaming  ( Rev.  Stat  .572)  does  not,  in  terms  or  by  implication,  prohibit 
all  wagers,  but  only  particular  kinds  of  gaming.  Until  the  Legislature  shall  think 
proper  to  interfere,  the  courts  can  (mly  adiiere  to  the  common  law  as  they  find  it 
established.  To  do  otherwise  would  be  au  act  of  legislation,  and  not  of  judicial 
construction. 

"  It  was  insisted  by  counsel,  and  with  much  apparent  force,  that  wagers  on  the  life 
of  a  tliird  person  are  in  their  very  nature  dangerous,  and  contrary  to  the  policy  of  tiie 
law,  and  to  sound  morality.  But  the  danger,  if  any  exists,  would  apply  with  great, 
although  with  not  equal  force,  to  policies  where  there  is  au  interest,  as  well  as  to 
tliose  where  there  is  none.  All  life  insurances  have  l)een  prohibited  in  some  countries. 
Tlie  objection  made  to  tlie  wager  in  the  case  of  Gilbert  v.  Sykes,  It;  Ka^t,  150,  \vas 
not  merely  that  a  wager  on  the  life  of  anotlier  would  endanger  his  assassination, 
the  fear  of  the  law  being  deemed  sufficient  to  countervail  that,  but  that  the  bet  was 
on  the  life  of  Napoleon,  a  foreign  sovereign,  and  grew  out  of  a  conversation  upon  the 
probability  of  his  being  assassinated,  so  that  to  entertain  an  action  on  it  was  considered 
to  contravene  pnlilic  policy.  As  was  well  remarked  in  the  argument  of  that  case,  such 
an  objection  would  ap])ly  with  equal  force  to  cases  for  the  life  of  a  tliird  person,  which 
have  never  been  held  illegal.  The  cases  of  Earl  of  Chesterfield  v.  Jansen,  I  Atk.  346, 
2  Ves.  2.5,  aufi  of  March  v.  Pigot,  3  Burr.  2803,  are  direct  authorities  in  favor  of  the 
legality  of  such  wagers.  And  the  same  principle  is  sanctioned  by  the  cases  which 
uphold  post  obit  securities,  wliere,  in  consideration  of  an  immediate  advance  of  money, 
bonds  are  given,  or  contingent  or  reversionary  property  charged,  for  the  payment  of  a 
much  larger  amount,  upon  the  death  of  a  particular  person.  Curling  v.  Marquis 
Townsenti,  19  Ves.  628;  Free  v.  Hinde,  2  Sim.  7." 

In  Vivar  v.  Knights  of  Pythias,  52  N.  J.  L.  4.55,  469  (1890),  s.  C.  post,  p.  300,  Dixon, 
J.,  for  the  court  said :  "  In  New  Jersey,  tlie  tendency  of  judicial  opinion  seems  to  be 
in_faAT)r^of_thej)roposition,  that  the  assured  need  not  have  an  interest  in  the  life  in- 
sured in  order  to  support  the  contract  of  insurance.  Trenton  Mut.  L.  &  F.  Ins.  Co. 
rTJolmsoii,  4  Zab.  576;  Martin  c.  Franklin  F.  Ins.  Co.,  9  Vroom,  140.  Elsewhere, 
contracts  of  insurance  without  such  an  interest  are  generally  condemned,  as  being 
contrary  to  public  policy." 

In  Meyers  v.  Schumann,  54  N.  J.  Eq.  414,  417  (1896),  the  Court  of  Errors,  per 
Magie,  J.,  in  affirming  upon  other  grounds  a  decree  partly  based  upon  the  two  New 
Jersey  cases  quoted  above,  said  :  "  The  questions  dealt  with  and  decided  in  the  two  cases 
in  the  Supreme  Court  .  .  .  have  never  before  been  presented  to  this  court.  They  are 
of  the  highest  importance,  and  ought  not  to  be  passed  upon  unless  it  is  necessarj  to 
do  so."  —  Ed. 


24  LE    CEAS    V.    HUGHES.  [CHAP.  IL 

PART   IL 
SATISFYING  THE   REQUIREMENT  OF   AN  INTEREST. 

SECTION   I. 

Marine  Insurance. 

LE  CRAS  V.  HUGHES. 
King's  Bench,  1782.     2  Park  Ins.  (8th  ed.)  568.' 

Action  upon  a  policy  of  insurance  on  the  sliip  "  St.  Domingo,"  at 
and  from  Omoa  to  London  ;  upon  which  a  case  was  reserved  for  tlie 
opinion  of  the  court.  The  facts  of  tlie  case  were  these:  Captain  Lut- 
trell,  commanding  five  of  his  Majesty's  sliips,  and  Captain  Dahymple, 
commanding  a  party  of  the  land  forces,  captured  two  Spanish  register 
ships,  lying  under  the  protection  of  Fort  Omoa;  that  the  ship  ''  St. 
Domingo"  (on  v;hich  the  insurance  was  made)  was  one  of  the  prizes, 
and  was  coming  home  laden  with  the  property  then  captured  ;  upon 
which  ship  the  defendant  underwrote  £500,  and  that  tlie  ship  was  lost 
by  perils  of  the  sea.  The  question  was,  whether,  by  virtue  of  the  prize 
act  of  the  19  Geo.  III.  c.  G7,  the  officers  and  crews  of  the  ships  under 
Captain  Luttrell  had  such  an  insurable  interest  in  the  "  St.  Domingo" 
as  to  entitle  them  to  recover? 

Lord  Mansfield.  There  are  two  questions  in  this  cause:  1st, 
Whether  the  sea  officers  had  an  insurable  interest?  This  will  depend 
on  the  Prize  Act  and  proclamation.  2dly,  Whether  possession  would 
entitle  them  to  insure,  upon  the  bare  contingency  of  a  future  grant  from 
the  crown?  As  to  the  first,  consider  the  act  of  Parliament  which  givos 
to  all  the  peoi^le  on  board  —  that  is,  to  the  flag  officers,  commanders, 
and  other  officers;  to  the  seamen,  marines,  and  soldiers  on  board  of 
every  ship  and  vessel  of  war —  the  sole  interest  and  property  of  and  in  all 
and  £very  ship  and  vessel,  goods,  and  merchandises  which  they  shall  take 
during  the  war,  after  condemnation.  Does  the  act  say  that  the  seamen 
only  shall  take?  Does  it  leave  a  joint  capture  by  the  army  and  navy 
undefined?  Certainly  not.  Suppose,  for  instance,  a  case  which  I 
remember  to  have  happened  :  A  Dutch  and  English  fleet  combined 
raptured  some  sliips;  the  English  sailors  could  not  take  solely;  nor 
eonld  the  act  mean  that  they  should  have  nothing.  In  the  case  in  ques- 
tion suppose  Cajitain  Dalrymple  had  given  no  assistance,  is  there  any 
doubt  that  Captain  Luttrell  would  have  taken  the  whole?  The  only 
ditference  is  that  now  he  has  not  the  merit  of  a  sole  capture.     The  word 

*  s.  c.  3  Donpf.  81,  where  are  reported  tlie  arguments  of  counsel  :  Erskine,  for  the 
plaintiff;  Scott,  contra.  —  Ed. 


PART  II.,  SECT.  I.] 


HILL    V.    SECRETAN. 


25 


"soldiers"  in  the  proclamation  means  soldiers  on  board  the  ship. 
Thus  it  stands  on  the  act  and  proclamation.  But  supposing  that 
doubtfulviis  far  back  as  Queen  Aivne's  time  do.w.n  to  the  presejiV-ffher- 
e ver  a  capture  has  been  made  by  a  kino;la„sMp-ov-ar-pmAteer,  the  crowa 
hlis^jTwnjsgiven  a  grant  of  it  afte^conrlejrinnlion.  There  is  no  instance 
to  the  contrar3'.  Is  then  the  contingency  of  the  ship's  coming  safe 
such  an  interest  as  the  captor  ma}-  insure?  Insurance  is  a  contract  of 
indemnit}- ;  some  interest  is  necessar}',  but  not  an}'  particular  form  of 
interest ;  it  does  not  depend  on  a  vested  formal  interest.  The  question 
is,  whether  this  contingency'  is  such  a  benefit  to  the  assured  as  will  make 
it  a  loss  to  him  if  the  ship  does  not  arrive?  An  insurance  on  the  profits 
of  a  voyage  was  holden  to  be  good.  An  agent  of  prizes  may  insure  the 
arrival  of  a  ship  which  will  produce  him  profit ;  for  though  he  has  not 
the  possession  of  the  propertj',  he  has  such  an  interest  in  the  ship  com- 
ing home  as  that  he  may  insure.  Here  the  possession  is  in  the  assured, 
and  a  certain  expectation  of  receiving  the  property  captured  from  the 
crown,  which  gives  him  an  interest  in  the  arrival.  It  is  not  a  vested 
interest,  but  such  an  expectation  as  never  was  defeated.  ' 

Judgment  for  the  jylaintijf.) 


HILL   AND   Another  v.   SECRETAN. 

King's  Bench,  1798.     1  B.  cfe  P.  315. 

Action  on  a  policy  of  insurance  on  goods  on  board  the  "San 
Bernardo  "  from  St.  Andero  to  London.  The  declaration  averred  that 
the  plaintiffs  were  interested  to  the  amount  insured. 

1  On  the  interest  of  captors,  see  further,  Boehm  v.  Bell,  8  T.  R.  154  (1799) ;  Yelton 
V.  Smith,  Faculty  Decisions,  1801-1807,  p.  7  (Court  of  Session,  Scotland,  1801)  ;  Lu- 
cena  v.  Craufurd,  1  Taunt.  325  (H.  L.  1808) ;  Routh  v.  Thompson,  11  East, 428  (1809) ; 
Stirling  v.  Vaughan,  11  East,  619  (1809) ;   Routh  v.  Thompson,  13  East,  274  (1811). 

In  Lucena  v.  Craufurd,  2  B.  &  P.  N.  R.  269,  323-324  (H.  L.  1806),  Lord  Eldon 
said  :  "  If  the  Omoa  case  was  decided  upon  the  expectatiqji  of  a  grant  from  the  crown, 
I  never  can  give  my  assent  to  such  a  doctrine.  That  expectation,  though  founded  upon 
the  highest  probability,  was  not  interest,  and  it  was  equally  not  interest,  whatever 
might  have  been  the  chances  in  favor  of  the  expectation.  That  which  was  wholly  in 
the  crown,  and  which  it  was  in  the  power  of  his  Majesty  to  give  or  withhold,  could 
not  belong  to  the  captors,  so  as  to  create  any  right  in  them.  I  am  far  from  saying, 
however,  that  that  case  might  not  have  been  put  upon  other  ground.  The  captors  not 
only  had  the  possession,  but  a  possession  coupled  witli  the  liability  to  pay  costs  and 
charges  if  they  had  taken  possession  improperly.  There  was  also  a  liability  to  render 
back  property  which  should  turn  out  to  be  neutral,  and  a  liability  as  agents  to  act  for 
tiie  king  as  their  principal ;  and  I  should  be  disposed  to  say  that  the  king  had  an 
insurable  interest  as  the  person  who  had  the  jus  possessioiiis.  Ilis  right  indeed  was 
liable  to  be  affected  by  a  sentence  of  the  Court  of  Admiralty.  But  as  the  insured  is 
often  entitled  to  consider  the  property  as  gone  the  moment  the  capture  takes  place,  so 
I  think  that  the  king  may  be  considered  as  against  all  the  world  as  having  an  interest 
in  the  property  before  condemnation  for  the  purpose  of  insuring." 

And  see  Devaux  v.  Steele,  6  Bing.  N.  C  358  (1840) ;  s.  c.  8  Scott,  637.  —  Ed. 


26  BAKCLAY   V.   COUSINS.  [CHAP.  11. 

At  the  trial  before  Eyre,  C.  J.,  at  the  Guildhall  sittings  after  Trinity 
Term,  it  was  proved  that  the  house  of  De  la  Torre  in  Spain  consigned 
twenty-nine  bags  of  wool  to  the  house  of  Dubois  and  Son  in  London, 
and  indorsed  the  bill  of  lading  to  them  ;  but  that  with  the  bill  of  lading 
came  a  letter  annexed,  directing  Dubois  and  Son  to  hold  fifteen  bags  for 
a  house  at  Halifax  and  the  remainder  for  the  plaintiffs  at  Exeter,  which 
was  the  subject  of  the  present  insurance.  It  appeared  also  that  De  la 
Torre  was  indebted  to  the  plaintiffs  in  the  sum  of  £500,  but  that  they 
had  given  no  orders  for  these  goods.  The  ship  was  captured  by  the 
French,  but  afterwards  retaken.  The  jury  found  a  verdict  for  the 
plaintiffs. 

Shepherd,  Serjt.,  now  moved  for  a  rule  to  show  cause  why  the  verdict 
should  not  be  set  aside  and  a  new  trial  be  had,  insisting  that  the  plain- 
tiffs had  no  insurable  interest  in  the  goods,  as  the  bill  of  lading  was 
not  indorsed  to  tiiem,  and  as  De  la  Torre  would  still  be  hable  for  his 
debt  to  the  plaintiffs,  if  tlie  goods  should  not  reach  them. 

But  the  court  were  clearly  of  opinion  that  as  the  goods  were  con- 
signed to  Dubois  and  Son  to  hold  for  the  plaintiffs,  the  former  were  to 
be  considered  as  trustees  for  the  latter  from  the  time  the  goods  were 
put  on  board  the  ship ;  that  the  circumstance  of  the  plaintiffs  being 
creditors  of  De  la  Torre  raised  a  good  consideration  for  the  consign- 
ment, and  therefore  no  doubt  could  be  entertained  of  the  plaintiffs 
having  an  insurable  interest. 

Shepherd  took  nothing  by  this  motion. 


BARCLAY  V.    COUSINS. 

King's  Bench,  1802.     2  East,  544. 

This  was  an  action  on  a  policy  of  insurance,  dated  the  27th  August, 
1799,  and  effected  by  the  plaintiff,  as  agent  for  and  on  account  of  one 
Richard  Wells,  on  the  ship  "  Jonah,"  at  and  from  Barbadoes  to  the  coast 
of  Africa,  during  her  stay  and  trade  there,  and  at  and  from  thence  back 
to  her  port  or  ports  of  discharge  in  the  West  Indies,  at  a  premium  ol 
twenty-five  guineas  per  cent,  with  various  returns  for  convoy.  The 
policy  was  declared  to  be  on  profits  valued  at  £2,000,  and  was  under- 
written by  the  defendant.  The  declaration  contained  averments  that 
the  ship  sailed  on  the  voyage  insured,  wMth  a  cargo  of  goods  and  mer- 
chandises on  board  ;  and  that  the  said  Richard  Wells  was  interested  in 
the  profits  to  arise  and  be  made  from  the  sale  and  disposal  of  the  said 
cargo  of  goods  and  merchandises,  to  the  amount  insured  ;  and  stated  a 
total  loss  by  capture.  The  defendant  pleaded  the  general  issue,  and 
paid  the  premium  into  court.  At  the  trial  before  Lord  Kenton,  at  the 
sittings  at  Guildhall  after  last  Trinity  Term,  a  verdict  was  found  for  the 


PART  II.,  SECT.  I.]  BARCLAY    V.   COUSINS.  27 

plaintiff  for  £221  05.,  subject  to  the  opinion  of  this  court  on  the  following 
case  :  — 

In  Februar}',  1799,  Richard  Wells  shipped  a  cargo  of  goods  on  his 
own  account,  on  board  his  own  ship  the  "Jonah"  at  Barbadoes.  to  be 
carried  on  a  trading  voyage  to  the  coast  of  Africa.  The  invoice  value 
of  the  ship  and  cargo  was  about  £5,880.  In  April,  1799,  the  plaintiff 
received  an  order  from  Mr.  Wells  to  insure  £6,000  on  this  ship  and 
cargo ;  in  consequence  whereof  he  effected  an  insurance  to  the  amount 
of  £8,470  to  cover  the  sum  of  £6.000  ordered,  and  the  premiums  of 
insurance  thereon  ;  which  insurance  was  declared  to  be  on  the  ship  and 
cargo  at  and  from  Barbadoes  to  the  coast  of  Africa,  during  her  stay 
and  trade  there,  and  at  and  from  thence  back  to  her  port  or  ports  of 
discharge  in  the  West  Indies.  On  the  13th  of  August  following,  the 
plaintiff  received  a  letter  from  Mr.  AVells,  directing  the  insurance  in 
question,  which  was  thereupon  accordingly  effected.  The  said  ship 
sailed  from  Barbadoes  on  the  29th  of  March,  1799,  upon  the  voyage 
insured,  and  arrived  at  Cape  Mount,  her  port  of  discharge  in  Africa, 
on  the  21st  of  July  following ;  and  thereupon  the  agents  of  tlie  assured 
began  to  unload  and  sell  her  cargo,  and  with  part  of  the  produce 
thereof  purchased  thirty  slaves ;  and  on  the  28th  of  August  follow- 
ing she  was  captured  by  three  French  frigates ;  but  was  afterwards 
given  'up  to  one  George  Hewitt,  for  the  purpose  of  conveying  English 
prisoners  to  a  B?-itish  port,  and  arrived  at  Sierra  Leone  on  the  6th  oi 
September,  together  with  the  said  tliirt}'  slaves  and  the  remainder 
of  her  cargo,  and  a  number  of  English  prisoners ;  but  was  soon  after 
deserted  hy  the  said  George  Hewitt  and  part  of  her  crew ;  and  her 
original  captain  refusing  to  take  the  charge  of  her,  Captain  Gra}',  the 
then  acting  governor  of  that  settlement,  gave  the  command  thereof  to 
one  Walter  Stott,  who  accordingly  took  possession  thereof.  That  by 
the  direction  of  the  said  Walter  Stott,  the  thirty  slaves  were  unshipped 
and  sent  to  Bance  Island,  where  they  were  afterwards  sold,  and  the 
remainder  of  the  cargo  was  landed  and  sold  at  Sierra  Leone,  and  pro- 
duced the  sum  of  £46  6s.  Qd.  That  the  said  brig  afterwards  departed 
for  Barbadoes,  with  prisoners  on  board,  where  she  arrived,  and  where 
the  Couit  of  Admiralty  adjudged  to  tlie  said  Walter  Stott  and  the  then 
crew  of  the  said  brig  one  full  eighth  part  of  the  net  proceeds  thereof, 
and  of  the  cargo  on  board  her  at  the  time  she  was  taken  possession  of 
as  aforesaid.  The  question  for  the  opinion  of  the  Court  is.  Whether 
the  plaintiff  is  entitled  to  recover? 

This  case  was  very  fully  argued  first  in  Easter  Terra,  41  Geo,  III.,  by 
J.  B.  Warren  for  the  plaintiff,  and  Giles  for  the  defendant ;  and  again 
in  last  Easter  Term,  by  Park  for  the  plaintiff,  and  Adam  for  the 
defendant. 

Lawrence,  J.  (in  the  absence  of  Grose,  J.,  who  was  indisposed),  now 
delivered  the  opinions  of  Grose  and  Le  Blanc,  Justices,  and  his  own. 

The  case  states  that  the  insured  shipped  on  board  the  ship  "Jonah" 
a  cargo  of  goods,  to  be  carried  on  a  trading  voyage  ;  so  that  it  appears 


28  BARCLAY  V.   COUSINS.  [CHAP.  H. 

that  he  had  an  interest  in  the  profits  to  arise  from  a  cargo,  which  was 
liable  to-be  alTected  by  the  perils  insured  against.     And  the  question 
is,  If,  on  an  insurance  made  on  the  profits  to  arise  from  such  cargo,  the 
plaintiff  can  recover?     As  insurance  is  a  contract  of  indemnity,  it  can- 
not be  said  to  be  extended  beyond  what  the  design  of  such  species  of 
contract  will  embrace,  if  it  be  applied  to  protect  men  from  those  losses 
and  disadvantages  which,  but  for  the  perils  insured  against,  the  assured 
would  not  suffer ;  and  in  every  maritime  adventure  the  adventurer  is 
liable  to  be  deprived  not  only  of  the  thing  immediately  subjected  to  the 
perils  insured  against,  but  also  of  the  advantages  to  arise  from  the 
arrival  of  those  things  at  their  destined  port.     If  they  do  not  arrive,  his 
loss  in  such  case  is  not  merely  that  of  his  goods  or  other  things  exposed 
to  the  perils  of  navigation,  but  of  the  benefits  which,  were  his  money 
employed  in  an  undertaking  not  subject  to  the  perils,  he  might  obtain, 
without  more  risk  than  the  capital  itself  would  be  liable  to;   and  if, 
^•heu  the  capital  is  subject  to  the  risks  of  maritime  commerce,  it  be 
allowable  for  the  merchant  to  protect  that  by  insuring  it,  why  may  he 
not  protect  those  advantages^he  is  in  danger  of  losing  by  their  being 
subjected  to  the  same  risksU  It  is  surely  not  an  improper  encourage- 
ment of  trade  to  provide  that  merchants,  in  case  of  adverse  fortune, 
should  not  only  not  lose  the  principal  adventure,  but  that  that  principal 
should  not,  in  consequence  of  such  bad  fortune,  be  totally  unproductive  ; 
and  that  men  of  small  fortunes  should  be  encouraged  to  engage  in  com- 
merce, by  their  having  the  means  of  preserving  their  capitals  entire, 
which  would  continually  be  lessened  by  the  ordinary  expenses  of  living, 
if  there  were  no  means  of  replacing  that  expenditure,  in  case  the  returns 
of  their  adventures  should  fail.     Where  a  capital  is  employed  subject  to 
such  risks,  in  case  of  loss,  the  party  is  a  sufferer  by  not  having  used 
his  money  in  a  way  which  might,  with  a  moral  certainty,  have  made  a 
return  not  only  of  his  principal  but  of  profit ;  and  it  is  but  playing  with 
words  to  say  that,  in  such  case,  there  is  no  loss,  because  there  is  no 
possession  ;  and  that  it  is  but  a  disappointment.     Foreign  writers  upon 
insurance,  whose  doctrines  form  the  greatest  part  of  our  law  on  this 
sul)ject.  certainly  do  not  treat  of  insurance  on  profits  as  a  matter  in- 
consistent with  the  true  nature  and  design  of  such  a  contract ;  and 
where  it  is  spoken  of  by  them  as  a  species  of  insurance  which  cannot 
be  made,  this  latter  doctrine  will  be  found  to  be  referable  to  the  positive 
institutions  of  different  nations,  who  have  tliought  it  wise  to  prohibit  it. 
Roccus,  an  Italian  jurist,  inquiring  how  goods  that  are  lost  are  to  be 
valued,  has  in  his  Notabilia  de  Assecurationibns,  No.  31,  this  passage  : 
"  Distingue,  quod  aut  merces  fuerunt  testimatiie,  pro  certa  quantitate,  tem- 
pore contractus  assecurationis,  et  tunc  non  sumus  in  dnbio,  quia  dicta 
quantitas  rcstimata  solvenda  est ;  aut  assecuratio  fuit  facta  pro  asportan- 
dis mercibus  salvis  Romam.et  tunc cestimatio inspiciendaest BorrKX ;  aut 
assecuratio  fuit  facta  suvpb'citer,  de  solvendo  a?stimationem  sen  valorem 
morcium,  in  casu  poriculi,  si  navis  perierit,  et  tunc  insi)ici  debet  tempus 
obligutionis,  ct  prout  tunc  valebant,  debet  fieri  sestimatio,  et  sic  damnum 


PART  II.,  SECT.  I.]  BARCLAY   V.   COUSINS.  29 

quod  assecuratus  patitnr  in  amissione  rei,  non  hicrum  faciendum  con- 
sideratur."  And  for  this  he  cites  Santerna,  a  Portuguese  lawyer,  de 
Assecurationibus,  part  the  3d.  num.  40  and  41  ;  in  which  book  there  is 
a  long  disquisition  to  show  that,  in  this  latter  case,  the  profit  on  the 
goods  is  not  to  be  paid,  but  only  the  value  at  the  time  of  the  insurance. 
So  that  it  seems  the  insurance  of  profits  is  so  far  from  being  incon- 
sistent with  the  nature  of  insurance  that,  e  contra^  Santerna  thinks  it 
necessary  to  show  by  argument  that  the  profit  is  not  to  be  considered 
in  all  cases ;  and  that  where  the  assurance  is  made  simpliciter^  then 
lucrum  non  spectatur.  And  Straccha,  another  Italian  law3'er,  agrees 
with  Santerna  in  his  Gloss.  No.  6.  In  France  such  assurances  were 
unlawful ;  but  that  depends,  according  to  Valin,  on  the  ordinance  of 
the  marine,  which  also  forbids  insurance  upon  freight ;  and  the  reason 
given  b}'  Valin  for  making  these  ordinances,  with  respect  to  the  one  and 
the  other,  is  the  same  ;  so  in  Holland,  it  appears  from  Bynkershoek's 
QuiEStiones  Juris  Privati,  book  4,  c.  o,  that  such  insurances  cannot  be 
legally  made  there ;  but  that  is  by  the  positive  laws  of  that  country ; 
notwithstanding  which,  the  practice  has  so  generally'  obtained  to  insure 
expected  profits,  as  that  in  a  case  he  there  states,  the  majority  of  the 
judges  of  the  court,  where  the  question  arose,  determined  in  favor  of 
the  assured  ;  and  those  who  opposed  that  decision  rested  their  opinions 
on  the  positive  laws  of  the  country,  and  not  on  such  contracts  being 
contrary  to  the  nature  of  insurance.  In  tliis^oimtry  there  is  no  law 
forbidding  such  insurance ;  unless  it  could  be  shown  that  the  insurer 
had  no  interest  in  the  profits,  or  that  from  its  nature  it  must  be  a  mere 
wager,  so  as  to  bring  the  case  within  the  Stat.  19  Geo.  II. ;  and  that  they 
are  not  considered  as  contracts  inconsistent  with  the  general  nature  of 
insurance  is  proved  bj'  the  instance  put  of  an  insurance  on  freight, 
which,  as  was  ver}-  truly  argued  at  the  bar,  differs  only  from  the  case 
now  before  us  in  the  same  degree  as  a  return  of  capital  vested  in  ship- 
ping differs  from  a  return  of  capital  vested  in  merchandise  ;  and  by  the 
cases  of  Grant  y.  Parkinson,  in  Marshall,  111,  and  Park,  267,  which 
was  an  insurance  on  the  profits  of  a  cargo  of  molasses  ;  and  the  case  of 
Henrickson  and  Walker,  and  Henrickson  and  Margetson,  Mich.  1776. 
The  authority  of  Grant  and  Parkinson,  as  applied  to  this  case,  has  been 
attempted  to  be  gotten  rid  of  by  observing  that  the  thing  insured  there 
was  the  profits  of  a  specific  cargo ;  but  in  that  respect  the  two  cases  do 
not  differ,  for  this  is  an  insurance  on  a  specific  cargo ;  and  we  have  no 
ground  to  sa}-  that  the  profits  of  a  cai'go  to  be  exchanged  in  the  African 
trade,  from  which  exchange  the  profits  will  arise,  are  not,  to  use  the 
expression  of  Lord  Mansfield  in  Grant  and  Parkinson,  prett}'  certain ; 
admitting,  for  the  sake  of  the  argument,  which  it  is  not  necessary  for 
us  now  to  determine,  that  in  some  mercantile  adventures  there  ma}'  be 
so  much  uncertaint}-  as  to  the  profits,  as  to  make  it  not  possible  to 
insure  them  without  the  policy-  being  a  wagering  contract.  This,  how- 
ever, we  cannot  presume  of  the  returns  to  be  made  from  an  adventure, 
undertaken  according  to  a  long-established  course  of  trade  like  that 


30  BARCLAY  V.   COUSINS.  [CHAP.  11. 

in  question,  in  wliich  numbers  have  been  engaged  to  great  advantage 
for  a  continued  succession  of  jears.  It  has  been  objected  to  this 
sort  of  insurance  that  the  subject,  having  no  physical  existence,  can- 
not be  insured.  This  objection  would  hold  against  insuring  freight, 
and  bottomry,  and  respondentia  interest.  Again,  that  the  goods 
might  be  going  to  a  losing  market,  in  which  case  the  assured  would 
gain  by  the  loss  of  his  goods ;  but  if  that  were  the  case,  it  would  be 
evidence  on  non  assumpsit,  as  it  would  prove  either  that  the  plaintiff 
was  not  damnified  as  to  profit  by  the  loss  of  the  goods,  or  that  at  the 
time  of  the  loss  he  had  no  interest  in  tlie  thing  insured.  It  was  further 
objected,  that  there  can  be  no  average  nor  abandonment ;  but  that  ob- 
jection does  not  hold  in  the  present  case,  for  if  there  be  only  a  partial 
loss,  the  assured  will  only  be  liable  to  pay  for  the  expected  profits  on 
the  goods  lost ;  and  there  may  be  an  abandonment  of  the  profits  by 
abandoning  the  goods  from  whence  the  profits  are  to  arise ;  and  as  to 
general  average,  there  would  be  no  diflSculty  in  the  case  of  a  valued 
policy  ;  and  in  the  case  of  an  open  policy,  the  difficulty  would  be  no 
greater  than  in  ascertaining  the  damages  in  case  of  loss,  the  impos- 
sibility of  doing  which,  in  every  case,  will  not  prove  that  an  insurance 
can  be  made  on  profits  in  no  case.  A  considerable  time  has  elapsed 
between  the  first  and  second  argument  of  this  case,  in  consequence  of  a 
writ  of  error  in  the  Exchequer  Chamber  in  another  case,  the  decision  of 
which  might  have  had  weight  in  favor  of  the  defendant,  had  it  been 
determined  otherwise  tlian  it  has  been.  The  grounds  of  that  decision 
we  are  not  acquainted  with,  so  as  to  say  whether  they  will  support  this 
case ;  but  as  that  determination  does  not  militate  with  the  opinion 
Mr.  J.  Grose,  Mr.  J.  Le  Blanc,  and  I  have  formed,  and  I  may  add  that 
of  Lord  Kexvon  on  hearing  the  first  argument,  we  do  not  think  it  fit 
that  we  should  longer  delay  the  judgment  of  the  court. 

Postea  to  the  plaintiff .^ 

1  In  Lncena  v.  Craiifurd,  2  B.  &  P.  N.  R.  269  (H.  L.  1806),  at  pp.  301-303,  Law- 
RENX'E,  J.,  in  his  answer  to  (juestions  proposed  to  the  judges,  said  :  "  Insurance  is  a  con- 
tract by  whicli  the  one  party,  in  consideration  of  a  price  paid  to  him  adequate  to  the 
risk,  becomes  security  to  tlie  other  that  lie  sliall  not  suffer  loss,  damage,  or  prejudice 
by  the  happening  of  the  perils  specified  to  certain  things  which  may  be  exposed  to 
them.  If  this  be  the  general  nature  of  the  contract  of  insurance,  it  follows  that  it  is 
a})plicable  to  protect  men  against  uncertain  events  which  may  in  any  wise  be  of  dis- 
advantage to  them ;  not  only  those  persons  to  whom  positive  loss  may  arise  by  such 
events,  occa.sioriiiig  the  deprivation  of  that  which  they  may  possess,  but  those  also  who 
in  consequence  of  .such  events  may  have  intercei)tcd  from  them  the  advantage  or  profit, 
which  but  for  such  events  they  would  acquire  according  to  the  ordinary  and  probable 
course  of  things.  .  .  .  That  a  man  must  somehow  or  other  be  interested  in  the  preser- 
vation of  the  subject-matter  exposed  to  perils,  follows  from  the  nature  of  this  contract, 
when  not  uae<l  a.s  a  mode  of  wager,  l)ut  as  apj)licable  to  the  purposes  for  which  it  was 
originally  introduced  ;  but  to  confine  it  to  the  protecti(m  of  the  intere.st  which  arises 
out  of  property,  is  adding  a  restriction  to  the  contract  which  does  not  arise  out  of  its 
nature.  Accor.ling  to  Scaccia  (Qmestio  prima.  No.  153).  Assecumtionis  coutnictits 
hnbet  locum  m  quAvin  re,  seu  de  fjiuh-is  re  qim  subjacere  posslt  pericu/o  seu  wteritui.  A 
man  is  interested  in  a  thing  to  whom  advantage  may  arise  or  prejudice  happen  from 
the  circurastauces  which  may  attend  it;  in  quantum  mea  inter/uil  i.  e.  quantum  viihi 


PART  II.,  SECT.  I.]  MERRY    V.   PRINCE.  31 

MERRY,   Plaintiff  in  Review,  v.  PRINCE. 
Supreme  Judicial  Court  of  Massachusetts,  1806.     2  Mass.  176. 

This  was  a  review  of  an  action  of  the  case  upon  two  policies  of  reas- 
surance, both  dated  Dec.  11,  1795,  one  of  which  was  a  reassurance 
upon  the  "brigantine 'Columbia' and  cargo,"  upon  which  Merry  sub- 
scribed 8350  ;  the  other  was  upon  the  "  schooner  'Harmony,'  appurte- 
nances and  cargo,"  upon  which  Merry  subscribed  $300.  In  the  original 
action,  there  was  a  verdict  for  Prince  for  $836.35,  as  for  a  total  loss. 

On  the  review,  a  verdict  was  also  given  for  Prince  at  April  Term, 
1803,  subject  to  the  opinion  of  the  court  on  a  state  of  facts  drawn  up 

abest  quantum  que  lucrari  potni.  Dig.  lib.  46,  lib.  8,  c.  13.  And  whom  it  importeth, 
that  its  condition  as  to  safety  or  other  quality  should  continue  :  interest  does  not  ne- 
cessarily imply  a  right  to  the  whole,  or  a  part  of  a  thing,  uur  necessarily  and  e.xclu- 
sively  that  which  may  be  the  subject  of  privation,  but  the  having  some  relation  to,  or 
concern  in,  the  subject  of  the  insurance,  which  relation  or  concern  by  the  happening 
of  the  perils  insured  against  may  be  so  affected  as  to  produce  a  damage,  detriment,  or 
prejudice  to  the  person  insuring ;  and  where  a  man  is  so  circumstanced  with  respect 
to  matters  exposed  to  certain  risks  or  dangers  as  to  have  a  moral  certainty  of  advan- 
tage or  benefit,  but  for  those  risks  or  dangers  he  may  be  said  to  be  interested  in  the 
safety  of  the  thing.  To  be  interested  in  the  preservation  of  a  thing  is  to  be  so  circum- 
stanced with  respect  to  it  as  to  have  benefit  from  its  existence,  prejudice  from  its  de- 
struction. The  property  of  a  thing  and  the  interest  devisable  from  it  may  be  very 
different ;  of  the  fir.st  the  price  is  generally  the  measure,  but  by  interest  in  a  thing 
every  benefit  and  advantage  arising  out  of  or  depending  on  such  thing,  may  be  con- 
sidered as  being  comprehended."  At  p.  321  Lord  Eldon  said:  "Since  the  19  Geo. 
II.  it  is  clear  that  the  insured  must  have  an  interest,  whatever  we  understand  by  that 
term.  In  order  to  distinguish  that  intermediate  thing  between  a  strict  right,  or  a 
right  derived  under  a  contract,  and  a  mere  expectation  or  hope,  which  has  been 
termed  an  insurable  interest,  it  has  been  said  in  many  cases  to  be  that  which  amounts 
to  a  moral  certainty.  I  have  in  vain  endeavored,  however,  to  fiud  a  fit  definition  of 
that  which  is  between  a  certainty  and  an  expectation ;  nor  am  I  able  to  point  out 
■what  is  an  interest  unless  it  be  a  right  in  the  property,  or  a  right  derivable  out  of 
some  contract  about  the  property,  which  in  either  case  may  be  lost  upon  some  contin- 
gency affecting  the  possession  or  enjoyment  of  the  party." 

In  Hancox  v.  Fishing  Ins.  Co.,  3  Sumner,  132,  140  (1837),  Story,  J.,  said:  "The 
truth  is  that  an  insurable  interest  is  stti  ijenetis,  and  peculiar  in  its  te.xture  and  opera- 
tion. It  sometimes  exists  where  there  is  not  any  present  property,  or  jus  in  re,  or  jus 
ad  rem.  Inchoate  rights,  founded  on  subsisting  titles,  unless  prohibited  by  the  policy 
of  the  law,  are  insurable ;  as,  for  example,  freight,  respondentia,  and  bottomry." 

In  McDonald  ;;.  Black,  20  Ohio,  185,  193  { 1851 ),  Ranne y,  J.,  for  the  court,  said  :  "  It 
is  well  settled  at  the  present  day  that  an  insurable  interest  need  not  amount  to  a  right 
of  property  or  of  possession.  Whenever  a  legal  connection  can  be  shown  to  exist  be- 
tween injury  to  the  thing  insured  and  the  loss  to  the  party  insuring,  it  will  suffice." 

In  Wilson  v.  Jones,  L.  R.  2  Ex.  139,  150,  151  (Ex.  Ch.  1867),  Blackburn,  J.,  said: 
"  I  apprehend  that  the  distinction  between  a  policy  and  a  wager  is  this :  a  policy  is, 
properly  speaking,  a  contract  to  indemnify  the  insured  in  respect  of  some  interest 
which  he  has  against  the  perils  which  he  contemplates  it  will  be  liable  to;  and  I  know 
no  better  definition  of  an  interest  in  an  event  than  that  indicated  by  Lawrence,  J.,  in 
Barclay  v.  Cousins,  and  more  fully  stated  by  him  in  Lucena  v.  Craufurd,  that  if  the 
event  happens  the  party  will  gain  an  advantage,  if  it  is  Iruitrated  he  will  suffer  a 
loss."  —  Ed. 


32  MEERY   V.   PRINCE.  [CHAP.  II. 

and  subscribed  b}'  the  parties ;  and  it  was  agreed  that,  if  the  court 
should  be  of  opinion  that  the  reassurance  declared  on  was  illegal,  the 
verdict  should  be  set  aside,  and  the  defendant  in  review  defaulted,  and 
judgment  accordingl}*.  But  if  the  court  should  be  of  opinion  that  the 
reassurance  was  legal,  but  that  the  verdict  was  for  too  large  a  sum,  then 
the  defendant  in  review  should  release  on  the  record  such  part  of  said 
sum  as  the  court  should  think  too  much,  and  judgment  should  be  ren- 
dered according!}'. 

The  facts  agreed  were,  in  substance,  that  Merrj'  subscribed  the  two 
policies  declared  on  ;  the  flrst  of  which  was  opened  for  $1,050  on  the 
"Columbia"  and  cargo,  "  from  Newburj'port  to  an}-  or  all  the  ports  in 
the  West  Indies,  and  at  and  from  thence  to  Newburyport ;  "  the  other 
was  opened  for  S300  on  the  "Harmon}',"  appurtenances  and  cargo, 
"  at  and  from  Lisbon  to  Newburyport;  "  both  the  policies  were  for  a 
premium  of  ten  per  cent,  and  expressed  that  the}'  were  reassurances. 
That  Prince,  before  effecting  these  policies,  had  subscribed  $500  to  a 
polic}'  of  insurance  on  the  "Columbia"  and  cargo,  the  risk  being  de- 
scribed in  terms  similar  to  those  used  in  the  polic}'  of  reassurance  ;  this 
last  policy  was  opened  for  S2,000  on  the  vessel,  and  $2,700  on  the  cargo. 
T.  TV.  Hooper  also  subscribed  it  for  $200 ;  on  the  back  of  it  was  the 
following:  "  N.  B.  James  Prince  takes  the  risk  of  one  hundred  and 
thirt}'  dollars,  wrote  by  T.  W.  Hooper,"  written  b}'  the  insurance  broker, 
by  order  of  Prince  and  Hooper,  and  subscribed  b}'  Prince.  That  he 
had  also  subscribed  to  another  polic}',  dated  Nov.  17,  1795,  "upon 
effects  on  board  the  *  Columbia '  to  one  or  all  the  islands  in  the  West 
Indies,"  for  a  premium  of  four  per  cent;  and  a  third  polic}',  dated 
Dec.  4,  1795,  for  $167,  "  upon  property  on  board  the  'Columbia'  from 
Newburyport  to  an}'  port  in  the  West  Indies,"  at  a  premium  of  seven 
per  cent.  That  the  "  Columbia"  was  lost  by  the  perils  of  the  sea  on 
her  passage  from  Newburyport  towards  the  West  Indies,  in  the  voyage 
insured.  That  Prince  had  paid  all  the  sums  aforesaid,  being,  in  the 
whole,  $1,297,  as  for  a  total  loss,  before  he  commenced  the  action  now 
reviewed.  That  he  had  also,  previous  to  his  effecting  the  said  reassur- 
ance on  the  "Harmony,"  subscribed  $200  to  a  policy  dated  Nov.  3, 
1795,  "upon  the  schooner  'Harmony'  and  cargo,  at  and  from  Lisbon 
to  Newburyport,"  at  a  premium  of  four  per  cent.  That  T.  Bradbury, 
Jun.,  had  subscribed  S200  to  the  same  policy.  On  the  back  of  this  last 
policy  was  the  following  memorandum:  "It  is  agreed  by  Prince,  and 
T.  Bradbury,  .Jun.,  that  the  said  Prince  takes  the  risk  on  one  hundred 
dollars,  wrote  by  said  Bradbury,  on  the  within  policy."  This  memo- 
randum was  subscribed  by  the  insurance  bioker  only,  and  was  agreed 
to  have  been  made  by  the  parties  within  thirty  days  from  the  date  of 
the  policy.  On  this  $100  Bradbury  paid  Prince  a  premium  ^  eight  per 
cent.  That  the  "  Harmony"  was  lost  by  the  perils  of  the  sea  on  her 
passage  from  Lisbon  towards  Newburyport,  in  the  voyage  insured  ;  and 
that  Prince  had  paid  $300,  the  amount  of  the  two  sums  last  mentioned, 
as  for  a  total  loss,  before  he  commenced  the  action  now  reviewed. 


PART  II.,  SECT.  I.l  MERRY    V.    PRINCE.  .  33 

The  principal  question  upon  these  facts  was,  whether  the  British  stat- 
ute of  19  Geo.  II.,  c.  37,  among  other  things  proliibiting  reassurances, 
had,  by  its  own  provisions,  extended  to  this  country,  —  or,  if  not,  had 
been  ''adopted,  used,  and  approved"  here  ;  in  other  words,  whether  a 
policy  of  reassurance  was,  here,  a  legal  and  binding  contract. 

Prescott,  for  the  plaintiff  in  review. 

Jackson,  for  the  defendant  in  review. 

The  opinion  of  the  court  was  afterwards  delivered  bv 

Sedgwick,  J.  This  action  is  brought  on  two  policies  of  reassurance, 
the  one,  dated  1st  December,  1795,  being  on  "  brigantine  'Columbia' 
and  cargo,  from  Newburyport  to  an\'  or  all  the  islands  or  ports  in  the 
West  Indies,  and  from  thence  back  to  Newburyport;"  the  other,  dated 
on  the  same  daj',  "on  the  schooner  'Harmony,'  appurtenances  and 
cargo,  at  and  from  Lisbon  to  Newburyport." 

There  are  other  facts,  which  will  liereafter  be  mentioned,  for  the  con- 
sideration of  questions  which  have  been  made  in  the  argument  of  the 
case.  At  present,  enough  is  stated  to  expose  to  discussion  the  first 
and  principal  question  in  the  case,  namely,  whether  the  contract  itself, 
being  a  reassurance,  is  legal,  and  binding  on  the  parties. 

That  a  contract  of  reassurance  is  not  prohibited  b}-  the  principles  of 
the  common  law,  is  admitted  by  the  parties.^  It  is  a  contract  which, 
in  itself,  seems  perfectlj-  fair  and  reasonable,  and  might  be  productive 
of  very  beneficial  consequences  to  those  concerned  in  this  important 
branch  of  commerce  ;  but,  because  it  was  much  abused,  and  turned  to 
pernicious  purposes,  it  was  prohibited  by  an  act  of  the  Parliament  of 
Great  Britain,^  by  which  reassurance  was  rendered  illegal  in  all  cases 
except  where  the  original  assurer  should  become  insolvent,  a  bankrupt, 
or  die.  And  the  only  question  is,  whether  that  statute,  as  such,  is  law 
within  this  commonwealth. 

As  an  act  of  the  British  Parliament  merely,  it  is  not  pretended  that 
its  binding  force  was  extended  to  the  colonies.  But  it  is  said,  and,  in 
my  opinion,  it  is  true,  that,  from  the  very  nature  of  our  relation  as  col- 
onies to  Great  Britain,  the  parent  state  at  the  time  the  act  was  passed, 
it  was  competent  to  the  Parliament  to  have  extended  this  provision  to 
the  colonies,  if  it  had  seen  fit  to  do  it.  But  if  that  was  the  intention,  it 
ought  to  appear  by  express  words,  or  at  least  by  inevitable  implication. 
Blackstone,  in  his  Commentaries,  vol.  i.  pp.  107,  108,  while  treating  of 
the  countries  subject  to  the  laws  of  England,  speaking  of  these  then 
colonies,  lays  it  down  without  an}'  restriction,  that  "  they  were  subject 

1  Ace. :  Haistie  v.  De  Peyster,  3  Caines,  190  (1805) ;  X.  Y.  Bowery  Fire  Ins.  Co.  v. 
N.  Y.  Fire  Ins.  Co.,  17  Wend.  359  (1837);  Philadelphia  Ins.  Co.  v.  Washington  Ins. 
Co.,  23  Pa.  2.50  (1854). 

And  see  Reed  v.  Cole,  3  Burr.  1512  (1764);  Eastern  Eailroad  Co.  v.  Relief  Fire 
Ins.  Co.,  98  Mass.  420  (1868).  — Ed. 

2  St.  19  Geo.  II.  c.  37,  s.  4  (1746)  :  "And  be  it  further  enacted  .  .  .  That  it  shall 
not  be  lawful  to  make  reassurance,  unless  the  assurer  shall  be  insolvent,  become  a 
bankrupt,  or  die."  This  provision  was  repealed  by  St.  27  &  28  Vict.  c.  56,  s.  1  (1864). 
—  Ed. 

3 


34  MEURY   V.    PRINCE.  [CHAP.  11. 

to  the  control  of  the  Parliament,  though  (like  Ireland,  Man,  and  the 
rest)  not  bomid  l\v  an3'  acts  of  Parliament,  unless  particularly  named." 
If  this  be  so,  it  is  decisive  in  this  case,  as  the  colonies  are  not  at  all 
named  in  the  act.  And  I  think  we  ma}'  prett}'  safely-  conclude  that 
that  learned  and  elegant  writer  was  well  acquainted  with  the  claims  of 
Great  Britnin,  in  relation  to  her  colonies,  and  that  he  had  no  disposition 
to  narrow  their  effects.  But,  should  we  even  go  much  farther,  and 
admit  that,  although  the  colonies  are  not  expressl}-  named,  ^-et  if,  from 
the  whole  purview  of  the  statute,  it  manifestl}'  appears  to  have  been  the 
intention  of  the  legislature  that  reassurance  should  be  prohibited  in  the 
colonics,  that  such  ought  to  be  the  construction,  3-et  I  think  that  the  case 
would  be  with  the  defendant  in  review  ;  because  I  can  discover  no  such 
intention. 

There  are  no  words  in  the  section  prohibiting  contracts  of  reassur- 
ance, or  in  any  other  part  of  the  act,  which  manifest,  or  even  imi)ly, 
such  an  intention.  By  the  most  attentive  consideration  of  the  statute, 
I  can  nowhere  perceive  such  an  intention,  but,  on  the  contrary,  I  think 
it  evident  that  no  such  intention  existed.  The  observation  of  the  coun- 
sel for  the  defendant  in  review  is  undoubtedly  just,  that  part  of  the 
provisions  of  the  act  were  not  intended  to  extend,  and  indeed  could 
not  extend,  to  the  colonies.  Now,  it  can  hardly  be  believed  that  the 
Parliament  could  have  intended  that  part  only  of  that  act  should,  b}' 
indefinite  expression,  be  construed  to  extend  to  the  colonies.  If  such 
had  been  the  will  of  the  legislature,  it  would  have  been  declared,  and 
not  left  a  subject  of  uncertain  or  difficult  construction. 

There  is  another  foundation  on  which,  it  is  said,  a  defence  against 
this  action  ma}'  be  bottomed.  The  constitution  declares  (chap.  vi. 
art.  6),  that  "All  laws  which  have  heretofore  been  adopted,  used,  and 
approved  in  the  colony,  and  usually  practised  on  in  the  courts  of  law, 
shall  remain  in  force  until  altered  or  repealed  by  the  legislature."  It 
is  true  that  many  acts  of  the  British  Parliament  have  been  adopted 
here,  from  causes  which  are  now  unknown.  And  it  is  said  that  wager 
policies,  which  are  only  rendered  illegal  by  the  same  act,  are  here  con- 
sidered as  invalid,  and  that  this  could  result  only  from  an  adoption 
here,  in  practice,  of  that  act.  In  answer  to  this  argument,  I  observe 
that,  admitting  wager  policies  are  heye  illegal,  I  do  not  think  the  argu- 
ment would  be  conclusive ;  for  it  is  true  that,  at  the  time  of  the  settle- 
ment of  this  country,  and  for  some  time  afterwards,  wager  policies  were, 
in  England,  considered  and  held  to  be  illegal  at  common  law. 

I  now  proceed  to  the  consideration  of  other  circumstances  in  the 
case.  The  reassurance  on  the  "Columbia"  is  on  the  vessel  and  cargo 
to  any  or  all  the  islands  or  ports  in  the  West  Indies,  and  from  thence  to 
Is'ewburyport ;  and  it  is  a  reassurance  by  wh'ch  the  assurers  are  to  re- 
spond the  full  amount  of  all  losses,  damages,  and  misfortunes  to  which 
the  assured  might  be  liable  on  a  like  sum  written  by  him  on  a  former 
policy  ;  and  in  the  same  proportion  on  vessel  and  cargo.  The  reassur- 
ance then,  in  express  terms,  extends  only  to  a  policy  of  insurance,  and 


PART  II.,  SECT.  I.]  MERRY   V.    PRINCE.  35 

which  was  a  policy  of  insurance  on  vessel  and  cargo.  Instead  of  con- 
fining the  reassurance  to  one  policy  of  insurance,  the  defendant  in  re- 
view would  extend  it  to  three.  One  is  admitted  as  properly  described 
b\'  the  polic}'  of  reassurance,  and  here  I  think  he  must  stop.  The  policy 
of  reassurance  is  confined,  in  the  terms  of  it,  to  a  reassurance  of  a  policy 
of  insurance,  and  cannot  be  extended  to  three.  Besides,  the  policies 
on  "effects"  and  on  "property''  are  confined  to  cargo,  and  are  not  in 
proportion  on  vessel  and  cargo ;  the}-  also  describe  different  voyages 
from  that  which  the  instrument  declared  on  reassures.  It  would  be 
infinitely  too  loose  a  construction  of  this  contract,  and  altogether  un- 
safe, in  my  opinion,  that  all  these  policies  of  insurance  were  compre- 
hended in  it,  and  reassured  b}'  it. 

I  am  of  opinion  that  the  defendant  in  review  has  a  right  to  recover 
the  Si  30  which  he  assumed  as  part  of  that  which  was  originall}-  sub- 
scribed b}-  Hooper,  because  he  was  in  fact,  by  agreement  with  all  the 
parties  at  the  time  of  the  reassurance,  an  insurer  for  that  sum,  as  much 
as  for  his  own  original  subscription.  M}-  opinion  as  to  this  sum  is 
founded  solely  on  the  evidence,  which  the  case  affords,  that  Prince  had, 
before  the  reassurance,  been  received  as  a  substitute  for  Hooper,  to  that 
amount,  and  that  Hooper  was,  to  the  same  amount,  released  from  his 
engagement,  —  in  other  words,  that  Prince  was  an  Insurer,  and  as  sucii 
immediately  responsible  to  the  assured.  This  I  consider  as  a  case  alto- 
gether distinct  from  Prince's  assuming  the  SlOO  which  had  been  under- 
written by  Bradbur}'.  In  this  case,  it  is  obvious  that  the  agreement 
was  not  between  Prince  and  the  assured,  but  between  Prince  and  Brad- 
bury. The  agreement  does  not,  as  is  the  case  in  the  other  instance, 
appear  to  have  been  subscribed  by  Prince,  and  it  is  certain  the  assured 
could  have  brought  no  action  against  Prince  upon  it.  It  could  not, 
therefore,  in  m}-  opinion,  be  a  reassurance  to  Prince  of  that  sum,  be- 
cause Prince  had  never  insured  it. 

But  as  to  the  6100  assumed  by  Prince,  which  was  originally  sub- 
scribed by  Bradbury,  I  have  the  misfortune  to  differ  from  both  my 
brothers,  who  think  that  it  is  irapossilile  to  distinguish  this  from  the 
$130  which  was  originally  subscribed  by  Hooper,  and  afterwards  as- 
sumed by  Prince.  They  think  that  his  assent,  as  expressed  in  the 
broker's  memorandum,  in  the  one  case,  constituted  Prince  as  much  an 
insurer  as  his  own  subscription  in  the  other. 

By  a  computation,  it  will  appear  that  the  whole  reassurance  on  the 
"Columbia''  will  be  completely  covered  by  the  subscriptions  previous 
to  that  of  the  plaintiff  in  review. 


36  SANSOM   V.    BALL.  [CHAP.  IL 

SANSOM  V.   BALL. 
.  Supreme  Court  of  Pennsylvania,  1806.     4  Dall.  459. 

Case  on  a  policy  of  insurance,  upon  tlie  freight  of  the  sliip  ''Rich- 
mond," for  a  vo3age  at  and  from  Philadelphia  to  Batavia,  and  thence 
back  again.  The  premium  was  20  per  cent,  "to  return  five  per  cent 
if  the  ship  proceeds  only  to  Batavia  and  back  to  Philadelphia,  and  no 
loss  happens;"  and  the  insurance  was  declared  to  be  "on  freight  ad- 
vanced here,  and  which,  by  agreement,  is  valued  at  $13,500."  .   .   . 

On  the  trial  of  the  cause,  it  appeared  that  the  "Richmond"  was 
owned  by  Messrs.  Jesse  and  Robert  Wain  ;  that  the  plaintiff  purchased 
from  the  owners  three-eighths  of  the  tonnage  of  the  ship  for  the  voyage, 
at  the  price  of  $10,837.50,  which  was  paid  before  the  ship  sailed  ;  that 
the  "Richmond"  proceeded  safely  to  Batavia,  but,  on  her  return  thence 
to  Philadelphia,  she, was  captured  by  a  French  privateer.   .   .   . 

The  present  suit  was  brought  to  recover  an  average  loss  ;  and  the 
case  being  submitted  for  tlie  opinion  of  the  Court,  two  questions  were 
discussed.^  .  .  . 

TiLGHMAN,  C.  J.  In  this  case  two  questions  have  been  made :  1st. 
Had  the  plaintiff  an  insurable  interest?^  2d.  If  it  was  insurable,  was 
it  liable  to  a  general  average? 

1st.  In  order  to  determine  whether  the  plaintiff's  interest  was  insur- 
able, we  must  first  ascertain  the  nature  of  it.  It  seems  to  be  a  kind  of 
interest  not  much  known  in  Europe,  though  well  known  in  this  cit}'. 
The  plaintiff  advanced  a  sum  of  money  to  the  owners  of  the  ship,  in 
consideration  of  which  they  gave  him  a  right  to  fill  up  three-eighths  of 
the  tonnage  of  the  ship,  for  that  voyage,  with  goods,  either  his  own  or 
the  property  of  others.  It  is  called  in  the  policy  "freight  advanced," 
an  expression  well  calculated  to  show  its  meaning.  All  countries,  and 
even  all  cities,  have  singularities  of  expression.  All  new  inventions, 
either  in  commerce  or  the  arts,  give  rise  to  new  modes  of  speech,  which, 
when  once  introduced  into  contracts,  are  recognized  by  courts  of  jus- 
tice, whose  duty  it  is  to  carry  into  execution  the  intention  of  the  con- 
tracting parties.  Now,  what  is  there  in  this  interest  which  should 
exclude  it  from  the  benefit  of  insurance?  there  is  nothing  unlawful  in 
it.  It  is  subject  to  loss  ;  for,  whether  the  plaintiff  used  the  tonnage  for 
the  transportation  of  his  own  goods,  or  of  the  goods  of  others,  he  would 
lose  his  money,  unless  the  ship  performed  tlie  voyage  in  safety.  Indeed, 
I  think  Mr.  Ingersoll,  in  arguiug  for  the  defendant,  conceded  that  the 

^  Mr.  Fitzsiramons,  a  merchant  and  underwriter  of  great  intelligence  .and  experi- 
ence, proved,  at  the  trial  of  the  cause,  that  the  interest  acquired  by  tlie  jjlaintiff  in 
the  tonnage  of  the  ship  was  a  well  known  subject  of  insurance  iu  Philadelphia  .  . 
—  Kep. 

2  The  reprint  of  the  statement  and  of  the  opinion  has  been  confined  to  the  first 
question.  —  Ed. 


PART  II.,  SECT.  I.]       HOBBS  V.    HANXAM.  37 

phiiiitiff's  interest  migh't  have  been  insured  if  it  had  been  properly  de- 
scribed ;  but  he  conceived  it  to  be  in  the  nature  of  bottomry.  This  it 
certain!}'  cannot  be  ;  there  was  no  loan  of  nione}".  INfessrs.  Wain  were 
obliged  to  make  no  payment  to  the  plaintiff,  but  the  plaintitTwas  entitled 
to  make  what  he  could  from  the  tonnage  he  had  purchased.  Whether  it 
was  more  or  less,  Messrs.  Wain  had  nothing  to  do  with  it.  The  tes- 
timony' of  Mr.  Fitzsimmons  goes  far  towards  proving  that  the  plaintiff's 
interest  was  well  described,  and  was  a  proper  object  of  insurance.  Jn 
the  case  of  Gregory  v.  Christie  (Park,  11),  ui}'  Lord  Mansfield  thus 
expresses  himself:  "I  should  think  that  the  words  'goods,  specie,  and 
effects,'  did  not  extend  to  the  plaintiff's  interest,  if  we  were  only  to 
consider  the  words  by  themselves.  But  here  is  an  express  usage,  which 
must  govern  our  decision.  A  great  many  captains  in  the  East  India 
service  swear  that  this  kind  of  interest  is  always  insured  in  this  way." 
Now,  though  there  have  not  been  a  great  man}'  witnesses  in  this  cause, 
yet  there  has  been  one,  very  much  conversant  in  the  business  of  insur- 
ance, who  stands  uncontradicted.  Upon  this  first  point,  therefore,  tlie 
insurability  of  the  plaintiff's  interest,  whether  it  is  considered  on  princi- 
ple or  on  usage,  I  have  no  doubt  but  the  law  is  with  the  plaintiff.  .  .  . 

We  are  of  opinion  that  the  plaintiff  is  entitled  to  recover  on  this 
policy,  according  to  his  demand.^ 

IjPxi:is^  Haicle,  and  tT.  Serjeant,  for  the  plaintiff. 

M'Kean  (Attorney-General)  and  Jngersoll,  for  the  defendant. 


nOBBS  V.  HANXAM. 
Nisi  Prics,  1811.     3  Camp.  93. 

This  was  an  action  on  a  polic}'  of  insurance  on  the  ship  "  Jane,"  valued 
at  £3,600.  ^  .  .  .  The  ship  was  the  property'  of  the  plaintiff,  and  was  char- 
tered by  him  to  one  Woodman,  who  covenanted  bv  the  charter-party 
that  in  case  the  ship  was  lost  he  should  pay  the  plaintiff  £3,600.  .   .  . 

Gorrov^,  for  the  defendant,  first  objected  that  the  plaintiff  had  not  an 
insurable  interest  in  the  ship,  as  he  had  a  right  to  recover  the  £3,600 
from  Woodman  the  charterer. 

Lord  Ellenborough  held  that  he  was  not  bound  to  trust  exclusively 
to  the  credit  of  the  charterer  ;  but  might  likewise  protect  himself  by  a 
policy  of  insurance.   ... 

Marryat  and  Nbkin,  for  the  plaintiff. 

Garroxc,  Jervis,  (rurney,  and  Abbott,  for  the  defendant. 

1  See  De  Silvale  v.  Kendall,  4  M.  &  S.  37  (181.5);  Mansfield  v.  Maitland,  4  B.  & 
Aid.  582  (1821).— Ed. 

^  In  all  parts  of  the  case  passages  not  bearing  on  insurable  interest  have  been 
omitted.     There  were  other  points,  one  of  which  caused  a  nonsuit.  —  Ed. 


38  HAGEDOEN   V.   OLIVEKSON.  [CHAP.  II. 

HAGEDORN  v.  OLIVERSON. 
King's  Bench,  1814.     2  M.  &  S.  485. 

Assumpsit  on  a  policy  of  assiiranee  tried  before  Lord  Ellenborougii, 
C.  J.,  at  tlie  London  sittings  after  Michaelmas  Terra,  when  a  verdict 
was  found  for  the  plaintiff  for  £200,  the  amount  of  the  defendant's 
subscription,  subject  to  tlie  opinion  of  the  Court  on  the  following 
case  : 

The  policj-  was  effected  by  the  plaintiff^  on  or  about  the  2d  of 
August,  1810,  as  well  in  his  own  name  as  for  and  in  the  name  and 
names  of  all  and  ever}'  other  person  and  persons  to  whom  the  same 
doth,  may,  or  shall  appertain,  etc.,  in  the  usual  form,  upon  the  ship 
"Fiesco,"  valued  at  £2,300,  at  and  from  Gluckstadt,  and  any  port  and 
ports  in  the  river  Ell)e,  to  an}-  port  or  ports  in  the  United  Kingdom, 
with  liberty  to  carr\-  simulated  papers,  etc.,  sail  under  any  flag,  etc. 
The  declaration  averred  the  interest  to  be  in  F.  S.  Schroeder,^  and  a 
loss  by  capture.  At  the  time  of  effecting  the  policy  Schroeder  was 
and  is  a  subject  of  the  King  of  Denmark,  then  and  now  at  war  with 
Great  Britain.  In  order  to  legalize  the  voyage  the  plaintiff  had  pro- 
cured a  license,  which  was  granted  to  him  h\  the  name  of  J.  P.  H. 
Hagedorn,  of  London,  on  behalf  of  himself  or  other  British  or  neutral 
merchants,  permitting  a  vessel  bearing  any  flag  except  the  French  to 
proceed  witli  a  cargo  from  within  certain  specified  limits,  within  which 
Gluckstadt  was,  to  an}-  port  of  this  kingdom  north  of  Dover,  etc.  The 
ship  was  loaded  at  Gluckstadt  in  July,  1810,  with  a  cargo  on  British 
and  neutral  account,  and  sailed  fiom  thence  under  Danish  colors 
for  London  on  the  26th  of  that  month,  and  was  captured  by  enemies, 
carried  into  a  port  of  Holland,  and  condemned.  The  policy  was 
effected  for  the  benefit  of  Schroeder,  but  no  letter  or  order  was  proved 
from  Schroeder  before  the  loss,  but  a  letter  from  him  to  the  plaintiff, 
dated  the  2nth  of  July,  1812,  before  the  commencement  of  this  action, 
was  produced,  wherein  he  ado[)ted  the  insurance  in  the  following 
term^  :  — 

"  I  may  now,  I  hope,  expect  that  you  have  effected  a  final  settle- 
ment with  the  underwriters  per  '  Fiesco,'  and  request  you  to  lay  out 
the  amount  for  me  in  coffee." 

No  other  evidence  was  given  of  the  connection  of  Schroeder  with 
tills  policy.  The  question  for  the  opinion  of  tlie  court  is  whether  the 
plaintiff  is  entitled  to  recover;  if  the  comt  shall  be  of  that  opinion,  the 
verdict  is  to  stand  ;  if  not,  a  nonsuit  is  to  be  entered. 

^  It  was  statcil  upon  the  arpnnient,  and  so  taken,  that  the  plaintiff  gave  the  order 
>  the  tirokfT  to  effect  the  insurance.  —  Kkp. 
•^  See  Ilagodorn  v.  Heid,  1  M.  &  S.  5G7,  by  wliicli  it  appears  that  Schroeder  was  in- 
terested in  a  moiety  of  the  ship.  —  Rep. 


PART  II.,  SECT.  I.]  HAGEDOEN    V.    OLIVERSON.  39 

Taddy,  for  the  plaintiff.^ 

Scarlett,  contra. 

Lord  Ellenbokough,  C.  J.  The  difficult}'  in  this  ease  arises  from 
the  situation  of  Schroeder,  because  he  might,  b}'  refusing  to  adopt  the 
poHcy  in  case  the  sliip  had  arrived,  have  got  clear  of  tlie  premium,  for 
if  the  plaintiff  had  brought  an  action  against  him  to  recover  it,  I  do  not 
see  how  he  could  have  succeeded.  That  constitutes  something  of  an 
auomal}',  because  in  one  event,  namcl}*,  that  of  a  loss,  he  might  secure 
himself,  and  nevertheless  might  have  avoided  the  payment  of  tlie  pre- 
mium, in  the  other  event  of  the  ship's  arrival,  l)y  declaring  that  lie 
chose  to  stand  his  own  insurer.  But  1  do  not  think  that  consideration 
governs  the  case  now  before  us  between  this  plaintiff  and  the  under- 
writer. The  plaintiff  had  a  right  to  effect  an  insurance,  on  tiie  chance 
of  its  being  adopted,  for  the  benefit  of  all  those  to  whom  it  might  iip- 
pertain  ;  which  are  the  words  of  the  polic}'.  He  might  insure  for  those 
who  were  actually  interested,  and  possibl}'  for  those  who  might  be 
interested.  Schroeder  was  interested,  and  might  become  privy  to  the 
benefit  of  this  insurance  b}'  subsequent  adoption,  according  to  Lucena 
V.  Craufurd,  and  Routh  v.  Thompson.  He  has  adopted  it,  and  now  it 
is  made  a  question  whether  he  can  become  privy  to  the  benefit  of  it.  It 
appears  to  me  upon  those  authorities  that  he  maj-,  and  may  make  nse 
of  the  name  of  the  person  at  the  head  of  the  policy,  as  the  person  who 
had  given  the  order  to  effect  the  insurance,  which  will  satisfy  the  Stat. 
28  Geo.  HI.  c.  56.  It  seems  to  me,  therefore,  that  this  action  is 
maintainable  for  the  benefit  of  Schroeder,  who  was  interested  at  the 
time,  and  has  become  privy  by  adoption. 

Le  Blanc,  J.  The  difficult^'  thrown  in  the  wa}'  of  the  plaintiff  has 
been  this,  that  if  Schroeder,  in  the  event  of  the  ship's  arrival,  had 
chosen  to  repudiate  instead  of  adopt  the  contract,  he  might  have  done 
so,  and  there  would  have  been  no  means  of  coming  upon  him  for- the 
premium.  But  this  polic}'  was  effected  for  the  benefit  of  all  persons 
interested,  and  Schroeder  was  a  person  interested  ;  and  I  take  it,  that 
after  the  ship  sailed  on  the  voyage  insured,  the  plaintiff  was  bound 
by  the  insurance,  and  could  not^  have  recovered  back  the  premium 
from  the  underwriter,  b}-  averring  that  this  was  a  polic}'  without  in- 
terest;  the  answer  would  have  been  Schroeder  is  interested;  and  he 
ma}'  elect  to  adopt  the  insurance.  I  therefore  conceive  the  underwriter 
would  have  had  a  right  to  retain  the  premium.  Then  Routli  v.  Thomp- 
son is,  I  think,  an  authority  to  show  that  Schroeder  being  interested 
might  subsequently  adopt  the  insurance  made  bv  tlie  plaintiff.  There 
the  crown  adopted  it  after  a  loss  ;  and  the  distinction  taken  in  tlinl 
case,  that  the  party  making  the  insurance  was  appointed  by  the  cap- 
tors who  had  no  insural)le  interest,  and  therefore,  that  he  stood  in  the 
relation  of  agent  on  the  part  of  the  crown,  whose  agents  the  captors 

1  Citing  Wolff  V.  Horncastle,  1  B.  &  P.  316  (1798) ;  Lucena  v.  Craufurd,  2  B.  &  P. 
N.  R.  269  (H.  L.  1806);  Lucena  v.  Craufurd,  1  Tauut.  325  (H.  L.  1803);  and  Kouth 
V.  Thompson,  13  East,  274  (1811).  — Ed. 


40  HAGEDORN   V.    OLIVEESON.  [CHAP.  II. 

were,  does  not,  I  think,  make  awy  difference.  Here  the  plaintiff  was 
not  unconnected  with  tlie  insurance  ;  he  obtained  a  license  and  made 
insurance  for  the  benefit  of  the  owners,  though  without  commu'nicating 
with  them.  Schroeder,  who  is  an  owner,  afterwards  adopted  it.  That 
case  is  an  authority  to  show  that  he  might  afterwards  adopt  it.  This, 
it  must  be  remembered,  is  a  question  between  the  plaintiff  and  the  un- 
derwriter, and  not  Schroeder  and  the  underwriter^^  and  unless  we  saw 
that  the  underwriter  would  not  have  been  entitled  to  retain  the  pre- 
mium, we  cannot  say  that  the  plaintiff  is  not  entitled  to  his  contract, 
unless  it  could  be  shown  that  this  a  mere  gaming  policy. 

Bayley,  J.  I  think  this  is  a  case  in  which  the  defendant  ought  to 
pa}-,  and  the  plaintiff  ought  to  receive  for  a  loss  under  the  policy.  A  loss 
has  happened,  upon  which  the  defendant  undertook  to  pay,  and  if  the 
premium  could  not  have  been  recovered  back  from  the  defendant,  .there 
is  not  an}'  circumstance  here  which  should  exonerate  him  from  liability. 
I  think  the  plaintiff  never  could  have  recovered  back  the  premium  from 
the  underwriter,  because  of  the  uncertainty  whether  Schroeder  would 
adopt  the  assurance,  in  respect  of  which  the  underwriter  would  have  in- 
curred the  risk.  While  the  contract  was  in  fieri  there  was  not  any  dispo- 
sition on  the  plaintiff's  part  to  have  the  policy  vacated,  and  if  there  had 
been,  it  would  have  been  an  answer  to  him,  that  Schroeder  might  have 
adopted  it.  Then  comes  the  question  whether  Schroeder  is  entitled  to 
take  the  benefit  of  this  insurance.  It  is  stated  that  it  was  effected  for 
bis  benefit,  therefore  it  was  intended  to  cover  his  specific  interest  at  the 
time.  Schroeder  had  an  interest  at  the  time,  and  although  there  was 
not  an}'  specific  communication  at  the  time,  yet  as  Schroeder  was  con- 
nected in  the  concern,  it  was  reasonable  for  the  plaintiff  to  expect  tliat 
Schroeder  would  adopt  an  act  which  could  be  done  with  no  other  view 
than  for  his  benefit.  Schroeder  must  be  considered  as  under  a  moral  if 
not%  legal  obligation  to  adopt  it,  although  the  ship  arrived.  Being 
under  that  obligation  in  all  events,  he  thinks  that  he  is  warranted  in 
adopting  it  even  after  a  loss,  and  has  adopted  it.  The  case  of  Eouth 
V.  Thompson  shows  that  if  a  policy  be  effected  with  reference  to  the 
benefit  of  a  person  interested,  an  adoption  of  it  by  such  person  after 
the  loss  will  be  sufficient. 

Uamfier,  J.  The  plaintiff  placed  himself  in  an  awkward  situation 
hy  advancing  his  money  for  the  premiums,  upon  the  expectation  that 
Schroeder  would  adopt  his  act,  which  Schroeder  might  have  refused  to 
do  in  the  event  of  the  ship's  arrival ;  and  if  he  had,  I  do  not  see  that 
tiie  plaintiff  could  have  recovered  back  the  premiums.  The  question 
then  is  whether  Schroeder  had  an  interest  in  the  policy.  He  was  owner 
of  the  ship,  and  the  policy  was  effected  for  his  benefit ;  that  seems  to 
me  to  give  him  an  interest.  If  then  he  had  an  interest  his  subsequent 
adoption  will  be  good.  Routh  v.  Thompson  is  a  full  and  clear  author- 
ity to  that  point ;  there  the  agency  was  only  a  constructive  agency, 
and  it  does  not  appear  to  me  to  afford  any  distinction,  because  the  in- 
surance did  not  come  within  the  scope  of  his  agency.     Therefore  it 


PAET  II.;  SECT.  I.]  HIGGIXSOX   V.   BALL.  41 

seems  to  me  to  govern  this  ease ;  there  is  no  distinction  In  reason 
tliough  there  may  be  a  difference.  All  the  averments  in  this  declara- 
tion are  certainly  fully  proved,  and  therefore  the  plaintiff  is  entitled. 

Judgment  for  the  plaintiff.^ 


HIGGINSON  V.   DALL. 
Supreme  Judicial  Court  of  Massachusetts,  1816.    13  Mass.  96. 

Case  upon  a  policy  of  insurance,  to  recover  the  amount  underwritten 
hy  the  defendant  for  81500  npon  the  ship  "  Silenns,"  and  82000  upon  her 
freight,  at  and  from  Calcutta  to  her  port  of  discharge  in  the  United 
States.^  ... 

At  the  time  tlie  polic}'  declared  on  was  effected,  there  was  a  subsist- 
ing mortgage  upon  the  ship  to  a  mercantile  house  in  Calcutta,  to  secure 
advances  made  to  the  plaintiff  by  that  house.  .   .   . 

A  verdict  was  taken  for  the  plaintiff"  for  the  sum  of  82,300,  subject  to 
the  opinion  of  the  whole  court  upon  the  report  of  the  judge.  .  .  . 

Otis  and  Hahbard,  for  the  plaintiff. 

Dexter  and  Hall,  for  the  defendant. 

Parker,  C.  J.  .  .  .  The  first  objection  to  the  plaintiff's  recover* 
ing  was,  that  he  had  not  an  insurable  interest,  in  consequence  of  the 
conveyance  of  the  ship  by  waj-  of  mortgage.  But  this  objection  was 
not  much  insisted  on,  because  of  the  uncertainty  of  some  of  the  evi- 
dence, whether  the  mortgage  was  subsisting  or  not  at  the  time  of  mak- 
ing the  policy.  We  are  satisfied,  however,  that,  if  it  were  subsisting,  it 
left  an  insurable  interest  in  the  plaintiff;  even  if  the  ship  were  mort- 
gaged to  her  full  value  ;  for  it  has  been  settled  by  many  decisions,  that 
different  parties,  having  different  interests  in  the  same  subject-matter, 
ma}'  severally  cause  insurance  upon  it.  .  .  . 

Judgment  on  the  verdict. 

1  Ace:  Bridge  v.  Niagara  Ins  Co.,  1  Hall,  247  (1828);  Williams  v.  North  China 
Ins.  Co.,  1  C.  P.  D.  757  (C.  A.  1876). 

And  see  Stillwell  v.  Staples,  19  N.  Y.  401  (1859).  — Ed. 

-  In  reprinting  the  statement  and  the  opinion,  passages  not  bearing  on  insurable 
interest  have  been  omitted.  —  Ed. 


42  SUTHEELAND  V.   PRATT.  [CHAP.  II. 

SUTHERLAND   v.   PRATT  and  Others. 

Exchequer,  1843.     11  M.  &  W.  29G. 

Assumpsit.     The  declaration  stated,  that  the  plaintiff,  on  the  8th  of 
September,  1841,  caused  to  be  made  a  policy  of  assurance  (setting  it 
forth    verbatim),    purporting    thereby    and    containing     therein    that 
Messrs.  Boggs,  Taylor,  &  Co.,  as  well  in  their  own  names  as  for  and 
in  the  names  of  all  and  every  person  or  persons  to  whom  the  same  did, 
might,  or  should  appertain  in  part  or  in  all,  did  make  assurance,  and 
cause  themselves  and  them  and  every  of  them  to  be  assured  with  tlie 
General  Maritime  Assurance  Company,  lost  or  not  lost,  at  and  from 
Bombay  to  London.^  .  .  .     The  insurance  was  declared  to  be  on  360 
bales  of  cotton,  and  the  policy,  after  admitting  the  receipt  of  the  pre- 
mium, stated,  that  the  said  company  were  content,  and  did  take  upon 
them  that  assurance  for  the  sum  of  £2,000.  —  The  declaration  then 
alleged,  that,  in  consideration  of  the  premises,  and  that  the  plaintiff  at 
the  request  of  the  defendants  (then  being  three  of  the  directors  of  the 
said  company),  tlien  paid  to  the  said  company  the  sum  of  £40  as  a 
premium  for  the  assurance  of  £2,000  upon  the  said  goods,  on  the  said 
voyage  in  the  policy  mentioned,  and  then  promised  the  defendants  to 
perform  and  fulfil  all  things  in  the  policy  mentioned,  on  the  behalf  of 
the  assured  to  be  performed  and  fulfilled,  the  defendants  then  promised 
the  plaintiff  that  the  said    company  would    become  and   be    assurers 
to  the  plaintiff  of  the  said  sum  of  £2,000,  upon  the  said  goods  in  the 
said  ship  in  the  policy  mentioned,  and  would  perform  and  fulfil  all  things 
therein  mentioned  on  their  part  and  behalf,  as  assurers  of  the  said  sum 
of  £2,000,  to  be  performed  and  fulfilled  :  that  the  said  goods,  on  the  1st 
of  September,  1841,  were  shipped  at  Bombay  on  the  said  voyage  ;  that 
the  plaintiff  was,  during  the  said  voyage,  to  wit,  on  the  same  day  and 
year  last  aforesaid,  interested  in  the  said  goods  in  the  said  policy  men- 
tioned, and  so  loaded  on  board  the  said  ship,  to  the  amount  insured: 
that  the  said  insurance  was  made  for  the  use  and  benefit,  and  on  the 
account  of  tlie  plaintiff  as  aforesaid  :  that   the    said   ship    afterwards 
sailed  on  the  said  voyage,  and  being  injured  by  tempestuous  weather, 
became  filled  with  water,  whereby  the   said   goods  were  wetted   and 
damaged,  and  rendered  of  no  use  or  value  to  the  plaintiff. 

Tlie  defendants  pleaded  eight  pleas.  .  .  .  The  eighth  plea,  after 
stating,  that  although  the  said  ship,  with  the  said  goods  on  board, 
departed  and  set  sail  upon  the  said  voyage  from  Bombay  to  London, 
and  although  the  said  goods  were  damaged  and  diminished  in  use 
and  value  on  the  said  voyage,  as  in  the  declaration  mentioned  ;  and 
although,  after  the  commencement  and  during  the  course  of  the  said 

^  The  reporter's  abstract  of  the  policy  has  not  been  repriutcil  in  full  ;  and,  in  re- 
printing the  statement,  the  arpnnicnts,  and  the  opinion,  passages  not  bearing  on  insur- 
able interest  liavc  been  omitted.  —  Ed. 


PAKT  II.,  SECT.  I.]  SUTHERLAND   V.    PKATT.  43 

vo3'age,  and  after  the  ship  had  sailed  on  the  said  vo3'age  for  divers,  to 
wit,  thirty-five  days,  and  for  divers,  to  wit,  1,000  miles,  the  phiintiff 
acquired  an  interest  in  the  said  goods,  and  then,  to  wit,  on  the  10th  da}' 
of  September,  a.  d.  1841,  became  and  was  interested  in  the  said 
goods,  to  wit,  to  the  value  and  amount  in  that  behalf  mentioned  : 
nevertlieless,  that  the  said  goods  were  so  damaged  and  diminished  in 
value,  as  in  the  declaration  mentioned,  before  the  plaintiff  acquired  or 
had  any  interest  therein,  to  wit,  upon  the  20th  day  of  August,  A.  d. 
1841.  —  Verification.  .   .   . 

To  the  eighth  plea  the  plaintiff  demurred  generally :  and  the  point 
marked  for  argument  on  his  part  was,  that  the  policy  being  effected 
"  lost  or  not  lost,"  the  underwriters  were  responsible  for  the  loss,  not- 
witlistanding  it  happened  before  the  plaintiff  acquired  an  interest  in  the 
goods. 

Joinders  in  demurrer. 

Martin,  in  support  of  the  demurrer.  The  onh"  question  of  substance 
is  that  which  arises  on  the  demurrer  to  the  eighth  plea,  viz.  whether  it 
is  legal  to  enter  into  such  a  contract  of  insurance  as  is  mentioned  in 
that  plea.  This  is  the  case  of  a  policy  on  goods,  lost  or  not^  lost^  at  and 
from  Bombay  to  London,  beginning  the  adventure  from  the  loading  of 
the  goods  on  board  the  ship.  The  defendants,  therefore,  expressly 
contract  to  be  responsible  to  the  plaintiff,  lost  or  not  lost,  from  the 
loading  of  the  goods  at  Bombay  till  their  arrival  and  safe  discharge  in 
London.  Tiie  plaintiff  is  admitted  by  the  plea  to  have  become  inter- 
ested in  the  goods  daring  the  voyage :  and  the  defendants  have 
engaged  to  become  responsible  to  him  for  any  loss  sustained  during  the 
entire  course  of  that  voyage.  By  the  express  terms  of  their  contract 
with  the  plaintiff,  therefore,  they  engage  to  lie  responsible  for  this  loss. 
Why  are  they  not  to  be  held  to  their  contract?  At  the  common  law,  a 
contract  of  insurance  without  any  interest  was  legal :  Craufurd  v. 
Hunter,  8  T.  R.  13,  confirmed  by  the  Court  of  Exchequer  Chamber  in 
Ireland,  in  British  Insurance  Co.  v.  Magee,  Cooke  &  Alcock,  182. 
Is  there,  then,  anything  in  the  Stat.  19  Geo.  II.  e.  37,  to  affect  this 
case?  That  statute  enacts,  "  that  no  assurance  shall  be  made  on  any 
British  ship,  or  on  an}*  goods,  merchandises, ^r  effects,  laden  on  board 
of  any  such  ship  or  ships,  interest  or  no  interest,  or  without  further 
proof  of  interest  than  the  policy,  or  by  way  of  gaming  or  wagering,  or 
without  benefit  of  salvage."  This  is  not  a  case  where  there  is  no  proof 
of  interest  but  the  policv,  nor  is  it  a  case  of  gaming  or  wagering.  The 
plaintiff  has  the  interest  of  a  pledgee,  and  to  protect  himself  against 
loss  as  such,  effects  the  insurance  :  there  is  nothing  illegal  in  that 
either  at  common  law  or  by  the  statute.  He  had  the  greatest  possible 
interest  in  tlie  arrival  of  the  goods  in  the  condition  in  which  he  sup- 
posed tliem  to  be  when  he  made  the  advance  upon  them,  so  as  to  secure 
him  from  loss.  Mead  v.  Davison,  3  Ad.  &  E.  303  ;  4  Nev.  &  M.  701, 
goes  further  than  the  present  case.  There  the  policy  was  in  fact  exe- 
cuted after  the  loss  of  the  ship  had  become  known  to  both  parties, 


44  SUTHEELAND  V.    PRATT.  [CHAP.  II. 

being  made  in  pursuance  of  a  contract  entered  into  before  the  loss,  and 
yet  it  was  held  valid  :  being  assimilated  to  the  case  of  a  conveyance  of 
land,  where  the  house  had  been  burnt  down  since  the  contract  was 
made :  Paine  v.  Meller,  6  Ves.  349.  [Parke,  B.  There  the  plaintiff 
was  interested  at  the  time  of  the  loss  :  here  he  is  not.]  But  the  defend- 
ants have  expressly  contracted  to  indemnify  him  against  that  loss: 
and  how  can  it  be  said  that  he  effected  the  policy  "  interest  or  no  inter-- 
est,"  when  he  had  the  strongest  possible  interest  that  the  goods  should 
reach  him  undamaged.  [Parke,  B.  Your  argument,  I  suppose, 
would  be  the  same  in  case  of  a  total  loss.]  There  might  be  a  difficulty 
there,  because  it  miglit  be  said  a  person  could  not  buy  a  thing  whicli 
was  lost :  but  here  it  is  expressly  stated  to  be  a  partial  loss,  and  the 
goods  exist  in  solido.  [Parke,  B.  It  is  not  a  wagering  policy, 
because  the  plaintiff  meant  to  insure  against  perils  of  the  sea  an  interest 
which  he  would  have  had  if  tlie  ship  had  arrived  safe.]  To  render  the 
contract  illegal,  it  must  be  in  the  nature  of  a  wager,  and  in  no  respect 
in  the  nature  of  an  indemnity  for  a  bona  fide  interest.  [Parke,  B. 
Stockdale  v.  Dunlop,  6  M.  &  W.  224,  may  be  cited  for  the  defendants : 
there,  however,  the  plaintiff  had  no  legal  interest  in  the  goods,  because 
there  was  only  a  verbal  contract.]  This  is  a  loss  expressly  protected 
by  the  terras  of  the  contract,  and  the  plaintiff  has  a  sufficient 
interest.   ... 

Greenwood^  contra.  The  object  of  this  declaration  obviously  is,  to 
defeat  the  answer  which  the  plaintiff  knows  the  defendants  would  be 
able  to  give  to  any  claim  by  Boggs,  Taylor,  &  Co.  The  mode  in 
which  the  interest  is  averred  on  this  record  is  a  mere  evasion  of  the 
ordinary  allegation  of  an  interest  during  the  risk  and  down  to  the  time 
of  the  loss.  Tlie  plaintiff  could  not  apply  the  ordinary  form  here,  be- 
cause the  loss  occurred  before  he  had  any  interest  in  the  goods;  he 
therefore  uses  an  ambiguous  expression,  which  may  mean  either  that  he 
was  interested  during  the  whole  of  tlie  voyage,  or  that  he  had  an  inter- 
est on  some  particular  day  in  the  course  of  the  voyage.  In  the  latter 
sense  the  allegation  is  true,  because  on  a  day  after  the  loss  he  was 
interested  in  the  goods,  in  the  state  in  which  they  then  were,  but  he 
has  therefore  suffered  no  I'oss.  The  argument  on  the  part  of  the  plain- 
tiff must  be  the  same  as  in  the  case  of  a  total  loss.  [Parke,  B.  But 
there  is  an  averment  that  the  goods  were  wetted  and  damaged,  and  so 
became  of  no  use  or  value  to  the  plaintiff ;  that  is,  that  he  received 
damage  by  means  of  the  loss.]  Anybody  might  say  that,  whosesoever 
the  goods  were  that  were  injured.  If  a  party  chooses  to  make  such  a 
contract  by  way  of  pledge,  he  may  provide  against  loss  by  getting  the 
owners  to  effect  an  insurance  upon  the  goods,  lost  or  not  lost,  and  they 
may  recover  upon  the  policy  as  trustees  for  the  pledgee.  Powles  v. 
Innes,  11  M.  &  W.  10;  Sparkes  /'.  Marshall,  2  Bing.  N.  C.  761  ;  3 
Scott,  172.  Independently  of  the  provisions  of  the  statute  against 
wagering  policies,  the  language  of  the  courts  has  always  been,  that  the 
plaintiff  must  be  interested  at  the  time  of  the  loss.     There  is  no  such 


PART  II.,  SECT.  I.]  SUTHERLAND   V.    PRATT.  45 

allegation  here,  nor  an}-  direct  averment  that  he  sustained  any  loss. 
[Parke,  B.  Surek  the  averment  I  have  referred  to  means,  that  b}'  the 
perils  of  the  seas  a  loss  has  been  ca  sed  to  the  plaintiff,  which  would 
not  be  true  if  he  bought  the  goods  in  their  damaged  state.]  That  is  a 
mere  superfluous  statement,  meaning  in  truth  no  more  than  the  words 
at  the  end  of  the  declaration,  '■  to  the  damage  of  the  plaintiff,"  &c.  If 
he  proves  the  contract,  the  interest,  and  the  damage,  the  right  of  action 
is  complete  ;  the  rest  is  mere  matter  of  evidence  as  to  the  amount  of 
the  damages.  The  allegation  referred  to  could  not  have  been  traversed, 
and  therefore  nothing  is  admitted  against  the  defendants  by  not  putting 
it  in  issue.  Could  the  plaintiff  have  recovered  in  case  of  a  total  loss  ? 
He  has  not  lost  anything.  It  is  like  the  case  of  the  sale  in  London  of 
a  particular  horse,  described  as  being  "  then  on  his  voyage  from  Edin- 
burgh," but  which  is  in  fact  dead  at  the  time  of  the  sale.  Surely  the 
purchaser  could  not  be  Ijound  in  such  a  case  to  pay  the  price,  nor,  if  he 
had  insured  the  horse,  could  have  recovered  on  the  policy  :  for  there  is 
an  implied  engagement  in  every  contract  for  the  sale  of  a  specific 
chattel,  that  the  thing  is  in  existence  ;  Barr  v.  Gibson,  3  M.  &  W. 
300  ;  and  a  contract  of  insurance  is  only  a  contract  of  indemnity. 
Rhiud  V.  "Wilkinson,  2  Taunt.  237,  was  the  first  case  in  which  it  was 
said  to  be  unnecessary  to  aver  an  interest  at  the  time  of  effecting  the 
policv  :  but  it  clearly  must  exist  during  the  risk.  But  when  goods  are 
lost  or  destroyed,  whether  in  whole  or  in  part,  no  risk  exists.  It  can 
make  no  difference  in  principle  whether  the  loss  is  total  or  partial.  If 
I  sell  this  year's  crop  of  hay  from  a  particular  field,  and  it  is  then  dis- 
covered that  the  stack  was  burnt  down  before  the  contract,  the  pur- 
chaser is  not  bound  to  pay  ;  but  if  it  has  been  damaged  by  weather  or 
otherwise,  still  retaining,  in  common  acceptation,  the  character  of  ha}*, 
then  he  must  take  it  as  he  bought  it,  and  pay  the  stipulated  price. 
Can  it  make  any  difference  whether  the  hay  was  in  a  stack  or  on  board 
ship,  or  whether  it  was  damaged  by  rain  or  sea  water?  If  the  purchase 
is  after  the  injury,  the  purchaser  takes  the  goods  as  he  finds  them  ;  and 
if  he  insures  them,  however  improvident  the  bargain  he  has  made,  in- 
asmuch as  his  goods  were  not  injured,  the  insurers  can  no  more  be 
liable  to  pa}'  for  the  partial  damage  than  the}'  would  in  case  of  a  total 
loss.  [Par5:e,  B.  You  say  that  where  goods  are  injured  to  a  tenth 
part  of  their  value  it  is  the  same  thing  as  if  that  tenth  did  not  exist.] 
Yes :  as  to  that  part  there  is  an  entire  loss  before  the  plaintiff  has  any 
interest  in  it.  In  case  of  the  insurance  of  a  house,  it  has  always  been 
necessary  to  show  that  the  plaintiff  had  a  property  in  it  at  the  time  of 
the  fire  :  Lynch  v.  Dalzell,  3  Bro.  P.  C.  497.  Lord  King  there  says, 
"  The  party  insuring  must  have  a  property  at  tlie  time  of  the  loss,  or 
he  can  sustain  no  loss,  and  consequently  can  be  entitled  to  no  satis- 
faction." So,  in  The  Sadlers'  Company  u.  Badcock,  2  Atk.  554, 
Lord  Ilardwicke  says,  "  I  ara  of  opinion  it  is  necessary  the  party 
insured  should  have  an  interest  or  property  at  the  time  of  insuring,  and 
at  tlie  time  the  fire  happens."     And  he  observes,  "  These  insurances 


46  SUTHERLAND  V.    PRATT.  [CHAP.  II. 

from  fire  have  been  introduced  in  later  times,  and  therefore  differ  from 
insurance  of  ships,  because  there  interest  or  no  interest  is  almost  con- 
stantly inserted,  and  if  not  inserted  you  cannot  recover,  unless  you 
prove  a  property."     That  case  occurred  before  the  Stat.  19  Geo.  II. 
c.  36,  since  which  statute  the  distinction  taken  by  Lord  Hardwicke  no 
longer  exists.     There  is  no  case  in  which  a  party  has  been  allowed  to 
recover  who  had  not  an  interest  in  the  property  at  the  time  of  the  loss. 
Mead  v.  Davison  is  distinguishable  :  there  the  party  had  an  interest  at 
the  time  of  the  loss,  under  the  antecedent  contract.     In  Grant  v.  Par- 
kinson, cited  3  Bos.  &  P.  85,  the  insurance  was  on  £1,000,  "  being 
profits  expected  to  arise  from  the  cargo  of  the  ship  Providence  in  the 
event  of  her  safe  arrival  at  Quebec,"  and  there  was  an  allegation  in  the 
declaration  that  the  plaintiff,  "  until  and  at  the  time  of  the  misfortune 
hereinafter  mentioned,  was  interested  in  the  profits  expected  to  arise 
from  the  said  goods,  &c.  to  a  large  value,  &c."    In  Abitbol  v.  Bristow, 
6  Taunt.  464,  an  allegation  of  interest  at  the  time  of  the  loss  is  assumed 
by  Gibbs,  C.  J.,  to  be  a  necessary  allegation.     All  the  precedents  con- 
tain such  an  allegation  :  see  Cliitty  on  Pleading,  Vol.  2,  pp.  105,  107. 
The  ordinary  plea,  that  tlie  plaintiff  was  not  interested  in  the  goods  at 
the  time  of  the  loss,  would  be  altogether  nugatory  if  the  plaintiff  be 
right,  and  the  issue  upon  it  would  be  immaterial.    Besides,  the  contract 
of  the  insurer  is  merely  to  secure  the  assured  against   any  loss   the 
goods  may  sustain  by  perils  of  the  seas :  but  here  the  plaintiff  is  no 
loser  thereby,  but  by  his  having  entered  into  an  improvident  contract 
with  a  third  party.     Surely  it  is  too  metaphysical  and  unnatural  a  con- 
struction to  put  upon  the  language  of  the  parties  to  this  policy,  that 
because  the  plaintiff  eventually  suffers  from  having  been  a  party  to  a 
contract,  the  subject-matter  of  which  had  previously  been  affected  by 
the  perils  of  tlie  sea  without  his  knowledge,  his  goods  have  been  lost 
or  damaged  by  those  perils.   .   .   . 

Martin,  in  reply.  .  .  .  The  cases  cited  from  equity  have  no  appli- 
cation :  the  words  "  lost  or  not  lost "  were  not  contained  in  the  policies, 
and  the  interest  had  been  transferred  before  the  loss.  The  question 
here  merely  is,  did  the  defendants  contract  to  indemnify  the  plaintiff 
against  a  peril  wliich  in  fact  had  already  occurred,  and  was  it  lawful  to 
do  so?  Now  the  terms  of  the  contract  are,  that  the  plaintiff  shall  be 
indemnified  against  any  loss  the  goods  may  sustain  in  the  specified 
voyage.  And  the  averment  of  interest  is  made  necessary  only  by  the 
st.'itute,  with  reference  to  which  this  averment  would  be  true  :  the  plain- 
tiff was  interested  in  every  particle  of  goods  which  left  Bombay  by  this 
ship.  It  is  enough  to  show  an  interest  sufficient  to  satisfy  the  statute, 
whenever  existing.  ^w''-  «f^^-  *'«<^^- 

Parke,  B.^  .  .  .  We  are  of  opinion  that  the  eighth  plea  contains  no 
answer  to  the  declaration.    The  plea  admits  expressly  that  the  plaintiff 

1  The  restatement  of  the  case  has  been  omitted ;  and  so  has  bo  much  of  the  opinion 
as  explains  why  the  second  and  third  pleas  were  bad  in  form.  —  Ed. 


PART  11. ,  SECT.  I.]     SUTHERLAND  V.   PRATT.  47 

had,  during  the  voyage,  an  interest  in  the  goods  on  board,  to  the 
amount  insured  thereon,  and  it  admits  impHedly  (for  it  does  not  deny 
that  allegation),  that  the  insurance  was  made  for  the  use  and  benefit 
and  on  the  account  of  the  plaintiff,  that  is,  as  a  contract  of  indemnit}' 
to  the  plaintiff  against  an}'  loss  in  respect  of  that  interest,  b}'  any  of 
the  perils  insured  against.  This  being  admitted,  the  simple  question 
is,  whether  it  is  any  answer  to  an  action  on  a  policy  on  goods  (lost  or 
9wt  lost),  that  the  interest  in  them  was  not  acquired  until  after  the  loss. 
We  are  of  opinion  that  it  is  not.  Such  a  policy  is  clearly  a  contract  of 
indemnit}'  against  all  jMst,  as  well  as  aW  future  losses,  sustained  by  the 
assured,  in  respect  to  the  interest  insured.  It  operates  just  in  the  same 
wa}'  as  if  the  plaintiff  having  purchased  goods  at  sea,  the  defendant,  for 
a  premium,  had  agreed,  that  if  the  goods  had  at  the  time  of  the  pur- 
chase sustained  any  damage  by  perils  of  the  sea,  he  would  make  it 
good.     The  plea,  therefore,  is  bad  in  substance. 

It  was  argued  by  Mv.  Greemoood,  that  upon  the  pleadings  it  might 
be  assumed  that  the  plaintiff  bought  the  goods  in  their  damaged  state, 
and  consequently'  was  not  entitled  to  any  indemnit}'  for  that  damage. 
But  it  does  not  appear  that  he  purchased  them  as  damaged  goods.  If 
that  had  been  true,  he  could  not  have  recovered  on  this  polic}',  on 
a  plea  denying  the  loss  by  the  plaintiff  by  perils  of  the  seas ;  and 
that  would  have  been  the  proper  form  of  plea  to  have  raised  this 
question.  .   .  . 

Leave  to  the  defendant  to  amend,  on  the  usual  terms  :  otherwise 

Judgment  for  the  plaintiff ^ 

1  In  Ehind  v.  Wilkinson,  2  Taunt.  237  (1810),  the  declaration  alleged  that  at  the 
respective  times  of  effecting  the  policy,  and  of  the  loss,  the  plaintiff  was  interested 
in  the  sliip  and  freight  respectively.  There  was  a  motion  for  a  nonsuit  upon  tho 
ground,  among  others,  that  the  interest  did  not  commence  until  long  after  the  date 
of  the  policy.  Although  the  rule  was  made  absolute  upon  one  of  the  other  grounds, 
"the  court  held,  as  to  the  time  of  the  commencement  of  the  plaintiff's  interest,  that 
if  the  declaration  had  averred  that  he  was  interested  at  the  time  of  the  ship's  sailing, 
or  that  the  policy  was  made  on  a  certain  day,  and  that  afterwards  on  a  subsequent 
day  the  plaintiff  acquired  an  interest,  it  would  have  sufficed,  and  if  that  would  have 
been  good,  the  allegation  of  interest  at  the  time  of  effecting  the  policy  was  an  imma- 
terial allegation,  and  needed  not  to  be  proved.  It  was  immaterial  to  aver  interest  at 
any  day  previous  to  the  commencement  of  the  risk.  It  is  every  day's  practice  to  in- 
sure goods  on  a  return  voyage,  long  before  the  goods  are  bought." 

On  the  necessity  of  averring  interest,  see  Cousins  v.  Nantes,  3  Taunt.  513  (Exch. 
1811);  Cohen  v.  Hannam,  5  Taunt.  101  (1813).  And  see  these  fire  insurance  cases: 
Fowler  v.  N.  Y.  Indemnity  Ins.  Co.,  26  N.  Y.  422  (1863) ;  People's  Fire  Ins.  Co.  v.  Heart, 
24  Ohio  St.  331  (1873) ;  Quarrier  v.  Peabody  Ins.  Co.,  10  W.  Va.  507,  521-524  (1877) ; 
Home  Ins.  Co.  i\  Duke,  75  Ind.  535  (1881) ;  Commercial  Fire  Ins.  Co.  v.  Capital  City 
Ins.  Co.,  81  Ala.  320  (1886)  —Ed. 


48  PUTNAM   V.   MEBCANTILE   MARINE   INS.    CO.         [CHAP.  II. 


SAMUEL  R.   PUTNAM  v.    THE    MERCANTILE  MARINE 
INSURANCE   CO. 

Supreme  Judicial  Court  of  Massachusetts,  1843.     5  Met.  38G. 

This  was  an  action  of  assumpsit  on  a  policj'  of  insurance,  made  by 
the  defendants  on  March  11,  1835,  by  which  the  plaintiff,  "  for  Alfred 
Barrow,  Putnam,  &  Co.,  payable  to  S.  R.  Putnam,  In  case  of  loss,"  insured 
"$1,500  on  commissions  on  the  cargo  of  the  brig  'Progress,'  at  and 
from  St.  Helena  to  Antwerp."  *  .  .  -  The  commissions  were  valued  at 
the  sum  nisured.  «  e 

The  declaration  alleged  that  Alfred  Barrow  of  Antwerp  and  Samuel 
R.  Putnam  of  Boston  were  jointly  interested  in  the  commissions  afore- 
said ;  tliat  the  policy  was  made  to  and  for  the  use  and  account  of  said 
firm,  and  that  the  plaintiff  was  their  authorized  agent  to  effect  said 
insurance  ;  that  the  vessel  sailed  from  St.  Helena  for  Antwerp  with  a 
cargo,  and  was  lost,  about  March  10,  1835,  by  the  perils  of  the  sea; 
and  that  thus  the  said  commissions  were  wholly  lost.  .   .  . 

By  consent  a  verdict  was  taken  for  the  plaintiff,  subject  to  the 
opinion  of  the  whole  court,  who  were  desired  to  draw  such  inferences 
,  .   .  as  a  jury  would  be  warranted  in  drawing. 

C.  G.  Loring  and  Croicninshield,  for  the  plaintiff. 
W.  D.  Sohier,  for  the  defendants. 

Hubbard,  J.  Two  questions  are  presented  for  the  consideration  of 
the  court  in  this  case  :  The  one,  whether  the  plaintiff  had  an  insurable 
interest  in  the  subject-matter  of  the  insurance  ;  and  the  other,  if  the 
plaintiff  had  such  insurable  interest,  whether  a  loss  has  happened  for 
which  the  defendants  are  answerable  under  their  contract. 

In  the  progress  of  the  law  of  insurance,  many  cases  have  arisen 
for  legal  investigation,  which  exhibit  the  varieties  of  interest  that 
grow  out  of  the  complicated  business  of  commercial  communities. 
Originally,  the  owners  of  the  vessel  and  cargo,  and  the  designated 
voyage,  were  alone  the  subjects  of  the  contract ;  but,  as  commerce  has 
been°extended,  the  rights  of  persons  other  than  those  of  the  specific 
owners  of  the  property  have  become  involved  in  the  results  of  the 
voyages.  In  consequence  of  it,  the  law  of  insurance  has  been  most 
reasonably  extended  to  embrace  within  its  provisions  cases  where  the 
parties,  having  no  ownership  of  the  property,  have  a  lien  upon  it,  or 
such  an  interest  connected  with  its  safety  and  its  situation  as  will  cause 
them  to  sustain  a  direct  loss  from  its  destruction,  or  from  its  not 
reaching  its  proper  place  of  destination.  Such  rights  have  received 
protection,  and  the  expectation  of  profits,  the  loan  upon  mortgage  or 
respondentia,  the  advances  of  a  consignee,  an  agent  or  factor,  and  the 

i  The  reporter's  statement  has  been  abridged ;  and,  in  reprinting  the  opinion,  pas- 
sages not  bearing  on  insurable  interest  have  been  omitted.  —  Ed. 


PART  II.,  SECT.  I.]       PUT^'AM    V.    MERCANTILE    MARINE    INS.    CO.  49 

comnussions  of  a  master  or  supercargo,  are  all  now  the  well  recognized 
subjects  of  insurance. 

The  contract  before  us  is  that  of  an  insurance  on  the  expected  com- 
missions of  a  merchant  upon  goods  on  shipboard,  in  the  progress  of  the 
vovao-e,  and  which  are  consigned  to  him  for  sale,  but  upon  which  he  has 
made  no  advances,  nor  accepted  bills  on  the  failh  of  the  consignment. 
This  presents  a  case  which  has  not  yet  been  decided,  and  the  question 
is,  whether  it  is  embraced  within  the  principles  by  which  contracts  for 
the  insuring  of  profits,  and  of  expected  freight,  and  commissions  of 
supercargoes  and  masters,  have  been  held  valid  ;  or  whether  it  is  to  be 
classed  with  wager  policies,  on  the  ground  tliat  it  is  a  case  of  mere 
expectation,  not  coupled  with  an  interest. 

The  facts  spread  before  us  are  these  :  The  plaintiff  is  a  partner  in  a 
mercantile  house  in  Antwerp,  which  receives  the  goods  of  foreign  mer- 
chants to  sell  on  commission.  The  owners  of  the  brig  "  Progress  "  had 
despatched  her  to  India  for  a  cargo,  to  be  carried  to  and  sold  in 
Europe  ;  and  if  a  certain  cargo  was  procured  i't  was  to  be  carried  to 
Antwerp.  Such  a  cargo  was  obtained,  and  the  vessel  sailed  for  that 
port.  While  at  Manila  the  supercargo  wrote  to  his  owners.^  On  re- 
ceiving the  letters,  tliey  wrote,  it  would  appear  (so  far  as  we  can  gather 
from  the  correspondence,  the  whole  not  being  produced  on  the  trial),  to 
the  house  in  Antwerp,  consigning  the  cargo  to  them.  They  also  wrote 
to  the  master  and  supercargo,-  informing  them  of  the  consignment,  and 
directing  them  to  their  consignees  for  instructions.  They  also  gave  dis- 
cretionary orders  to  the  consignees  to  send  the  vessel  to  Holland,  if  the 
market  there  was  preferable  to  that  at  Antwerp.  With  the  knowledge  |  ij^ 
of  these  facts,  and  that  the  vessel  had  been  heard  from  at  St.  Helena,  1  \ 
Putnam,  the  partner  in  Boston,  procured  insurance  on  the  commissions 
the  house  would  receive  if  the  vessel  should  arrive,  as  on  a  voyage  from 
St.  Helena  to  Antwerp. 

There  is,  then,  a  direct  consignment  of  the  cargo  to  the  plaintiff's 
house  ;  the  commissions  will  be  earned  if  the  vessel  arrives  and  the  cargo 
is  sold  there  ;  and  if  she  is  lost  on  her  way,  or  the  voyage  to  Antwerp 
is  defeated  by  one  of  the  perils  insured  against,  the  plaintiff  will  sus- 
tain a  certain  loss. 

The  case,  in  its  essential  features,  is  like  that  of  an  insurance  on 
profits,  depending  on  the  arrival  of  the  vessel  at  a  particular  port,  and 
founded  on  like  expectation.  It  partakes  not  of  the  nature  of  wager  ; 
for,  in  the  event  of  the  wager,  independent  of  the  policy,  the  party  insured 
,  has  nothing  to  lose.  Here,  if  there  were  no  insurance,  the  party  would 
lose  his  commissions,  if  there  should  be  a  loss  of  the  cargo. 

The  subject  of  an  interest  like  the  present  is  treated  of  in  the  cele- 

1  This  letter  contained  the  invoice  and  bills  of  lading.  The  bills  of  lading  stated 
that  the  cargo  was  shipped  for  account  of  the  owners  (naming  them),  and  bound  fur 
Antwerp,  to  be  delivered  to  the  master  and  the  supercargo  (naming  them)  or  theii 
assigns.  — Ed. 

2  This  letter  was  received  after  the  loss.  —  Ed. 

4 


)/ 


50  PUTNAM   V.   MERCANTILE   MARINE    INS.    CO.  [CHAP.  II. 

brated  case  of  Lucena  v.  Craufiird,  2  New  Rep.  292.  In  the  opinion, 
in  whicli  seven  of  the  judges  concuiTcd,  it  was  said  tliat  "  a  vested  in- 
terest is  not  necessary  to  give  the  right  of  insuring.  The  commissioners 
had  a  contingent  interest ;  and  supposing  the  intentions  of  the  crown  to 
remain  unaltered,  nothing  stood  between  them  and  the  vesting  of  that 
contingent  interest  but  the  perils  insured  against.  It  is  stated  that 
they  cannot  be  entitled  to  an  indemnity  ;  for  they  had  nothing  to  lose. 
But  in  fact  they  lost,  by  the  perils  of  the  sea,  what  but  for  those  perils 
would  have  vested  in  them  absolutely.  At  the  time  both  of  the  insur- 
ance and  the  loss,  their  title,  like  that  of  a  consignee,  was  inchoate  ; 
occupancy  was  necessary  to  perfect  it.  It  is  true  that  their  interest  is 
revocable.  But  so  is  that  of  a  consignee.  The  owner  may  at  any  time 
appoint  another  consignee  or  agent ;  he  may  change  his  intention  in  the 
course  of  the  voyage.  It  is  very  common  to  direct  the  cajitain  to  touch 
at  particular  ports  for  new  instructions.  The  powers  of  a  consignee, 
therefore,  are  not  more  permanent  than  those  of  the  commissioners." 
And  in  page  301,  Mr.  Justice  Lawrence  observed  that  "insurance 
is  a  contract,  by  which  the  one  party,  in  consideration  of  a  price  paid 
to  him  adequate  to  the  risk,  becomes  security  to  the  other,  that  he  shall 
not  suffer  loss,  damage  or  prejudice,  by  the  happening  of  the  perils 
specified,  to  certain  things  which  may  be  exposed  to  them.  If  this  be 
the  general  nature  of  the  contract  of  insurance,  it  follows  that  it  is  ap- 
plicable to  protect  men  against  uncertain  events  which  may  in  any 
wise  be  of  disadvantage  to  them  ;  not  only  those  persons  to  whom  posi- 
tive loss  may  arise  by  such  events  occasioning  the  deprivation  of  that 
which  they  may  possess,  but  those  also  who  in  consequence  of  such 
events  may  have  intercepted  from  them  the  advantage  or  profit  which 
but  for  such  events  they  would  acquire  according  to  the  ordinary  and 
probable  course  of  things." 

This  reasorning  is  sound  and  sagacious.  It  introduces  no  novel  prin- 
ciples into  the  law  ;  it  advances  no  position  hazardous  to  regular  trade, 
though  its  tendency  is  to  enlarge  the  legitimate  subjects  of  insurance. 
We  cannot  but  be  struck  with  the  pointed  bearing  which  the  foregoing 
remarks  have  on  the  case  at  bar,  and  we  feel  justified  in  making  a  prac- 
tical application  of  them.  See  also  the  cases  of  Flint  v.  Le  Mesurier, 
Park  on  Ins.  403  ;  liarclay  v.  Cousins,  2  East,  544  ;  Law  v.  Goddard, 
12  Mass.  112  ;   De  Forest  v.  Fulton  Fire  Ins.  Co.,  1  Hall,  84. 

There  is  also  a  case  in  our  own  books  where  the  right  of  the  con- 
signee to  effect  insurance  on  liis  commissions  is  mentioned  without  ex- 
pressing any  doubt  in  regard  to  it.  French  v.  Hope  Ins.  Co.,  16  Pick. 
397.  This  was  an  insurance  on  profits  on  mercliandise.  It  was  held 
that  the  plaintiff  had  a  substantial  interest  at  risk  ;  for,  if  the  ship 
had  arrived  safely,  he  woiUd  have  been  entitled  to  profits,  and  they 
depended  on  her  safe  arrival.  The  learned  judge  who  delivered  this 
opinion  says,  "  The  objection  principally  relied  upon  is  that  the  plaintiff 
was  not  the  owner  of  the  merchandise  ;  tliat  he  could  not  have  insured 
the  goods,  and  a  fortiori  not  the  profits  on  the  goods  which  did  not 


PART  II.,  SECT.  I.]      BRIGGS  V.  MERCHANT  TRADERS*  ASSOCIATION.      51 

belong  to  him.  The  rule,  if  received  to  the  extent  laid  down,  would 
prevent  the  insurance  of  commissions  on  goods  consigned  to  the  plain- 
titr.  If,  in  the  case  of  a  consignee,  the  goods  should  arrive  safely,  he 
would  be  entitled  to  commissions  on  the  sale.  So,  in  the  case  at  bar, 
if  the  goods  had  arrived,  the  plaintiff  would  have  realized  a  profit.  The 
cases  seem  to  us  to  be  perfectly  analogous.  In  each  the  party  claiming 
profits  or  commissions  has  either  to  run  the  risk  and  bear  the  loss  him- 
self, or  to  get  insurance  against  marine  risk.  In  each  case  he  has  a 
real  interest  to  protect." 

The  case  at  bar,  indeed,  stands  on  the  very  borders  of  the  line  — 
which  may  be  deemed  almost  shadowy  —  where  interest  ends  and  ex- 
pectation  begins;  but  the  line,  however  thin,  must  be  drawn  somewhere, 
or  the  difference  between  wager  policies  and  tliose  coupled  witli  an  in- 
terest must  cease.  And  upon  consideration  we  are  of  opinion  that  the 
regular  consignee  of  goods  has  an  interest  in  liis  expected  commissions 
equivalent  to"  that  of  expected  profits,  and  that  such  commissions  are 
the  lawful  subject  of  insurance.  Judgment  on  the  verdict} 


"  BRIGGS   V.   THE  MERCHANT  TRADERS'   SHIP  LOAN 
AND   INSURANCE  ASSOCIATION. 

Queen's  Bench,  1849.     13  Q.  B.  1G7. 

Covenant.  The  declaration  averred  that  the  plaintiff  .was  owner  of 
the  ship,"  Joseph  Alexander,"  lying  at  Yarmouth,  on  which  were  then 
goods  previously  loaded,  belonging  to  William  Dawson  and  John 
Woods;  and  that  tliere  was  due  to  the  plaintiff,  as  such  owner  of  the 
ship,  by  tlie  owners  of  the  goods  in  respect  thereof  as  such  owners, 
£700,  for  certain  average  expenses,  being  the  average  expenses  men- 
tioned in  the  policy  thereinafter  mentioned,  that  is  to  say,  for  contri- 
bution to  certain  salvage  of  the  ship  and  of  the  goods  whilst  the  same 
were  on  board  the  ship,  paid  by  the  plaintiff  to  the  salvors  thereof:  the 
declaration  then  averred  that  plaintiff,  at  the  time  of  making  the  policy, 
up  to  the  time  of  the  loss,  had  a  lien  on  the  goods  for  the  amount  of 
the  average  expenses  and  contribution,  and  during  all  that  time  was 
interested  in  the  goods,  to  wit,  to  the  amount  insured.  The  declara- 
tion then  set  out  a  policy  of  insurance  under  the  seal  of  the  defendants, 

1  In  Seagrave  v.  Union  M.  lus.  Co.,  L.  R.  1  C.  P.  305,  320  (1866),  Willes,  J.,  for 
the  court,  said  :  "  We  are  not  aware  that  it  has  ever  been  hekl  that  a  mere  agent,  with- 
out possession  or  lien,  has  an  insurable  interest  to  the  extent  of  the  value  of  the  goods, 
simply  because  his  name  appears  in  the  bill  of  lading  instead  of  tliat  of  his  principal ; 
and  tlie  general  rule  is  clear,  that,  to  constitute  interest  insurable  against  a  peril,  it 
must  be  an  interest  such  that  the  peril  would  by  its  proximate  effect  cause  damage  to 
tlie  assured."  —  Ed. 


52 


BEIGGS   V.   MERCHANT   TRADERS'   ASSOCIATION.       [CIIAP.  11. 


in  nearly  the  ordinary  form,  in  wliicla  tlie  policy  was  declared  to  be  on 
average  expenses  per  "Josepli  Alexander."  Tlie  count  then  averred 
a  total  loss  of  the  ship  and  goods ;  and  that  the  plaintiff  thereby  lost 
his  lien  on  the  goods,  and  the  sum  so  due  for  average  expenses  and 
contribution.     Breach,  non-payment. 

Pleas.  1.  Mn  est  factum.  2.  That  there  was  not  due  or  owing,  in 
respect  of  the  goods,  to  the  plaintiff,  for  average  expenses,  the  said  sum 
or  any  part  thereof,  modo  et  forma.  3.  That  the  plaintiff  was  not  in- 
terested in  the  goods  or  any  part  thereof,  modo  et  forma.  4.  A  trav- 
erse of  the  plaintiff  having  lost  the  sum,  7nodo  et  forma,  on  which  issues 
were  joined.  There  were  other  issues,  of  which  the  affirmative  lay  on 
the  defendant,  and  on  which  notliiiig  turned. 

On  the  trial,  before  Pollock,  C.  B.,  at  the  Norfolk  Spring  assizes, 
1848,  it  was  proved  that,  before  the  policy  was  made,  the  "Joseph 
Alexander"  had  sailed,  with  the  goods  mentioned  in  the  declaration  on 
board,  bound  to  Grimsby  and  Goole  ;  she  met  witli  a  collision,  and 
was  abandoned  by  her  crew;  slie  was  fonnd  derelicri;  and  the  ship 
njv]r^nvcrn_wpvgj^^  Safe  luto  Yarmoulh.     The  plaintiff,  wliQ  >vas 

owncr_cf_lh°_v£i55-^^  nini.npri  hpr ;  and  the  Court  of  Admirnlly  or- 
dered  the  ship  and  cargo_to  be^iven  up  to  him  on  his  entering  into  a 
i:i^^^njzance^E^iS£nnt^ 

~tEe~pblicv,  intending  thereby  to  insure  the  sjimJicjiilghyia^^IEQlpay 
~~         "  -   ■   "    '   -'-  '"the 


iTmTeFThe  recognizance.     The  ship  and  cargo  were  totally  los_ 

perils  of  the  sea,  on  the^voyage  from   larmouthto  Goole  ;  and__the 

pTTmTtnnrnneinnTsl^ecog^^ 


TlIeT:;ordXliTen^ron  expressed  an  opinion  that  tlie  plaintiff  had  an 
insurable  interest,  as  having  a  lien  :  and  the  plaintiff  had  a  verdict. 

Prender(jast  obtained  a  rule  rnsi  for  a  new  trial  on  the  ground  of 
misdirection,  or  to  arrest  the  judgment. 

Byles,  Scrjt,  Palmer,  and  Unthank  showed  cause. 

Premler<jast  and  O'Malley,  contra. 

Cur.  adv.  vult. 

Lord  Denmax,  C.  J.,  delivered  the  judgment  of  the  court. 

Tlie  question  in  this  case  was,  whether  the  plaintiff  had  an  insurable 
interest  in  the  goods  on  board  the  "Joseph  Alexander."  It  was  con- 
tended for  the  plaintiff  that  the  interest  arose  from  average  expenses 
iji  respect  of  the  goods,  and  that  the  plaintiff  had  a  lien  upon  them  in 
respect  of  those  expenses.  The  goods  were  shipped,  and  the  vessel 
sailed  upon  a  voyage  from  Yannoulh  to  Grimsby  and  Goole.  Shortly 
after  she  sailed,' slie  was  struck  by  another  vessel,  and  abandoned  by 
her  crew  and  brought  back  to  Yarmouth  by  some  persons  who  claimed 
and  received  salvage  for  bringing  her  back,  which  was  paid  by  the 
plaintiff,  the  owner  of  the  "Josepli  Alexander;"  and  the  insurance 
was  in  respect  of  the  average  pro[)orlion  of  the  salvage  expenses  pay- 
able, as  the  plaintiff  contended,  by  the  owners  of  the  goods. 

The  first  question  was,  whetlior  the  owners  of  the  goods  were  bound 
to  contribute  to  the  salvage  at  all.     By  Stat.  9  &  10  Vict.  c.  9^>.  s.  19, 


PAin  II.,  SECT.  I.]       BUIGGS  V.  MERCHANT  TRADERS*  ASSOCIATION.       53 

the  salvors  of  a  vessel  with  goods  ou  board  are  entitled  to  reasonable 
compensation  for  their  trouble  ;  and  the  vessel  and  goods  are  to  remain 
in  the  custody  of  the  officer  of  the  Customs  until  the  salvage  is  paid  or 
security  given.  The  plaintiff  was  therefore  obliged  to  pay  or  secure  the 
salvage  before  he  could  regain  possession  of  the  ship  which  had  the 
floods  on  board.  There  was  no  decree  for  salvage  ;  but  tlie  amount 
appears  to  have  been  ascertained  by  agreement. 

It  was  said  by  Lord  EUenborough  in  Cox  v.  IMay,  4  M.  &  S.  159, 
that  general  average  was  analogous  to  the  case  of  salvage,  and  tliat  the 
persons  to  contribute  to  the  salvage  are  those  who  would  have  borne 
the  loss  had  there  been  no  rescue,  and  who  reap  the  benefit  of  that 
rescue.  In  the  present  case  the  owners  of  the  goods,  who  would  have 
lost  them  with  the  ship  but  for  the  salvage,  have  had  the  benefit  of  sav- 
ing their  goods,  and  would,  according  to  the  judgment  of  Lord  Ellen- 
borough,  be  bound  to  contribute,  as  in  the  case  of  general  average. 
This  view  of  the  case  is  supported  by  several  authorities  cited  from 
foreign  jurists  in  Mr.  Arnould's  "  Treatise  on  Marine  Insurance,"  vol.  ii. 
p.  915. 

Assuming,  then,  that  the  owners  of  the  goods  were  bound  to  con- 
tribute to  the  salvage  as  in  tlie  case  of  general  average,  the  next  ques- 
tion is,  whether  the  plaint! fi\  who  had  paid  the  whole  amount  of  the 
salvage,  had  a  lien  upon  the  goods  for  the  amount  of  the  contribution. 
Whatever  doubts  may  have  existed  formerly,  it  seems  now  to  be  settled 
that  the  owner  of  the  ship  has  a  lien  upon  the  cargo  for  general  average.J^ 
This  was  the  opinion  of  Lord  Tenterden  intimated  in  Abbott  on  Ship- 
ping, 507,  8th  ed.,  and  expressed  in  Scaife  v.  Tobin,  3  B.  &  Ad.  528, 
and  is  in  accordance  with  the  decisions  in  the  Courts  of  the  United 
States,  which  are  mentioned  in  Mr.  Arnould's  "  Treatise  on  Insurance," 
vol.  ii.  pp.  949,  950.  But,  as  the  contribution  to  salvage  is  in  the  na- 
ture of  general  average,  it  is  subject  to  the  same  incidents,  and  is  in 
effect  the  same  ;  and  we  therefore  think  that  the  plaintifl?*,  as  owner  of 
the  ship  who  bad  paid  the  whole  of  the  salvage^juTJ  ^^^^  ^  claim  against 
the  owner  of  the  goods  for  contributiojr^vas  entitled  to  a  lien  on  the 
goods,  and  consequently  had  an  insural>le  interest  in  respect  of  such 
lien. 

The  rule,  therefore,  will  be  discharged.  Eule  discharged.^ 

1  Compare  Buchanan  r.  Ocean  Ins.  Co.,  6  Cow.  318  (1826). 

In  Insurance  Co.  v.  Baring,  20  Wall.  1.59,  1G2,  16.3  (187.3),  Clifford,  J.,  for  tlic 
court,  said  :  "  Attempt  is  made  in  argument  to  maintain  that  the  plaintiffs  had  no  in- 
surable interest  in  the  hark  unless  it  he  assumed  tliat  it  was  created  by  a  bottomry 
bond,  but  the  court  is  entirely  of  a  different  opinion,  as  it  is  alleged  in  the  declaration 
that  the  advances  were  made  to  equip  the  vessel  and  to  procure  for  her  a  cai'go  in  the 
voyage  from  a  foreign  port  to  the  port  of  destination.  Founded  as  the  declaration  is 
upon  the  policy  of  insurance  it  must  be  construed  in  connection  with  tfie  policy.  By 
the  terms  of  the  policy  the  insurance  is  upon  the  bark,  her  tackle,  and  apparel,  which 
is  the  proper  language  to  be  employed  in  a  case  where  the  insured  had  an  interest  in 
the  vessel. 

"  Advances  made  on  the  credit  of  a  ship  for  necessary  repairs  cr  supplies  in  a  for 


54  FOLSOM    V.    merchants'   MUT.    mar.    ins.    CO.         [chap.   II 


FOLSOM  ET  AL.  V.  MERCHANTS'  MUTUAL  MARINE 
INS.  CO. 

Supreme  Judicial  Court  of  Maine,  1854.     38  Me.  414. 

On  exceptions  from  JVisi  Prius,  Appleton,  J.,  presiding. 

Assumpsit  on  a  policy  of  insurance  made  to  the  plaintiffs  on  May  17, 
1852,  "  on  account  of  whom  it  may  concern,  loss  payable  to  them,"  on 
the  outfits  of  schooner  "  Pilot,"  for  a  fishing  voyage  to  the  "  Banks," 
and  back  to  port  of  discharge  in  the  U.  S. 

The  writ  contained  several  counts,  one  of  which  averred  that  the 
insurance  would  be  collected  by  plaintiffs,  as  agents  and  merchants,  for 
owners  of  said  "  Pilot,"  to  whom  the  same  may  in  law  belong,  suliject 
to  the  plaintiffs'  lien  thereon.^  .   .   . 

When  the  plaintiffs  had  introduced  all  their  evidence,  a  nonsuit  was 
ordered  on  motion  of  defendants,  because  the  suit  could  not  be  main- 
tained in  the  name  of  the  plaintiffs,  and  because  of  a  deviation  in  the 
vo\age. 

The  plaintiffs  excepted. 

J.  A.  Peters,  in  support  of  the  exceptions. 

Hoice  and  Bartlett,  contra. 

Tenney,  J.  Two  material  questions  are  presented  by  the  exceptions. 
First,  had  the  plaintiffs  any  insurable  interest  in  the  property  described 
b}'  the  polic}'  at  the  time  of  its  execution,  and  at  the  time  of  the  loss  of 
the  propert}'?  Second,  had  the  plaintiffs  so  conducted  in  reference  to 
the  property  that  they  were  guilty  of  a  deviation  in  the  voyage? 

1.  The  attempted  insurance  was  upon  the  outfits  of  the  fishing 
schooner  "  Pilot,"  bound  to  the  Banks.  This  does  not  embrace  goods 
as  a  part  of  the  cargo,  but  in  a  fishing  vo3'age  consists  principally  in 
the  api)aratus  and  instruments  necessar}'  for  the  taking  of  fish,  etc. , 
and  the  disposing  of  tiiem,  when  taken,  in  such  manner  as  to  bring 
home  the  produce  of  the  adventure.  Hill  v.  Patten,  8  J]ast,  373.  In 
cod  fisliing  voyages  as  they  are  conducted  in  the  United  States,  the 
outfits  consist  of  the  great  and  the  small  general.  The  great  general 
is  supplied  wholly  by  the  owners,  and  includes  the  salt  for  curing  the 
fish,  the  bait,  premium  of  insurance  and  some  other  small  articles  and 

eign  port  create  a  maritime  lien  upon  the  ship,  and  it  is  well-settled  law  that  a  mari- 
time lieu  is  a  jus  in  re,  and  that  it  constitutes  an  incumbrance  ou  the  property  of  the 
ship  which  is  not  divested  by  the  death  or  insolvency  of  the  owner.  Tlie  Young  Me- 
chanic, 2  Curtis,  404;  s.  c.  3  Ware,  58;  1  Parsons's  Maritime  Law,  489;  3  Kent  (11th 
ed.),  1"0;  General  Smith,  4  Wheat.  438.  Such  a  lien  may  be  enforced  by  a  process 
in  rem,  which  is  founded  on  a  riglit  in  the  thing,  the  object  of  the  process  being  to 
obtain  the  thing  itself,  or  a  satisfaction  out  of  it,  for  some  claim  resting  on  a  real  or 
quasi  proprietary  right  in  the  thing.  The  Commerce,  I  Black,  580;  Buck  et  al.  v.  In- 
surance Co.,  1  Pet.  164;  The  Maggie  Hammond,  9  Wall.  456.  Liens  of  the  kind  con- 
stitute an  insurable  interest."  —  Ed. 

^  Th«  reporter's  statement  of  the  evidence  has  been  tjmitted. — Ed. 


PART  II.,  SECT.  I.]       FOLSO.M  V.  MERCHANTS*  MUT.  MAR.  INS.  CO.  55 

expenses.  The  small  general  is  supplied  b}-  each  man  for  himself,  and 
consists  mosth-  of  the  provisions  and  fuel.  The  insurable  interest  of 
the  owners  accordingly  consists  of  their  interest  in  the  vessel,  and  the 
great  general,  and  their  proportion  of  the  fare  or  stock.  1  Phil,  on  Ins, 
145,  146. 

The  master  of  the  vessel  testified  that  Partridge  was  the  owner  of 
the  vessel;  that  she  was  fitted  by  the  plaintiffs;  outfits  came  from 
their  store  in  Bucksport ;  they  have  a  lien  on  the  voyage  and  outfits, 
till  they  get  their  pay  out  of  the  same ;  sucli  was  the  understanding  ; 
and  on  cross-examination  he  stated,  "  I  obtained  the  supplies  of  tiie 
plaintiflTs  as  agent,  and  on  the  credit  of  Partridge.  I  tokl  one  of  the 
plaintiffs  that  they  might  have  a  lien  on  the  outfits  and  voyage  for 
their  pa}',  for  that  was  customary- ;  took  no  bill  of  outfits.  Tliat  was 
the  amount  of  conversation  about  the  lien.  Mr.  Partridge,  I  suppose, 
was  also  liable  for  the  goods." 

From  the  evidence  of  the  plaintiffs,  the  goods  constituting  the  outfits 
were  sold  to  the  owner  of  the  vessel  unconditionally,  subject  only  at 
most  to  a  lien  thereon  as  securit\-  for  payment  for  the  price  under  the 
contract.  The  evidence  does  not  show  what  was  designed  to  be  the 
nature  and  extent  of  the  lien,  any  farther  than  the  word  itself  imports. 
Lien  has  been  defined  to  be  the  right  of  one  man  to  retain  that  which 
is  in  his  possession,  belonging  to  another,  until  certain  demands  of  him 
the  person  in  possession  are  satisfied.  Hammond  v.  Barclay,  2  East, 
235  ;  Story's  Agenc\-,  §  352.  And  it  is  said  by  .Judge  Story,  in  the 
same  work,  §  356,  that  when  liens  arise  bv  contract  express  or  implied, 
the}'  are  more  properly  pledges  than  liens.  And  it  is  an  universal 
principle  that  a  voluntary  parting  of  the  goods  will  amount  to  a  waiver 
or  surrender  of  the  lien. 

In  Seamaus  v.  Loring  et  al.,  1  Mason,  pp.  138  and  139,  it  is  said  by 
Judge  Story,  "  a  lien  may  be  acquired  for  advances  by  a  mere  posses- 
sion, under  a  contract  for  that  purpose,  but  it  is  of  the  very  essence  of 
the  lien  on  goods,  that  possession  accompanies  it."  "  A  voluntary 
parting  with  the  goods  will  amount  to  a  waiver  or  surrender  of  tlie 
lien."     Brackett  v.  Ilayden,  15  Maine,  347. 

The  outfits,  from  tlieir  nature  and  character,  were  expected  to  be 
worn  out  by  use,  and  to  be  so  disposed  of  that  their  identity  would  not 
be  preserved.  And  when  they  were  suffered  to  go  into  the  possession 
of  the  purchaser,  and  were  surrendered  by  the  plaintiffs,  if  it  was  at  the 
moment  that  the  sale  itself  was  perfected,  tlie  lien  did  not  attach  ;  if  it 
was  after  the  purchase  had  been  concluded,  the  lien  was  surrendered. 
It_does  not  appear  that  there  was  any  agency  of  the  plaintiffs  designed 
to  maintain  their  possession,  and  there  was  no  insurable  interest  in 
them  after  the  owner  of  thp  vpsspI  had  the  on^tiij^jjossession. 

This  lien,  from  the  nature  of  the  property  and  its  intended  use,  is 
unlike  that  secured  by  contract,  and  to  attach  to  property  designed  to 
be  modified  in  its  form,  without  losing  its  identity,  for  the  purpose  of 
being  made  more  valuable  ;  in  which  case  the  surrender  of  the  posses- 


56  WORTHINGTON   V.    BEARSE.  [CHAP.  II. 

sion  is  qualified,  find  for  an  object  entertained  b}-  tlie  parties  to  tlie 
contract,  wlien  It  was  made,  and  not  inconsistent  witli  tlie  constructive 
possession  of  the  property-.     Bradeen  v.  Brooks,  22  Maine,  463. 

It  is  averred  in  the  new  count  filed  by  leave  of  court  that  the  sum 
covered  by  the  insurance  will  be  collected  by  the  plaintiffs,  as  agents 
and  merchants,  for  the  owners  of  the  vessel,  to  whom  the  same  may  in 
law  belong,  subject  to  the  plaintiffs'  lien  thereon.  There  is  nothing  in 
the  case  showing  that  the  insurance  was  intended  for  the  benefit  of  the 
owner  of  the  vessel  by  the  plaintiffs,  professing  to  act  as  his  agents,  or 
that  they  were  ever  employed  for  such  a  purpose.  The  policy  purports 
to  be  insurance  only  of  the  plaintiffs'  interest  in  the  outfits,  and  it  can 
cover  nothing  beyond.  King  v.  State  Mut.  Fire  Ins.  Co.,  7  Cusli.  1  ; 
Gushing  v.  Thompson,  34  Maine,  496.^  .  .  . 

Exceptions  overrided.     Nonsuit  confirmed.'^ 

Shepley,  C.  J.,  and  Howard,  J.,  concurred  in  the  result  only. 
Hathaway,  J.,  concurred. 


WORTHINGTON  v.  BEARSP:  and  Others. 
Supreme  Judicial  Court  of  Massachusetts,   1866.     12  Allen,  382. 

Contract  upon  a  policy  of  insurance  for  $2,000,  payable  to  the 
plaintiff  in  case  of  loss,  issued  by  the  defendants  to  David  P.  Nicker- 
sou,  upon  seven  eighths  of  the  schooner  "  William  B.  Castle,"  for  one 
year  from  April  8,  i860. 

It  was  agreed,  in  the  Superior  Court,  that  Nickerson  had  mortgaged 
his  interest  in  the  schooner  to  the  plaintiff;  and  afterwards,  on  the 
11th  of  October,  1860,  Nickerson  conveyed  thirteen  sixteenths  of  the 
schooner  to  George  T.  Lovell,  receiving  notes  of  Lovell,  Atwood,  & 
Co.  in  pa3'ment,  and  Nickerson  was  to  pay  to  the  plaintiff  what  was 
then  due  to  him,  namely,  aboiit  $4,000.  About  the  20th  of  the  same 
month,  Lovell  reconveyed  said  interest  to  Nickerson,  and  took  back 
the  notes  which  had  been  given  in  payment  therefor,  none  of  them 
having  become  due.  This  interest  was  reconveyed  to  Nickerson  be- 
cause he  could  not  carry  out  his  contract  to  obtain  a  release  from  the 
plaintiff,  as  the  latter  would  not  accept  said  notes  in  payment  thereof; 
and  on  the  part  of  Lovell,  because  a  person  who  was  to  be  her  master 
was  dissatisfied  with  her ;  so  that  the  parties  acted  from  difTercnt  mo- 
tives, and  each  party  was  ignorant  of  the  motives  of  the  other.  Upon 
both  of  these  transfers,  the  papers  were  changed  in  the  custom-house. 
The  schooner  was  totally  lost  on  or  about  the  16th  of  March,  1861. 

1  The  omitted  passages  were  to  the  effect  that  there  had  been  a  deviation,  and  that 
for  this  reason  also  the  plaintiffs  could  not  recover.  —  Ed. 

2  Compare  Hancox  v.  Fishing  Ins.  Co.,  3  Sumner,  132  (1837).  — Ed. 


PART  II.,  SECT.  I.]  WORTHIXGTON   V.    BEAESE.  57 

Nickerson  then  owned  seven  eighths  of  her,  subject  to  the  mortgage  to 
Worthington. 

On  these  facts  judgment  was  rendered  for  the  plaintiff  for  the 
amount  of  the  pohcy  and  interest ;  and  the  defendants  appealed  to 
this  court. 

G.  Harston,  for  the  defendants. 

T.  31.  Hayes  and  J.  D.  Howe.,  for  the  plaintiff. 

BiGELOW,  C.  J.  We  entertain  no  doubt  that  the  defendants  are  lia- 
l)le  for  the  full  amount  insured  by  the  policy.  This  liability  rests  upon 
two  grounds,  either  of  which  is  sufficient  to  sustain  the  plaintiff's  claim. 

In'^the  first  place,  on  the  facts^tated,  the^Ucged  sale  by  the  assured 
of  jliTiire"eirsIxteentKs^r  the  vessel  covered  by  the  policy  was  incom- 
pTeTe,  and  never  took  effect  jo_as  to  extinguish  his  insurable  interegt 
therein.  One  of  the^ssentralltipulations  of  the  agreement  of  sale  was 
not  complied  with.  Tiie  vendor  expressly  agreed  to  pay  the  amount 
due  on  the  mortgage  of  liis  share  of  tiie  vessel,  and  to  procure  a  release 
from  the  mortgagee.  This,  the  case  finds,  he  did  not  and  could  not 
do.  Until  this  part  of  the  contract  was  complied  with,  the  vendee  had 
a  right  to  avoid  the  sale  and  rescind  the  whole  bargain.  The  delivery 
of  the  bill  of  sale  passed  a  title  only  at  the  election  of  the  vendee.  He 
miglit,  within  a  reasonable  time  after  the  failure  of  the  assured  to  fulfil 
his^contract  of  sale  by  procuring  a  release  of  the  mortgage  on  the  ves- 
sel, elect  to  restore  the  legal  title  and  recover  back  the  consideration  of 
the  transfer.  During  this  time  the  plaintiff  had  a  continuing  and  sub- 
sisting interest  in  the  vessel.  The  transfer  could  not  be  regarded  as 
absolute  and  complete,  but  only  conditional  on  a  compliance  with  the 
terms  of  the  bargain.  A  mere  transfer  of  the  legal  title  of  a  vessel 
does  not  extinguish  a  right  to  recover  on  a  policy,  if  the  party  making 
the  transfer  still  retains  any  right  or  interest  in  the  vessel  or  her  pro- 
ceeds. Gordon  v.  Mass.  Ins.  Co.,  2  Pick.  249  ;  Lazarus  v.  Common- 
wealth Ins.  Co.,  19  Pick.  81 ;  Wilson  v.  Hill,  3  ]\fet.  66,  71.  The 
insured  clearly  had  an  interest  in  the  preservation  of  the  vessel  until  it 
was  certain  that  the  contract  for  her  sale  had  become  complete,  and  the 
title  to  her  had  vested  absolutely  in  the  vendee.  In  this  view  of  the 
facts,  the  insured  did  not  forego  his  right  to  recover  on  the  policy  pend- 
ing the  transactions  in  relation  to  the  transfer  of  the  vessel. 

But  if  it  were  otherwise,  and  it  had  appeared  that  the  sale  of  the 
vessel  was  complete  and  absolute,  so  that  for  a  time  the  insured  had 
parted  with  his  insurable  interest,  his  right  to  recover  on  the  policy 
vvas^rgone  fof^er."  It  "^was  only  suspended  auring  ihe  xime  thai  lire 
title  to  the  vessel  was  vested  in  the  vendee,  and  was  revived  again  on 
the  reconveyance  to  the  insured  during  the  term  specified  in  the  policy. 
The  insurance  was  for  one  year.  There  was  no  stipulation  or  condition 
in  the  policy  that  the  insured  should  not  convey  or  assign  his  interest 
in  the  vessel  during  this  period.  The  contract  of  instirance  was  abso- 
lute to  insure  the  interest  of  a  person  named  in  a  particular  subject  for 
ft  specific  time ;  for  this  entire  risk  an  adequate  premium  was  paid,  and 


58  WORTHINGTON   V.   BEAESE.  [CHAP.  II. 

the  polic}'  dulj'  attached,  because  the  assured  at  the  inception  of  the 
risk  had  an  insurable  interest  in  the  polic}'.     So,  too,  at  the  time  of 
the  loss,  all  the  facts  necessary  to  establish  a  valid  claim  under  the 
polic}'  existed.    The  execution  of  the  polic}',  the  interest  of  the  assured 
in  the  vessel,  the  due  inception  of  the  risk,   a  compliance  with  all 
warranties,  expressed  and  implied,   and  the  loss  b}'  a  peril  insured 
against,  are  all  either  admitted  or  proved.     Upon  what  legal  ground, 
then,  can  it  be  maintained  that  the  polic}'  has  become  extinct?     No 
fact  is  shown  from  which  any  inference  can  be  made  that  by  the  alien- 
ation of  the  title  to  the  vessel  during  the  time  named  in  the  polic}-,  the 
risk  of  the  insurers  upon  the  subsequent  re-transfer  of  the  vessel  to  the 
assured  was  in  any  degree  increased  or  affected,  or  that  any  loss,  in- 
jury, or  prejudice  to  the  underwriter  was  occasioned  by  the  fact  that 
the  absolute  title  to  the  vessel  was  temporarily  vested  in  a  third  person. 
On  the  contrary,  such  temporary  transfer  of  title  would  seem  rather  to 
have  inured  to  the  benefit  of  the  insurers,  because  they  have  received  a 
premium  for  a  risk  from  which  they  were  exempted  during  a  portion  of 
the  time  designated  in  the  policy.     In  the  absence  of  any  express  stip- 
ulation,  as  in   the  policy  declared  on,  no  return  premium  could  be 
claimed  by  the  assured  by  reason  of  any  temporary  suspension  of  the 
risk  or  withdrawal  of  the  subject  insured.     The  policy  had  attached, 
and  the  risk  was  entire.     During  the  time  that  the  vessel  was  owned 
by  a  person  other  than  the  assured,  no  loss  could  happen  which  would 
be  covered  by  the  policy.     The  insured,  having  no  interest,  could  sus- 
tain no  loss.     If  a  total  loss  occurred  during  the  period,  the  insurable 
interest  would  become  extinct.     Upon  a  retransfer  of  title  to  the  in- 
sured, the  policy  would   revive  only  to  cover   the   renewed  interest 
thereby  acquired,  and  not  to  render  the  insurers  liable  for  losses  which 
may  have  happened  during  the  intermediate  period.     The  sole  effect 
would  be  to  suspend  the  risk  for  the  time  during  which,  by  reason  of 
the  transfer,  the  assured  had  no  interest^in  the  subject  insured,  and  to 
revive  it  as  soon  as  the  original  interest  was  revested  in  him.     The 
transfer  of  the  vessel  rendered  the  policy  inoperative,  and  not  void.    It 
could  have  no  effect  while  the  insured  had  no  interest  in  the  subject 
insured.     But  when  this  interest  was  revived  or  restored  during  the 
term  designated  in  the  policy,  without  any  increase  or  change  of  risk 
or  other  prejudice  to  the  underwriter,  there  seems  to  be  no  valid  reason 
for  holding  that  the  policy  has  become  extinct.     Inasmuch  as  neither 
the  subject  nor  the  person  insured  is  changed,  and  the  risk  remains  the 
same,  the  intermediate  transfer  is  an  immaterial  fact,  which  can  in  no 
way  affect  the  claim  under  the  policy.^  .   .  . 

Judgment  for  the  plaintiff? 

»  The  omitted  passage  suggested  analogies,  but  did  not  deal  directly  with  insurable 
interest.  —  Ed. 

2  See  Reed  v.  Cole,  3  Burr.  1.512  (1764),  a  case  showing,  among  other  things,  that 
the  original  interest  and  the  interest  at  the  time  of  loss  need  not  be  identical. 

In  Howard  v.  Albany  Ins,  Co.,  3  Denio,  301,  303  (1846),  a  fire  insurance  caSe, 


PART  II.,  SECT.  I.]  SHAW    V.   iETNA   INS.    CO.  59 

SHAW  ET  AL.,  Appellants,  v.  ^TNA  INS.  CO.,  Respondent. 
Supreme  Court  of  Missouri,  1872.     49  Mo.  578. 

Appeal  from  St.  Louis  Circuit  Court. 

Jforris  and  Peabody,  for  appellants. 

X.  EiUon^  for  respondent 

Adams,  J.  This  was  an  action  on  a  policy  of  insurance  issued  by 
defendant.  The  plaintiffs  filed  a  second  amended  petition,  to  which 
the  defendant  demurred  ;  the  demurrer  was  sustained  and  judgment 
given  thereon  against  the  plaintiffs,  from  which  they  appealed  to  the 
general  term,  where  the  judgment  of  the  special  term  was  affirmed,  and 
the  plaintiffs  have  appealed  to  this  court. 

The  petition  substantially  sets  forth  that  the  plaintiffs  being  the 
owners  of  five  barges  of  ice,  on  the  upper  Mississippi  River,  consigned 
the  same  to  Scherholtz  &  Klinesmith,  of  the  city  of  St.  Louis,  to  be 
sold  by  them  on  commission  ;  that  the  i)laintitfs  ordered  the  consignees 
to  have  the  ice  insured,  and  that  the  consignees  undertook  the  agency 
and  agreed  to  have  the  ice  insured  for  plaintiffs.  Instead  of  insuring 
the  ice  in  the  names  of  the  plaintiffs,  they  made  the  insurance  in  their 
own  names,  to  indemnify  themselves  in  case  of  loss,  as  they  would  be 
liable  for  such  loss,  having  disobeyed  the  instructions  of  their  principds 
in  not  procuring  insurance  in  tiieir  names.  One  of  the  barges  of  ice 
was  lost  by  a  peril  provided  against,  and  the  consignees  assigned  the 
policy  to  plaintiffs,  and  this  suit  was  brought  by  them  as  assignees  for 
the  value  of  the  lost  cargo.  The  alleged  ground  of  demurrer  was  that 
the  consignees  had  no  insurable  interest  in  the  ice. 
"IT^onsignee,  as  such,  has  no  insurable  interest  in  goods  consigned 
to  him  for  sale  on  commission,  unless  it  be  to  the  extent  of  the  com- 
missions or  profits,  he  expects  to  derive  from  such  sales.  This  he  has  a 
rio;ht  to  insure  regardless  of  any  instructions  from  the  consignoi'.  But 
ifhe  accepts  a  consignment  wlth_j_nstructions  from  his  principals  to 
insure  for  their  benefit,  it  becomes  his  dujy  to  insure ;  and  Jf  he  neg^ 
lects  to  do  so  and  a  loss  occurs,  he  is  liable  to  'tliem  for  the  amoiint. 
The  consignees,  in  the  case  under  consideration,  instead  of  taking  out 
a  new  policy  in  the  names  of  their  principals,  had  the  risk  entered  on^ 

BROXsoy,  C.  J.,  in  a  dissenting  opinion,  said  :  "  When  the  assured  owns  the  property  at 
the  time  the  insurance  is  effected,  a  suhsequent  transfer  of  his  interest  cannot  render 
the  policy  void.  The  contract  will  be  of  no  value  to  the  assured,  for  tlie  reason  that 
there  is  no  longer  anything  upon  which  it  can  operate ;  but  the  subsequent  transfer 
cannot  infuse  any  vice  into  that  which  was  origitially  a  valid  agreement.  I  agree  that 
in  fire  policies  the  assured  must  have  an  interest  at  the  time  of  the  loss,  as  well  as 
when  the  contract  is  made.  (The  Sadlers  Company  v.  Badcock,  2  Atk.  554;  Lynch 
I".  Dakel,  3  Bro.  P.  C.  497;  3  Kent.  371.)  And  so,  if  he  has  parted  with  all  his  in 
terest  before  the  loss  happens,  he  cannot  recover.  But  he  does  not  fail  on  account  of 
any  vice  in  the  contract,  but  for  the  reason  that  he  has  sustained  no  loss  or  damage." 
—  Ed. 


60  AMSINCK    V.    AMEBIC  AN    INS.    CO.  [CHAP.  II. 

their  own  policy  in  their  own  names,  as  a  convenient  mode  of  indemni- 
fving  themselves  against  such  damage  as  they  might  suflFer  in  not  insur- 
ing in  the  names  of  llieir  principals.  I  think  they  had  the  right  to  thus 
protect  themselves,  and  to  this  end  they  ought  to  be  considered  as  inter- 
ested to  the  full  value  of  the  ice.  See  Bartlett  et  al.  v.  Walter,  13  Mass. 
297  ;  Ohver  v.  Green,  3  Mass.  133;  Herkimer  v.  Keil,  27  N.  Y.  163. 

After  being  ordered  to  insure,  the  consignees  might  have  considered 
themselves  trustees  for  the  consignors  and  insured  in  their  own  names 
for  them.  My  impression  is  that  in  such  case  the  "  positive  stipulation 
of  the  underwriter  to  pay  the  loss  to  the  agent  would  never  be  rendered 
void  ])y  the  inability  of  the  party  really  assured  to  sustain  an  action  on 
the  policy  in  his  own  name."  (See  2  Duer  Ins.  7,  §  6.)  In  such  case 
the  policy  ought  to  inure  to  the  benefit  of  the  principal,  and  the  agent 
or  consignee  be  treated  as  a  trustee  of  an  express  trust,  and  the  amount 
of  recovery  would  go  to  his  principal.  But  whether  he  is  a  trustee  of 
an  express  trust  or  not,  he  is  nevertheless  a  trustee  for  the  consignor ; 
and  in  a  suit  upon  the  policy,  in  the  name  of  the  consignee,  this  may 
be  shown  in  order  to  show  that  he  had  an  insurable  interest  as  trustee 
lor  his  consignor.  The  demurrer  in  this  case  ought  to  have  been 
overruled.  Judgment  reversed  and  cause  remanded} 


AMSINCK   V.   AMERICAN   INS.    CO. 
Supreme  Judicial  Court  of  Massachusetts,  1879.     129  Mass.  185. 

Three  actions  of  contract  upon  policies  of  marine  insurance.  At 
the  trial  in  this  court,  before  Morton.  J.,  the  jury  returned  a  verdict 
for  the  plaintiffs  ;  the  case  was  reported  for  the  consideration  of  the 
full  court,  and  appears  in  the  opinion. 

A.  S.  Wheeler  and  E.  W.  Hutchins,  for  the  defendants. 

L.  S.  Dabney  and  R  H.  Dana,  Jr.,  for  the  plaintiffs. 

Endicott,  .1.  Upon  the  facts  reported,  the  court  is  of  opinion  that 
Machado  had  an  insurable  interest  in  the  vessel  at  the  time  the  policies 

1  In  Silloway  v.  Neptune  Ins.  Co.,  12  Gray,  73,  89  (18.58),  Bigelow,  J.,  (or  the 
court,  said :  "  By  tlie  charter  party  under  wliich  the  plaintiffs  hired  the  ves.sel,  it  ap- 
pears that  they  were  to  pay  the  owners  for  tiie  round  voyage  to  Guayama  and  back 
again  to  a  port  in  the  United  States  the  sum  of  seven  hundred  dollars,  and  they  also 
thereby  stipulated  to  insure  the  freight  for  the  said  sum  of  seven  hundred  dollars. 
Under  this  provision  it  was  the  right  and  duty  of  the  plaintiffs  to  procure  insurance 
on  the  freight  or  charter  money  for  tlie  use  and  benefit  of  the  owner.  They  were  his 
agents  to  procure  insurance  on  the  freight,  and  can  well  maintain  the  action  in  their 
own  names.  2  Phil.  Ins.  §§  19.58,  1965.  Munson  v.  New  England  Marine  Ins.  Co., 
4  Ma.ss.  88.  This  was  the  clear  intent  of  the  parties.  The  plaintiffs  had  no  insurable 
interest  in  their  own  right  in  the  freight.  As  the  vessel  was  lost  by  perils  insured 
against  during  the  performance  of  the  voyage  specified  in  the  charter  and  before  any 
freight  was  due,  there  was  a  total  loss  of  tliia  subject  of  insurance."  —  Ed. 


PART  II.,  SECT.  I.]  AMSIXCK    V.    AMERICAN    IXS.    CO.  61 

attached,  even  if  we  assume  that  the}-  took  effect  on  Jul}'  5,  1876,  the 
da}-  of  their  date.  On  that  day,  the  plaintiffs,  as  agents  for  Machado, 
made  an  oral  agreement  in  New  York  with  the  owners  of  the  vessel  for 
her  purchase  for  the  sum  of  811,000,  payable  on  delivery  of  a  proper 
bill  of  sale  ;  and,  having  previously  ascertained  that  the  defendants 
would  insure  her,  they  gave  directions  to  have  the  insurance  closed. 
The  policies  were  written  on  that  day  ;  the  precise  time  of  their  deliv- 
ery does  not  appear.  The  oral  contract  to  purchase  was  reduced  to 
writing  and  signed  by  the  plaintiffs  and  the  owners  on  July  7  ;  and  a 
portion  of  the  purchase  money  was  paid  on  that  day.  Possession  was 
taken  by  Machado,  the  balance  due  was  paid,  and  a  bill  of  sale  was 
duly  executed  to  a  third  person  in  trust  for  Machado,  who  was  a 
foreigner. 

It  is  conceded  by  the  defendants  that  Machado  was  tlie  only  person 
whose  interest  was  insured,  as  appears  by  the  declarations  and  the 
policies.  But  they  contend  that  he  had  no  insurable  interest  on  July  5, 
for  at  that  time  he  had  only  an  oral  contract  for  the  purchase  of  the 
vessel ;  and  that  such  a  contract,  being  witliin  the  statute  of  frauds, 
and  incapable  of  being  enforced,  gives  no  insurable  interest. 

But  the  oral  contract  to  purchase  was  not  void  or  illegal  by  reason 
of  the  statute  of  frauds.  Indeed,  the  statute  presupposes  an  existing 
lawful  contract ;  it  affects  the  remedy  only  as  between  the  parties,  and 
not  the  validity  of  the  contract  itself;  and  where  the  contract  has 
actually  been  performed,  even  as  between  the  parties  tliemselves,  it 
stands  unaffected  by  the  statute.  It  is  therefore  to  be  "  treated  as  a 
valid  subsisting  contract  when  it  comes  in  question  between  other  par- 
ties for  purposes  other  than  a  recovery  upon  it."'  Townsend  v.  Har- 
graves,  118  Mass.  325,  336;  Cahill  r.Bigelow,  18  Pick.  369;  Beal  r. 
Brown,  13  Allen,  114;  Norton  y.  Simonds,  124  Mass.  19.  See  also 
Stone  17.  Denison,  13  Pick.  1.  Machado  had  under  his  oral  agreement 
an  interest  m  the  vesseL-and  woulrl  Imvp  suffered  a  loss  by  lipv  injury 
or  destruction.  Eastern  Railroad  v.  Relief  Ins.  Co.,  98  Mass.  420. 
This  interesf  he  could  have  assigned  for  a  valuable  consideration,  and, 
if  he  had  assigned  it,  all  the  rights  afterwards  perfected  in  him  would 
have  enured  to  the  benefit  of  his  assignee.  Norton  r.  Simonds,  ubi 
supra.  The  case  of  Stockdale  v.  Dunlop,  6  M.  &  W.  224,  relied  upon 
by  the  defendants,  does  not  sustain  their  position,  for  reasons  which 
are  stated  in  Townsend  >'.  Hargraves,  kM  supra}  .  .  . 

As  we  decide  that  Machado  had  an  insurable  interest  in  the  ship 
when  the  policies  attached,  and  that  it  was  open  to  the  defendants  to 
show  that  there  was  unreasonable  delay  at  Bangor,  the  cases  must  stand 
for  trial  upon  the  questions  of  delay  at  New  York  and  at  Bangor. 

Verdicts  set  aside. 

*  Passages  dealing  with  uureasonable  delay  have  been  omitted.  —  Ed. 


62  merchants'  CO.  v.  rumsey  and  JOHNSON.       [chap,  il 


MERCHANTS'   MARINE  INSURANCE   CO.,  Appellants,  v. 
RUMSEY   AND   JOHNSON,  Respondents. 

Supreme  Court  of  Canada,  1884.     9  Can.  S.  C.  577. 

Appeal  fi-om  a  judgment  of  the  Supreme  Court  of  Nova  Scotia,  dis- 
charging a  rule  nisi  to  set  aside  a  verdict  of  Si, 871. 93,  rendered  bj' 
Wetherbe,  J.,  without  a  jur^-,  in  favor  of  tlie  respondents.^ 

Stephen  C.  Tupper  and  William  Mouzar  chartered  the  schooner 
"  Mabel  Claire  "  for  a  trading  voyage  from  Nova  Scotia  to  Labrador 
and  back,  and  not  having  sufficient  means  themselves  to  load  the  ves- 
sel with  merchandise  for  the  voyage,  made  an  arrangement  with  the 
plaintiffs  to  supply  them  with  a  cargo.  Application  for  this  arrange- 
ment was  first  made  to  the  plaintiffs  at  Liverpool,  where  the  vessel 
then  was,  by  Tupper,  through  a  friend  of  his,  who  had  agreed  to  give 
liim  a  certain  amount  toward  his  supplies,  and  that  such  portion  should 
stand  as  security-  to  the  plaintiffs  that  they  should  be  paid  first.  The 
arrangement  was  not  then  completed,  but  Tupper  put  goods  on  the 
vessel  at  Liverpool  to  the  amount  of  $1,200,  and  took  the  vessel  to 
Halifax,  where  the  arrangement  with  the  plaintiffs  was  completed,  by 
which  it  was  agreed  between  Tupper  and  Mouzar  and  the  plaintiffs, 
that  the  plaintiffs  should  furnish  the  greater  part  of  the  cargo  for  the 
trading  voyage,  and  were  to  have  complete  control  of  all  the  goods  put 
on  board  the  vessel  until  it  should  veturn,  when  the  return  cargo  was 
to  be  disposed  of  by  the  plaintiffs,  who  were  to  pay  themselves  for  their 
advances,  and  pa}'  over  an}-  balance  remaining  to  Tupper  and  Mouzar. 
In  trading  on  the  voj'age  Tupper  and  INIouzar  were  not  to  dispose  of 
any  goods  on  credit,  but  were  to  bring  back  such  goods  as  they  could 
not  dispose  of  so  as  to  olitain  a  return  cargo  in  lieu  thereof.  Accord- 
ingly the  i)laintiffs  put  on  board  the  vessel  at  Halifax  merchandise  to 
an  amount  exceeding  $6,000,  and,  after  having  done  so,  and  upon  the 
day  on  which  the  vessel  sailed  from  Halifax,  effected  with  the  defend- 
ants the  policy  of  insurance  sued  upon  to  the  amount  of  $2,000,  on 
merchandise  under  deck,  from  Halifax  to  Labrador  and  back  to  Hali- 
fax on  a  trading  voyage —  time  not  to  exceed  four  montlis  —  shipped 
in  good  order  and  well  conditioned,  on  board  schooner  "  Mabel  Claire," 
beginning  the  adventiu'e  upon  the  said  goods  and  merchandise  from  and 
immediately  following  the  loading  thereof  on  board  said  vessel,  and  to 
continue  and  endure  until  the  said  goods  should  be  safely  discharged 
and  landed.  On  the  13th  July,  1878,  the  vessel  sailed  on  her  voyage 
with  Mouzar  as  master,  and  Tupper  as  supercargo.  In  the  course  of 
the  voyage  the}'  disposed  of  all  the  goods  which  had  been  laden  on  the 
vessel,  with  the  exception  of  goods  to  the  value  of  about  81,000,  with 
which  on  board,  together  with  a  large  return  cargo,  the  vessel,  when 

1  The  foUowing  statement  has  been  taken  from  the  opinion  of  Gwyxne,  J.  —  Ed- 


PART  II.,  SECT.  I.]       merchants'  CO.  V.  RUMSEY  AND  JOHNSON.  63 

on  her  return  voyage  to  Halifax,  within  the  four  months  named  in  the 
polic}',  together  with  her  cargo,  was  lost  by  the  perils  insured  against. 

Hutton^  for  appellants. 

Graham,  Q.  C,  for  respondents. 

Ritchie,  C.  J.^  Two  points  were  raised  in  this  case.  First,  Did 
the  policy  cover  onl}'  the  goods  laden  at  Halifax?  Second,  Have  the 
respondents  proven  sufficient  interest  to  entitle  them  to  recover?  As 
to  the  first  point:  This  case  seems  to  me  abundantly  clear;  the  policy 
was,  in  my  opinion,  unquestionabl}'  intended  to  cover,  during  the  trad- 
ing voyage  from  Halifax  to  Labrador  and  back,  all  "  the  merchandise 
under  deck  "  on  board  said  vessel  during  the  period  mentioned  in  the 
policy,  viz.,  for  four  months  from  tlie  loth  July,  1878,  shipped  in  good 
order,  and  was  not  confined  to  the  goods  shipped  at  Halifax  and  brought 
back  to  Halifax.  The  policj'  dated  13th  Julj-,  1878,  insures  to  the  ex- 
tent of  82,000  on  the  undermentioned  propert}',  from  Halifax  to  Lab- 
rador and  back  on  trading  voyage  —  time  not  to  exceed  four  months, 

—  shipped  in  good  order  and  well  conditioned,  on  board  the  schooner 
«' Mabel  Claire." 

Then  what  is  the  undermentioned  propert}"?  Description  of  goods 
insured;  merchandise  under  deck;  amount,  $2,000;  rate,  5  per  cent; 
premium,  $100,  to  return  two  (2)  if  risk  ends  1st  October  and  no  loss 
claimed. 

Trading  voyages  are  well  understood.  The  goods  are  constantly 
shifting.  The  idea  is  simply  to  barter  the  goods  taken  from  Halifax 
between  that  place  and  Labrador,  and  to  bring  back  to  Halifax  the 
goods  obtained  by  such  bartering,  and  the  goods  insured  were  all  mer- 
chandise under  deck  on  the  trading  voyage  from  Halifax  to  Labrador, 
and  back,  irrespective  of  where  the  same  ma}'  be  taken  on  board, 
whether  on  the  voyage  from  Halifax  or  on  its  return,  provided  they 
were  merchandise  under  deck  on  the  trading  voyage.  I  oan  discover 
nothing  whatever  to  limit  the  subject-matter  of  the  insurance  contem- 
plated by  this  policy  to  the  original  cargo  on  board  at  Halifax.  There 
is  nothing,  in  mj-  opinion,  in  the  terms  used,  on  the  most  strict  con- 
struction of  language,  to  justify  such  a  conclusion  —  if  we  take  the 
nature  of  the  voyage  —  "a  trading  voyage  "  —  the  termini,  "Halifax 
and  Labrador  and  back  to  Halifax,"  that  it  is  to  be  an  insurance  on  ths 
trading  voyage  from  Halifax  to  Labrador  and  back  to  Halifax,  the  ob- 
ject of  such  a  voj-age  being  for  trade  and  barter,  that  is,  the  exchange 
from  time  to  time,  and  from  place  to  place  during  the  continuance  of 
the  voyage,  of  the  delivered  cargo  for  a  return  cargo,  which,  from  the 
coast  between  Halifax  and  Labrador,  we  may  take  historical,  if  not 
judicial,  notice,  would  be  a  fish  cargo.     Then,  the  duration  of  the  risk 

—  four  months,  the  rate,  5  per  cent,  —  everything,  in  my  opinion,  in- 
dicates that  it  was  never  intended  by  the  parties  that  there  was  to  be 
an  insurance  on  a  single  passage  from  Halifax  to  Labrador,  nor  can  it 
be  supposed  that  it  was  contemplated  that  the  cargo  taken  in  Halifax 

1  After  giving  the  history  of  the  litigation  and  quoting  the  policy.  — Ed. 


64  merchants'  CO.  v.  rumsey  and  JOHNSON.       [chap.  ii. 

would  be  brought  back  iu  specie  as  shipped  there.  On  the  contrar}', 
the  cargo  brought  back  would  be  obtained  by  barter  or  sale  of  the  out- 
ward cargo,  aud  from  this  a  return  cargo,  and  therefore  unless  the  term 
"and  back"  referred  to  such  return  cargo  it  would  be  meaningless. 
"From  Halifax  to  Labrador"  fix,  in  m}' opinion,  merel\- the  termini 
of  the  trading  vo3-age,  and  the  subject-matter  of  insurance,  "  merchan- 
dise under  deck,"  "  if  shipped  in  good  order  and  well  conditioned,"  on 
such  "  trading  voyage." 

There  is  no  language  in  this  polic}'  such  as  "beginning  the  adven- 
ture from  the  loading  thereof  on  board  at  Halifax,"  or  any  language 
intimating  that  the  policy  is  only  to  attach  on  goods  loaded  at  that 
port,  which  is  the  terminus  a  qxio  of  the  trading  voyage  insured,  viz., 
"from  Halifax  to  Labrador  and  back,"  aud  tlie  reason  is  very  obvious  ; 
any  such  language  would  be  utterly  inconsistent  with  the  nature  of  the 
vo3"age,  the  provisions  contained  in  the  polic}',  and  the  object  the  par- 
ties must  have  had  in  view  in  effecting  the  polic}'.  Had  it  been  the 
intention  of  the  parties  that  the  policy  should  be  so  restricted,  I  can- 
not doubt  but  that  unequivocal  language,  so  limiting,  would  have  been 
used,  and  in  its  absence,  bearing  in  mind  the  character  of  the  voyage 
and  the  terms  used,  the  irresistible  inference  is  that  no  such  limitation 
was  contemplated. 

In  what  in  principle  does  this  differ  from  the  constant  and  ever^'-day 
practice  of  insuring  goods  or  stock-in-trade  iu  a  store  for  a  given  period, 
where  the  insured  reproduce  the  same  stock  ?  Has  it  ever  been  doubted 
or  questioned  that  a  polic3'  on  a  stock  of  goods  covers  such  after  ac- 
quired and  substituted  goods?  According  to  defendant's  contention, 
the  return  cargo  in  this  case  would  not  be  covered  at  all.  It  cannot 
be  supposed  that  either  party  couhl  have  contemplated  that  the  trading 
voyage  would  be  utterly  fruitless,  and  that  the  goods  taken  from  Hali- 
fax would  not  be  used  for  the  purpose  for  which  tiie}'  were  shipped,  but 
would  be  brought  back  to  Halifax.^  .  .  . 

As  to  the  second  point  —  that  the  plaintiffs  have  no  insurable  interest 
in  the  goods  —  the  evidence,  I  may  say  the  uncontradicted  evidence,  on 
this  point  as  to  the  transaction  and  the  plaintiff's  interest  in  the  goods 
lost,  is  as  follows  :  — 

B.  A.  Rumsey,  sworn :  —  My  partner  is  Johnson,  —  Rumsey,  Johnson  &  Co. 
The  schooner  "  IMabel  Claire"  loaded  most  of  cargo  July,  1878.  Value  of 
cargo  I  think  between  §9,000  and  S10,000.  Had  arrangement  with  Stephen 
C.  Tapper  to  fit  him  out,  a  verbal  arrangement.  We  were  to  supply  most  of 
cargo  for  trading  voyage.  We  took  bills  of  lading  of  it.  The  return  cargo 
was  to  come  back  to  us.  We  were  to  dispose  of  cargo  and  pay  ourselves,  ana 
pay  them  the  balance.  It  was  to  be  a  trading  voyage  to  Newfoundland  aud 
back.  The  whole  return  cargo  was  to  come  back  to  us.  This  is  the  B.  L.  of 
cargo  we  put  on  board,  only  what  we  put  on  board.  It  is  signed  by  the  mas- 
ter of  the  schooner.  .  .  .  Cargo  was  put  on  board  by  Weir  Brothers  and 
others,  which  we  paid  for,  but  it  is  not  in  this  B.  L.     Tapper  put  in  some  of 

1  Here  were  stated  Violett  v.  Allnutt,  3  Taunt.  419  (1811),  aud  Barclay  v.  Stirling, 
5  M.  &S.  6  (1816).  — Ed. 


PART  II  ,  SECT.  I.]       merchants'  CO.  V.  RUMSEY  AND  JOHNSON.  65 

the  cargo  himself.     The  whole  of  it,  including  what  Tupper  put  in,  was  In- 
sured by  us,  and  was  subject  to  the  arrangement  I  have  spoken  of. 

G.  R.  Johnson:  —  Partner  in  K.,  J.  &  Co.  I  made  arrangements  with 
Tupper.  He  wanted  supplies  for  a  trading  voyage  to  Labrador.  Had  char- 
tered new  schooner  "  Mabel  Claire."  He  wanted  us  to  supply.  He  applied 
to  me  at  Liverpool,  N.  S  ,  through  a  friend  of  his  who  offered  to  give  him  a 
certain  amount  toward  his  supplies,  and  that  as  security  to  us  he  would  allow 
that  portion  to  go  as  security  as  a  preference  that  ours  should  be  paid  first. 
I  asked  him  what  amount.  He  said  probably  ten  thousand  dollars.  The 
arrangement  was  not  made  at  Liverpool.  I  promised  to  telegraph  to  him 
what  we  would  do.  When  I  returned,  the  vessel  was  here,  and  I  made  the 
arrangements  for  the  firm  with  Tupper  and  Monzar.  We  were  to  supply  them 
and  have  complete  control  of  all  the  goods  until  they  got  back.  They  were  to 
give  no  goods  out  on  credit,  and  sooner  than  give  credit  they  were  to  bring  the 
goods  back,  and  we  would  credit  them  with  full  price.  They  promised  to 
bring  back  any  goods  for  which  they  exchanged  them.  We  were  to  effect 
insurance  on  them  to  the  full  extent  of  the  cargo,  and  if  there  was  not  suffi- 
cient to  pay  everybody  when  they  returned,  we  were  to  be  paid  first.  They 
were  our  goods  until  they  came  back.  When  they  went  away  they  expected 
to  make  a  profit  on  them.  If  they  were  successful  they  were  to  let  us  know 
what  extra  amount  to  price  was  needed  for  the  benefit  of  the  adventure. 

To  say  that  under  this  testiraon}'  the  plaintiffs  were  merelj-  unpaid 
vendors,  with  the  right  onl}'  of  unpaid  vendors,  is  simply  to  ignore  the 
evidence  in  the  case  and  the  agreement-  which  it  clearh"  establishes. 
The  only  evidence  apparenth'  relied  on  in  the  court  below  as  displacing 
the  effect  of  this  evidence  is  that  of  Rumse}',  who,  on  cross-examina- 
tion, in  answer  evidently  to  a  question  put  to  him,  says  :  — 

"  If  the  goods  had  been  lost  on  the  voyage  to  Newfoundland  without  insur- 
ance, the  loss,  I  suppose,  would  have  been  Tupper's." 

I  cannot  see  how  this  can  possibly  affect  in  an}'  wa}'  the  liability  of 
the  defendants  to  the  plaintiffs.  Plaintiffs  had  supplied  Tupper,  and 
no  doubt  looked  to  him  personally  for  payment,  as  well  as  to  the  goods 
over  which  it  was  agreed  that  they  should  retain  the  control  for  the 
purpose  of  securing  such  payment.  But  whatever  may  have  been  the 
relative  liabilities  of  the  parties  as  between  themselves,  it  is  quite  clear 
that  the  plaintiffs  had  such  a  claim  on  these  goods  supplied  and  shipped 
as  on  the  goods  acquired  and  shipped  in  good  order  and  well  condi- 
tioned during  such  trading  voyage  as  would  have  been  enforceable 
against  Tupper,  had  he  endeavored  to  dispose  of  them  and  divert  the 
proceeds  from  the  plaintiffs  contrary  to  the  terms  of  the  agreement.^ 

Appeal  dismissed  with  costs."^ 

1  Concurring  opinions  were  delivered  by  Strong,  Fournier,  Hexry  (hesitating), 
and  GwYNNE,  JJ.  —  Ed. 

2  See  Rhind  v.  Wilkinson,  2  Taunt.  237,  24.3  (1810),  quoted  ante,  p.  47,  n.  1. 

In  Columbian  Ins.  Co.  v.  Catlett,  12  Wheat.  383,  386,  387  (1827),  Story,  J.,  for 
the  court,  said  :  "  The  first  question  arising  in  this  case  is  upon  the  true  construction 
of  the  policy  itself  as  to  the  voyage  insured.  Is  it  an  insurance  upon  the  original 
cargo  only  from  the  time  of  its  loading  until  its  final  (h"scharge,  or  is  it  an  insurance 
upon  every  successive  cargo,  ■which  is  taken  on  board  in  the  course  of  the  voyage  out 

5 


66  merchants'  CO.  v.  rumsey  and  JOHNSON.        [chap.  II. 

and  home,  so  as  to  cover  the  risk  of  a  return  cargo,  the  proceeds  of  the  sales  of  the 
outward  cargo  ?  The  argument  in  behalf  of  the  defendant  is,  tliat  the  risk  applies 
upon  the  terms  of  the  policy  only  to  the  original  cargo,  laden  at  Alexandria.  The 
terms  of  the  policy  are,  on  a  voyage,  '  at  and  from  Alexandria  to  St.  Thomas  and  two 
other  ports  in  the  West  Indies,  and  back  to  her  port  of  discliarge  in  the  United  States, 
upon  all  lawful  goods  and  mercliandise  laden  or  to  be  laden  on  board  the  ship,  etc.  ; 
beginning  the  adventure  upon  the  said  goods  and  merchandise,  from  the  lading  at 
Alexandria,  and  continuing  the  same  until  the  said  goods  and  merchandise  shall  be 
safely  landed  at  St.  Thomas,  etc.,  and  the  United  States  aforesaid.'  It  is  supposed 
that  those  words  tie  up  the  adventure  to  the  original  cargo  shipped  at  Alexandria, 
because  the  risk  is  to  attach  on  the  same  at  that  port,  and  to  continue  on  the  same 
until  safely  lauded  at  St.  Thomas,  etc.,  and  the  United  States.  Perhaps  a  very  strict 
grammatical  construction  might  lead  to  such  a  conclusion.  But  policies  have  never 
been  construed  in  such  a  strict  aud  rigid  manner.  Tiie  instrument  itself  is  somewhat 
loose  in  its  form,  and  has  always  received  a  liberal  construction  with  reference  to  the 
nature  of  the  voyage  and  the  manifest  intent  of  the  parties.  What  is  the  nature  of 
the  present  voyage  1  It  is  upon  the  face  of  the  policy  plainly  an  insurance  upon  all 
lawful  goods,  not  only  for  the  outward  voyage  to  the  West  Indies,  but  for  the  home- 
ward voyage  to  tlie  United  States.  The  underwriters  must  be  presumed,  equally  with 
the  assured,  to  know  the  nature  and  course  of  such  a  voyage.  It  is  for  the  purpose 
of  trade,  and  the  exchange  of  the  outward  cargo,  by  sale  or  barter,  for  a  return  cargo 
of  West  India  productions.  If  we  could  shut  our  eyes  to  the  knowledge  of  this  fact, 
belonging,  as  it  does,  intimately  to  the  history  aud  commercial  policy  of  the  nation 
itself,  as  disclosed  in  its  laws,  the  whole  evidence  in  the  case  furnishes  abundant  proofs 
of  its  notoriety.  The  true  meaning  of  tiie  policy  is  to  be  sought  in  an  exposition  of 
the  words,  witli  reference  to  this  known  course  and  usage  of  the  West  India  trade. 
The  parties  must  be  supposed  to  contract  with  a  tacit  adoption  of  it  as  the  basis  of 
their  engagements.  The  object  of  the  clause  under  consideration  may  be  thus  ration- 
ally exp<mnded,  as  intended  only  to  point  out  tlie  time  of  the  commencement  and  ter- 
mination of  the  risk  on  the  goods,  successively,  and  at  diffeient  periods  of  the  voyage, 
constituting  the  cargo.  It  would  be  pushing  the  argument  to  a  most  unreasonable 
extent,  to  suppose  that  the  parties  deliberately  contracted  for  risks  on  a  homeward 
voyage,  on  goods  which,  according  to  the  known  course  of  the  trade,  aud  the  very 
nature  of  the  commodities,  were  not,  and  could  not  be,  intended  to  be  brought  back 
to  the  Unitetl  States.  We  are  of  opinion  that  tiie  policy  was  for  the  whole  voyage 
round,  and  covered  any  return  cargo  taken  on  board  at  any  of  the  designated  ports  in 
the  West  Indies.  This  is  not  like  the  cases  cited  at  the  bar,  where  a  p(jlicy  on  goods 
at  and  from  a  particular  ])ort,  beginning  the  adventure  from  the  loading  thereof,  has 
been  held  not  to  cover  goods  taken  on  board  at  an  antecedent  port.  Those  are  all 
cases  of  insurance  u])on  a  single  passage,  unaffected  by  any  known  course  or  usage 
of  trade  to  explain  the  intentions  of  the  parties." 

In  Ilenshaw  v.  Mutual  Safety  Ins.  Co.,  2  Blatch.  99,  10-3  (1848),  Betts,  J.,  for  the 
court,  said  :  "  It  was  conceded,  on  tlie  argument,  that  a  policy  upon  an  interest  to  be 
acquired  after  the  execution  of  the  contract  is  valid.  This  is  the  ordinary,  and  per- 
haps the  most  serviceable,  class  of  insurances.  Cargoes  can  be  purchased  and  laden 
from  portJ,o  ])ort,  on  trading  voyages,  under  the  ])rotection  of  policies  already  in  ex- 
istence, without  waiting  for  the  means  of  obtaining  satisfactory  insurance  after  the 
interest  is  acquired.  The  same  principle  applies  to  the  changeable  proprietorship  of 
vessels." 

On  the  topic  of  this  section,  see  also  :  — 

Crowley  v.  Cohen,  3  B.  &  Ad.  478  (18.32)  ; 

Cha-xe  V.  Washington  Mut.  Ins.  Co.,  12  Barb.  59.5  (1852) ; 

Wilson  I'.  Jones,  L.  U.  2  Ex.  139  (Ex.  Cli.  1867) ; 

Stephens  v.  Australasian  Ins.  Co.,  L.  R.  8  C  P.  18  (1872); 

Boston  Ins.  Co.  v.  Globe  F.  Ins.  Co.,  174  Mass.  229  (1899). 
And  see  tiie  cases  on  the  amount  of  recovery,  post.  —  Ed. 


PAKT  II.,  SECT.  II.]       McGIVNEY   V.   PHCENIX   FIRE    INS.    CO.  67 

SECTION   II. 

Fire  Insurance. 

McGIVNEY  V.  PHCENIX   FIRE   INS.  CO. 

Supreme  Court  of  New  York,  1828.     1  Wend.  85. 

Action  on  a  policy  of  insurance.  On  the  29th  October,  1825,  the 
defendants  insured  the  plaintiff  against  loss  or  damage  by  fire  on  a  two 
story  frame  building,  privileged  as  a  grocery,  and  on  a  stable  and  shed 
adjoining,  situate  in  the  city  of  New  York,  §2,500,  and  on  his  stock  of 
groceries,  shop,  furniture  and  fixtures,  household  furniture,  &c.,  $5,000. 
The  plaintiff  was  at  the  time,  and  had  been  for  several  years,  in  pos- 
session of  the  premises.  About  a  year  previous  to  the  destruction  of 
the  property  by  fire,  which  took  place  in  December,  1825,  he  had 
bought  the  lot  on  which  the  buildings  were  erected,  and  entered  into  a 
written  contract  with  the  vendor,  by  which  it  was  agreed  that  the 
plaintiff  should  pay  the  vendor  for  the  same  85,000,  in  five  yearly  in- 
stalments, with  interest,  the  title  not  to  be  conveyed  until  all  the 
instalments  were  paid.  During  the  3-ear  preceding  the  fire,  he  had 
made  extensive  repairs  on  the  buildings.  At  the  time  of  the  fire,  one 
year's  interest  had  been  paid.  After  the  fire,  the  plaintiff  surrendered 
his  contract  to  the  vendor.  The  judge  at  the  circuit  ruled  that  the 
plaintiff  had  an  insurable  interest  in  the  premises.  The  jury  found  for 
the  plaintiff,  85,277.17.  A  bill  of  exceptions  to  the  opinion  of  the  judge 
was  tendered  and  signed,  and  the  plaintiff  now  moved  for  judgment  on 
the  ground  of  its  frivolousness. 

D.  Graham,  for  plaintiff.  It  is  not  necessary  to  constitute  an  iji.- 
surable  interest  that  the  insured  shall  have  the  absolute  and  unquali- 
fied property  of  the  effects  insiired.  2  Marsh,  on  Ins.  656.  The 
plaintiff  held  under  a  contract  in  presentL  ^The  vendor's  right  to  the 
consideration  money  was  vested  the  moment  the  contract  was  exe- 
cuted ;  and  the  destruction  of  the  buildings  would  have  been  no  bar  to 
a  bill  for  specific  performance,  nor  to  an  action  to  recover  the  instal- 
ments. 7  The  plaintiff  was  liable  to  a  direct  and  immediate  loss  byjhe 
destruction  of  the  J^uildings.  Phil,  on  Ins.  27.  In  a  case  of  marine 
insurance,  the  sale  of  a  vessel  was  held  to  vest  an  insurable  interest, 
although  no  bill  of  sale  was  executed  ;  and  it  was  agreed  that  the  ves- 
sel should  continue  in  the  names  of  the  vendors  until  the  whole  of  the 
purchase  money  was  paid,  part  of  which  only  was  paid  at  the  time  of 
the  sale.     Henry  v.  Clarkson  and  Van  Home,  1  Johns.  R.  385. 

S.  A.  Foote,  for  defendants,  denied  the  application  of  the  rules  reg- 
ulating insurable  interest  in  marine  insurances  to  insurances  against 
loss  by  fire.     The  ownership  of  a  vessel  seldom  affects  the  risk  as- 


68  MARKS   V.   HAMILTON.  [CHAP.  II. 

sumed,  whilst  that  of  inhabited  houses  very  materially  affects  such 
risk.  The  plaintiff  had  a  mere  equitable  interest  in  the  premises.  He 
had  paid  nothing  towards  the  purchase  except  one  year's  interest, 
which  probabl}'  did  not  exceed  the  rent  he  had  before  paid ;  and,  for 
aught  that  appears,  the  jury  may  have  allowed  him  in  this  verdict  the 
full  value  of  the  buildings.  The  plaintiff  did  not  disclose  his  interest 
at  th'e  time  of  the  insurance. 

By  the  Court,  Savage,  C.  J.  The  plaintiff  is  entitled  to  judgment. 
Though  the  fee  of  the  premises  was  in  another,  the  plaintiff  was  in  pos- 
session under  a  contract  of  purchase,  had  made  a  paymcnf^of  interest 
in  pursuance  thereof,  and  had  made  valuable  improvements.  He 
therefore  had  an  insurable  interest  in  tlie^ premise's!  The  omission  of 
disclosure  of  title  is  not  presented  by  the  bill  of  exceptions  as  a  point 
raised  at  the  trial,  and  cannot  now  be  considered. 

Judgment  for  plaintiff?- 


MARKS   V.   HAMILTON. 

Exchequer,  1852.     7  Exch.  323. 

This  was  an  action  of  covenant  against  the  Sun  Fire  Office,  sued  in 
the  name  of  their  treasurer,  under  the  54  Geo.  3,  c.  ix.,  on  a  policy  of 
insurance,  effected  by  the  plaintiff  on  a  dwelling-house,  auction  room, 
and  offices,  household  goods,  fixtures,  wearing  apparel,  &c.  The 
declaration  contained  the  usual  averment,  that,  at  the  time  of  the  mak- 
ing of  the  policy,  and  from  thence  until  and  at  the  time  of  the  loss  and 
damage,  &c.,  the  plaintiff  was  interested  in  the  said  dwelling-house, 
&c.  The  defendants  pleaded  (inter  alia)  that  the  plaintiff  was  not  at 
the  time  of  the  lo4s  interested  in  the  said  dwelling-house,  r)iodo  et 
forma.  /       '  < 

1  In  Columbian  Ihs.  (^ v.  Lawrence,  2  Pet.  25,  46-47  (1829),  Marshall,  C.  J., 
for  the  court,  said :  "That  an  equitable  interest  may  be  insured  is  admitted.  We  can 
perceive  no  reason  which  excludes  an  interest  held  under  an  executory  contract.  While 
the  contracKsubsists,  the  person  claiming  under  it  has  undoubtedly  a  substantial  in- 
terest in  the  property.  If  it  be  destroyed,  the  loss  in  contemplation  of  law  is  his.  If 
the  purchase  money  be  paid,  it  is  his  in  fact.  If  he  owes  the  purchase  money,  the 
property  is  its  efpiivalent,  and  is  still  valuat)le  to  him.  The  embarrassment  of  his 
affairs  may  be  such  that  his  debts  may  absorb  all  his  property ;  but  this  circumstance 
has  never  been  considered  as  proving  a  want  of  interest  in  it.  The  destruction  of  the 
property  is  a  real  loss  to  the  person  in  possession,  wlio  claims  title  under  an  executory 
contract,  and  the  contingency  that  his  title  may  be  defeated  by  subsequent  events  does 
not  prevent  this  loss.  We  perceive  no  reason  why  he  should  not  be  permitted  to  in- 
sure against  it.  The  cases  cited  in  argument,  and  those  summed  up  in  Piiillips  on 
Insurance,  26,  on  insurable  interest,  and  in  1  Marsliall,  104,  c.  4,  and  2  Marshall,  787, 
c.  11,  prove,  we  think,  that  any  actual  interest,  legal  or  equitable,  is  insurable." 

See  also  Southern  Ins.  and  Trust  Co.  i-.  Lewis,  42  Ga.  587  (1871 ) ;  Redfield  v.  Hol- 
land Purchase  Ins  Co.,  56  N.  Y.  .354  (1874) ;  Farmers  and  Mechanics'  Mut.  Ins.  Co.  v. 
Meckes,  10  Weekly  Notes  of  Cases,  .306  (S.  C.  Pa.  1881) ;  8.  c  38  Legal  Intelligencer, 
317.  — Ed. 


PART  IL,  SECT.  II.]  MARKS   V.    HAMILTON.  69 

At  the  said  trial  before  Pollock,  C.  B.,  at  the  Middlesex  Sittings 
after  last  Term,  it  appeared  that,  in  April,  1848,  the  plaintiff  was,  on 
his  own  petition,  discharged  under  the  Insolvent  Debtors  Act,  1  «&  2 
Vict.  c.  110.  On  the  5th  of  September  following,  he  effected  the 
polic}'  in  question,  on  propert}-  acquired  by  him  after  his  discharge. 
The  premises  and  goods  were  destro3-ed  by  fire  on  the  11th  of  Novem- 
ber, 1848,  subsequenth'  to  which,  his  creditors  having  discovered  fraud 
in  the  proceedings,  he  was  again  brouglit  before  the  Court ;  and  on 
a  re-hearing  of  the  case,  the  original  order  of  discharge  was  annulled, 
and  he  was  adjudged  to  be  imprisoned  for  twelve  months  from  the  date 
of  the  vesting  order.  The  learned  Judge  directed  the  jury  that  the 
plaintiff  had  an  insurable  interest  in  the  property-  in  question,  and  a 
verdict  was  found  for  him,  with  700?.  damages. 

The  Attorney-General  moved  (.January  15)  for  a  new  trial,  on  the 
ground  of  misdirection.  The  plaintiff  had  no  insurable  interest  in  this 
property.  The  1  &  2  Vict.  c.  110,  s.  37,  vests  in  the  provisional 
assignee  all  the  property  which  an  insolvent  possessed  at  the  time  of 
filing  his  petition,  and  also  all  the  future  estate  which  he  may  acquire 
before  he  becomes  entitled  to  his  discharge.  Now  in  this  case,  the  I 
order  for  the  insolvent's  discharge  having  been  annulled,  he  was,  at  the 
time  he  effected  the  insurance,  in  the  same  position  as  if  the  order  had 
never  been  made ;  and  consequentlj-  the  provisional  assignee  was 
entitled  to  the  property  in  question,  and  might  compel  the  insurance  \ 
Company  to  pa}'  the  mone^'  to  them.  A  party  who  insures  must  have 
a  real  and  tangible,  and  not  a  mere  speculative,  interest  in  the  property 
insured.  [Pollock,  C.  B.  It  is  enough,  if  he  is  responsible  to  some 
person  for  the  property.  There  are  man}-  cases  on  marine  policies, 
which  show  that,  if  a  person  can  be  called  upon  to  account  for  propert}', 
he  has  an  insurable  interest  in  it.^  Aldersox,  B.  The  insolvent,  hav- 
ing the  possession  of  the  property,  is  responsible  for  it  to  his  assignees ; 
then  why  may  he  not  insure  it?]  He  has  simply  a  naked  possession 
b}'  permission  of  his  assignees.  Cu)-.  adv.  vult. 

Pollock,  C.  B.  In  this  case,  which  was  a  motion  by  the  Attorney- 
General  for  a  new  trial  on  the  ground  that  there  was  no  insurable 
interest  in  the  plaintiff,  who  was  an  insolvent,  and  had  acquired  prop- 
erty after  he  had  obtained  his  discharge,  and  insured  it,  and  subse- 
quently the  discharge  was  revoked,  we  are  all  clearly  of  opinion  that, 
as  he  was  in  possession  as  the  apparent  owner,  responsible  to  those 
whqjwere  the^ r eaLownexs^ he . bad,  under  those  circ umstances,  an  insu r- 
able  interest.  That  is  all  that  we  have  to  inquire  into,  and  we  think 
that  there  ought  to  be  no  rule  to  consider  a  question  which  we  look 
upon  as  a  very-  plain  one.  •  Rule  refused? 

1  See  the  cases  collected,  1  Arnould  on  Insurance,  229.  —  Eep. 

2  On  the  question  whether  an  assignee  for  the  benefit  of  creditors  can  procure  la- 
snrance,  see  Sibley  v.  Prescott  Ins.  Co.,  57  Mich.  14  (1883).  —  Ed. 


70  CONVERSE   V.   CITIZENS   MUTUAL   INS.   CO.  [CHAP.  II. 

CONVERSE  V.  CITIZENS   MUTUAL  INS.   CO. 

Supreme  Judicial  Court  of  Massachusetts,  1852.     10  Cush.  37. 

Shaw,  C.  J.  This  case  is  presented  to  us  upon  a  report  of  evidence, 
submitted  to  the  court,  to  draw  inferences  of  fact  and  render  judgment. 
A  policy  was  made  witli  the  plaintiff,  insuring  a  house,  barn,  and  fur- 
niture. The  house  was  burned  down  within  the  time  covered  by  the 
insurance.  Several  grounds  of  defence  were  taken,  but  they  ultimately 
resulted  in  one  only,  which  was,  that  the  plaintiff  had  no  insurable 
interest ;  and  that  is  the  question  now  to  be  determined.  The  report 
presents  an  unusual  state  of  facts  ;  it  came  mainly  from  the  testimony 
of  the  plaintiff's  father.  It  appears  that  the  plaintiff  is  twenty-nine 
years  old,  the  only  child  and  heir  presumptive  of  the  father  ;  that  since 
the  plaintiff  came  of  age  he  and  his  father  have  transacted  business 
jointly  as  fanners  and  traders,  tavern-keepers,  and  holders  of  real 
estate  rented,  that  the  real  estate  stood  in  the  name  of  the  father,  that 
tt^heir  entire  earnings  from  labor,  and  gains,  and  profits,  and  from  all 
other  sources,  were  put  into  a  common  stock,  from  which  each  had 
Llrawn  according  to  his  exigencies,  without  any  particular  account, 
either  of  contributions  or  receipts.  In  this  state  of  things,  before  any 
division  or  account  taken,  the  building  in  question,  then  standing  in 
another  place,  was  purchased  out  of  the  common  stock,  and  removed 
on  to  the  land  of  the  father.  The  house  was  partly  occupied  by  the 
father,  and  a  part  let  to  a  tenant  by  the  joint  act  of  father  and  son. 

Upon  these  facts  the  court  are  of  opinion  that  the  plaintiff  had  an 
insurable"  interest  in  the  building.  By  consent  and  agreement  of  the 
owner  of  the  land,  this  building  was  purchased  and  fitted  up  out  of  the 
joint  stock,  the  rent  of  it  went  into  the  common  fund,  and  constituted 
part  of  the  joint  propert}'.  Tiie  whole  arrangement  constituted  a  quali- 
fied partnership  and  gave  to  each  as  agent  of  the  other,  the  legal  and 
equitable  rights  and  remedies  of  a  partner.  It  is  now  a  well  settled 
rule,  that  real  estate,  purchased  out  of  partnership  funds  and  held  for 
partnership  uses,  although  the  legal  estate  may  be  held  by  the  partners, 
as  tenants  in  common,  yet  it  is  charged  with  a  trust  for  the  payment 
and  satisfaction  of  all  partnership  debts  and  claims,  including  the 
claims  of  each  partner  upon  the  joint  funds.  Burnside  v.  Merrick,  4 
Met.  537  ;  Dyer  i\  Clark,  5  Met.  562  ;  Howard  v.  Priest,  5  Met.  582. 

And  this  principle  we  think  is  not  the  less  applicable,  when  the  legal 
estate  is  in  one  of  the  partners ;  it  is  alike  chargeable  with  a  trust  for 
liic  partnership  as  if  lield  by  both.  If  this  principle  would  raise  a  trust 
ill  the  real  estate  itself,  a  fortiori,  would  it  have  this  effect  in  regard  to 
an  interest  created  by  the  application  of  partnership  funds  in  a  build- 
ing erected  on  such  i-eal  estate.  We  are  of  opinion,  therefore,  that 
upon  a  settlement  of  the  joint  account,  this  building  must  have  been 
treated  as  joint  property,  for  his  share  of  which,  the  son  would  have 


PART  II.,  SECT.  II.]       OAKMAN  V.  DORCHESTER  MUT.  FIRE  INS.  CO.        71 

been  entitled  to  credit  in  partnership  account.  He  therefore  had  such 
an  equitable  interest  in  the  building  before  an}'  account  settled,  that 
though  it  stood  on  the  land  of  his  father,  he  must  sustain  a  pecuniary 
loss,  by  its  destruction  by  fire. 

The  defendants  acted  under  no  misapprehension  in  this  respect,  or  in 
not  obtaining  a  lien  on  the  real  estate  for  their  security  ;  because,  in 
tlie  application  for  insurance,  the  plaintiff,  in  answer  to  the  question 
"  Whose  is  the  property  to  be  insured?"  stated,  "  Applicant's  father's." 
Unless,  therefore,  the  defendant  company  intended  to  insure  the  plain- 
tiff upon  some  interest  other  than  that  of  a  title  to  the  estate,  the}' 
took  his  money  as  a  premium,  for  no  equivalent,  which  is  not  to  be 
assumed.  It  is  more  just  and  reasonable  to  conclude  that  they  in- 
tended to  insure  him  upon  such  equitable  interest  as  he  had,  in  a  com- 
bustible building,  standing  on  the  land  of  his  father,  by  the  loss  of 
which  he  would  sustain  damage.  Upon  these  grounds,  the  plaintiflf 
will  be  entitled  to  recover  one  half  of  the  insurable  value  of  the  build- 
ing, which  was  three  quarters  of  the  whole  value. 

Judgment  accordingly^ 

R.  A.  Chapman  and  G.  Ashmen,  for  the  plaintiff. 

If.  Morris,  for  the  defendants. 


OAKMAN  V.  DORCHESTER  MUTUAL  FIRE  INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1867.     98  Mass.  57. 

Contract  by  the  surviving  partner  of  the  firm  of  Oakman  &  El- 
dridge,  on  a  policy  of  insurance,  made  November  20,  1866,  against 
loss  by  fire  on  "  their  frame  church  building"  in  Somerville.  Answer, 
denial  of  any  insurable  interest  of  Oakman  &  Eldridge  in  the  property, 
either  at  the  date  of  the  policy  or  the  time  of  the  fire. 

At  the  trial.  Wells,  J.,  directed  a  verdict  for  the  plaintiff  on  facts 
which  are  stated  in  the  opinion,  and  reported  the  case  for  revision  by 
the  full  court. 

JI.  W.  Paine  and  R.  D.  Smith,  for  the  defendants. 

C  B.  Goodrich  and  S.  J.  Thomas,  for  the  plaintiff. 

Chapman,  J.  The  legal  title  to  the  land  on  which  the  church  build- 
ing stood  was  conveyed  to  Oakman  &  Eldridge  in  April,  1863.  At 
the  time  of  the  conveyance,  they  gave  a  conditional  bond  for  a  deed  of 
the  land  to  Carleton,  the  treasurer  of  a  religious  society.  After  the 
time  for  performance  of  the  condition  had  expired  he  offered  to  per- 
form it,  and  demanded  a  deed  ;  but  this  offer  and  demand  would  not 
affect  the  legal  title  to  the  land.  The  society  built  the  house  on  the 
land  without  any  contract  that  the}-  should  hold  it  as  personal  property, 

1  See  Phoenix  Ins.  Co.  v.  Hamilton,  14  Wall  504  (1871).  — Ed. 


72  WAKREN   V.   DAVENPORT   FIRE   INS.   CO.  [CHAP.  II 

or  an}'  express  or  implied  consent  that  it  might  be  removed,  but  wilb 
an  understanding  that  the  laud  should  be  held  for  them,  and  an  evident 
expectation  that  it  would  after  a  while  be  conve3-ed  to  them.  A  build- 
ing of  that  character,  erected  under  such  circumstances,  becomes  part 
of  the  realty.  Milton  v.  Colby,  5  Met.  78  ;  Murphy  v.  Marland,  8  Cush. 
575  ;  King  v.  Johnson,  7  Graj',  239  ;  Curtis  v.  Riddle,  7  Allen,  185. 

The  case  of  Wells  v.  Banister,  4  Mass.  514,  did  not  adjudge  the 
right  of  the  son  to  hold,  as  personal  property-,  the  house  built  on  land 
of  his  father,  but  only  that  the  father  was  under  no  implied  obligation 
to  pay  for  it.  The  court  had  no  occasion  to  state  what  were  the  rights 
of  the  son  in  or  to  the  property'  itself,  except  to  show  that  giving  the 
utmost  effect  to  the  consent  of  the  father  to  build  it  on  his  land  would 
only  make  it  personal  property,  and  removable  by  the  son.  Whether 
the  facts  of  that  case  were  such  as  to  make  the  house  personal  property* 
is  a  question  which  was  not  judicially  determined  in  that  case,  and  not 
presented  for  determination. 

It  is  contended  that  the  house  became  personal  property  by  a  sheriffs 
sale  in  November,  1866.  The  sale  was  on  an  execution  against  the 
■societ}-,  and  the  plaintiff  consented  that  it  might  be  sold  as  personal 
property.  But  it  is  admitted  that  he  gave  notice  at  the  auction,  and 
before  the  sale,  that  the  building  was  part  of  the  realty,  and  belonged 
to  Oakman  &  Eldridge,  and  that  only  the  society's  interest  could  be 
sold,  whatever  that  might  be.  This  was  a  revocation  of  his  consent  to 
its  sale  as  personal  property.  No  title  to  it  passed  by  the  sale  ;  and  at 
the  time  of  the  fire,  December  9,  1866,  the  legal  title  was  in  Oakman  & 
Eldridge.  Apparentl}',  they  were  tenants  in  common.  Whatever  may 
be  the  equitable  rights  of  the  society  or  its  treasurer,  they  cannot  be 
considered  in  this  action.  Oakman  &  Eldridge  had  an  insurabls-intotv 
est  iu  the  building,  and  the  plaintiff  is  entitled  to  recover  as  survivor. 

Judgment  for  the  plaintiff  on  the  verdict.^ 


WARREN  ET  AL.  V.  DAVENPORT  FIRE  INS.   CO. 
ScpREME  Court  of  Iowa,  1871.     31  Iowa,  464. 

Appeal  from  Clinton  District  Court. 

Action  on  a  policy  of  insurance,  issued  by  defendant  on  alleged 
property  of  Goodale  «fe  Hosford,  payable,  in  case  of  loss,  to  the  plain- 
tiffs. It  is  averred  in  the  petition  that  on  the  20th  daj-  of  April,  1870, 
in  consideration  of  the  premium  of  $125  then  agreed  to  be  paid  bj-  one 
Goodale  to  defendant,  the  defendant,  by  its  duly  authorized  agent, 
agreed  to  insure,  and  did  then  insure,  said  Goodale  &  Hosford,  from 

1  See  Mayor  of  New  York  i'.  Hamilton  F.  Ins.  Co.,  10  Bosworth,  537  (1863) ;  Allen 
V.  Sun  Mutual  Ins.  Co.,  36  La.  Ana.  767  (1884).  — Ed. 


PART  II.,  SECT.  II.]       AVAEREN   V.    DAVENPORT   FIRE    INS.    CO.  73 

twelve  ox-lock  noon  of  that  da}'  until  twelve  o'clock  noon  on  the  20tli 
day  of  April,  1871,  against  loss  or  damage  by  fire,  to  the  amount  of 
$2,500  on  their  private  stock  contained  in  a  one  story  frame  saw-mill, 
uiachiner}',  fixed  and  movable,  engine  and  boilers  therein,  and  known 
as  that  of  the  Dubuque  Lumber  Companj',  of  Dubuque,  Iowa,  —  loss, 
if  any,  payable  to  the  plaintiffs  ;  that  the  defendant,  by  its  said  agent, 
on  the  da}'  aforesaid,  for  the  said  consideration,  agreed  to  make  and 
deliver  to  said  Goodale  &  Hosford  the  defendant's  polic}'  of  insurance, 
in  writing,  to  evidence  said  insurance  ;  and  that  on  the  29th  day  of 
April,  1870,  and  after  the  destruction  of  the  insured  propert}',  and 
with  full  knowledge  of  that  fact,  said  defendant,  by  its  said  agent,  did 
deliver  its  said  policy  of  insurance,  dated  April  20,  1870.  It  is  further 
alleged  that  the  premium  was  duly  paid  by  Goodale  &  Hosford,  in 
pursuance  of  the  agreement,  and  was  received  by  the  defendant  with 
knowledge  of  all  the  facts.  It  is  also  averred  that  the  said  Dubuque 
Lumber  Company,  at  the  date  of  said  policy,  was  and  still  is  a  corpo- 
ration under  the  laws  of  this  State  ;  that  by  the  "  private  stock  "  before 
mentioned  was  meant  the  capital  stock  which  said  Goodale  &  Hosford 
then  had  and  still  have  in  said  corporation,  all  of  which  was  known  to 
the  agent  of  defendant  at  the  time  of  the  insurance  ;  and  by  means  of 
such  stock  said  Goodale  &  Hosford  had  aud  continued  to  have  an  in- 
terest in  the  insured  property,  viz. :  in  said  saw-mill,  machinery,  etc., 
to  an  amount  exceeding  §2,500,  over  and  above  so  much  of  their  inter- 
est therein  as  was  covered  by  an  insurance  of  815,000,  effected  by  the 
corporation  in  its  corporate  name ;  that  the  plaintiffs  are  creditors  of 
Goodale  &  Hosford  to  a  large  amount,  and  hold  the  certificates  for  a 
considerable  amount  of  the  stock  of  said  corporation  as  security  for  the 
payment  of  the  money  due  them  from  said  Goodale  &  Hosford,  and 
that  the  insurance  was  effected  with  the  full  knowledge  and  consent  of 
said  lumber  compan}-. 

It  is  further  averred  that  the  true  and  actual  cash  value  of  the  inter- 
est of  Goodale  &  Hosford  in  the  property  covered  by  the  insurance 
was,  when  the  same  was  destroyed  by  fire  on  the  29th  day  of  April, 
1870,  more  than  $2,500  over  and  above  their  interest  in  said  property 
as  covered  by  the  insurance  of  $15,000,  in  the  name  of  the  corporation, 
and  that  said  Goodale  &,  Hosford  have  in  all  respects  conformed  to 
and  observed  and  kept  the  conditions  of  the  said  polic}-.  A  copy  of 
the  policy  is  attached  to  the  petition,  in  which  it  is  stipulated  that  "  the 
loss  or  damage  is  to  be  estimated  according  to  the  true  and  actual 
cash  value  of  the  property  at  the  time  the  same  shall  happen,  and  be 
paid,"  etc. 

To  this  petition  the  defendant  demurred  on  two  grounds  :  Firs't,  that 
it  does  not  show  that  the  plaintiffs  have  any  interest  in  the  property 
destroyed  or  in  the  policy;  second,  that  the  petition  does  not  show 
that  Goodale  &  Hosford  had  any  insurable  interest  in  the  property-  in- 
sured at  the  time  the  insurance  was  effected  by  them.  This  demurrer 
was  sustained  and  plaintiffs  appeal. 


74  WARREN   V.   DAVENPORT   FIRE   INS.    CO.  [CHAP.  IL 

Cotton  <b  Cross,  for  the  appellants. 
W.  K  Leffingtcell,  for  the  appellee. 

Miller,  J.  The  question  raised  by  the  demurrer  is  whether  the 
parties  effecting  the  insurance  in  this  case  had  an  insurable  interest  in 
the  property  insured  at  the  time  the  risk  was  taken,  and  at  the  time  of 
loss  by  fire.^  .  .  . 

In  the  ease  under  consideration,  the  assured  were  stockholders  in  the 

.Dubuque  Lumber  Company,  a  corporation  for  pecuniary  profit.     The 

property  destroyed  belonged  to  the  corporation.     The  insurance  was 

lupon  the  interest  which  the  assured  had  in  that  property  by  virtue  of 

(the  capital  stock  therein  owned  by  them. 

I  The  object  of  the  insurance  was  to  indemnify  the  assured  against 
loss  to  them  in  the  event  of  a  destruction  of  the  property  by  fire. 
Could  or  would  they  sustain  loss  in  such  event?  How  would  their 
interest  be  affected  ?  It  seems  to  us  to  be  beyond  controversy  that, 
in  case  of  the  destruction  of  the  corporate  property  by  fire,  the  stock- 
holders sustain  loss  to  a  greater  or  less  extent,  dependent  on  the  par- 
ticular circumstances.  Suppose  the  case  of  a  grain  elevator  upon  some 
one  of  our  numerous  railroad  lines,  built,  owned,  and  managed  by  a 
joint- stock  corporation ;  that  this  is  the  only  property  of  the  corpora- 
tion ;  that  the  entire  capital  stock  is  represented  in  and  by  this  prop- 
erty ;  that  in  consequence  of  the  profitable  nature  of  the  business  large 
dividends  are  realized  by  the  stockholders,  and  the  stock  is  above  par 
in  tlie  market.  The  destruction  of  this  property  by  fire  would  at  once 
result  in  the  loss  of  dividends  to  the  stockholders  and  a  destruction  of 
the  value  of  the  stock,  or  at  least  to  its  reduction  to  a  nominal  value. 
The  entire  property,  representing  the  whole  capital  of  the  corporation, 
being  destroyed,  it  is  difficult  to  perceive  what  would  give  any  value  to 
the  stock,  it  is  true  that,  primarily,  the  loss  is  that  of  the  corpora- 
tion, and  hence  it  may  insure,  but  the  corporation  may  refuse  to  nisure, 
and  then  the  real  and  actual  loss  falls  on  the  stockholders. 

The  appellee  argues  that  shares  of  stock  in  a  corporation  are  choses 
in  action,  and  are  not  considered  to  be  an  interest  in  the  real  property 
of  the  company,  and  cites  numerous  authorities  to  sustain  this  position. 
This  may  be  admitted  without  denying  the  shareholders'  "insurable 
interest"  in  the  property  of  the  corporation.  A  mortgage,  also,  is  but 
a  chose  in  action.  The  mortgagee  acquires  no  right  to  the  mortgaged 
proi)erty  which  can  be  attached,  levied  on  under  a  general  execution, 
or  that  can  be  inherited.  It  is  a  mere  security  for  a  debt.  Eaton  v. 
Whitney,  3  Pick.  484;  Smith  ?;.  Peoples'  Bank,  11  Shep.  (Me.)  185; 
Abbott  y.  Mutual  Fire  Ins.  Co.,  17  id.  414;  Middleton  Savings  Bank 
V.  Dubuque,  15  Iowa,  394  ;  Newman  v.  De  Lorimer,  19  id.  244  ;  Bald- 
win V.  Thompson,  15  id.  504 ;  Burton  v.  Hintrager,  18  id.  348 ;  Hil- 
liard  on  Mort.  215. 

And  yet  the  cases  are  uniform  to  the  effect  that  a  mortgagee  of  real 
property  has  an  insurable  interest  therein  which  he  may  insure  on  his 

1  The  omitted  passage  stated  the  general  doctrine  as  to  insurable  interest.  —  Ed. 


PART  II.,  SECT.  II.]       WARREN   V.   DAVENPORT    FIRE    INS.    CO.  75 

own  account,  but  that  when  he  does  so  it  is  but  an  insurance  of  his 
debt.  Eaton  v.  Whitne}-,  siq^ra.  And  in  case  of  damage  by  fire  to 
the  premises  before  payment  of  tlie  mortgage,  his  loss,  if  any,  is  that 
his  security  has  been  impaired  or  lost.  His  interest  is  but  a  chose  in 
action  in  the  nature  of  a  security  which  he  may  insure,  so  that  in  case 
of  destruction  of  or  damage  to  the  property  upon  which  his  security 
rests,  he  will  be  indemnified  for  the  loss  lie  actually  sustains.  So,  also, 
it  seems  to  us  that  the  owner  of  stock  in  a  corporation  for  pecuniary 
profit  has  a  like  interest  in  the  corporate  property.  A  mortgagee  of 
real  property  has  an  insurable  interest  in  the  mortgaged  premises, 
based  upon  the  interest  he  has  in  the  preservation  of  the  same  as  secu- 
rity for  a  debt.  He  has  a  legal  right  to  contract  for  indemnity  against 
injury  to  the  value  of  his  security. 

TJpon  precisely  the  same  principle,  a  stockholder  may  contract  for 
indemnity  againstlniurv  to  the  value  of  his  stock,  lor  ne  also  has"gTr 
interest  in  the  preservation  of  the  corporate  property  from  destruction 
By  fi7e  ;  and  in  its  destrur-tjon  hp.  snstnins  loss  in  so  far  as  the  value 
of  his  stock  is  depreciatp'l  in  p.nnstpgiiftncejhereof,  or  his  dividends" 
cut  off. 

The  argument  that  if  this  is  allowed  owners  of  stock  worth  not  more 
than  ten  per  cent  upon  its  nominal  value  may  be  insured  at  its  par 
value,  and  in  case  of  loss  by  fire  such  par  value  of  the  stock  recovered 
from  the  insurer,  seems  to  us  to  be  unsound.  Without  entering  into  a 
discussion  in  detail  of  what  would  be  the  exact  measure  of  recovery  in 
such  case,  we  simply  answer  that  no  more  than  the  actual  loss  sus- 
tained is  in  any  case  recoverable.  This  rule  is  well  established,  and 
rests  upon  just  principles.  See  Angell  on  Fire  and  Life  Ins.,  c.  11, 
and  cases  cited  in  notes. 

The  question  under  consideration  has  not  received  direct  judicial  de- 
termination in  any  of  the  States,  so  far  as  we  have  been  able  to  dis- 
cover. The  case  of  Phillips  v.  Knox  County  Ins.  Co.,  20  Ohio,  174,  is 
cited  and  claimed  as  an  authority  against  the  right  of  a  stockholder  to 
insure.  The  decision  in  that  case,  as  a  careful  examination  of  the  same 
fully  shows,  was  made  entirely  upon  a  construction  of  the  charter  of 
the  insurance  company.^  .  .   . 

The  judgment  of  the  District  Court  is  Beversed.^ 

1  Here  the  facts  of  that  case  were  summarized.  —  Ed. 

2  Ace:  Seaman  v.  Enterprise  F.  &  M.  Ins.  Co.,  5  McCrary,  558  (U.  S.  C  C,  E. 
D.  Mo.  1883) ;  s.  c.  18  Fed.  Rep.  250;  and  these  marine  cases :  Wilson  v.  Jones,  L.  R. 
2  Ex.  139  (Ex.  Ch.  1867),  and  Riggs  v.  Commercial  Mut.  Ins.  Co.,  125  N.  Y.  7  (1890) 
—  Ed. 


-76  WILLIAMS   V.    ROGER   WILLIAMS   INS.    CO.  [CHAP.  IL 

WILLIAMS  V.  ROGER  WILLIAMS  INS.  CO. 
Supreme  Judicial  Court  of  Massachusetts,  1871.     107  Mass.  377. 

Contract  on  a  policy  of  insurance,  dated  Jul}'  5,  1870,  b}'  which 
the  defendants  insured  "  Little  and  Stanton,  mortgagees,"  in  consider- 
ation of  a  premium  by  them  paid,  $3,500  for  one  ^"^eaFoirccrtain  build- 
ings and  fixed  machinery,  "  situate  in  Huntington,  Mass.,  and  known 
as  the  C.  F.  Whitaker  &  Co.'s  Mill,"  payable  in  case  of  loss  to  the  plain- 
tiff, and  containing,  among  others,  these  provisions:  "If  the  interest 
of  the  insured  in  the  property,  whether  as  owner,  trustee,  consignee, 
factor,  agent,  mortgagee,  lessee,  or  otherwise,  is  not  truly  stated  in 
this  policy,  this  policy  shall  be  void."  "  If  the  interest  of  the  insured 
in  the  property  be  any  other  than  the  entire,  unconditional,  and  sole 
ownership  of  the  property  for  the  use  and  benefit  of  the  insured,  or  if 
the  building  insured  stands  on  leased  ground,  it  must  be  so  represented 
to  the  company,  and  so  expressed  in  the  written  part  of  this  policy ; 
otherwise  the  policy  shall  be  void." 

The  case  was  submitted  to  the  judgment  of  the  Superior  Court,  and, 
on  appeal,  of  this  court,  upon  an  agreed  statement,  the  material  part 
of  which  was  as  follows :  •'  On  May  26,  1868,  Clarence  F.  Whitaker 
and  his  partner,  being  owners  of  the  premises,  gave  a  mortgage  thereof 
to  William  A.  Little  and  Atherton  J.  Stanton,  partners  under  the  firm 
of  Little  &  Stanton,  to  secure  six  notes  made  by  the  moi-tgagors  of 
that  date,  amounting  in  all  to  $4,000,  payable,  with  interfet  annually, 
in  two,  three,  four,  five,  six,  and  seven  years  respectively,  after  date, 
to  said  Little  &  Stanton  or  order.  On  January  31,  1870,  Little  & 
Stanton,  for  the  sum  of  $4,000  received  by  them  from  the  plaintiff, 
assigned  the  mortgage  and  indorsed  the  notes  to  the  plaintiff.  None 
of  the  notes  have  yet  been  paid.  They  and  the  mortgage  are  still 
held  by  the  plaintiff.  Little  &  Stanton  have  become  absolutely 
liable  to  pay  those  notes  which  have  matured  ;  the  same  having  been 
duly  at  maturity  presented  for  payment,  and  payment  thereof  demanded 
and  refused,  and  notice  of  such  presentment,  demand,  and  refusal,  and 
that  the  holder  would  look  to  them  for  payment,  having  been  duly  sent 
to  Little  &  Stanton.  On  the  notes  not  yet  matured  their  liability  is  the 
ordinary  liability  of  indorsers  on  notes  not  yet  due.  The  buildings  on 
the  premises  mortgaged  and  described  in  the  policy  were  destroyed  by 
accidental  fire  in  August,  1870,  of  which  due  notice  and  proofs  were 
given  to  the  defendants.  The  loss,  if  the  plaintiff  is  entitled  to  recover 
anything,  was  total.  The  premises,  apart  from  the  buildings  destroyed 
by  fire,  were  and  are  insuflficicnt  in  value  to  satisfy  the  mortgage  debt. 
The  mortgagors  were  at  the  time  of  the  fire  and  ever  since  have  been 
insolvent." 

A.  L.  Soulc,  for  the  plaintiff. 

G.  M.  Stearns,  for  the  defendants. 


PART  II.,  SECT.  II.]      "WILLIAMS   V.    ROGER    WILLIAMS   INS.    CO.  77 

Grat,  J.  It  is  admitted  that  Little  and  Stanton  are  the  assured  in 
this  policy",  and  that  the  plaintiff  is  the  only  person  to  whom  any  sum 
recoverable  under  it  is  to  be  paid.  Loring  v.  Manufocturers'  Insurance 
Co.,  8  Gray,  28  ;  Bates  v.  Equitable  Insurance  Co.,  10  Wallace,  33. 
Upon  the  facts  agreed  by  the  parties,  two  questions  have  been  argued : 
1st.  Whether  Little  and  Stanton  had  an  insurable  interest ;  2d. 
Whetlier,  if  they  had,   that  interest  is  well  described  in  the  policy. 

1.  In  the  present  state  of  the  law  there  can  be  no  doubt  that,  at  the 
time  oTprocuriutr  thla  Ijolicv,  Little  and  Slaiilun,  althuu;Lih  the\  had  liO 
legal  title  in  the  property^  HnH  nn  pgnifnblp  right  and  an  insurable  in- 
terest  therein.  The  mortgage  stood  as  security  for  the  payment  of  the 
mortgage  notes,  and  the  assured,  having  themselves  indorsed  those 
notes  at  the  time  of  assigning  the  mortgage,  would  be  entitled  in  equity, 
upon  being  charged  on  those  notes  and  paying  the  amount  thereof,  to 
have  the  mortgage  reassigned  to  them,  to  secure  reimbursement  from 
the  original  makers  of  the  notes  and  mortgage.  Eastman  v.  Foster, 
8  Met.  19  ;  Bryant  v.  Damon,  6  Gray,  564  ;  Rice  v.  Dewej-,  13  Gray, 
47;  New  Bedford  Institution  for  Savings  v.  Fairhaven  Bank,  9  Allen, 
175;  Matthews  u.  ^ikin,  1  Comst.  595.  In  Gordon  v.  Massachusetts 
Insurance  Co.,  2  Pick.  249,  one  who  had  made  an  absolute  bill  of  sale 
of  a  vessel,  and  taken  back  an  agreement  in  writing  from  the  purchas- 
ers to  apply  the  proceeds  of  the  vessel  to  the  payment  of  certain  notes 
and  obligations  due  from  him  and  indorsed  b}'  them,  was  held  to  have 
retained  an  insurable  interest  in  the  vessel.  In  Strong  v.  Manufac- 
turers' Insurance  Co.,  10  Pick.  40,  it  was  held  that  a  mortgagor  of 
real  estate,  whose  equity  of  redemption  had  been  seized  and  sold  on 
execution,  had  still,  so  long  as  the  time  of  redeeming  from  such  sale 
had  not  expired,  an  insurable  interest  in  the  premises.  And  it  is  now 
well  established  that  even  one  who  has  no  title,  legal  or  equitable,  in 
the  property,  and  no  present  possession  or  right  of  possession  thereof, 
3-et  has  an  insurable  interest  therein,  if  he  will  derive  benefit  from  its 
continuing  to  exist,  or  will  suffer  loss  by  its  destruction.  Putnam  v. 
Mercantile  Insurance  Co.,  5  Met.  386;  Eastern  Railroad  Co.  y.  Relief 
Insurance  Co.,  98  Mass.  420,  423,  and  other  cases  there  cited  ;  Spring- 
field Insurance  Co.  v.  Brown,  43  N.  Y.  389. 

2.  We  are  also  of  opinion  that  the  interest  of  the  assured  was  suffi- 
ciently described  in  the  polic3\^  .  .  . 

Judgment  for  the  plaintiff . 

1  The  remainder  of  the  opinion  dealt  with  thi.s  point.  —  Ed. 


78  CUMBERLAND    BONE    CO.    V.    ANDES    INS.    CO.  [CHAP.  IL 


CUMBERLAND   BONE  CO.   v.   ANDES   INSURANCE   CO. 
Supreme  Judicial  Court  of  Maine,  1874.     64  Me.  466. 

On  report.^ 

Strout  &  Holmes,  for  the  plaintiffs. 

Hoxoard  S  Cleaves,  and  C  W.  Larrahee,  for  the  defendants. 

Barrows,  J.  The  plaintiffs  claim  to  recover  a  loss  of  $2,000  under 
a  policy  issued  by  the  defendants  upon  a  stock  of  fish  scrap  contained 
in  the  Atlantic  Oil  Company's  Works  in  Boothba}'. 

After  the  testimony  was  out  a  default  was  entered,  to  be  taken  cff  if 
upon  a  full  report  of  the  testimony  we  conclude  that  the  juiy  would  not 
be  authorized  to  find  that  the  plaintiffs  had  an  insurable  interest  in  the 
property. 

This  stipulation  differs,  it  will  be  seen,  in  more  than  one  particular 
from  the  more  common  one  which  presents  to  this  court  the  whole  case, 
and  all  the  (juestions  both  of  law  and  fact  with  power  to  draw  infer- 
ences as  a  jur}'  might. 

As  the  default  is  to  stand  if  the  jury  would  be  authorized  to  find  that 
the  plaintiffs  had  an  insurable  interest,  we  must  accept  the  stipulation 
as  equivalent  to  an  admission  that  no  question  is  made  as  to  plaintiffs' 
right  to  recover,  if  they  had  an  insurable  interest,  and  that  the  testi- 
mony of  plaintiffs'  witnesses  is  to  be  accepted  as  true  as  to  all  matters 
respecting  which  there  is  an}'  conflict. 

In  all  cases  of  conflicting  testimony  the  jury  are  authorized  to  find 
the  facts  in  accordance  with  the  statements  of  those  witnesses  whom 
the}'  may  deem  most  deserving  of  confidence  and  belief;  and  it  cannot 
be  said  that  they  "would  not  be  authorized  to  find"'  all  the  facts  as 
plaintiffs'  witnesses  state  them. 

The  jury  "would  be  authorized  to  find,"  then,  that  Luther  Maddox, 
a  manufacturer  of  porgy  oil  and  fish  scrap,  dry  and  crude,  in  pursuance 
of  negotiations  with  the  plaintiffs  looking  to  his  furnishing  them  with 
large  quantities  of  dried  fish  scrap,  had  received  advances  from  the 
plaintiffs  before  the  taking  out  of  this  policy  to  the  amount  of  $2,000, 
and  had  the  dried  fish  scrap  on  hand  to  an  amount  in  value  considerably 
exceeding  the  sum  advanced  by  the  plaintiffs. 

As  the  fish  scrap  or  porgy  chum  was  not  wanted  by  plaintiffs  until  the 
following  season,  it  remained  at  the  Oil  Company's  Works,  not  sepa- 
rated from  that  belonging  to  Maddox,  under  Maddox's  agreement  to 
store  it  for  plaintiff,  free  of  expense^and  deliver  it  when  wanted,  and 
to  get  it  insured  in  order  to  secure  the  plaintiffs'  advances. 

In  pursuance  of  this  agreement  Maddox  told  the  agent  of  the  defend- 
ant company  that  plaintiffs  had  scrap  at  Boothbay,  that  they  had  made 
advances  to  him  to  the  amount  of  $2,000,  and  he  wanted  a  policy  to 

^  The  reporter's  statement  has  been  omitted.  —  Ed. 


PART  IL,  SECT.  II.]       CUMBERLAND  BONE  CO.  V.  ANDES  INS.  CO,  79 

protect  their  interest  in  case  of  loss.  He  procured  a  policy  on  his  own 
interest  at  the  same  time  for  a  like  amount.  The  cash  value  of  the 
whole  stock  of  fish  scrap  at  the  time  of  the  insurance  and  of  the  fire  was 
;$5;000,  and  it  was  \Qvy  nearlj*  a  total  loss.  No  part  of  it  had  ever 
been  delivered  to  plaintiffs,  but  Maddox  stated  fully  to  the  agent  of  the 
insurance  company  the  situation  and  condition  of  the  stock  "  and  the 
risk  the  compan}'  was  taking  just  as  it  was." 

He  testified  in  substance  that  the  porg}-  chum  burned  was  the  same 
upon  which  the  plaintiffs  had  made  the  advancements  to  him  ;  that 
there  were  150  tons  in  the  whole,  of  which  he  owned  three-fifths  and  the 
Cumberland  Bone  Company  two-fifths  by  virtue  of  the  advances  made 
him  ;  that  he  lield  it  for  them  to  be  delivered  as  wanted. 

The  insurance  compan}'  paid  the  amount  of  the  policy  running  to 
Maddox,  but  resist  the  claims  of  the  plaintiffs  on  the  ground  that  Mad- 
dox had  made  no  delivery  to  them,  that  the  property  in  no  specific  part 
of  the  porgy  chum  had  ever  passed  from  Maddox  to  the  plaintiffs,  was 
not  at  their  risk,  and  so  they  had  no  insurable  interest. 

If  it  were  essential  to  the  existence  of  an  insurable  interest  that  the 
assured  should  have  a  legal  title  to  the  property  upon  which  the  insur- 
ance is  effected,  the  case  would  present  a  different  and  perhaps  more 
difficult  question.  But  such  is  not  the  law.  An  equitable  interest  suf- 
fices. Cliancellor  Kent  lays  down  the  law  thus:  "The  interest  need 
not  be  a  property  in  the  suliject."  "  It  does  not  necessarily  imply  a 
right  to  or  property  in  the  subject  insured.  It  may  consist  in  having 
some  relation  to,  or  concern  in,  the  subject  of  the  insurance,  which 
relation  or  concern  may  be  so  affected  by  the  peril  as  to  produce 
damage." 

The  result  is  that  a  person  so  circumstanced  that  he  is  interested  in 
the  safety  of  a  thing,  derives  a  benefit  from  its  existence  and  suffers 
prejudice  from  its  destruction,  has  an  interest  in  that  thing  which  is  the 
lawful  subject  of  insurance. 

"An  equitable  as  well  as  a  legal  interest,  and  an  interest  held  under 
an  executory  contract  are  valid  subjects  of  insurance.''  Columbian  Ins. 
Co.  V.  Lawrence,  1  Peters  Sup.  C.  25.  Mortgagor  and  mortgagee, 
pledgor  and  pledgee,  both  have  an  insurable  interest  in  the  subject  of 
the  mortgage  or  pledge,  —  the  former  to  the  full  value  of  the  property, 
the  latter  to  the  amount  of  his  debt  thereb}'  secured. 

For  further  illustrations  of  interests  which  are  deemed  insurable,  .so 
as  to  relieve  the  contract  from  the  character  of  a  wager,  and  pi-event 
it  from  being  deemed  unavailable  for  want  of  insurable  interest,  see 
Locke  V.  No.  American  Ins.  Co.,  13  Mass.  61  ;  Bartlett  v.  Walter,  id., 
267  ;  Oliver  v.  Greene,  3  ]\rass.  133  ;  Rider  v.  Ocean  Ins.  Co.,  20  Pick. 
259;  Waters  v.  Monarch  F.  &  L.  Ass.  Co.,  5  El.  &  Bl.  870;  Godin 
V.  London  Ass.  Co.,  1  Burr.  489  ;  Wolff  v.  Horncastle,  1  Bos.  &  Pul. 
316;  Sutherland  v.  Pratt,  12  Mees.  &  Wels.  16;  Wells  v.  Philadelphia 
Ins.  Co.,  9  Serg.  &  Rawle,  103  ;  Ins.  Co.  v.  Chase,  5  Wall.  513. 

Mr.  Arnould  in  his  "  Treatise  on  Insurance,"  vol.  i,  p.  229,  premising 


80  CUMBERLAND    BONE    CO.    V.    ANDES   INS.    CO.  [CHAP.  II. 

that  "it  is  very  difficult  to  give  any  definition  of  an  insurable  interest," 
states  it  "as  the  fair  result  of  the  cases,  that,  in  order  to  have  an  in- 
surable interest,  it  is  not  necessary  to  have  an  absolute  vested  owner- 
ship or  property  in  that  which  is  insured  ;  it  is  sufficient  to  have  a  right 
in  the  thing  insured,  or  a  right  derivable  out  of  some  contract  about  the 
thing  insured  of  such  a  nature  that  the  party  insuring  may  have  benefit 
from  its  preservation  and  prejudice  from  its  destruction."  We  think 
that  the  plaintiffs  under  the  facts  here  developed  had  such  an  interest 
in  the  subject  of  insurance.  Maddox  was  holding  it  in  good  faith  in 
trust  for  them.  He  recognized  the  interest  they  had  acquired  in  it  by 
their  advances,  held  it  subject  to  their  order,  and  procured  the  insur- 
ance in  their  name  to  protect  their  advances,  refraining  from  insuring  it 
in  his  own,  and  making  known  to  Mr.  Plummer,  the  defendants'  agent, 
the  situation  and  condition  of  the  property,  and  the  fact  that  advance- 
ments had  been  made  to  him  thereon  by  the  plaintiffs,  and  that  the 
object  of  the  policy  was  to  protect  those  advances.  It  is  true  that  so 
long  as  Maddox  was  solvent  the  plaintiffs  might  not  lose  by  the  destruc- 
tion of  the  propert}'.  But  the  same  is  true  of  ever}^  mortgagee  or 
pledgee.  We  fail  to  see  how  the  insurers  could  be  injuriously  affected, 
suppose  it  true  that  the  agent  understood  that  the  part  belonging  to  the 
jDlaintiffs  had  been  separated,  weighed  off,  and  formally  delivered.  It 
does  not  appear  that  the  risk  the}'  assumed  was  changed  or  affected. 
As  we  settle  the  only  question  presented  by  the  report  in  the  plaintiffs' 
favor,  the  entry  must  be 

Default  to  stand.     Judgment  for  the  plaintiffs  for 
$2,000  aiuJ  interest  from  Sept.  10,  1872. 

Appleton,  C.  J.,  Walton,  Dickerson,  Virgin,  and  Peters,  JJ., 
concurred.^ 

1  In  Box  V.  Provincial  Ins.  Co.,  18  Grant's  Chancery,  280  (1871),  a  warehouseman 
sold  3,500  bushels  of  wlieat,  stored  in  liis  warehouse  and  mingled  with  wheat  belong- 
ing to  himself  and  to  others.  The  warehouseman  gave  to  the  buyers  a  receipt  tliat 
promised  delivery  on  order.  The  statutes  as  to  warehouse  receipts  did  not  apply  to 
the  case.  The  buyers  procured  insurance.  The  majority  of  the  Ontario  Court  of 
Error  and  Appeal,  though  expressing  an  opinion  that  there  had  not  been  a  legal 
transfer  of  the  property,  held  that  the  buyers  had  an  insurable  interest. 

In  Matthewson  v.  Royal  Ins.  Co.,  16  Lower  Canada  Jurist,  45  (1871),  there  was  a 
sale  of  a  certain  number  of  barrels  of  oil,  not  identified  and  not  separated  from  other 
barrels  of  oil.  The  majority  of  the  Quebec  Court  of  Queen's  Bench  held  that  the 
buyers  had  an  insurable  interest.  —  Ed. 


PAKT  11.,  SECT.  II.]       EOHRBACH   V.   GERMANIA   FIRE   INS.    CO.  81 


EOHRBACH,    Respondent,    v.    GERMANIA   FIRE   IXS.    CO., 

Appellant. 

Court  of  Appeals  of  New  York,   1875.     62  N.  Y.  47. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  third  judicial  department,  affirming  a  judgment  in  favor  of  plain- 
tiff entered  upon  a  verdict.  (Reported  below,  1  N.  Y".  S.  C.  [T.  &  C] 
339.) 

This  was  an  action  upon  a  police  of  insurance,  by  its  terms  insuring 
plaintiff  upon  ''his  two  framed  buildings"  situate  in  the  village  of 
.Jeffersonville,  N.  Y.  Prior  to  the  28th  June,  1868,  the  plaintiff  had 
been  in  the  employ  of  Margaretha  Hartmann,  and  she  was  indebted  to 
him  for  his  labor  and  services.  On  that  day  they  intermarried.  On 
tiie  tliirtieth  of  the  same  month  she  executed  and  delivered  to  him  an 
instrument,  in  writing,  of  the  body  of  which  the  following  is  a  copy : 

".Jeffersonville,  .Tune  30th,  1868. 

'•  I  do  hereby  certify  that  I  owe  to  John  Rohrbach  the  sum  of  seven 
hundred  dollars ;  and,  also,  twenty-five  dollars  for  each  and  every 
month  from  the  fourteenth  day  of  July,  1863,  and  for  every  month  he 
may  liye  with  me  henceforth  without  any  deduction  whatsoever,  which 
amount  shall  be  a  lien  on  my  property." 

She  died  intestate  July  8th,  1868,  leaving  personal  property  of  the 
value  of  S600,  and  a  lot  in  said  village  upon  which  were  the  buildings 
in  question.  The  principal  value  of  the  premises  was  in  the  buildings. 
One  Armbrust  was  appointed  administrator  of  her  estate.  Her  indebt- 
edness, other  than  that  to  plaintiff,  was  from  81,200  to  $1,400.  Her 
indebtedness  to  him  was  about  $2,100.  Plaintiff  continued  in  the  use 
and  occupation  of  the  buildings.  In  December,  1868,  plaintiff  negoti- 
ated for  insurance  on  the  buildings.^  .  .   . 

Defendant's  counsel  moved  for  a  nonsuit  on  the  ground  of  breach  of 
warranty,  and  that  plaintiff  had  not  an  insurable  interest.  The  motion 
was  denied,  and  defendant's  counsel  excepted. 

H.  C.  Cheticood,  for  the  appellants. 

tT".  A.  Thompson,  for  the  respondents. 

FoLGER,  J.  The  plaintiff  cannot  maintain  this  action,  unless  he  had 
an  insurable  interest  in  the  buildings  which  were  the  subject  of  the  risk 
taken  b\'  the  defendants,  and  which  were  destroyed  by  fire.  He  seeks 
to  found  such  an  interest,  upon  the  instrument  in  writing,  executed  by 
his  wife  after  her  marriage  to  him. 

"Without  entering  minutely  into  a  consideration  of  the  effect  of  the 
marriage  upon  her  pre-existing  obligations  and  liabilities  to  him,  it  is 

1  In  the  statement  and  in  the  opinion,  passages  not  bearing  on  insurable  interest 
have  been  omitted.  —  Ed. 

6 


82  KOHRBACH  V.    GEKMANIA  FIRE  INS.  CO.      [CHAP.  II. 

sufficient  to  sa}',  that  the  instrument  executed  b}-  her  was  based  upon  a 
consideration  adequate  to  uphold    her  express  promise ;   that   though 
made  by  a  married  woman  it  was  in  due  form  to  affect  her  separate 
estate  ;  and  that  though  a  transaction  between  a  wife  and  her  husband, 
yet  equity  would  have  upheld  and  enforced  it  in  his  favor  against  lier, 
had  she  lived,  and  will  enforce  it  against  her  estate  now  that  she  is 
dead.     By  it,  he  was  an  equitable  creditor  of  her  estate,  at  the  time 
of  the   insurance ;    but    he    was    no   more    than    a   general   creditor. 
Though  the  instrument  contains  the  phrase,  "shall  be  a  lien  on  ni}' 
property,"  no  specific  lien  was  thereby  created,  and  so  far  as  that  in- 
strument had  effect,  no  more  than  a  general  equitable  lien,  yet  to  be 
enforced  and  made  specific  by  a  judgment  in  an  equitable  action.     Tiie 
plaintiff  stood  thereby  in  no  better  plight,  so  far  as  having  an  insurable 
interest  in   the  buildings,  than  would   have   stood  a  creditor   of  the 
deceased  wife,  who    held    a  judgment   only,   rendered    and   docketed 
against  her,  which  would  have  become  a  general   lien  upon  her  real 
property.     He  did  not  stand  in  so  good  i)light,  but  for  other  facts  now 
to  be  mentioned.     She  had  died  after  giving  the  instrument,  leaving 
personal  and  only  this  real  estate  ;  a  person  other  than  the  plaintiff 
had  taken  out  letters  of  administration  thereon  ;  the  personal   estate 
was  by  much  insufficient  to  pay  the  debts  against  her;  and  this  real 
estate,  including  the  insured    buildings,  would  in  the  due   course   of 
administration,  for  a  space  of  at  least  three  years  from  the  granting  of 
letters  of  administration,  be  liable  to  sale  for  the  purpose  of  meeting  her 
liabilities,  and  it  was  the  only  fund  to  which  the  plaintiff  could  look  for 
payment ;  the  plaintiff  was  in  the  possession  of  the  Iniildings,  occup}-- 
ing  them  at  the  time  of  the  fire.     Judgment  creditors,  if  an}',  would 
have  had  a  preference  in  payment  from  the  personal  estate  ("2  R.  S. 
87,  §  27,  subs.  3,  4),  and,  of  course,  the  lien  acquired  by  the  docketing 
of  their  judgments  could  not  be  disturbed  by  the  application  of  the 
administrator  for  leave  to  sell  the  real  estate,  for  the  payment  of  debts, 
and  the  obtaining  of  permission  to  do  so.     Ikit  yet  the  plaintiff  had  a 
right  to  compel  an  accounting  by  the  administrator  (2  R.  S.  92,  §  52), 
and  a  sale  of  the  real  estate  (id.  108,  §  48),  for  the  payment  of  his  and 
other  debts.     Thus,  the  real  estate  was  to  a  degree  subject  to  the  pa}*- 
ment  thereof,  and  was  in  fact,  from  the  slender  amount  of  the  personal 
property,  substantially  all  that    he  could   look  to  for   payment.     His 
position  was  not  as  good  in  some  respects  as  that  of  a  judgment  credi- 
tor, but  it  was  not  unlike  it ;  both  had  a  right  to  have  the  real  estate 
sold  for  the  payment  of  their  debts  ;  for  a  certain  space  of  time  it  could 
not  escape  the  exercise  of  that  right ;  and  it  cannot  be  said  that  the 
interest  of  a  judgment  creditor  in  the  real  estate,  as    an   interest  in 
property,  was  greater  or  nearer  than  that  of  the  plaintiff.     It  was  more 
manageable,  but  not  more  direct  in  the  end. 

The  general  definitions  of  the  phrase  "insurable  interest,"  as  given 
in  the  textbooks,  are  quite  vague  and  not  always  concordant.  (See  1 
Arnould  on  Mar.  Ins.,  229  ;  Bunyon  on  Life  Ass.,  16  ;  Hughes  on  Ins., 


PART  II.,  SECT.  II.]       ROHRBACH    V.    GERMAXIA   FIRE    IXS.    CO.  83 

30  ;  1  Marshall  on  Ins.,  115  ;  1  Phillips  on  Ins.,  2  ;  id.  107  ;  Sherman 
on  Ins.,  93  ;  Parsons  on  Merc.  Law,  507  ;  Parsons  on  Cont. ,  438  ; 
Angell  on  Ins.,  §  56  ;  Flanders  on  Fire  Ins.,  342  ;  May  on  Ins.,  §  76.) 
The  last-cited  author  says,  that  an  insurable  interest  sometimes  exists, 
where  there  is  not  any  present  property,  any  jus  in  re^  ov  Jus  ad  rem, 
and  siicli  a  connection  must  be  established  between  the  subject-matter 
insured,  and  the  party  in  whose  behalf  the  insurance  has  been  effected, 
as  may  be  sutlicient  for  deducing  the  existence  of  a  loss  to  him,  from 
the  occurrence  of  an  injury  to  it ;  and  that  the  tendency  of  modern 
decisions  is  to  admit  to  the  protection  of  the  contract  whatever  act, 
event,  or  property  bears  such  relation  to  the  person  seeking  insurance, 
as  that  it  can  be  said,  with  a  reasonable  degree  of  probability,  to  have 
a  bearing  upon  his  prospective  pecuniary  condition.  While,  on  the 
other  hand,  the  statement  is,  that  the  interest  must  be  founded  on 
some  legal  or  equitable  title  ;  and  if  it  be  inconsistent  with  the  only 
title  which  the  law  can  recognize,  it  will  not  be  deemed  an  insurable 
interest.  (Marshall  on  Ins.,  supra.)  But  the  result  of  a  comparison 
of  the  text- writers  above  cited,  is,  that  there  need  not  be  a  legal  or 
equitable  title  to  the  property  insured.  If  there  be  a  right  in  or  against 
the  property,  which  some  court  v.ill  enforce  upon  the  property,  a  right 
so  closely  connected  with  it,  and  so  much  dependent  for  value  upon  the 
continued  existence  of  it  alone,  as  that  a  loss  of  the  property  will  cause 
pecuniary  damage  to  the  holder  of  the  right  against  it,  he  has  an  insur- 
able interest.  Thus  a  mortgagee  of  real  estate,  though  he  hold  also 
the  bond  of  the  mortgagor,  has  an  insurable  interest  in  the  buildings  ; 
while  a  judgment  creditor  of  the  same  mortgagor,  his  judgment  being  a 
lien  upon  the  same  real  estate  and  the  same  buildings,  is  said  not  to 
have  an  insurable  interest  in  them.  The  interest  of  the  first  is  said  to 
be  specific,  the  interest  of  the  latter  general.  As  a  general  rule,  the 
distinction  may  be  sound.  But  I  think  it  would  be  difficult  to  show  an 
appreciable  practical  difference  in  the  pecuniary  result  to  tlie  two.  If 
the  mortgagor  and  judgment  debtor  should  die  leaving  no  personal 
property,  and  no  real  estate  save  that  mortgaged,  it  principally  valu- 
able for  the  buildings  upon  it,  and  they  should  be  burned,  each  must 
then  look  to  the  real  estate,  the  lands  alone,  for  a  security  for  his  debt : 
and  if  that  be  insufficient,  each  must  with  equal  certaint}'  suffer  a 
pecuniary  disaster,  resulting  directly  from  the  fire.  What  legal  reason 
is  there,  why  the  one  may  not,  as  well  as  the  other,  protect  himself  by 
a  contract  of  insurance? 

In  Grevemeyer  v.  So.  Mut.  F.  Ins.  Co.  (62  Penn.  St.  340),  it  was 
held  that  a  judgment  creditor,  whose  judgment  was  taken  for  the  pur- 
chase-money of  the  propert}-  burned,  had  no  insurable  interest.  (See, 
also,  Conard  r.  At.  Ins.  Co.,  1  Pet.  386.)  The  reason  given  is,  that 
his  lien  was  general,  and  not  specific ;  that  he  was  not  interested  in  the 
property,*  but  in  his  lien  only.  His  judgment  was  distinguished  from  a 
mortgage,  in  that  the  latter  is  a  specific  pledge  of  definite  property,  and 
the  mortgagee  has  necessarily  an  interest  in  it ;  while  the  judgment  is  a 


84  KOHKBACH    V.    GEEMANIA    FIKE    INS.    CO.  [CHAP.  IL 

general  and  not  a  specific  lien  ;  so  that  if  there  be  personal  property  of 
the  debtor  it  is  to  be  satisfied  out  of  that ;  if  there  be  not,  then  it  is  a 
lien  on  all  his  real  estate  without  discrimination.  And,  citing  Cover  v. 
Black  (1  Barr,  493),  it  is  said  that  a  judgment  creditor  has  neither  J^<6' 
in  re,  nor  Jus  ad  rem,  as  regards  the  judgment  debtor's  property.  It 
seems  to  me  that  tlie  decision  there  goes  very  much  upon  the  fact  or 
the  assumption,  that  the  judgment  debtor  had  other  property,  real  and 
personal,  to  look  to  than  the  real  estate  damaged  ;  and  that  it  does  not 
touch  the  case  of  a  judgment  creditor  whose  onl^-  or  principal  reliance 
for  payment  was  upon  the  property  destroyed.  That  there  need  not 
be  an  existing  J«s  m  re,  ov  Jus  ad  rem,  is  declared  by  Story,  J.,  in 
Hancox  v.  Fishing  Ins.  Co.  (3  Sum.  132-140) ;  and  also,  that  the 
right  to  pursue  the  debtor  personally  does  not  deprive  the  creditor  of 
an  insurable  interest.  (Id.)^.  .  .  It  will  be  perceived,  that  between 
the  case  cited  from  62  Pennsylvania  State  (supra)  and  the  case  in 
hand,  there  are  some  features  of  distinction  :  here  the  debtor  was  dead  ; 
there  was  no  longer  any  personal  liability,  nor  sufficient  personal  prop- 
erty to  satisfy  the  debt;  nor,  as  may  be  inferred,  an}'  other  real  estate 
than  that  insured.  A  fund  for  the  payment  of  the  debt  was  to  be 
found  only  in  this  estate,  and  principally  in  the  buildings  insured.  By 
force  of  these  circumstances,  and  b}-  operation  of  the  statutes  above 
referred  to,  this  real  estate  was  for  a  certain  length  of  time  bound  for 
the  payment  of  this  debt.  As  it  was  bound,  as  it  alone  was  bound,  as 
there  was  naught  else,  nor  any  person,  liable  for  the  debt,  it  is  difficult 
to  see  why,  in  effect,  the  debt  was  not  as  if  a  specific  lien  upon  this 
real  estate.  A  lien,  in  its  most  extensive  signification,  is  a  charge  upon 
propert}'  for  the  payment  or  discharge  of  a  debt  or  dut}'.  A  specific 
lien  is  a  charge  upon  a  particular  piece  of  property,  by  which  it  is  held 
for  the  payment  or  discharge  of  a  particular  debt  or  duty,  in  priority  to 
the  general  debts  or  duties  of  the  owner.  It  is  not  the  name  of  the 
right  which  gives  or  refuses  an  insurable  interest ;  it  is  the  character  of 
the  right.  A  specific  lien  gives  an  insurable  interest,  because  a  loss  of 
the  particular  property  is  at  once  seen  to  afl^ect  disastrously  the  specific 
lienor.  But  when  a  right  to  payment  of  a  debt  exists,  which  can  be 
satisfied  only  from  a  particular  piece  of  propert}',  is  there  not  the  same 
result  from  the  same  cause?  If  I  have  a  debt  against  another,  and  he 
have  but  one  piece  of  real  estate  from  which  my  debt  may  be  made, 
and  he  die  leaving  no  personal  estate,  though  in  technical  language  my 
lien  ma}'  not  be  specific  upon  that  real  estate,  it  is  true  in  fact,  that 
there  is  a  specific  piece  of  property  from  which  alone  I  may  hope  to 
satisfy  my  lien,  and  which  is  alone  legally  bound  to  satisfy  it,  and  I  am, 
practically,  just  like  one  to  whom  that  i)iece  of  real  property  has  been 
specifically  pledged  for  a  specific  debt.  If  the  latter,  for  that  he  may 
suflTer  pecuniary  loss  by  the  burning  of  that  real  property,  has  such  an 

1  Here  were  cited  Putnam  v.  Mercantile  Marine  Tns.  Co  ,  ante,  p.  48  (1843);  Wil- 
son V.  Jones,  L.  K.  2  V.x.  139  (Ex.  Ch.  1867) ;  and  Buck  v.  Chesapeake  Ins.  Co.,  1  Pet. 
151,  163  (1828).  — Ed. 


PART  11.,  SECT.  II.]       IIOHRBACH    V.    GERMANIA    FIRE    INS.    CO.  85 

interest,  as  that  he  may  insure  against  that  burning,  I  have  such  an 
interest  also,  and  I  too  may  insure.  The  proljabiht}-,  nay,  the  possi- 
bility, of  the  payment  of  the  plaintiff's  debt,  out  of  the  propert}-  of  the 
deceased  debtor,  rested  entirely  upon  the  contingency  of  this  real 
estate  remaining  witliout  serious  impairment  in  value. 

The  reports  of  this  State  are  meagre  upon  this  precise  question.  In 
Mapes  V.  Coffin  (5  Paige,  296),  the  complainant  had  levied  upon  chat- 
tels in  the  hands  of  an  executor  of  the  judgment  debtor,  which  had  been 
insured  by  the  testator  in  his  lifetime,  and  which  were  destroyed  b}- 
fire  after  the  testator's  death,  and  after  the  levy.  The  chancellor,  in  a 
contest  between  judgment  creditors,  gave  the  avails  of  the  insurance  to 
the  creditors  who  had  made  tiie  first  levy.  Perhaps  the  levy  upon  the 
property  made  a  specific  lien  upon  it,  and  so  the  case  does  not  much 
aid  us.  In  Mickles  v.  Roch.  City  Bk.  (11  id.  118),  the  defendants 
were  judgment  creditors  of  a  manufacturing  corporation,  had  issued 
several  executions,  had  sold  and  bid  in  personal  property,  and  adver- 
tised for  sale  the  real  estate.  Pending  the  advertisement,  they  took  out 
insurance  on  the  buildings  and  fixtures  in  the  joint  name  of  themselves 
and  the  corporation.  A  few  days  after,  the  real  estate  was  sold  and 
bid  in  by  the  defendants.  After  that  occurred  a  fire,  with  damage  to 
the  buildings  and  fixtures.  The  insurers  repaired  the  buildings,  and 
paid  for  the  damage  by  fire  to  the  fixtures.  The  real  estate  was  never 
redeemed.  There  seems  to  have  been  no  doubt  made  of  there  being 
an  insurable  interest  in  the  creditors.  By  advertising  the  premises  for 
sale,  they  came  nearer  making  their  judgment  a  specific  lien  thereupon, 
though  it  wa's  still  a  general  lien  upon  all  other  like  propert}*.  In 
Springfield  F.  and  M.  Ins.  Co.  v.  Allen  (43  N.  Y.  389-395,  396),  it 
is  said  by  Allen,  J.  :  "  An  insurable  interest  may  exist,  without  any 
estate  or  interest  in  the  corpus  of  the  thing  insured  ;  "  "  it  was  enough 
tliat"  there  be  ••a  pecuniar}-  interest  in  the  preservation  and  protection 
of  the  property,  and"  that  one  "  might  sustain  a  loss  by  its  destruc- 
tion." I  know  of  no  decision  in  this  State  bearing  more  directly  upon 
this  precise  question  than  that  in  Herkimer  v.  Rice  (27  N.  Y.  163). 
The  propositions  advanced  there  are  sufficient,  if  sustainable,  or  if  to  be 
taken  as  authority,  to  uphold  an  insurable  interest  in  the  plaintiff  in  the 
case  in  hand.  Denio,  Ch.  J.,  there  says  :  "  It  is  certain  that  the 
creditors  had  no  estate  whatever  in  the  real  property.  In  a  technical 
sense  they  had  no  lien.  But  they  had  important  rights  connected  with 
it,  and  a  pecuniary  interest  in  its  preservation.  .  .  .  The  law  does 
not  require  that  the  assured  shall  have  an  estate  or  property  in  the 
subject  of  the  insurance.  .  .  .No  property  in  tlie  thing  insured  is 
required.  It  is  enough  if  the  assured  is  so  situated  as  to  be  liable  to 
loss,  if  it  be  destroyed  by  the  peril  insured  against.  Creditors  having 
no  other  means  of  enforcing  their  debts,  but  having  a  direct  and  certain 
right  to  subject  the  real  estate  to  a  sale  for  their  benefit,  have  an  inter- 
est as  positive  and  absolute  as  one  having  a  specific  lien,  or  even  as  the 
owner   liimself.  .   .   .  The    creditors,   whether   by  simple   contract   or 


86  "ROHRBACH    V.    GERMANIA   FIRE    IXS.    CO.  [CHAP.  II. 

special!}',  iincler  our  laws,  are  parties  interested  in  the  real  estate, 
when  there  is  a  deficienc}'  in  the  personal,  for  the^-  have  power  to  sub- 
ject it  to  the  payment  of  their  debts."  It  is  urged  that  these  remarks 
are  obiter  dicta,  and  tliat  the  real  question  to  be  decided  and  which 
was  decided  in  the  case,  was  whether  an  administrator  of  an  insolvent 
estate  had  such  an  interest  in  the  real  estate  of  his  intestate  as  was 
insurable.^  .  .  .  The  direct  question  was,  indeed,  whether  an  admin- 
istrator of  an  insolvent  estate  miglit  insure  its  real  property.  But  the 
reasoning  of  the  opinion  shows  that  this  was  deemed  to  depend  upon 
whether  the  creditors  of  that  estate  had  such  an  interest.  After  stat- 
ing the  question,  he  says:  "It  will  be  convenient  to  consider,  in  the 
first  place,  tchether  the  creditors  t/iemselces  have  such  an  -interest ;  and 
then,  whether  the  administrator  can  he  said  to  rejiresent  that  interest, 
so  as  to  enable  him  to  make  the  contract  for  the  benefit  of  the  credi- 
tors.''^ Again,  ..."  the  creditors  of  an  insolvent  estate  are  gener- 
all}'  numeious,  and  having  no  opportunity  for  concerted  action,  except 
through  the  executor  or  administrators,  they  could  scared}-  ever  avail 
themselves  of  the  advantage  of  insurance,  unless  b}-  the  agency  of  the 
representatives.  If  the  administrators  cannot  insure,  the  parties  iyiter- 
ested,  the  creditors^  will  be  excluded  from  a  remed\'  which  all  other 
persons  having  a  similar  interest  possess."  He  then  proceeds  to  show 
that  an  agent  or  trustee  ma}-  insure  the  interest  of  a  party  beneficially 
interested,  and  that  the  administrator,  though  not  the  trustee  of  the 
land,  is  a  trustee  of  a  power  over  it,  such  as  is  recognized  b}'  law,  and 
says :  "In  this  case  it  was  sufficiently  apparent,  fi-om  the  language  of 
the  receipt  for  the  premium,  that  it  was  the  interest  of  the  creditors 
which  was  designed  to  be  covered  1)y  the  contract ;  the  beneficiaries  of 
the  administrator  were  the  parties  intended  to  be  protected ;  the  in- 
surers, therefore,  must  have  seen  and  known  that  it  was  the  interest  of 
the  creditors  .  .  .  which  it  was  the  object  of  the  policy  to  protect, 
.  .  .  and  which  was  the  subject  of  the  contract."  There  is  more  to 
the  same  effect;  and  the  opinion  is  based  uj)on  the  ground  that  the 
administrator  is  the  representative  of  the  creditors.  Indeed,  but  for 
there  being  creditors,  the  administrator  would  have  no  concern  in  the 
land,  and  the  concern  he  has  with  it  is,  that  they  through  him  ma\-  dis- 
pose of  it  for  the  payment  of  their  debts.  Herkimer  v.  Rice  was  a 
case  in  which  there  was  full  argument  and  consideration.  I  consider  it 
gives  reasons,  as  well  as  authority,  for  the  determination  of  the  ques- 
tion now  in  consideration.-^  .  .  .  See  also  Waring  v.  Loder  (53  N. 
Y.  581),  where  it  is  cited  as  authorit}-  for  the  proposition,  that  a  mort- 
gagor after  he  has  sold  the  mortgaged  premises  has  still  an  interest 
in  it  which  is  insurable,  inasmuch  as  it  stands  between  him  and  per- 
sonal liabilit}'  for  the  mortgage  debt.  The  distinction  is  not  percep- 
tible, so  far  as  this  question  is  concerned,  between  a  power  to  obtain 

^  A  passage  on  the  vahie  of  dicta  has  been  omitted.  —  Ed. 

'■^  Here  were  cited  Savage  v.  Howard  Ins.  Co,  .52  N.  Y.  502  (1873),  and  Clinton  v, 
Hope  Iu8.  Co.,  45  N.  Y.  454  ( 1871 ).  —  Ed. 


PART  II.,  SECT.  II.]       IXSURAXCE    COMPANIES    V.    THOMPSOX.  87 

indemnity  against  loss  from  being  obliged  to  pa}-  a  debt  owing  to  an- 
other, and  against  loss  from  failure  to  obtain  payment  of  a  debt  owinw 
to  one's  self.  I  conclude  that  a  creditor  of  the  estate  of  one  deceased, 
whose  personal  property  left  is  insufficient  for  the  payment  of  his  debts, 
lias  an  insurable  interest  in  the  sole  real  estate  of  the  deceased  debtor 
v.'hen  it  is  plain  that  if  it  is  damaged  by  Qre  a  pecuniary  loss  must 
ensue  to  the  creditor  thereby.^  .  .  .  Judgment  reversed.'^ 


INSURANCE   COMPANIES   v.    THOMPSON. 

Supreme  Court  of  the  United  States,  1877.     95  U.  S.  547. 

Error  to  the  Circuit  Court  of  the  United  States  for  the  District  of 
Kentucky. 

The  facts  are  stated  in  the  opinion  of  the  court. 

1  In  Creed  i-.  Sun  Fire  Office,  101  Ala  522,  529-.5.30  (1893),  Colemax,  J.,  for  the 
court,  siiid :  — 

"  Has  a  creditor  an  in.'iurable  interest  in  a  building,  the  propert^v  of  the  estate  of 
his  deceased  debtor,  which  may  be  suljjected  to  his  debt,  the  personal  propertv  bein« 
insufficient  to  pay  tiie  debts  of  the  estate  ?  After  much  deliberation  our  conclusion  is 
tliat  he  has  an  interest  which  may  be  insured.  We  concede  and  affirm  that  a  simple 
contract  creditor,  without  a  lien,  either  statutory  or  contract,  without  Kjus  in  re  or  jus 
ad  rem,  owning  a  mere  personal  claim  against  his  debtor,  has  not  an  interest  in  the 
property  of  his  debtor.  Such  contracts  are  void  as  being  against  public  policv.  We 
do  not  think  tlie  principle  applies  after  the  death  of  the  debtor,  as  to  property  liable 
for  the  debt  and  whicli,  if  destroyed,  will  result  in  the  loss  of  the  debt.  The  real  e* 
tate  as  well  as  the  personal  property  of  a  deceased  debtor  is  liable  for  his  debts,  but 
tlie  real  estate  cannot  be  subjected  to  the  payment  of  his  debts  until  after  the  pe* 
sonalty  has  been  exhausted.  After  the  death  of  the  debtor  the  debt  is  no  longer  cit- 
forceable  in  personam.  The  proceedings  to  reach  the  property  of  the  estate  of  the 
deceased  debtor  are  in  rem.  The  property  of  the  debtor  takes  the  place  of  the  debtor, 
and  becomes,  as  it  were,  the  debtor.  .  .  . 

"  The  relation  of  debtor  and  creditor  invests  the  creditor  with  an  insurable  interest 
in  the  life  of  his  debtor.  ...  It  would  seem  upon  like  principles  that  when  tlie  projv 
erty  becomes  directly  subject  to  proceedings  in  rem  for  the  satisfaction  of  the  debt,  the 
creditor  should  become  invested  with  an  insuralde  interest  in  the  property.  Certainly 
if  a  creditor  cannot  obtain  satisfaction  of  his  debt  from  the  personal  property  of  his 
deceased  debtor,  and  has  a  legal  right,  wliich  cannot  be  defeated,  to  enforce  its  colleo 
tion  by  proceedings  in  rem  against  a  building  belonging  to  the  estate  of  the  deceased 
debtor,  and  if  it  be  true  that  the  destructiim  of  the  building  by  fire  would  immediately 
and  necessarily  result  in  pecuniary  loss,  the  loss  being  the  direct  consequence  of  tlie 
fire,  the  creditor  has  an  interest  in  the  protection  of  the  building.  He  has  no  lien  as 
in  the  case  of  a  mortgagee,  nor  such  lien  as  the  statute  may  confer  on  an  attaching  or 
execution  creditor,  but  his  right  to  subject  the  specific  property  to  his  debt  invests  him 
witli  an  interest  but  little  less,  if  any,  than  that  of  the  attaching  or  execution  creditor 
or  mortgagee." 

And  see  Spare  v.  Home  Mut.  Ins.  Co.,  8  Sawyer,  618  (U.  S.  C.  C,  Dist.  Oregon, 
1883)  ;  Shepard  c.  Peabody  Ins.  Co  ,  21  W.  Va.  368  (1883).  — Ed. 

2  The  reversal  was  based  upon  breach  of  warranty  and  of  express  conditions,  as 
explained  in  passages  that  have  been  omitted.  —  Ed. 


88  INSURANCE    COMPANIES   V.    THOMPSON.  [CHAP.  II. 

Mr.  Charles  W.  Jones  and  Mr.  J.  Hubley  Ashton,  for  the  plaintiffs 
in  error. 

Mr.  G.  C.  Whart07i,  contra. 

Mr.  Justice  Miller  delivered  the  opinion  of  the  court. 

The  defendants  in  error  recovered  in  the  Circuit  Court  of  the  United 
States  for  the  District  of  Kentucky  a  joint  judgment  for  83,317.58  on  a 
policy  of  insurance  issued  b}'  The  Germania  Fire  Insurance  Company, 
The  Hanover  Fire  Insurance  Company,  The  Niagara  Fire  Insurance 
Company,  and  The  Republic  Fire  Insurance  Company,  on  whiskey  in  a 
distiller's  bonded  warehouse.  The  distillery  and  the  warehouse  were 
owned  and  conducted  by  George  H.  Dearen  ;  but  the  spirits  were  dis- 
tilled for  and  owned  by  the  defendants  in  error  at  the  time  the  polity 
was  issued.  They  were  also  sureties  on  Dearen's  distillery  bond  to 
the  United  States,  and  as  such  were  liable  for  the  tax  on  the  whiskey 
if  not  paid  by  Deai-en,  or  made  out  of  the  whiske}'.  It  will  be  thus 
seen  that  Thompson  &  Walston  had  two  distinct  interests  in  the  whiskey, 
—  namely,  the  general  ownership  of  it  and  their  lialiilit}-  for  the  tax  on 
it  which  Dearen  had  assumed  to  pay,  atid  which,  if  he  did  not  pay, 
might  fall  upon  them  in  either  of  two  ways  ;  to  wit,  by  a  seizure  and  sale 
of  the  whiskey  for  the  tax  by  the  government,  or  b}-  a  suit  on  the  bond 
on  which  they  were  sureties.  The  policy,  which  was  manifestly  designed 
to  protect  both  these  interests  of  the  assured  from  loss  or  damage  by 
fire,  was  for  that  reason  peculiar  and  special  in  its  provisions.  'By  its 
terms  the  companies  bind  themselves  to  ' '  insure  Messrs.  Thompson  & 
Co.  against  loss  or  damage  by  fire  to  the  amount  of  $8,000  for  the  term 
of  one  year,  upon  whiske}',  their  own  or  held  by  them  on  a  commission, 
including  government  tax  thereon  for  which  the}-  ma}'  be  liable,  con- 
tained in  the  log  bonded  warehouse  of  G.  H.  Dearen." 

After  the  whiskey  was  burned,  these  companies  paid  their  share  with 
others  of  the  loss  on  the  value  of  tlie  whiskey  apart  from  the  tax  ;  but 
by  the  receipt  which  they  took  it  was  stated  that  the  claim  for  liability 
on  account  of  tax  remained  undecided.  Thompson  &  Co.  were  sued  on 
their  bond  with  Dearen  for  this  tax ;  and  they  notified  the  insurance 
companies  of  the  suit,  and  asked  them  to  defend  it,  which  was  declined. 
Judgments  were  obtained  in  each  case  on  the  bonds,  and  Thompson  & 
Co.  replevined  the  judgments.  By  this  is  meant  that  they  gave  bail 
which  operated  as  a  stay  of  execution  for  the  period  which  the  law  of 
Kentucky  allowed  in  such  cases.  The  present  action  was  brought  by 
Thompson  &  Walston  to  recover  the  amount  of  these  judgments. 

On  the  trial,  evidence  was  given  tending  to  show  that  before  the  fire 
Walston  had  sold  to  his  partner,  Thompson,  all  his  interest  in  the  part- 
nership, and  that  Hite  Thompson  had  become  interested  with  the  other 
Thompson  in  the  business  to  the  extent  of  one-fifth.  And,  on  the 
hypothesis  that  the  jury  believed  this,  the  counsel  for  the  companies 
asked  the  court  in  several  forms  to  instruct  the  jury  that  plaintiffs  could 
not  recover.  This  proposition  was  based  on  a  provision  in  the  policy 
that  it  should  be  void  ' '  if  the  property  be  sold,  or  transferred,  or  any 


PART  II.,  SECT.  II.]       INSUEANCE    COMPANIES   V.   THOMPSON.  89 

change  take  place  in  title  or  posses.sion,  whether  by  legal  process,  or 
judicial  decree,  or  voliintar}'  transfer  or  conveyance." 

The  refusal  of  the  court  to  do  so,  and  the  charge  of  the  court  to  the 
effect  that  this  change  in  regard  to  the  ownership,  if  true,  did  not  defeat 
the  right  to  recover  the  amount  of  the  judgments  against  plaintiffs  for 
taxes,  are  the  errors  on  which  a  reversal  is  asked. 

The  argument  of  counsel  on  the  effect  of  a  mere  change  in  the  title 
by  one  partner  selling  to  another  his  interest  in  the  property  insured, 
and  the  authorities  presented  on  both  sides,  are  very  able  and  full,  and 
the  decisions  are  conflicting.  So,  also,  the  effect  of  the  introduction  of 
a  new  part  owner,  in  a  case  like  the  present,  where  the  possession  and 
care  of  the  goods  remain  unchanged,  are  well  considered  ;  but  in  the 
view  we  take  of  the  case  it  is  not  necessary  that  tiiis  court  sl¥)uld  de- 
cide these  questions. 

We  are  of  opinion  that  a  careful  consideration  of  the  facts  of  this  case, 
in  their  relation  to  some  of  the  most  elementary  principles  of  the  contract 
of  insurance,  will  enable  us  to  dispose  of  it  without  much  difficulty. 

It  is  to  be  observed  that,  whether  insurance  be  against  fire,  or  marine 
loss,  or  loss  of  life,  it  is  neither  tlie  property  nor  the  life  that  is  insured. 
Nor  does  tlie  contract  propose  or  intend  to  say  that  there  shall  be  no 
destruction  of  the  property  or  loss  of  life.  In  point  of  fact,  the  obliga- 
tion of  the  insurer  is  designed  to  come  into  operation  after  the  loss 
either  of  property  or  life  has  occurred,  and  to  give  compensation  to 
some  one  interested  in  the  life  or  the  property,  for  the  loss  of  that  life  or 
injury  to  the  property. 

In  regard  to  property  this  compensation  is  intended  by  the  funda- 
mental principles  of  insurance  to  bear  a  direct  relation  to  the  moneyed 
value  of  the  interest  which  the  party  insured  had  in  the  property.  Where 
the  only  interest  of  the  assured  is  the  full  and  perfect  ownership  of  the 
property,  that  is  the  interest  insured  ;  and  the  amount  to  be  recovered 
on  the  policy  of  insurance  is  that  full  value  or  such  sum  less  than  that 
as  the  insurer  stipulates  to  be  liable  for. 

But  it  often  occurs  that  tlie  interest  of  the  party  insin-ed  is  not  that 
of  full  ownership.  Ilis  interest  may  be  that  of  a  trustee,  or  executor, 
or  some  other  I'epresentative  character,  in  which  case  the  recovery  will 
be  in  accordance  with  the  nature  of  the  contract.  The  policy  before  us 
is  a  striking  illustration  of  this.  The  interest  of  the  plaintiffs  in  tiie 
whiskey  which  is  insured  is  threefold, — their  own,  or  held  on  a  com- 
mission, and  tlie  government  tax,  for  which  they  may  he  held  liable. 
If  the  makers  of  this  policy  intended  to  insure  no  other  interest  of 
Thompson  &  Co.  in  the  whiskey  than  their  proprietaiy  interest,  the  in- 
terest which  at  the  time  of  the  loss  they  had  as  owners  of  the  whiskey, 
the  enumeration  of  the  two  other  interests  was  useless  and  misleading. 
The  facts  alieady  stated  show  that  they  had  another  interest ;  and,  since 
they  insured  it,  it  must  be  presumed  that  it  was  known  to  the  insurers. 
The  whiskey  which  they  owned  was  liable  to  tiie  government  for  a  tax  ; 
and  this  Dearen  was  primarily  liable  for  and  had  promised  to  pay,  but, 


90  INSURANCE    COMPANIES   V.    THOMPSON.  [CHAP.  II. 

if  he  did  not,  the  whiskey  could  be  sold  for  it.  They  had  also  become 
bound  with  him  on  his  bond  for  the  payment  of  this  tax.  In  the  event 
of  the  whiskey  being  destroyed  by  fire,  the  danger  of  their  personal 
liability  was  greatly'  increased.  The}'  were,  therefore,  right  in  wishing 
to  be  secured  against  this  loss  also,  if  the  whiske}'  was  burnt.  It  is 
impossible  to  give  an}'  other  construction  to  the  polic}'  than  that 
the  company  agreed  to  furnisli  this  indemnity.  The  language,  when 
brought  into  relation  with  the  conceded  facts  of  the  case,  admits  of  no 
other. 

This  interest  was  an  insurable  interest,  as  much  as  freights  at  sea  or 
profits  in  an  adventure.  The  whiskey  stood  between  them  and  their 
loss.  The  whiskey  when  in  the  warehouse  was  loaded  with  this  tax. 
It  woulci  sell  for  as  much  less  as  the  tax,  unless  the  tax  was  paid.  80 
long  as  it  was  in  the  warehouse  plaintiffs  were  not  liable  for  the  tax. 
The  moment  it  was  lost  they  became  liable.  This  was  a  fair  subject  of 
insurance.  Fireman's  Fire  Insurance  Co.  r.  Powell,  13  B.  Mon.  (Ky.) 
311;  Gordon  v.  Massachusetts  Fire  &  Marine  Insurance  Co.,  2  Pick. 
(Mass.)  249  ;  Rohrbach  v.  Germania  Fire  Ins.  Co.,  62  N.  Y.  47. 

In  regard  to  this  interest,  Walston  had  never  parted  with  it.  His 
sale  of  the  partnership  interest  did  not  release  him  from  his  liabilit}'  on 
Dearen's  bonds;  nor  did  the  subsequent  purchase  of  Ilite  Thompson  of 
one-fifth  interest  in  the  whiskey  have  that  eftbct,  or  destroy  AV^alston's 
interest  to  that  extent  in  the  whiskey.  As  to  him,  it  is  very  clear  that 
he  had  the  strongest  interest  that  the  whiskey  should  be  secure  from 
fire  until  the  tax  on  it  was  paid,  since  its  continued  existence  was  his 
best,  if  not  his  only,  security  against  liability  on  the  bonds. 

It  is  to  be  observed  that  no  other  interest  of  Thompson  «fe  Co.  is  in 
issue  in  this  suit.  The}-  never  held  the  whiskey  on  commission,  and 
the  loss  in  regard  to  the  proprietary  interest  had  been  paid  by  the  com- 
panies. Tliis  was  another  and  a  different  interest  in  the  same  propert}'. 
A  man  might  insure  his  interest  in  property'  as  an  executor,  and  his 
interest  as  a  legatee.  His  removal  from  the  office  of  executor  b}-  the 
proper  court  might,  within  the  terms  of  this  policy,  prevent  his  recover- 
ing in  that  character ;  but  if  his  interest  in  the  property  as  legatee  was 
one-sixth,  would  the  change  of  executorship  bar  his  recovery  as  legatee? 
This  would  hardly  be  asserted  by  any  one. 

It  is  objected  further  to  a  recovery  that  plaintiffs  have  not  actually 
paid  the  judgment.  The  answer  to  this,  if  any  were  necessary,  is  that 
by  the  law  of  Kentucky  the  replevin  bond  is  a  satisfaction  of  the  judg- 
ment. It  is  as  to  this  obligor  a  debt  discharged.  It  is  said  that,  in 
case  of  a  loss  like  this,  the  government  cannot  collect  the  tax  from 
the  bondsmen.  The  answer  is,  that  the  government  has  sued  and  ob- 
tained judgment  for  the  tax  ;  and  defendants  were  asked  to  defend  that 
suit,  and  declined  to  do  so. 

Judgm  en  t  affirm  ed. 


PART  II.,  SECT.  11.]       AGRICULTURAL    INS.    CO.    V.    MONTAGUE.  91 

AGRICULTURAL   INS.   CO.  v.  MONTAGUE. 
Supreme  Court  of  Michigan,  1878.     38  Mich.  548. 

Error  to  Tuscola. 

Assumpsit  on  insurance  polic}'.     Defendant  brings  error. 

H.    W.  Huston  and  Hatch  (k  Coolei/^  for  plaintiff  in  error. 

Timothy  E.   Tarsney,  for  defendant  in  error. 

CooLEY,  J.  The  action  in  this  case  was  upon  a  policy  of  insurance 
issued  to  one  Graves  and  assigned  by  him  after  a  loss  to  Montague, 
the  plaintiff  below.  Tlie  plaintiff  recovered  judgment  and  the  case 
is  before  us  on  error. ^  .   .  . 

A  quantity  of  silver  ware  was  covered  by  the  policy,  which  proved  to 
belong,  not  to  the  insured  but  to  his  wife.  In  respect  to  this  the  plain- 
tiff claimed  to  recover  on  a  showing  that,  when  the  policy  was  drawn, 
Graves  disclosed  to  the  agent  the  real  facts.  The  ars^umejiLsias-ikatj 
asjhe  company,  through  its  agent,  had  knowledge  of  all  the  facts,  ^Vi^ 
stilFgranted  the  policy,  the  issuing^  of  the  policy  wasji^waiver  of  alL 
objection  orTthat  score.  This  view  was  accepted  by  the  court,  and  the 
jury  was  instructed  acTbrdingly.  If  the  instruction  was  correct,  it  i3_ 
manifest  that  any  person  may  obtain  insurance  upon  [n'operty  without. 
any  right  in  it  wliatsoever  ;  lie  has  b^t  to  disclose  tGe  facts,  and  the_ 
policy,  though  only  a  wager  policy-,  will  be  as  legal  as  any  othei'.  But 
sueli  a  docTruie'is  at  waflvT CRT  The  fundamental  principles  of  insurance, 
which  require  that  a  person  shall  have  an  insurable  interest  before  he 
can  insure  :  a  policy  issued  when  there  is  no  such  interest  is  void,  and 
it  is  immaterial  that  it  is  taken  in  good  faith  and  with  full  knowledge. 
The  policy  of  the  law  does  not  admit  of  such  insurance,  however  willing 
the  parties  may  be  to  enter  into  it.  The  doctrine  of  waiver  has  ob- 
viously nothing  to  do  with  such  a  case.  The  agent  cannot  do  for 
the  company  by  waiver  what  the  company  is  powerless  by  express 
contract  to  do  for  itself:  he  cannot  by  waiver  invest  the  insured  with 
an  interest  be  does  not  own.  There  was  occasion  to  consider  this 
question  in  Peoria  M.  &  F.  Ins.  Co.  v.  Hall,  12  Mich.  202,  and  it  was 
tliere  held  that  an  insurance  of  partnership  property  by  one  partner  in 
his  own  name  could  not  be  made  to  embrace  the  interest  of  the  other 
partner,  notwithstanding  it  was  written  by  the  agent  with  full  knowl- 
edge of  the  facts.  The  reason  is  the  one  above  assigned  :  it  is  not 
competent  to  write  an  insurance  where  an  insurable  interest  is  wanting, 
whether  the  facts  are  known  or  not.  The  difficulty  is  inherent  in  the 
case,  and  is  beyond  the  reach  of  waiver. 

It  is  proper  to  say  in  this  connection  that  under  our  statute  the  hus- 
band has  no  control  whatever  over  his  wife's  property ;   so  that  the 

1  The  p.assages  oinitterl,  here  and  near  the  end  of  the  opinion,  dealt  with  points  for- 
eign to  waiver,  and  upon  one  of  these  points  found  that  the  lower  court  had  committed 
error.  —  Ed. 


92  HOWARD    V.   THE   LANCASHIRE    INS.    CO.  [CHAP.  II. 

question  arises  here  precisely  as  it  would  had  the  silver  been  owned  by 
a  stranger.^  .  .  . 

Tlie  judgment  must  be  reversed  with  costs  and  a  new  trial  ordered. 


HOWARD,  Appellant,  v.  THE   LANCASHIRE   INS.   CO., 
Respondents. 

Supreme  Court  of  Canada,  1885.     11  Can.  S.  C.  92. 

This  was  an  appeal  from  a  judgment  of  the  Supreme  Court  of  Nova 
Scotia,  5  Russell  &  Geldert,  172,  making  absolute  a  rule  nisi  for  a  new 
triai;^ 

On  .')  Aug.,  1875,  the  Lancashire  Insurance  Company  issued  in  favor 
of  Howard  &  Son  a  fire  insurance  policy  on  a  stock  of  dry  goods 
and  general  merchandise.     The  amount  insured  was  $2,000.     Howard 
&  Son  were  represented  in  the  transaction  by  their  general  manager, 
Jenkins.      The  application  stated  that  one  Strong  owned  the  stock  and 
that  Howard  &  Son  were  mortgagees.     Strong  was  the  owner,  and  was 
indebted  to  Howard  &  Son,  and  had  authorized  Howard  &  Son  to  take 
out  this  insurance  as  security  ;  but  Howard  &  Son  had  no  mortgage  or 
other  lien  at  the  time  of  taking  out  the  policy.     On  20  Dec,   1875, 
Strong  made  an  assignment  under  the  insolvent  act  of  1875.     On  21 
Jan.,  1876,  a  deed  of  composition  and  discharge  was  executed  by  his 
creditors ;  and,  on  the  same  day,  the  official  assignee  executed  the  stat- 
ntorv  transfer  of  the  insolvent  estate  to  Jenkins,  the  assignee  chosen  by 
the  creditors.      On  5  May,  187fi,  Strong's  discharge  was  confirmed 
by  the  court,  and  on  15  May  Jenkins  executed  the  statutory  transfer  of 
the  estate  to  him."   Meanwhile,  on  8  March,  1876,  Strong  executed  to 
Jenkins  a  bill  of  sale,  containing  a  proviso  that  Jenkins  would  execute 
a  reassignment  if,  on  demand.  Strong  should  pay  $4,000,  and  that  until 
default  Strong  should  retain  possession.     This  bill  of  sale,  as  was  con- 
tended at  the  trial,  was  taken  by  Jenkins  as  the  agent  of  Howard  &  Son. 
It  was  released  by  Jenkins  on  12  Jan.,  1877;  and,  on  the  same  day, 
Strong  executed  an  absolute  bill  of  sale  to  Henry  Howard,  of  Howard 
&  Son.     The  property  was  destroyed  by  fire  on  31  March,  1877.     The 
policy  had  been  renewed  on  5  Aug.,  1876,  by  the  issue  of  a  receipt 
acknowledging  payment  of  the  premium  on  the  polic},  "  which  is  hereby 
renewed  and  continued  in  force  for  one  j-ear." 

1  On  the  question  whether  a  husband  can  procure  insurance  on  his  wife's  property, 
see  Clarke  v.  Firemen's  Ins.  Co.,  18  La.  431  (1841)  ;  Harris  v.  York  Mutual  Ins.  Co., 
50  Pa.  341  (186.5);  American  Central  Ins.  Co.  v.  McLanathan,  11  Kans.  533  (1873)  ; 
Trade  Ins.  Co.  v.  Barracliff,  45  N.  J.  L.  (16  Vroom),  .543  (1883)  ;  Clark  v.  Dwelling 
House  Ins.  Co.,  81  Me.  373  (1889)  ;  Traders'  Ins.  Co.  v.  Newman,  120  Ind.  5.54  (1889). 
—  Ed. 

2  The  statement  has  been  rewritten  upon  the  basis  of  the  facts  detailed  in  5  Kussell 
&  Geldert,  172.  — Ed. 


PART  II.,  SECT.  II.]       NATIONAL   OIL    CO.    V.    CITIZENS'    INS.   CO.  93 

A  condition  of  the  original  policy  said :  "  Insurances,  original  or  re- 
newed, shall  be  considered  as  made  under  the  original  representation, 
in  so  far  as  it  may  not  be  varied  by  a  new  representation  in  writing, 
which,  in  all  cases,  it  shall  be  incumbent  on  the  party  insured  to  make, 
when  the  risk  has  been  changed,  either  within  itself  or  by  the  surround- 
ino-  or  adjacent  buildings."  Another  condition  said:  "  If  the  inter- 
est in  property  to  be  insured  be  a  leasehold,  trustee,  mortgagee,  or 
reversionary  interest,  oi^  other  interest  not  absolute,  it  must  be  so 
represented  to  the  company,  and  expressed  in  the  policy  in  writing, 
otherwise  the  insurance  shall  be  void." 

Howard  &  Son  having  brought  action  upon  the  policy,  the  defendant 
company  pleaded  numerous  pleas,  to  the  effect  that  there  was  no  insur- 
able interest  in  the  plaintiffs  and  that  the  proofs  of  loss  were  defective.^ 

The  cause  was  tried  before  Smith,  J.,  who  found  a  verdict  in  the 
plaintiffs'  favor  for  $2,000,  the  full  amount  claimed. 

Gormully,  for  the  appellant.  When  Strong  gave  the  bill  of  sale  to 
Jenkins  he  was  in  possession  of  the  goods,  and  his  discharge  by  the 
court  made  the  mortgage  of  the  eighth  of.March  valid.  On  the  fifth  of 
August  a  new  premium  was  paid,  and  I  contend  that  each  payment  of 
premium  is  a  new  contract.  It  was  not  intended  to  make  a  change  in 
the  polic}',  but  to  continue  a  binding  contract  of  insurance. 

I  am  going  to  contend  that  a  party  need  not  have  an  interest  in  the 
property  at  the  time  of  effecting  the  insurance  ;  it  is  sufficient  if  he  has 
such  interest  at  the  time  of  the  loss. 

Tremcmie  for  the  respondents  was  not  called  on. 

Ritchie,  C.  J.  1  do  not  think  this  is  an  arguable  case  at  all.  I 
think  that  before  a  man  can  recover  on  a  policy  of  insurance  he  must 
have  an  insurable  interest  in  the  property  when  he  effects  the  insur- 
ance. The  renewal  was  merely  a  continuance  of  the  original  insurance 
and  not  a  new  policy.     This  appeal  must  be  dismissed. 

Ajjpeal  dismissed,  with  costs. 


THE   NATIONAL  FILTERING  OIL  CO.,  Respondent,  v. 
THE  CITIZENS'  INS.  CO.,  Appellant. 

Court  of  Appeals,  New  York,  1887.     106  N.  Y.  535. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  first  judicial  department,  entered  upon  an  order  made  January 
IG,  1887,  which  affirmed  a  judgment  in  favor  of  plaintiff  entered  upon 
a  decision  of  the  court  on  trial  witliout  a  jury. 

The  action  was  upon  a  policy  of  fire  insurance,  the  substance  of 
which  and  the  material  facts  are  stated  in  the  opinion. 

^  Tlie  facts  as  to  proofs  of  loss  have  been  omitted.  —  Ed. 


94  NATIONAL    OIL   CO.    V.    CITIZENS'    INS.    CO.  [CHAP.  XL 

G.  A.  Clement,  for  appellant. 

i'^.  Ji.  Coudert  and  Paul  Fuller,  for  respondent. 

Finch,  J.  The  insurance  which  forms  the  subject  of  this  litigation 
was  of  an  unusual  character,  and  presents  a  question  for  the  solution  of 
which  we  have  no  admitted  precedent.  It  was  an  insurance  upon  the 
oil  reducing  and  filtering  works  of  Ellis  &  Co.,  and  for  the  protection 
of  specified  royalties,  payable  by  that  firm  to  the  plaintiff  as  compensa- 
tion for  an  exclusive  license  to  use  in  their  business  a  certain  patent 
which  belonged  to  and  was  controlled  by  the  plaintiff"  compan}'.  Tlie 
policy,  by  its  terms,  insured  tliat  company  "  on  royalties  payable  to 
insured  from  the  business  of  John  Ellis  &  Co.,  carried  on  in  premises 
situate  in  Brooklyn,  on  block  bounded  by  Sullivan,  Walcott  and  Ferris 
Streets  and  Buttermilk  channel,"  and  then  proceeded  with  a  more 
specific  statement,  thus:  "Whereas,  the  above  named  firm  of  John 
Ellis  &  Co.,  by  virtue  of  an  agreement  with  the  assured,  are  bound  to 
pay  to  them  royalties  for  the  privilege  of  using  their  patent,  which  roy- 
alties are  guaranteed  to  amount  to  $250  a  month ;  now,  therefore,  the 
conditions  of  this  insurance  are  that,  in  case  the  premises  occupied  as 
above  by  said  Ellis  &  Co.  shall  be  dximaged  by  fire  so  as  to  cause 
a  diminution  of  said  royalties,  this  company  will  make  good  to  the 
insured  the  amount  of  such  dimiiuition  during  the  restoration  of  said 
premises  to  their  producing  capacity  immediately  preceding  said  fire. 
In  case  of  the  destruction  by  fire  of  said  premises,  then  this  company 
shall  pay  the  full  amount  insured."     That  full  amount  was  $1,000.^  .  .  . 

We  are  first  to  ascertain  what  loss  was  insured  against.  The  de- 
fendant company  contends  that  the  risk  it  assumed  extended  no  further 
than  diminution  of  royalties  below  the  guaranteed  minimum,  and, 
since  there  never  was  such  diminution,  that  the  judgment  rendered  was 
erroneous.  But  such  is  not  the  proper  construction  of  the  polic}'. 
That  insured  the  royalties  payable  under  the  contract;  not  merely  the 
guaranteed  proportion,  but  the  royalties  stipulated;  that  is,  the  whole 
of  them.  Up  to  the  minimum  amount  they  depended  upon  the  financial 
responsibility  of  Ellis  &  Co. ,  for  to  that  extent  they  were  payable  in 
any  event,  and  the  risk  was  on  the  licensees.  But  beyond  that  they 
depended  upon  the  running  capacity  of  the  works,  and  the  amount  of 
oil  they  could  put  upon  the  market,  and  which  could  be  sold.  The 
phrase  "  said  royalties"  in  the  policy  refers  to  the  royalties  payable  by 
force  of  the  agreement,  and  to  the  whole  of  them,  and  is  not  restricted 
or  narrowed  by  the  descriptive  statement  that  they  —  that  is,  the  royal- 
ties insured  —  were  guaranteed  to  be  not  less  than  $250  a  month. 
Whatever  they  should  prove  to  be  they  were  insured  against  a  diminu- 
tion caused  by  fire  at  the  works,  and  not  merely  a  minimum  proportion 
guaranteed  part  of  them. 

But  these  royalties,  it  is  argued,  were  not  capable  of  supporting  an 
insurance,  and  the  policy  was  a  wager  policy.     It  is  quite   true  that, 

1  The  passages  omitted  did  not  deal  with  insurable  interest.  —  Ed. 


PART  II.,  SECT.  II.]       NATIONAL    OIL   CO.    V.    CITIZENS*    INS.   CO  95 

be3-ond  the  guaranteed  minimum,  the}-  were  contingent  and  dependent 
upon  the  condition  of  the  market,  and  even,  possibl\-,  upon  the  will  or 
choice  of  Ellis  &  Co.,  in  the  reasonable  control  of  their  business.  That 
firm  was  not  bound  to  pay  except  upon  oil  manufactured  and  sold,  and 
might  limit  both,  or  be  compelled  by  the  market  to  limit  both  to  a  pro- 
duction yielding  no  royalties  beyond  the  guaranteed  minimum  ;  and  so, 
it  is  said,  the  plaintiff  had  no  fixed  or  definite  right  to  royalties  beyond 
such  minimum,  no  assurance  of  their  existence,  no  power  to  compel  or 
demand  their  being,  and  could  not  be  said  to  have  lost  what  it  neither 
had,  nor  the  absolute  right  to  possess.  But  a  further  fact  in  the  case 
establishes  more  definitely  the  plaintiff's  risk  and  loss,  and  the  direct 
causative  connection  between  that  loss  and  the  fire  which  injured  the 
works.  The  license  held  by  Ellis  &  Co.  to  use  the  plaintiff's  patent, 
was  an  exclusive  one,  and  the  earning  power  of  that  patent  was  thus 
narrowed  to  the  business  of  Ellis  &  Co.  If  the  latter  did  not  continue 
their  business,  and  so  preserve  the  fruitfulness  of  the  patent,  by  reason 
of  some  fault  of  their  own,  or  from  a  cause  for  which  the}'  were  respon- 
sible, the  exclusive  character  of  the  license  ended,  and  the  patentees 
were  at  liberty  to  transfer  the  right  to  othei's,  and  thus  secure  the 
profits  of  their  invention.  But  if  the  business  of  Ellis  &  Co.  was  less- 
ened or  restricted  because  of  a  fire  which  should  destroy  or  impair  their 
works,  the  exclusive  right  given  them  was  to  continue ;  the  patentees 
could  not  license  others,  and  must  necessarily  bear  the  loss  of  their 
diminished  royalties.  Tiiis  was  the  one  business  risk  involved  in  their 
contract.  Against  all  others  they  could  provide,  but  this  one  they 
were  compelled  to  bear  by  the  terms  of  their  agreement.  Against  that 
risk  they  insured.  It  had  a  direct  and  necessary  connection  with  the 
safety  of  the  structures  burned.  A  fire  destroying  them  destroyed  the 
rovalties  pro  tanto,  because  the  eflScient  cause  of  their  loss,  and  so  was 
established  the  needed  connection  between  the  premises  insured  and 
the  royalties  dependent  upon  their  safety  and  measuring  the  loss  result- 
ing from  their  destruction.  The  policy  was,  therefore,  not  a  mere 
wager,  and  the  royalties  could  be  protected  by  an  insurance  against 
the  fire  risk  which  threatened  them. 

The  authorities  in  this  State  go  far  enough  in  their  general  principles 
to  cover  the  case  in  hand.  (Herkimer  v.  Rice,  27  N.  Y.  163  ;  Spring- 
field F.  &  M.  Ins.  Co.  V.  Allen,  43  id.  389  ;  Rohrbach  v.  Germania 
Fire  Ins.  Co.,  62  id.  47.)  The}-  decide  that  an  intei-est,  legal  or  equit- 
able, in  the  property  burned,  is  not  necessary  to  support  an  insurance 
upon  it ;  that  it  is  enough  if  the  assured  is  so  situated  as  to  be  liable 
to  loss  if  it  be  destroyed  by  the  peril  insured  against ;  that  such  an 
interest  in  property  connected  with  its  safety  and  situation  as  will  cause 
the  insured  to  sustain  a  direct  loss  from  its  destruction  is  an  insurable 
interest ;  that  if  there  be  a  right  in  or  against  the  property  which  some 
court  will  enforce  upon  the  property,  a  right  so  closely  connected  with 
it  and  so  much  dependent  for  value  upon  the  continued  existence  of  it 
alone,  as  that  a  loss  of  the  property  will  cause  pecuniary  damage  to 


96  farmers'  mutual  ins.  co.  v.  turnpike  CO.       [chap.  II. 

the  holder  of  the  right  against  it,  he  has  an  insurable  interest.  The 
plaintiff  brought  its  case  within  these  principles.  A  loss  measured  by 
the  diminution  of  its  royalties  was  the  inevitable  result  to  it  of  a  fire  in 
the  works  of  Ellis  &  Co.  It  could  not  substitute  a  new  license  and 
must  await  the  repairs  necessary  to  a  renewal  of  the  business.  B}"  its 
contract  it  became  so  situated  relative  to  the  buildings  insured,  that  it 
had  a  direct  pecuniar^'  interest  in  their  safety'  from  accidental  fire. 
That  interest  it  could,  as  it  did,  insure.   .  .  . 

Judgraent  affirmed. 


FARMERS'   MUTUAL   INSURANCE   CO.  y.  NEW  HOLLAND 
TURNPIKE  CO. 

Supreme  Court  of  Pennsylvania,  1888.     122  Pa.  37. 

Error  to  the  Court  of  Common  Pleas  of  Lancaster  County.-^ 

An  action  of  covenant  was  brought  upon  a  policy  of  insurance  for 
$4,000  upon  a  bridge  over  Conestoga  Creek,  where  the  New  Holland 
Turnpike  Company's  road  crosses.  The  defendant  pleaded  covenants 
performed,  absque  hoc} 

The  judge  instructed  the  jury  that  the  turnpike  company  "has  an 
equitable  interest  which  may  be  insured  ; "  and  he  refused  the  defend- 
ant's request  for  an  instruction  that  "  it  has  not  been  proved  .  .  .  that 
the  plaintift"  had  any  insurable  interest." 

The  jury  found  for  the  plaintiff.  Judgment  being  entered,  the  de- 
fendant took  this  writ,  and  assigned  many  errors,  of  which  the  second 
was  the  refusal  to  give  the  instruction  requested  by  the  defendant,  and 
the  third  was  the  passage  quoted  from  the  charge. 

Mr.  H.  M.  JS'orth  (with  him  Mr.  A.  O.  Newpher).,  for  the  plaintiff 
in  error. 

Mr.  A.  M.  Frantz  (with  him  Mr.  S.  H.  Reynolds).,  for  the  defend- 
ant in  error. 

Green,  J.^  .  .  .  The  more  important  question  ...  is  whether  the 
turnpike  company  had  any  insurable  interest  in  the  bridge.  It  is  a 
novel  question,  but  perhaps  not  difficult  of  solution.  The  basis,  upon 
which  the  insurable  interest  is  claimed  to  exist,  is  the  fact  that  the 
turnpike  company  contributed  $5,500  to  the  cost  of  erecting  the  bridge, 
being  one-third  its  total  cost,  $16,500.  If  this  contribution  was  com- 
pulsory—  that  is,  legally  compulsory  —  it  would  perhaps  have  to  be 
admitted  that  an  interest  in  the  bridge,  legal  or  equitable,  would  neces- 
sarily flow  from  it.      For  it  cannot  be  supposed  that  the  law  would 

1  The  reporter's  statement  has  been  omitted.  —  Ed. 

2  The  omitted  parts  of  the  opinion  sustained  the  insurer's  contention  that  tlie  lower 
court  had  committed  other  errors,  and  also  quoted  definitions  of  insurable  interest. 
—Ed. 


PART  II.,  SECT.  II.]       farmers'  MUT.  IXS.  CO.  V.  TURNPIKE  CO.  97 

oblige  any  person  or  corporation  to  contribute  directly  to  the  cost  of 
erecting  a  structure,  without  conferring  an  interest  in  the  structure 
whicli  the  law  would  recognize  and  enforce.  While  saying  this,  we  do 
not  of  course  refer  to  that  kind  of  contribution  which  is  accomijlished 
b}-  the  payment  ot  taxes.  Such  contribution  is,  of  course,  for  public 
use,  and  confers  no  title  or  interest  upon  the  tax-payer  in  structures 
which  ma}'  be  erected  with  public  funds.  But  in  this  case  there  is  no 
pretence  of  an}-  compulsion  upon  the  turnpike  compan}-.  The  evidence 
as  to  the  payment  of  the  money  is  barren  of  information  except  as  to 
the  mere  fact  of  the  payment. 

There  is  absolutely  no  testimony  to  prove  why  or  upon  what  consid- 
eration, or  for  what  purpose  or  reason,  the  turnpike  compau}'  paid  any 
part  of  the  cost  of  erecting  the  bridge.  It  is  not  difficult  to  imagine  a 
reason,  since,  as  the  company's  road  crossed  the  stream  over  which  the 
bridge  was  erected,  it  would  be  quite  desirable  for  them  to  have  a 
briilge  over  which  persons  using  the  road  could  travel.  But  while  that 
miglit  be  a  reason  for  the  company  Ixiilding  a  biidge  of  its  own,  it  was 
still  tlie  fact  that  the  bridge  was  a  public  county  I)ridge,  free  to  all  travel, 
built  many  years  before  I)v  a  private  person  who  transferred  it  to  the 
count}',  and  hence  the  property  of  the  county  exclusively.  Being  thus 
a  free,  public  bridge,  there  could  not  possibly  be  any  private  estate  or 
ownership  in  it.  The  turnpike  company  could  charge  no  tolls  for  pass- 
ing over  it.  They  could  exercise  no  acts  of  ownership  over  it.  They 
could  not  obstruct  it  nor  take  it  down,  even  if  to  rebuild  it,  without  the 
consent  of  the  county,  and  perhaps  not  even  with  such  consent,  as  it  was 
a  part  of  tlie  public  highway. 

In  point  of  fact,  while  tlie  turnpike  company  did  contriI)ute  the  third 
part  of  the  cost  of  its  erection,  after  the  former  bridge  had  fallen  down, 
the  county  at  that  time  paid  the  other  two-thirds  of  the  cost,  and  re- 
erected  the  bridge  in  discharge  of  its  undoubted  legal  obligation  to  do 
so.  And  so,  after  its  destruction  by  fire  in  1S82,  it  was  again  rebuilt 
by  the  county  as  a  public  county  bridge  in  obedience  to  a  general  law 
of  this  Commonwealth,  Act  of  May  o,  187G,  P.  L.  112,  and  the  decree 
of  this  court:  Myers  v.  Commonwealth,  110  Pa.  217.  All  this  was 
done  without  any  cost  to  this  plaintiff,  who  now  enjoys  the  use  of  the 
bridge  in  the  same  manner  and  to  the  same  extent  as  before  the  fire. 
The  only  injury  the  plaintiff  has  sustained  by  the  fire  is  in  being  de- 
prived of  the  use  of  the  bridge,  not  as  its  own,  but  as  a  part  of  the 
public  highway,  during  the  period  of  the  reconstruction  of  the  bridge. 
But  for  that  injury  the  defendant  was  not  responsible  in  any  sense, 
and  it  never  assumed  an  obligation  to  make  compensation  for  it.  The 
county  was  legally  charged  with  the  duty  of  rebuilding,  and  however  an 
argument  might  be  made  against  the  county  for  not  performing  its  duty 
in  that  regard  with  promptness,  it  is  perfectly  manifest  that  the  breach 
of  that  duty  by  the  comity  conferred  no  right  of  action  aganst  the  de- 
fendant insurance  c-ompany.  What  then  remains  to  impose  any  liability 
upon  the  defendant?     Tlie  bridge  is  restored  without  any  expense  to 

7 


98  BALOW  V.  farmers'  mux.  fire  ins.  CO.        [chap.  II. 

the  plaintiff.  Every  right  which  the  plaintiff  enjoyed  before  the  fire  is 
enjoyed  since,  so  far  as  the  bridge  is  concerned,  without  any  additional 
cost  to  the  plaintiff.  It  may  be  remarked  in  passing  that  the  right  of 
the  plaintiff  in  the  bridge  is  only  the  public  and  common  right  of  its 
patrons  as  citizens,  to  use  the  l)ridge  as  a  part  of  the  public  highway. 
It  is  therefore  not  a  riglit  peculiar  to  the  plaintiff  in  any  sense.  .  .  . 

There  was  clearly  no  interest  in  the  bridge  belonging  to  the  turnpike 
company  which  could  be  recognized  or  enforced  either  at  law  or  in 
equity.  There  could  not  be  any  right  of  property  of  any  kind,  nor  of 
possession,  nor  of  custody.  Even  the  use  of  it  was  not  a  use  by  the 
plaintiff  in  its  corporate  capacity,  but  a  mere  right  of  passage  over  it 
which  belonged  to  all  citizens  in  common.  The  money  which  was  con- 
tributed to  its  construction  by  the  plaintiff  was  a  mere  gratuity,  which 
it  was  not  bound  to  give  and  which  it  could  never  recover.  In  such 
circumstances  there  was  no  interest  or  property  in  the  bridge  as  a 
structure  and  hence  no  insurable  interest  capable  of  protection  and 
enforcement.  .  .  .  Judgment  reversed. 


SOPHIA  BALOW  v.  TEUTONIA  FARMERS'  MUTUAL   FIRE 

INS.   CO. 

Supreme  Court  of  Michigan,  1889.     77  Mich.  540. 

Error  to  Wayne.     (Reilly,  J.) 

Assumpsit.     Defendant  brings  error. 

James  H.  Pound,  for  appellant. 

M.  B.  Breitenhach  (  W.  B.  Jacl'son,  of  counsel),  for  plaintiff. 

Sherwood,  C.  J.     The  two  important  questions  in  this  case  were  — 

1.  Did  the  plaintiff  have  an  insurable  interest  in  the  property  insured 
at  the  time  the  application  was  made  for  insurance? 

2.  If  she  had,  did  that  interest  continue  until  the  time  of  the  fire  by 
which  it  was  destroyed?  ^  .  .  . 

The  jury  found  for  the  plaintiff.  .  .  . 

Tlie  defendant's  counsel,  after  the  evidence  was  closed,  asked  the 
court  to  instruct  the  jury  to  return  a  verdict  for  his  client,  under  the 
pleadings  and  proofs  in  the  case  ;  and  the  court  refused  the  request. 
This  raises  the  first  question  to  be  considered.  Certain  evidence  ap- 
pears in  the  case,  undisputed  ;  and,  if  it  is  sufficient  to  dispose  of  the 
case,  it  will  be  unnecessary  to  go  further  with  our  discussion. 

Among  the  facts  upon  which  there  is  no  dispute  upon  this  record  are 
the  following :  That  the  plaintiff  became  a  member  of  the  company,  for 
the  purpose  of  insurance,  in  April,  1884  ;  that,  before  effecting  the  in- 
surance in  this  case,  the  plaintiff  conveyed  by  warranty  deed  the  prop- 
erty in  question   to  Ervin  Palmer ;    also  made,  at  the  same  time,  a 

i  The  omitted  passages  did  uot  deal  with  insurable  interest.  —  Ed. 


PART  II.,  SECT.  II.]   BALOW  V.   FARMERS'  MUT.  FIRE  INS.  CO.       99 

contract  with  hira,  which  contains  an  agreenaent  on  the  part  of  Palmer 
that  he  will  try  and  sell  and  dispose  of  the  eighty  acres  of  land,  including 
the  insured  property,  and  from  the  proceeds,  provided  a  certain  limit 
was  reached,  a  portion  was  to  go  to  the  plaintiff;  and  she  further  cove- 
nanted that  the  sale,  under  Palmer's  deed,  was  not  to  be  construed  con- 
ditional, in  the  following  words  :  — 

"  It  is  hereby  distinctly  understood  and  agreed  that  the  sale  of  said 
premises  is  absolute,  and  nothing  herein  contained  shall  be  construed 
to  make  said  sale  conditional." 

That  said  insurance  was  effected  October  22,  1881,  and  the  deed  to 
Palmer  was  made  on  August  6  preceding,  as  well  as  the  said  contract; 
that  said  deed  to  Palmer  was  duly  recorded  in  the  register's  office  in 
Wayne  Count}',  among  the  records  of  deeds,  when  the  plaintiff  took  her 
insurance. 

That,  the  complainant  claiming  that  she  had  some  equitable  interest 
in  the  property'  insured,  arising  under  the  contract  with  Palmer,  above 
referred  to,  and  which,  she  claimed,  furnished  a  proper  basis  for  the 
insurance  she  obtained  in  the  defendant  company  upon  the  propert}'  in 
question,  she  and  her  husband,  David  Balow,  filed  a  bill  of  complaint 
against  said  Palmer  and  others  on  October  8,  1885,  to  enforce  her 
claimed  rigiits,  and  praying,  among  other  things,  that  her  said  deed  to 
Palmer  might  be  decreed  a  mortgage,  and  her  rights  secured  to  her  as 
mortgagor  of  the  property,  instead  of  grantor  in  fee.  That  said  Palmer 
answered  said  bill  fully,  denying  the  equity  of  the  same  ;  that  proofs 
were  taken,  and  upon  which,  and  the  pleadings,  the  cause  was  heard  in 
the  Wayne  Circuit  Court,  in  chancer}- ;  and  the  circuit  judge  made  a 
decree  therein,  dismissing  the  complainant's  bill  absolutely,  and  which 
is  still  in  force,  it  never  having  been  appealed  from,  or  in  any  way 
modified;  which  decree  was  rendered  previous  to  the  destruction  of 
the  insured  property  by  fire,  on  April  19.   1886. 

It  is  claimed  b}*  counsel  for  the  defendant  that  these  undisputed  facts" 
show  that  the  plaintiff,  at  the  time  the  property  burned,  had  no  interest 
therein  which  would  entitle  her  to  recover;  and  that  the  circuit  judge 
should  have  given  his  request  to  charge  as  asked.  We  think  the  coun- 
sel is  correct,  ami  the  ruling  otherwise  was  error. 

The  decision  made  in  the  chancery  case  conclusively  shows  the  title 
to  the  Insured  property  passed  to  Palmer  by  the  plaintiff's  deed  to  him. 
The  contract  of  August  6,  1884,  entered  into  at  the  time  the  deed  was 
made  to  Palmer,  contains  the  following  clause  :  — 

"In  consideration  of  said  deed,  and  the  undertakings  herein  con- 
tained to  be  performed  by  said  Palmer,  it  is  hereby  agreed  that  .said 
Palmer,  whenever  he  sells  said  premises,  —  and  he  agrees  that  when- 
ever he  can  sell  said  premises  for  a  fair  price  he  will  sell  the  same,  — 
he  will  pay  out  of  the  proceeds  of  the  premises  the  Miller  mortgage,  to 
whomsoever  holds  the  same.  And  he  is  to  retain  in  his  hands  sufficient 
to  pay  his  said  mortgages,  and  the  indebtedness  due  him  from  said  par- 
ties of  the  first  part,  or  either  of  them.     He  is  also  to  pay  out  of  said 


100  BALOW   V.    farmers'    MUT.    FIRE   INS.    CO.  [CHAP.  IL 

proceeds  all  liens,  taxes,  and  other  encumbrances  on  said  premises.  He 
is  to  pay,  and  said  Palmer  hereby  agrees  to  pay,  to  said  Sophia  Balow, 
out  of  the  proceeds  of  said  sale,  the  sum  of  two  thousand  ($2,000)  dol- 
lars, if  there  shall  be  enough  of  said  purchase  price  or  proceeds  remain- 
ing after  paying  the  above  amounts,  including  the  mortgages  of  said 
Palmer ;  and,  if  there  shall  not  be  $2,000  remaining  of  said  proceeds 
after  paying  said  amounts  above  specified,  then  said  Palmer  is  to  pay 
to  said  Sophia  Balow  what  shall  remain  of  said  proceeds." 

This  clause  of  the  contract  creates  no  more  than  a  personal  obligation 
on  the  part  of  Palmer,  in  a  certain  contingency,  to  pay  to  this  plaintiff 
an  amount  of  money  which  can  only  be  determined  in  the  future ;  de- 
pending entirely  upon  the  amount  he  may  receive  in  case  of  sale  of  the 
property  mentioned  in  the  deed.  It  may  be  $1,  or  $2,000,  or  none  at 
all.  In  no  way  is  it,  whatever  may  be  the  amount,  made  a  charge  upon 
the  land,  nor  does  it  create  an  interest  therein,  in  favor  of  the  plaintiff, 
upon  which  she  could  obtain  insurance. 

It  is  claimed  by  plaintiff's  counsel  that  the  contract  was  part  of  the 
consideration  for  the  deed  to  Palmer,  and  for  what  was  secured  under 
it  to  plaintiff;  that  she  had  a  vendor's  lien  upon  the  property  sold; 
and  this,  coupled  with  the  possession  which  she  held  at  the  time  the 
buildings  were  burned,  gave  her  an  equitable  interest  in  the  property, 
which  was  insurable.  But  this  proposition  cannot  be  maintained,  under 
the  undisputed  facts  in  this  case.  A  vendor's  lien  is  always  in  the 
nature  of  a  mortgage.  The  decree  of  the  court  in  the  chancery  suit 
was  to  the  effect  that  plaintiff  had  no  such  interest,  and  that  slie  was 
not  entitled  to  the  possession  of  the  property.  But,  independently  of 
this,  a  vendor's  lien  must  always  be  for  some  certain  amount,  known 
to  exist  at  the  time  the  lien  is  created.  In  this  case,  it  was  not  known 
that  any  amount  would  ever  become  due  to  the  plaintiff  from  Palmer 
under  the  contract  by  which  she  claims  the  lien.  Certain  it  is  that 
no  indebtedness  to  her  had  been  ascertained  at  the  time  this  suit  was 
brought ;  neither  does  the  record  disclose  that  any  amount  has  become 
due  to  her  since.     This  claim  to  such  lien  is  therefore  unfounded.  .  .   . 

The  judgment,  therefore,  must  be  reversed,  and  a  new  trial  granted.^ 

1  On  the  topic  of  this  section,  see  also :  — 

Carter  v.  Humboldt  Fire  Ins.  Co.,  12  Iowa,  287  (1861) ; 

Sawyer  v.  Dodge  County  Mutual  Ins.  Co.,  37  Mich.  503  (1875) ; 

Holbrook  v.  St.  Paul  F.  &  M.  Ins.  Co.,  25  Minn.  229  (1878) ; 

"Walsh  r.  Fire  Association,  127  Mass.  383  (1879); 

Clark  V.  Scottish  Imperial  Ins.  Co.,  4  Can.  S.  C.  192  (1879); 

Insurance  Company  v.  Stinson,  103  U.  S.  25  (1880)  ; 

Horsch  V.  Dwelling  House  Ins.  Co.,  77  Wis.  4  (1890) ; 

Planters  and  Merchants  Ins.  Co.  v.  Thurston,  93  Ala.  255  (1890); 

Berry  v.  American  Central  Ins.  Co.,  132  N.  Y.  49  (1892); 

Home  Ins.  Co.  v.  Mendenhall,  164  111.  458  (1897) ; 

Sun  Ins.  Office  v.  Merz,  64  N.  J.  L.  (35  Vroom)  301  (1900).  — Ed. 


PART  II.,  SECT.  III.]  LORD    V.    BALL.  101 

SECTION   III. 

Life  Insurance. 

ANDERSON   v.   EDIE. 
Nisi  Prius,  King's  Bench,  1795.     2  Park  Ins.  (8th  ed.)  914. 

In  an  action  on  a  policy  of  insurance  on  the  life  of  Lord  Newhaven 
from  the  1st  December,  1792,  to  the  1st  of  December,  1793,  the  only 
question  made  by  the  defendant  was  as  to  the  plaintiff's  interest,  which 
it  was  contended  was  not  sufficient  to  take  this  case  out  of  the  statute 
14  Geo.  3,  c.  48.  It  appeared  in  evidence  that  Lord  Newhaven  was 
indebted  to  the  plaintitf  and  a  Mr.  Mitchell  in  a  large  sum  of  money, 
part  of  which  debt  had  been  assigned  by  them  to  another  person ;  the 
remainder,  being  more  than  the  amount  of  the  sum  insured,  was  upon 
a  settlement  of  accounts  between  the  plaintiff  and  Mitchell,  agreed  by 
them  to  remain  to  the  account  of  Mitchell  only. 

Lord  Kenyon  was  of  opinion  that  this  debt  was  a  sufficient  interest, 
and  said  that  it  was  singular  that  this  question  had  never  been  directly 
decided  before.  That  a  creditor  had  certainly  an  interest  in  the  life  of 
his  debtor ;  the  means  by  which  he  was  to  be  satisfied  may  materially 
depend  upon  it,  and  at  all  events  the  death  must  in  all  cases  in  some 
degree  lessen  the  securit}'.  Verdict  for  the  plaintiff. 


LORD   V.    DALL.  ^^  ;  ,      n 


Supreme  Judicial  Court  of  Massachusetts,  1815.     12  Mass.  115. 

Assumpsit  on  a  policy  of  assurance,  made  for  85,000,  in  favor  of  the 
plaintiff,  upon  the  life  of  Jabez  Lord,  her  brother,  aged  thirty-three 
years,  bound  on  a  voyage  to  South  America,  or  any  other  place  he 
might  proceed  to  from  Boston,  commencing  the  risk  on  the  16th  of 
December,  1809,  at  noon,  and  to  continue  until  the  16th  of  Jul}-,  1810, 
at  noon  ;  for  a  premium  of  seven  per  cent.  The  defendant  underwrote 
the  sum  of  S500. 

At  the  trial  of  the  cause  upon  the  general  issue,  at  the  last  Novem- 
ber term,  before  the  chief  justice,  it  was  proved  that  the  said  Jabez  had 
died  on  the  coast  of  Africa  before  the  expiration  of  the  time  for  which 
his  life  was  insured,  and  not  from  any  of  the  causes  excepted  from  the 
risk.^  .  .  . 

1  In  reprinting  the  statement  and  the  opinion,  passages  not  bearing  on  insurable 
interest  have  been  omitted.  The  omitted  passages  dealt  principally  with  the  illegality 
of  the  vovaire.  —  Ed. 


102  LORD   V.   BALL.  [CHAP.  II. 

The  olijections  made  at  the  trial  to  the  plaintiff's  recovery  wci'e,  — 

1.  That  she  had  no  Insurable  interest  in  the  life  of  the  said  Jabez. 
But  it  being  in  evidence  that  she  was  a  person  of  no  property-  at  the 
time,  depending  altogether  upon  the  said  Jabez  for  her  support  and 
education,  and  he  having  for  several  3'ears  paid  her  board,  provided  her 
with  clothing,  and  paid  for  her  education,  —  all  which  he  continued  to 
do  at  the  time  the  policy  was  effected,  —  this  objection  was  overruled, 
but  reserved  for  the  consideration  of  the  whole  court.   .  .  . 

The  said  Jabez  Lord  gave  his  note  for  the  premium ;  and  there  was 
no  evidence  that  the  plaintiff  knew  where  the  said  Jabez  was  bound. 

If  the  court  should  be  of  opinion  that  the  plaintiff  had  not  an  insur- 
able interest,  or  that  the  policy  was  void  on  account  of  the  illegality  of 
the  voyage,  the  verdict  returned  for  the  plaintiff  was  to  be  set  aside, 
and  she  was  to  become  nonsuit ;  otherwise  judgment  was  to  be  rendered 
on  the  verdict. 

Prescott  and  Hubbard  argued  for  the  plaintiff,  and  Livermore  and 
W.  Sidlwan,  for  the  defendant. 

Parker,  C.  J.,  delivered  the  opinion  of  the  court. 

It  has  been  made  a  question  in  the  argument,  whether  a  polic}'  of 
assurance  upon  a  life  is  a  contract  which  can  be  enforced  b^-  the  laws 
of  this  State  :  the  law  of  England,  as  it  is  suggested,  applicable  to  such 
conti'acts  never  having  been  adopted  and  practised  upon  in  this  country. 

It  is  true  that  no  precedent  has  been  produced  from  our  own  records 
of  an  action  upon  a  policy  of  this  nature.  But  whether  this  has  liap- 
pened  from  the  infrequency  of  disputes  which  have  arisen,  it  being  a 
subject  of  much  less  doubt  and  difficulty  than  marine  insurances,  or  from 
the  infrequenc}'  of  such  contracts,  it  is  not  possible  for  us  to  decide. 
B}-  the  common  principles  of  law,  however,  all  contracts  fairl3'  made, 
upon  a  valuable  consideration,  which  infringe  no  law,  and  are  not  re- 
pugnant to  the  general  polic\'  of  the  laws,  or  to  good  morals,  are  valid 
and  ma}'  be  enforced,  or  damages  recovered  for  the  breach  of  them. 

It  seems  that  these  insurances  are  not  favored  in  an}' of  the  commer- 
cial nations  of  Europe  except  England ;  several  of  them  having  ex- 
pressly forbidden  them,  for  what  reasons,  however,  does  not  appear : 
unless  the  reason  given  in  France  is  the  prevailing  one,  viz.  "that  it  is 
indecorous  to  set  a  price  upon  the  life  of  man,  and  especiall}'  a  freeman, 
whicli,  as  the}'  say,  is  above  all  price."  It  is  not  a  little  singular  that 
such  a  reason  should  be  advanced  for  prohibiting  these  policies  in  France, 
where  freedom  has  never  been  known  to  exist,  and  that  it  never  should 
have  been  thought  of  in  England,  which  for  several  centuries  has  been 
the  country  of  established  and  regulated  liberty. 

This  is  a  contract  fairly  made ;  the  premium  is  a  sufficient  consider- 
ation ;  there  is  nothing  on  the  face  of  it  which  leads  to  the  violation  of 
law ;  nor  anything  objectionable  on  the  score  of  policy  or  morals.  It 
must,  then,  be  valid  to  support  an  action,  until  something  is  shown  by 
the  party  refusing  to  perform  it  in  excuse  of  his  non-performance. 

It  is  said  that,  being  a  contract  of  assurance,  the  law  on  the  subject 


PART  II.,  SECT.  III.]  LORD    V.    DALL.  103 

of  marine  insurance  is  applicable  to  it ;  and  therefore  unless  the  as- 
sured had  an  interest  in  the  subject-matter  insured,  he  is  not  entitled 
to  his  action. 

This  position  we  agree  to ;  for  otherwise  it  would  be  a  mere  wager 
policy, which  we  think  would  be  contrary  to  the  general  policy  of  our 
laws,  and  therefore  void.  Had  then  the  plaintiff  an  interest  in  the  lite 
of  her  brother  which  was  insured? 

The  report  states  the  facts  upon  which  that  interest  was  supposed  at 
the  trial  to  exist.  The  plaintiff,  a  young  female  without  property,  was 
and  had  been  for  several  years  supported  and  educated  at  the  expense 
of  her  brother,  who  stood  towards  her  in  loco  parentis.  Nothing  could 
show  a  stronger  affection  of  a  brother  towards  his  sister  than  that  he 
should  be  willing  to  give  so  large  a  sum  to  secure  her  against  the  con- 
tingency of  his  death,  which  would  otlierwise  have  left  her  in  absolute 
want.  One  per  cent  per  month  upon  S5,000,  taken  on  the  life  of  a  man 
of  thirty-three  years  of  age,  in  good  health  at  the  time,  was  a  sufficient 
inducement  to  the  underwriter  to  take  at  least  common  chances,  and 
proved  the  strong  disposition  of  the  brother  to  secure  his  sister  against 
the  melancholy  consequence  to  her  of  his  death.  In  common  under- 
standing no  one  would  hesitate  to  sa}-,  that  in  the  life  of  such  a  brother 
the  sister  had  an  interest ;  and  few  would  limit  that  interest  to  the  sum 
of  five  thousand  dollars. 

But  it  is  said  the  interest  must  be  a  pecuniary,  legal  interest,  to  make 
the  contract  valid  ;  one  that  can  be  noticed  and  protected  by  the  law  : 
such  as  the  interest  which  a  creditor  has  in  the  life  of  his  debtor,  a  child 
in  that  of  his  parent,  etc.  The  former  case,  indeed,  of  the  creditor 
would  have  no  room  for  doubt.  But  with  respect  to  a  child,  for  whose 
benefit  a  policy  may  be  effected  on  the  life  of  the  parent,  the  interest, 
except  the  insurable  one  which  may  result  from  the  legal  obligation  of 
the  parent  to  save  the  child  from  public  charity,  is  as  precarious  as  that 
of  a  sister  in  the  life  of  an  affectionate  brother.  For  if  the  brother 
may  withdraw  all  support,  so  may  the  father,  except  as  before  stated. 
And  yet  a  policy  effected  by  a  child  upon  the  life  of  a  father,  who  de- 
pended on  some  fund  terminable  by  his  death  to  support  the  child,  would 
never  be  questioned  ;  although  much  more  should  be  secured  than  the 
legal  interest  which  tlie  child  had  in  the  protection  of  his  father.  Indeed, 
we  are  well  satisfied  that  the  interest  of  the  plaintiff  in  the  life  of  her 
brother  is  of  a  nature  to  entitle  her  to  insure  it.  Nor  can  it  be  easily 
discerned  why  the  underwriters  should  make  this  a  question  after  a  loss 
has  taken  place,  when  it  does  not  appear  that  any  doubts  existed  when 
the  contract  was  made ;  although  the  same  subject  was  then  in  their 
contemplation.  .  .  . 

Perceiving  nothing  in  this  contract  unfriendly  to  the  morals  or  inter- 
ests of  the  community,  and  no  knowledge  of  an  illegal  intention  being 
imputed  to  the  plaintiff,  we  see  no  reason  for  setting  aside  the  verdict. 
Judgment  will  therefore  be  entered  upon  it.^ 

1  Compare  Lewis  v.  Phceuix  Mut.  L.  lus.  Co.,  39  Conn.  100  (1872).— Ed. 


104  HALFORD   V.    KYMER.  [CHAP.  II. 

HALFORD  V.  KYMER  and  Others. 

King's  Bench,  1830.     10  B.  &  C.  724. 

This  was  an  action  of  covenant  on  a  polic}'  of  insurance,  dated  the 
13th  of  Febi'iiaiy,  1826,  whereby  the  directors  of  the  Asylum  Life  In- 
surance Company  agreed  with  the  plaintiff  to  insure  the  life  of  Robert 
Bargrave  Halford,  the  son  of  the  plaintiff,  in  the  sum  of  £5,000,  for 
the  term  of  two  years,  and  covenanted  that  if  Robert  Bargrave  Halfoid 
should  die  at  any  time  within  the  term  of  two  3ears,  to  be  computed 
from  the  da}-  of  the  date  of  that  polic}',  the  funds  of  the  company 
sliould  be  liable  to  pa}',  within  six  calendar  months  after  proof  of  the 
death  of  the  said  Robert  Bargrave  Halford  within  the  said  term  of  two 
years,  unto  the  said  Richard  Halford,  his  executors,  &c.,  the  sum  of 
£5,000.  Plea,  first,  that  at  the  time  of  making  the  policy  in  the  dec- 
laration mentioned,  the  plaintiff  was  not  interested  in  the  life  of  the 
said  Robert  Bargrave  Halford.  Secondly,  that  at  the  time  of  the  death 
of  the  said  Robert  Bargrave  Halford,  the  plaintiff  was  not  interested  in 
his  life.  At  the  trial,  before  Lord  Tenterden,  C.  J.,  at  the  Middlesex 
sittings  after  last  term,  it  appeared  from  the  statement  of  the  plaintiff's 
counsel,  that  by  a  settlement,  dated  the  18th  of  Ma}',  1805,  made  on 
the  marriage  of  the  plaintiff  with  S.  T.  Bargrave,  the  sum  of  £8,000, 
and  also  the  moneys  to  arise  from  the  sale  of  certain  freehold  and  lease- 
hold estates,  were  settled,  after  and  subject  to  the  trusts  for  the  plain- 
tiff and  his  wife  successively  during  their  lives,  in  trust  for  the  children 
or  child  of  the  said  marriage,  according  to  the  appointment  of  the  said 
plaintiff,  and  of  his  said  wife,  as  therein  mentioned  ;  and  in  default  of 
appointment,  if  there  should  be  but  one  child  of  the  said  marriage,  then 
in  trust  for  such  child,  to  become  a  vested  interest  in  such  child,  if  a 
son,  at  the  age  of  twent3'-one  years ;  and  if  no  child  of  the  said  mar- 
riage, or  issue  of  such  child,  should  become  entitled  to  the  vested  inter- 
est in  the  said  trust  moneys,  then  upon  such  trusts  as  the  said  S.  T. 
Bargrave  should  appoint;  and  in  default  of  her  appointment,  in  trust 
for  her  next  of  kin,  as  if  she  had  died  intestate  and  unmarried."  There 
was  onl}'  one  child  of  the  marriage,  namely,  Robert  Bargrave  Hal- 
ford ;  and  the  marriage  of  the  plaintiff  with  the  said  S.  T.  Bargrave 
having  been  dissolved  b}'  act  of  Parliament,  the  plaintiff  married  again, 
and  effected  the  policy  in  question  to  provide  against  the  death  of  his 
son,  Robert  Bargrave  Halford,  before  he  attained  the  age  of  twentj'- 
one.  The  said  Robert  Bargrave  Halford  did  attain  the  age  of  twent}- 
one  years  on  the  2d  of  June,  1827,  and  on  the  5th  of  Januar}-,  1828, 
made  his  will,  and  thereb}'  gave  all  his  real  and  personal  estate  to  tlie 
phiintiff,  his  father,  and  appointed  him  sole  executor,  and  died  on  the 
nth  of  January,  1828.  The  plaintiff,  on  the  17th  of  July,  1828,  proved 
his  son's  will  in  the  Prerogative  Court  of  the  Archbishop  of  Canterbury. 
Upon  this  statement  of  facts.  Lord  Tenterden  was  of  opinion  that  the 


PART  II.,  SECT.  III.]  HALFORD   V.   KYMER.  105 

plaintiff,  not  having  an}'  pecuniary  interest  in  the  life  of  his  son  at  the 
time  when  he  effected  the  policy,  the  same  was  void  by  the  Statute 
14  Geo.  III.  c.  48,  §  3,  and  he  nonsuited  the  plaintiff,  but  reserved  lib- 
erty to  him  to  move  to  enter  a  verdict  if  the  court  should  be  of  opinion 
that  he  had  an  insurable  interest. 

F.  Pollock  now  moved  accordingly.  It  is  quite  clear  that  but  for  the 
Statute  14  Geo.  III.  c.  48,  this  policy  would  be  available.  That  stat- 
ute, by  §  1,  enacts  "  that  no  insurance  shall  be  made  by  any  person  or 
persons  on  the  life  of  any  person  or  persons,  or  on  any  event  or  events 
whatsoever,  wherein  the  person  for  whose  use,  benefit,  or  on  whose 
account  such  policy  shall  be  made,  shall  have  no  interest,  or  by  way  of 
gaming  or  wagering ;  and  that  every  insurance  made  contrary  to  the 
true  intent  and  meaning  thereof  shall  be  null  and  void  to  all  intents 
and  purposes  whatsoever."  Now,  the  plaintiff  clearly  had  an  interest 
in  the  life  of  his  son,  for  he  might  reasonably  expect  that  the  latter 
would  reimburse  him  the  expenses  of  his  maintenance  and  education. 
This  clearly  was  not  a  wagering  policy  within  the  meaning  of  that 
clause.  It  is  true  that  the  third  section  enacts,  "  that  in  all  cases  where 
the  assured  hath  interest  in  such  life  or  lives,  event  or  events,  no 
greater  sum  shall  be  recovered  or  received  from  the  insurer  than  the 
amount  or  value  of  the  interest  insured  on  such  life  or  lives,  or  other 
event  or  events."  It  is  clear  that  a  man  may  effect  an  insurance  on  his 
own  life,  although  he  may  have  no  pecuniary  interest  depending  on  it, 
and  although  his  own  income  may  be  of  the  most  ample  kind,  not  de- 
pending on  his  own  exertions,  or  on  any  contingency ;  and  if  that  be 
so,  upon  what  principle  can  it  be  said  that  he  cannot  have  an  insurable 
interest  in  the  life  of  his  sou  or  his  wife?  If  a  man  be  deprived  of  the 
comfort,  society,  and  assistance  of  his  wife  by  the  misconduct  of  an- 
other, he  may  recover  damages  for  that  loss.  So,  if  he  be  deprived  of 
the  services  of  his  daughter  by  her  seduction,  or  if  he  lose  the  assist- 
ance of  any  other  member  of  his  family  by  the  wrongful  act  of  another, 
he  may  maintain  an  action  for  damages.  Surely,  the  law  which  gives 
a  man  a  right  of  action  for  the  wrongful  act  of  another,  by  which  he  is 
deprived  of  the  assistance  of  his  wife,  daughter,  or  servant,  will  not 
prevent  him  from  protecting  himself  against  that  casualty  which  for- 
ever deprives  him  of  that  assistance.  [Bayley,  J.  In  Innes  v.  The 
Equitable  Assurance  Company  (which  was  tried  before  Lord  Kenyon), 
the  plaintiff  had  effected  a  policy  on  the  life  of  his  daughter.  In  order 
to  show  that  he  had  an  interest,  he  produced  a  paper,  purporting  to  be 
a  will,  by  which  it  appeared  that  he  was  entitled  to  the  sum  of  £1,000 
in  the  event  of  his  daughter  dying  under  the  age  of  twent3--one.  One 
Gardiner  swore  that  he  was  a  subscribing  witness  to  the  will,  and  that 
it  was  made  at  Glasgow,  and  that  he  was  acquainted  with  the  other 
subscribing  witnesses;  but  another  of  those  witnesses  stated  that  it 
was  not  made  at  Glasgow,  but  by  a  schoolmaster  in  the  borougli. 
Innes  was  tried,  convicted,  and  executed  for  the  forcrerv,  and  Gardiner, 
who  had  sworn  that  the  will  was  made  at  Glasgow,  was  convicted  of 


106  HALFORD    V.    KYMER.  [CHAP.  II. 

perjury.  Lord  Tenterden,  C.  J.  It  was  in  effect  admitted,  in  that 
case,  that  it  was  necessar}-  to  prove  that  the  father  had  a  pecuniary 
interest  in  the  life  of  his  daughter,  otherwise  there  would  have  been  no 
occasion  to  go  into  the  question  as  to  the  will ;  and  unless  it  were  a 
fact  material  in  the  case,  the  witness  could  not  have  been  convicted  of 
perjury.]  That  was  onl}-  a  nisi  jyrius  case.  But  a  father  has  a  legal 
interest  in  the  life  of  his  son  sufficient  to  entitle  him  to  insure.  By  the 
statute  of  Elizabeth,  if  a  father  become  poor  in  his  old  age,  and  his  son 
be  capable  of  maintaining  him,  he  is  bound  to  do  so.  Now,  why  does 
a  man  insure  the  life  of  his  debtor?  Because  the  death  of  his  debtor 
diminishes  the  chance  of  his  being  paid.  So,  if  a  son  dies,  the  chance 
of  the  father  being  maintained  in  poverty  and  old  age  is  diminished. 
[Bayley,  J.  The  parish  is  bound  to  maintain  him,  and  it  is  indifferent 
to  him  whether  he  be  maintained  by  the  parish  or  his  son.]  The 
amount  of  maintenance  which  a  parish  must  afford  maj",  in  many  cases, 
be  much  less  than  that  which  a  son  would  be  ordered  to  pay.  Besides, 
a  father  may  have  a  claim  on  his  son,  when  he  has  no  claim  on  the 
parish.  He  may  not  be  able  to  show  his  settlement  in  the  parish  from 
.which  he  claims  relief.  In  that  case  the  life  of  his  son  would  be  of 
importance  to  him,  as  affording  him  the  certainty  of  having  a  comfort- 
able provision.  The  word  "  interest "  in  the  act  of  Parliament  is  not  to 
be  confined  in  construction  to  pecuniary  interest,  but  may  be  taken 
to  mean  legal  interest ;  and  the  third  section,  which  allows  the  insured 
to  recover  to  the  amount  or  value  of  his  interest,  shows  that  the  law 
would  recognize  an  interest  of  any  kind,  provided  a  value  can  be  set 
upon  it. 

Lord  Tenterden,  C.  J.    I  retain  the  opinion  which  I  expressed  at  the 
trial,  that  the  word  interest  in  this  statute  means  pecuniary  interest. 

Bayley,  J.  It  is  enacted  b}*  the  third  section,  "  that  no  greater  sum 
shall  be  recovered  than  the  amount  of  the  value  of  the  interest  of  tlie 
insured  in  the  life  or  lives."  Now,  what  was  the  amount  or  value  of 
the  interest  of  the  party  insuring  in  this  case?  Not  one  farthing,  cer- 
tainly. It  has  been  said  that  there  are  numerous  instances  in  which  a 
father  has  effected  an  insurance  on  the  life  of  his  son.  If  a  father, 
wishing  to  give  his  son  some  propert}'  to  dispose  of,  make  an  insurance 
on  his  son's  life  in  his  (the  son's)  name,  not  for  his  (the  father's)  own 
benefit,  but  for  the  benefit  of  his  son,  there  is  no  law  to  prevent  his 
doing  so;  but  that  is  a  transaction  quite  different  from  the  present; 
and  if  a  notion  prevails  that  such  an  insurance  as  the  one  in  question 
is  valid,  the  sooner  it  is  corrected  the  better. 
Littledale  and  PakkE;  JJ.,  concurred. 

Mule  refused. 


PART  IL,  SECT.  III.]      MOKRELL  V.  TRENTON  MUT.,  ETC.  INS.  CO.         107 


CYRUS   K.   MORRELL  v.  TRENTON  MUTUAL  LIFE  AND 
FIRE   INS.  CO. 

ScpREME  Judicial  Court  of  Massachusetts,  1852.     10  Cush.  282. 

Action  on  a  poUc}'  of  life  insurance,  issued  by  the  defendant  com- 
pany, February  16,  1850,  insuring  the  plaintiff,  in  the  sum  of  Si, 000, 
on  the  life  of  William  C.  Morrell,  with  leave  to  make  a  journey  to 
California  and  back,  and  also  to  reside  there. 

On  the  trial  ia  this  court,  before  Bigelow,  J.,  it  was  proved  or 
admitted,  that  said  William  C.  Morrell  died  near  Sacramento  in  the 
State  of  California,  on  the  12th  of  May,  1850;  that  due  notice  of  his 
death  was  given,  and  payment  demanded,  before  the  action  was  com- 
menced. It  appeared  by  the  evidence  of  John  H.  Morrell  (who  with  the 
said  William  C.  composed  the  firm  of  Morrell  and  Company),  that  prior 
to  the  issuing  of  said  policy,  it  was  agreed  between  the  plaintiff  and  the 
said  William  C.  that  the  latter  should  work  in  the  California  mines  one 
year,  and  that  one  fourth  part  of  the  proceeds  of  his  labor  there  should 
belong  to  the  plaintiff,  and  that,  as  a  consideration  therefor,  the  plaintiff 
was  to  labor  for  the  said  William  C.  in  the  store  of  Morrell  and  Com- 
pany, and  that  said  arrangement  was  assented  to  by  the  other  partner, 
John  H.  Morrell. 

It  further  appeared,  that  the  plaintiff  did  in  fact  labor  in  said  store 
for  the  said  William  C.  Morrell,  by  virtue  of  said  agreement,  till  the 
news  of  the  death  of  the  said  William  C.  was  received,  which  was  in 
July,  1850.  It  also  appeared  in  evidence  that,  on  the  22d  day  of 
January,  1849,  the  said  firm  of  Morrell  and  Company  purchased  of 
the  plaintiff  a  stock  of  goods  and  gave  him  their  note  for  $2,000,  which 
note  was  unpaid,  except  one  year's  interest  thereon,  at  the  time  of  the 
death  of  the  said  William  C,  and  at  the  trial  of  this  suit.  No  adrainis- 
trator  of  the  estate  of  the  said  William  C.  Morrell  was  ever  appointed, 
and  the  father  of  the  said  William  C.  was  the  only  heir  to  his  estate. 
It  was  agreed  that  the  estate  of  the  said  William  C.  was  more  than 
sufficient  to  pay  all  his  debts  and  liabilities. 

On  the  9th  day  of  September,  1850,  it  was  agreed  between  said  John 
H.  Morrell,  and  the  father  of  the  said  William  C,  that  the  said  John 
H.  should  take  to  himself  all  the  property  of  the  said  William  C,  and 
that  he  should  assume  and  pay  his  debts,  and  should  moreover  pay  his 
father  the  further  sum  of  S300,  and  the  plaintiff  knew  of,  and  did  not 
object  to,  said  arrangement.  Upon  these  facts,  the  presiding  judge 
ruled  that  the  plaintiff  had  an  insurable  interest  in  the  life  of  the  said 
William  C,  and  was  entitled  to  a  verdict  for  the  full  amount  insured. 
The  verdict  therefore  being  for  the  plaintiff,  the  defendants  alleged 
exceptions. 

A.  II.  Nelson,  for  the  defendants. 

J.  G.  Abbott,  for  the  plaintiff. 


108  DALBY  V.  INDIA   AND   LONDON   L.   ASSUR.   CO.         [CHAP.  IL 

Shaw,  C.  J.  The  court  are  of  opinion  that,  upon  the  facts  stated, 
the  plaintiff  had  an  interest  such  as  is  recognized  as  a  good  insurable 
interest  in  the  life  of  the  person  on  which  this  policy  was  made  by  the 
defendant  company  to  the  plaintiff.  He  held  a  promissory  note  signed 
by  a  firm,  of  which  the  said  William  C.  Morrell  was  one  of  the  partners, 
to  an  amount  larger  than  the  amount  insured  ;  this  was  due  and  owing 
at  the  time  the  insurance  was  made  ;  at  the  death  of  the  party  whose 
life  was  insured,  and  at  the  time  of  the  trial.  Each  partner  is  a  debtor 
in  soliclo  to  the  whole  amount  of  a  joint  debt.  It  is  no  answer,  we 
think,  that  the  estate  of  the  deceased  was  solvent,  and  that  the  other 
joint  debtor  might  be  able  to  pay  it ;  it  was  enough,  we  think,  that  by 
the  contract  of  the  defendants,  made  on  a  valuable  consideration,  they 
guaranteed  to  the  plaintiff  that  if  his  debtor  should  die  within  the  time, 
and  the  debt  remained  unpaid,  they  would  pay  the  amount  stipulated. 
Anderson  v.  Edie,  cited  in  Park  on  Ins.  640 ;  Tidswell  v.  Ankerstein, 
Peake's  Cas.  151. 

But  the  court  are  strongly  inclined  to  the  opinion  lihat  the  plaintiff 
had  another  interest  in  the  life  of  the  person,  on  whose  life  he  was 
insured  by  the  defendants.  He  had  a  subsisting  contract  with  that 
person,  made  on  a  valuable  consideration,  by  which  he  was  to  receive 
one  quarter  part  of  his  earnings  in  the  mines  of  California  for  one  year. 
Such  an  interest  cannot,  from  its  nature,  be  valued  or  apportioned. 
It  was  an  interest  upon  which  the  policy'  attached.  B}-  the  loss  of  his 
life  within  the  j'ear,  the  person  whose  life  was  insured  lost  the  means 
of  earning  anj'thing  more,  and  the  plaintiff  was  deprived  of  receiving 
his  share  of  such  earnings;  to  an  uncertain  and  indefinite  amount. 

Exceptions  overruled.'^ 


DALBY  V.  INDIA   AND   LONDON  LIFE  ASSURANCE   CO. 
Exchequer  Chamber,  1854.     15  C.  B.  365. 

This  was  an  action  ^  on  a  polic}'  effected  b}'  the  plaintiff  on  January-  9, 
1847,  for  and  on  behalf  of  the  directors  of  the  Anchor  Life  Assurance 
Co.,  in  the  sum  of  £1,000,  on  the  life  of  the  Duke  of  Cambridge,  for  the 
whole  term  of  his  life. 

The  pleadings  and  the  facts  are  abstracted  in  the  opinion  of  the 
court. 

Tlie  cause  came  on  for  trial  before  Creswell,  J.,  when,  a  point  being 
reserved  for  the  opinion  of  the  Court  of  Common  Pleas  involving  a 
question  as  to  the  propriet}'  of  the  decision  in  Godsall  %k  Boldero, 
9  East,  72,  it  was,  at  the  suggestion  of  that  court,  agreed  that  the  facts 

1  Ace:  Connecticut  Mut.  L.  Ins.  Co.  v.  Luchs,  108  U.  S.  498  (1883).  — Ed. 

2  The  statement  has  been  condensed.  —  Ed. 


PART  II.,  SECT.  III.]     DALBY  V.  INDIA  AND  LONDON  L.  ASSUR.  CO.      109 

should  be  stated  for  the  opinion  of  the  Court  of  Error  in  the  shape  of  a 
bill  of  exceptions. 

According  to  the  bill  of  exceptions,  the  judge  directed  the  jury  that 
there  was  no  evidence  that  the  Anchor  Life  Assurance  Company  was 
interested  in  the  life  of  the  Duke  of  Cambridge,  in  manner  and  form  as 
the  declaration  liad  alleged  ;  and  thereupon  the  jury  gave  their  verdict 
for  the  defendants ;  but  the  counsel  for  the  plaintiff,  before  verdict,  ex- 
cepted to  the  direction. 

Bramwell  (with  whom  were  H.  Tindal  Atkinson  and  F.  J.  Smith),  for 
the  plaintiff.^ 

Chaimell,  Serjt.  (with  whom  were  Partridge  and  Coxon),  contra.^ 

Cur.  adv.  vult. 

Parke,  B.,  now  delivered  the  judgment  of  the  court.'  .  .  . 

It  is  an  action  on  what  is  usually  termed  a  policy  of  life  assurance, 
brought  by  the  plaintiff  as  a  trustee  for  the  Anchor  Assurance  Com- 
pany, on  a  policy  for  £1,000  on  the  life  of  his  late  Royal  Highness,  the 
Duke  of  Cambridge. 

The  Anclior  Life  Assurance  Company  had  insured  the  Duke's  life  in 
four  separate  policies,  —  two  for  £1,000,  and  two  for  £500  each,  granted 
by  that  company  to  one  Wright.  In  consequence  of  a  resolution  of 
their  directors,  the}-  determined  to  limit  their  insurances  to  £2,000  on 
one  life  ;  and,  this  insurance  exceeding  it,  the}*  effected  a  policy  with 
the  defendants  for  £1,000  hy  way  of  counter-insurance. 

At  the  time  this  polic}'  was  subscribed  by  the  defendants,  the  Anchor 
Compan}'  had  unquestionably  an  insurable  interest  to  the  full  amount. 
Afterwards,  an  arrangement  was  made  between  the  office  and  Wright 
for  the  former  to  grant  an  annuit}-  to  Wright  and  his  wife,  in  considera- 
tion of  a  sum  of  money,  and  of  the  deliver}'  up  of  the  four  policies 
to  be  cancelled,  which  was  done ;  but  one  of  the  directors  kept  the 
present  policy  on  foot,  by  the  payment  of  the  premiums  till  the  Duke's 
death. 

It  ma}^  be  conceded,  for  the  purpose  of  the  present  argument,  that 
these  transactions  between  Wright  and  the  office  totall}*  put  an  end  to 
that  interest  which  the  Anchor  Company  had  when  the  polic}'  was  effected, 
and  in  respect  of  which  it  was  effected  ;  and  that  at  the  time  of  the 
Duke's  death,  and  up  to  the  commencement  of  the  suit,  the  plaintiff  had 
no  interest  whatever. 

Tliis  raises  the  ver}'  important  question,  whether,  under  these  circum- 
stances, the  assurance  was  void,  and  nothing  could  be  recovered 
thereon. 

1  In  the  midst  of  this  argument,  Aldersov,  B.,  said :  "The  case  of  Godsall  v.  Bol- 
dero,  9  East,  72,  starts  with  the  palpable  fallacy  that  it  is  a  mere  contract  of  in- 
demnity. In  the  case  of  a  fire  or  marine  insurance,  the  oflSce  does  not  necessarily  pay 
anything.  Life  assurance  is  altogether  different :  every  life  must  come  to  an  end.  In 
Godsall  V.  Boldero,  it  happened  to  be  the  contract  of  a  creditor."  —  Ed. 

2  Parke,  B.,  interrupted  counsel  thus :  "  You  had  better  address  yourself  to  the 
question  whether  or  not  an  interest  at  the  time  of  the  cnntrnct  is  sufficient." — Ed. 

*  The  omitted  passage  stated  how  the  case  came  before  this  court.  —  Ed. 


110  DALBY   V.   INDIA   AND   LONDON   L.   ASSUK.   CO.       [CHAP.  IL 

If  the  court  had  thought  some  interest  at  the  time  of  the  Duke's 
death  was  necessary  to  make  the  polic}'  valid,  the  facts  attending  the 
keeping  up  of  the  iiolicj'  would  have  undergone  further  discussion. 

There  is  the  usual  averment  in  the  declaration,  that,  at  the  time  of 
the  making  of  the  polic}',  and  thence  until  the  death  of  the  Duke,  the 
Anchor  Assurance  Compau}-  was  interested  in  the  life  of  the  Duke,  and 
a  plea  that  they  were  not  interested  modo  et  forma,  —  which  traverse 
makes  it  unnecessar}'  to  prove  more  than  the  interest  at  the  time  of 
making  the  polic}",  if  that  interest  was  sufficient  to  make  it  valid  in 
point  of  law.  Lush  v.  Russell,  5  Exch.  203.  We  are  all  of  opinion 
that  it  was  sufficient;  and,  but  for  the  case  of  Godsall  v.  Boldero, 
9  East,  72,  should  have  felt  no  doubt  upon  the  question. 

The  contract  commonly  called  life  assurance,  when  properly  con- 
sidered, is  a  mere  contract  to  pay  a  certain  sum  of  money  on  the  death 
of  a  person,  in  consideration  of  the. due  payment  of  a  certain  annuity 
for  his  life,  —  the  amount  of  the  annuity  being  calculated,  in  the  first 
instance,  according  to  the  probable  duration  of  the  life  ;  and,  when  once 
fixed,  it  is  constant  and  invariable.  The  stipulated  amount  of  annuity 
is  to  be  uniformly  paid  on  one  side,  and  the  sum  to  be  paid  in  the  event 
of  death  is  always  (except  when  bonuses  have  been  given  by  prosperous 
offices)  the  same,  on  the  other.  This  species  of  insurance  in  no  waj* 
resembles  a  contract  of  indemnit}'. 

Policies  of  assurance  against  fire  and  against  marine  risks,  are  both 
properly  contracts  of  indemnit}-,  —  the  insurer  engaging  to  make  good, 
within  certain  limited  amounts,  the  losses  sustained  bj'  the  assured  in 
their  buildings,  ships,  and  effects.  Policies  on  maritime  risks  were 
afterwards  used  improperl}',  and  made  mere  wagers  on  the  happening  of 
those  perils.  This  practice  was  limited  by  the  19  Geo.  II.,  c.  37,  and  put 
an  end  to  in  all  except  a  few  cases.  But,  at  common  law,  before  this 
statute  with  respect  to  maritime  risks,  and  the  14  Geo.  III.,  c.  48,  as  to 
insurances  on  lives,  it  is  perfectly  clear  that  all  contracts  for  wager 
policies,  and  wagers  which  were  not  contrary  to  the  policy  of  the  law, 
were  legal  contracts  ;  and  so  it  is  stated  b}'  the  court  in  Cousins  v, 
Nantes,  3  Taunt.  315,  to  have  been  solemnly  determined  in  the  case  of 
Lucena  v.  Craufurd,  2  Bos.  &  P.  324  ;  2  N.  R.  269,  without  even  a 
difference  of  opinion  among  all  the  judges.  To  the  like  effect  was  the 
decision  of  the  Court  of  Error  in  Ireland,  before  all  the  judges  except 
three,  in  The  British  Insurance  Compan}-  ?'.  Magee,  Cooke  &  Alcock, 
182,  that  the  insurance  was  legal  at  common  law. 

The  contract,  therefore,  in  this  case,  to  pay  a  fixed  sum  of  £1,000  on 
the  death  of  the  late  Duke  of  Cambridge,  would  have  been  unquestion- 
ably legal  at  common  law,  if  the  plaintiff  had  had  an  interest  thereon 
or  not ;  and  the  sole  question  is,  whether  this  policy  was  rendered  ille- 
gal and  void  by  the  provisions  of  the  statute  14  Geo.  III.,  c.  48.  This 
depends  upon  its  true  construction. 

The  statute  recites  that  the  making  insurances  on  lives  and  other 
events  wherein  -the  assured  shall  have  no  interest  hath  introduced  a 


PART  II.,  SECT.  III.]      LOOMIS  V.  EAGLE   LIFE,  ETC.  INS.  CO.  Ill 

mischievous  kind  of  gaming  ;  and,  for  the  remed}'  thereof,  it  enacts  "  that 
no  insurance  shall  be  made  b\'  any  one  on  the  life  or  lives  of  anj*  person 
or  persons,  or  on  anj-  other  events  whatsoever,  wherein  the  person  or 
persons  for  whose  use  and  benefit,  or  on  whose  account,  such  polic}'  shall 
be  made,  shall  have  no  interest,  or  by  way  of  gaming  or  wagering  ;  and 
that  ever}'  assurance  made  contrary  to  the  true  intent  and  meaning 
hereof  shall  be  null  and  void  to  all  intents  and  purposes  whatsoever." 

As  the  Anchor  Assurance  Companj'  had  unquestionably  an  interest 
in  the  continuance  of  the  life  of  the  Duke  of  Cambridge,  —  and  that  to 
the  amount  of  £1,000,  because  they  had  bound  themselves  to  pa}'  a  sum 
of  £1,000  to  Mr.  AV right  on  that  event,  —  the  policy  effected  by  them 
with  the  defendants  was  certainly  legal  and  valid,  and  the  plaintiff, 
without  the  slightest  doubt,  could  have  recovered  the  full  amount,  if 
there  were  no  other  provisions  in  the  act. 

This  contract  is  good  at  common  law,  and  certainh'  not  avoided  hy  the 
first  section  of  the  14  Geo.  III.  c.  48.  This  section,  it  is  to  be  observed, 
does  not  provide  for  any  particular  amount  of  interest.  According  to 
it,  if  there  was  any  interest,  however  small,  the  policy  would  not  be 
avoided.^  .  .  .  Judgment  reversed  and  venire  de  novo.^ 


LOOMIS,   Administratok,  v.  EAGLE  LIFE   AND   HEALTH 

INS.   CO. 

Supreme  Judicial  Court  of  Massachusetts,  1856.     6  Gray,  396. 

Action  of  contract  upon  a  policy  of  insurance,  dated  February  2, 
1849,  for  seven  years,  for  the  sum  of  $700  upon  the  life  of  Freedom 
Keith,  a  minor  son  of  Bela  M.  Keith,  the  plaintiffs  intestate,  to  whom 
this  policy  was  made. 

At  the  trial  in  the  Court  of  Common  Pleas  at  October  term,  1853, 
before  Mellen,  J.,  there  was  evidence  of  the  following  facts  :  Freedom 
was  twenty  years  of  age  on  the  6th  of  January',  1849,  and  resided  with 
his  father  in  Manchester,  Conn.,  and  worked  in  a  factory  there ;  the 
father,  with  his  other  children,  working  in  the  same  factor}',  and  usually 
receiving  the  wages  of  all  his  children,  which  together  with  his  own 
wages  constituted  the  principal  support  of  his  family. 

On  the  17th  of  February,  1849,  Freedom  sailed  for  California,  having 
on  the  8th  of  January'  previous  made  an  agreement  in  writing  with 
Aaron  Cook,  in  consideration  of  the  sum  of  $300  paid  by  Cook  into 
tiie  treasury  of  a  trading  and  mining  company,  of  which  Freedom  was  a 
member,  to  devote  his  services  to  said  company  during  its  continuance, 

1  The  remainder  of  the  opinion  dealt  with  the  amount  of  recovery.  It  w'll  be 
found  post,  p.  932.  — Ed. 

^  See  Connecticut  Mut.  L.  Ins.  Co.  v.  Schaefer,  94  U.  S.  457  (1876).  — Ed. 


112  LOOMIS   V.    EAGLE    LIFE,    ETC.    INS.    CO.  [CHAP.  IL 

and  to  pay  half  of  his  share  of  the  profits  to  Cook ;  and  his  father  as- 
sented to  tliis  agreement,  and  relinquished  any  claim  to  his  services,  so 
far  as  Cook  was  concerned  ;  and  supplied  Freedom  with  an  outfit  out  of 
his  former  earnings.  On  the  2d  of  February,  1849,  Cook  procured 
from  the  defendants  a  policy  of  insurance  for  $500  on  Freedom's  life. 
Freedom  died  on  board  of  the  ship  on  the  1st  of  December,  1849,  soon 
after  arriving  in  California.^  .  .   . 

The  defendants  contended  that  the  plaintiffs  intestate  bad  no   insur- 
able interest  in  the  life  of  Freedom  Keith.  .  .  . 

But  the  judge  ruled  that  upon  the  facts  proved  the  intestate  had  an 
insurable  interest  to  the  amount  of  the  policy,  .  .  .  and  directed  the 
jury  to  return  a  verdict  for  tlie  full  amount  of  the  policy ;  which  they 
did  ;  and  the  defendants  alleged  exceptions. 
IL  Vose  and  L.  Norton,  for  the  plaintiflT. 
H.  Jforris,  for  the  defendants. 

Shaw,  C.  J.  .  .  .  The  ground  principally  relied  on  is,  that  the 
assured  had  no  pecuniary  interest  in  the  life  of  his  son  at  the  time  the 
policy  was  made,  and  no  insurable  interest  at  the  time  the  loss  occurred. 
We  understand  that  the  law  of  Connecticut  (where  the  parties  re- 
sided) is  similar  to  that  of  Massachusetts,  and  that  by  the  law  of  both 
States  a  father  who  supports,  maintains,  and  educates  a  son,  under 
twenty-one  years  of  age  and  not  emancipated,  is  entitled  to  the  earn- 
ings of  such  son,  and  may  maintain  an  action  for  them.  Here,  when 
the  father  had  in  terms  relinquished  his  right  to  a  share  in  the  son's 
earnings,  for  a  valuable  stipulation  on  the  other  side,  designed  and  in- 
tended to  increase  those  earnings,  by  a  necessary  implication  he  re- 
served his  right  to  tlie  other  share  of  those  earnings.  According  to 
any,  the  strictest  rule  of  construction,  the  assured  in  this  case,  we 
think,  had  a  direct  and  pecuniary  interest  in  the  life  of  the  cestui  que 
vie,  his  son.  It  is  argued,  that  the  time  which  would  remain  after  his 
probable  arrival  in  California,  before  coming  of  age,  would  be  so  short 
that  his  earnings,  if  anything,  would  be  very  small.  Supposing  he 
was  to  have  a  passage  of  three  or  five  months,  he  might  still  have  five 
or  six  months  to  work  in  California  ;  and  this  being  a  contract  dealing 
■with  chances  and  probabilities,  and  even  possibilities,  and  to  be  con- 
strued as  such,  it  may  well  be  supposed  that  the  parties  had  it  in  con- 
templation that,  by  working  a  few  weeks  or  days  in  a  gold  mine,  or  by 
a  lucky  hit  in  a  single  day,  he  might  gain  gold  enough  to  make  his 
share  exceed  the  whole  sum  insured.  But  nearness  or  remoteness  of 
this  chance  is  immaterial ;  the  parties  regulate  that  matter  for  them- 
selves in  fixing  the  sum  to  be  insured  and  the  rate  of  premium.  It 
seems  to  us  therefore  that,  according  to  the  rule  relied  on  by  the  defend- 
ants, the  assured  in  the  present  case  had  a  direct  and  pecuniary  interest 
in  the  life  of  the  son,  sufficient  to  enable  him  to  maintain  this  action. 

1  In  the  statement  and  the  opinion,  passages  foreign  to  insurable  interest  have  been 
">niitte(l.  —  Ed. 


PART  II.,  SECT.  III.]       LOOMIS   V.    EAGLE    LIFE,    ETC.    INS.    CO.  113 

But,  upon  broader  and  larger  grounds,  we  are  of  opinion  that,  inde- 
pendently of  the  fact  that  the  son  was  a  minor,  and  the  assured  had  a 
pecuniary  interest  in  his  earnings,  the  assured  had  an  insurable  interest 
sufficient  to  maintain  this  action. 

The  case  in  this  State  must  be  governed  b}'  the  rules  and  princiitlos 
of  the  common  law,  there  being  no  regulation  of  the  subject  b}-  statute. 
This  was  distinctly  stated  as  the  ground  of  decision  in  the  leading  and 
principal  case  decided  in  this  commonwealth.^  .  .  . 

In  discussing  the  question  in  this  commonwealth,  we  are  to  consider 
it  solely  as  a  question  at  common  law,  unaffected  by  the  St.  of  14  Geo. 
III.  c.  48,  passed  about  the  time  of  the  commencement  of  the  Revolu- 
tion, and  never  adopted  in  this  State.  All  therefore  which  it  seems 
netessary  to  show,  in  order  to  take  the  case  out  of  the  objection  of 
being  a  wager  polic}',  is  that  the  insured  has  some  interest  in  the  life 
of  the  cestui  que  vie  ;  that  his  temporal  affairs,  his  just  hopes  and  well- 
grounded  expectations  of  support,  of  patronage,  and  advantage  in  life 
will  be  impaired ;  so  that  the  real  purpose  is  not  a  wager,  but  to  secure 
such  advantages  supposed  to  depend  on  the  life  of  another ;  such,  we 
suppose,  would  be  sufficient  to  prevent  it  from  being  regarded  as  a 
mere  wager.  Whatever  ma}'  be  the  nature  of  such  interest,  and  what- 
ever the  amount  insured,  it  can  work  no  injur}'  to  the  insurers,  because 
the  premium  is  proportioned  to  the  amount;  and  whether  the  insur- 
ance be  to  a  large  or  small  amount,  the  premium  is  computed  to  be  a 
precise  equivalent  for  the  risk  taken.  Perhaps  it  would  be  difficult  to 
lay  down  any  general  rule  as  to  the  nature  and  amount  of  interest 
which  the  assured  must  have.  One  thing  ma}'  be  taken  as  settled,  that 
every  man  has  an  interest  in  his  own  life  to  any  amount  in  which  he 
chooses  to  value  it,  and  may  insure  it  accordingly. 

We  cannot  doubt  that  a  parent  has  an  interest  in  the  life  of  a  child, 
and,  vice  versa,  a  child  in  the  life  of  a  parent ;  not  merely  on  the 
ground  of  a  provision  of  law  that  parents  and  grandparents,  children 
and  grandchildren,  are  bound  to  support  their  lineal  kindred  when  they 
may  stand  in  need  of  relief,  but  upon  considerations  of  strong  morals, 
and  the  force  of  natural  affection  between  near  kindred,  operating  often 
more  efficaciously  than  those  of  positive  law.  In  the  case  of  Lord  v.  Dall, 
it  was  held  that  it  might  be  inferred  from  particular  circumstances.^  .  . . 

Prima  facie  the  plaintitf  in  the  present  case  has  an  interest  in  the 
life  of  his  son,  the  policy  of  insurance  was  a  valid  one,  and  the  plaintiff 
is  entitled  to  recover  upon  it. 

ExcejJtions  overruled.^ 

1  Here  was  quoted  Lord  v.  Dall,  ante,  p.  101  (1815).  —  Ed. 

2  The  omitted  passage  bore  iudirectly  ou  insurable  interest,  but  more  directly  on 
amount  of  recovery.  —  Ed. 

3  Ace:  Mitchell  v.  Union  L.  Ins.  Co.,  45  Me.  104  (1858).  — Ed. 


114  CAMPBELL   V.   N.   E.   MUT.   LIFE   INS.   CO.  [CHAP.  IL 


MARGARET   CAMPBELL  v.   NEW  ENGLAND   MUTUAL 
LIFE  INS.   CO. 

Supreme  Judicial  Court  of  Massachusetts,  1867.     98  Mass.  381. 

Contract  against  a  mutual  insurance  corapanj'  on  a  policj'  of  insur- 
ance made  by  them  to  Andrew  Campbell  upon  his  life,  payable  to 
him,  his  executors,  administrators,  and  assigns,  for  the  benefit  of  the 
plaintiff.^  .  .  . 

The  declaration  alleged  .  .  .  that  the  plaintiff  was  the  wife  of  a 
brother  of  the  deceased.  .  .  . 

The  answer  .  .  .  declared  the  defendants'  ignorance  whether  the 
plaintiff  was  his  brother's  wife  or  the  person  to  whom  the  policy  was 
made  payable ;  and  averred  that  she  had  not  an  insurable  interest  in 
his  life  ;  and  also  that  the  policy  was  made  upon  the  faith  of  an  appli- 
cation therefor,  signed  b}-  Andrew  Campbell.  .  .  . 

A  trial  .  .  .  resulted  in  a  verdict  for  the  plaintiff,  which  was  set 
aside  as  against  evidence. 

At  the  second  trial  .  .  .  before  Wells,  J.,  the  plaintiff  proved  that 
she  was  the  person  named  in  the  polic}'  and  for  whose  benefit  it  was 
made  ;  and  rested  her  case  ;  whereupon  the  defendants  asked  the  judge 
to  rule  that  in  order  to  maintain  her  action  she  must  prove  an  insurable 
interest  in  the  life  of  her  brother-in-law  ;  but  he  declined  so  to  rule.  .  .  . 

The  judge  .  .  .  instructed  the  jur\- .  .  .  "  that  an  untrue  statement 
innocently  made,  in  regard  to  a  latent  disease  of  which  the  applicant 
was  unconscious,  would  not  avoid  the  polic}'."  .  .  . 

The  jury  returned  a  verdict  for  the  plaintiff ;  and  the  defendants 
alleged  exceptions. 

T.  K.  Lothrop  and  G.  W.  Baldwin,  for  the  defendants. 

H.  G.  Hutchins,  for  the  plaintiff. 

Wells,  J.^  The  polic}'  in  this  case  is  upon  the  life  of  Andrew 
Campbell.  It  was  made  upon  his  application  ;  it  issued  to  him  as  "the 
assured  ; "  the  premium  was  paid  by  him  ;  and  he  thereby-  became  a 
member  of  the  defendant  corporation.  It  is  the  interest  of  Andrew 
Campbell  in  his  own  life  that  supports  the  policy.  The  plaintiff  did 
not,  by  virtue  of  the  clause  declaring  the  policy  to  be  for  her  benefit, 
become  the  assured.  She  is  merely  the  person  designated  by  agreement 
of  the  parties  to  receive  the  proceeds  of  the  policy  upon  the  death  of  the 
assured.  The  contract  (so  long  as  it  remains  executor}*),  the  interest 
by  which  it  is  supported,  and  the  relation  of  membership,  all  continue 
the  same  as  if  no  such  clause  were  inserted.  Fogg  v.  Middlesex  Insur- 
ance Co.,  10  Cush.  337,  346  ;  Sanford  v.  Mechanics'  Insurance  Co.,  12 

1  In  the  statement  and  the  opinion,  many  passages  foreign  to  insurable  interest 
have  been  omitted.  —  Ed. 

2  Hoar  and  Foster,  JJ.,  did  not  sit  in  this  case.  —  Hep. 


FART  II.,  SECT.  III.]       CAMPBELL   V.    N.    E.    MUT.    LIFE   INS.    CO.  115 

Cash.  541  ;  Hale  v.  Mechanics'  Insurance  Co.,  6  Gray,  169  ;  Campbell 
V.  Charter  Oak  Insurance  Co.,  10  Allen,  213  ;  Forbes  v.  American  In- 
surance Co.,  15  Gray,  249.  It  was  not  necessary  therefore  that  the 
plaintiff  should  show  that  she  had  an  interest  in  the  life  of  Andrew 
Campbell,  by  which  the  policy  could  be  suppoi'ted  as  a  policy  to  herself 
as  the  assured.  The  defendants  raise  no  question  as  to  her  right  to 
bring  this  action,  if  the  policy  can  be  supported  for  her  benefit.^  .  .  . 

The  instruction  "that  an  untrue  statement  innocently  made,  in  rcgai  .1 
to  a  latent  disease,  of  which  the  applicant  was  unconscious,  would  not 
avoid  the  policy,"  as  a  general  statement  of  the  law  applicable  to  repre- 
sentations in  insurance  contracts,  was  incorrect.  ... 

As  the  instruction  was  in  itself  incorrect,  it  seems  to  be  necessary 
tiiat  the  verdict  should  be  set  aside,  and  the 

Exception  upon  this  single  point  is  sustained. 

1  In  Eawls  v.  American  Mutual  L.  Ins.  Co.,  27  N.  Y.  282,  287  (1863),  Wright,  J., 
for  the  majority  of  the  court,  said  :  "  The  defendants,  in  form,  contracted  with  Fish  for 
an  insurance  upon  liis  life.  In  consideration  of  certain  statements  and  representations 
made,  and  a  premium  of  $117,  to  be  paid  annually,  in  advance,  the  defendants  prom- 
ised and  agreed  with  Fish,  his  heirs  or  other  legal  representatives,  to  pay  the  sum  of 
$.5,000  to  the  plaintiff,  within  twenty  days  after  the  proof  of  the  death  of  Fish,  pro- 
vided the  policy  should  then  be  in  force.  If  this  is  to  be  regarded  and  treated  as  a 
contract  with  Fisli  to  insure  his  own  life,  then  the  question  attempted  to  be  raised  on 
the  motion  for  a  nonsuit,  viz.,  that  the  plaintiff  had  no  insurable  interest  in  the  life  of 
Fish,  and,  hence,  that  it  was  a  gaming  or  wagering  policy,  cannot  arise.  If  the  con- 
tract is  with  the  party  whose  life  is  insured,  he  may  have  the  loss  payable  to  his  own 
representatives,  or  to  his  assignee  or  appointee ;  and  whichever  be  the  form,  his  own 
interest  is  the  same.  It  can  only  be  by  holding  the  policy  in  substance  and  legal 
effect,  that  of  a  creditor  upon  the  life  of  his  debtor,  that  an  interest  was  necessary  on 
the  part  of  the  plaintiff  to  support  it. 

"  I  am  inclined  to  regard  the  insurance  as  effected  by  the  plaintiff  on  the  life  of 
Fish,  although  the  policy,  in  form,  purports  to  have  been  procured  by  the  latter.  The 
plaintiff  applied  for  and  obtained  it  as  the  creditor  of  Fish,  to  protect  his  interest  as 
such  creditor,  in  Fish's  life.  lie  took  the  initiatory  steps  for  procuring  the  policy; 
the  .application  stated  it  to  be  for  his  benefit;  he  paid  the  original  and  all  subsequent 
premiums ;  it  was  delivered  to  him,  and  he  sues  upon  it  as  the  party  in  interest,  and 
as  the  only  party  connected  with  the  policy  who  could  maintain  an  action  upon  it.  So 
far  as  the  question  of  its  validity  is  involved,  it  will,  therefore,  be  treated  as  a  contract, 
in  substance,  between  the  plaintiff  and  the  defendants." 

And  see  Bloomington  Mut.  Benefit  Assn.  v.  Blue,  120  lU.  121  (1887);  Heiulein  v. 
Imperial  L.  Ins.  Co.,  101  Mich.  250  (1894) ;  and  post,  p.  117,  n.  1. 

In  Pennsylvania  and  Texas  the  law  upon  this  point  is  peculiar,  and  possibly  not 
finally  settled.  Gilbert  v.  Moose,  104  Pa.  74,  78  (1883) ;  Scott  v.  Dickson,  108  Pa.  6, 
16  (1884);  Mayher  v.  Manhattan  L.  Ins.  Co.,  87  Tex.  169  (1894).  — Ed. 


116  CHISHOLM  V.   NATIONAL   CAPITOL  LIFE   INS.   CO.      [CHAP.  IL 


CHISHOLM,  Respondent,  v.  NATIONAL  CAPITOL  LIFE 
INS.  CO.,  Appellant. 

Supreme  Court  of  Missouri,  1873.     52  Mo.  213. 

Appeal  from  St.  Louis  Circuit  Court. 

Menderschott  and  Chandler,  for  appellant. 

Isaac  T.  Wise,  for  respondent. 

Wagner,  J.  The  main  error  assigned  and  relied  upon  for  the  rever- 
sal of  this  case  is  the  action  of  the  court  in  refusing  to  declare  that  the 
plaintiff  had  no  such  insurable  interest  in  the  life  of  the  person  insured 
as  would  entitle  her  to  recover. 

The  record  shows  that  there  was  a  contract  of  marriage  existing  be- 
tween plaintiff  and  Robert  Peel  Clark,  and  that  on  the  17th  day  of  Jul}^, 
1869,  the  defendant  made  and  delivered  to  plaintiff  its  policy  of  insur- 
ance whereby  it  insured  the  life  of  the  said  Clark  for  the  term  of  his 
natural  life,  for  the  sum  of  $5,000.  The  policy  was  issued  and 
delivered  to  plaintiff  and  made  payable  to  her  as  the  intended  wife  of 
Clark,  she  paying  the  annual  premium  of  $90.20.  The  first  premium 
was  duly  paid  by  her,  and  on  the  12th  da}'  of  Januar}-,  1870,  whilst 
the  policy  was  in  full  force,  but  before  the  contemplated  marriage  had 
been  solemnized,  Clark  died. 

What  interest  or  whether  an}-  is  necessary  in  the  life  of  the  person 
insured  to  support  the  contract  of  insurance  is  left  in  some  confusion  by 
the  adjudged  cases,  as  the  authorities  are  contradictor^'.^ 

In  this  State  we  have  no  statute  on  the  subject  covering  the  case,  and 
as  the  policy  is  not  void  by  the  common  law,  it  can  only  be  declared  so 
on  the  ground  that  it  is  against  public  policy.  There  is  nothing  to 
show  that  the  contract  was  a  mere  wagering  one,  or  that  it  is  in  any 
wise  against  or  contrary  to  public  policy.  .  .  . 

The  insurance  was  not  a  mere  wagering  contract,  and  therefore  can- 
not be  said  to  contravene  an}-  principle  of  public  polic}'.  The  plaintiff 
had  an  interest  in  the  life  of  Clark ;  a  valid  contract  of  marriage  was 
subsisting  between  them.  Had  he  lived,  and  violated  the  contract,  she 
would  have  had  her  action  for  damages.  Had  he  observed  and  kept  the 
same,  then  as  his  wife  she  would  have  been  entitled  to  support.  In 
m}'  opinion  she  had  such  an  interest  as  was  entirel}'  sufficient  to  render 
the  contract  valid.  The  defence  in  this  case  is  devoid  of  merit,  and  is 
not  creditable  to  the  defendant  making  it.  There  is  no  pretence  that 
there  was  any  concealment  of  facts  at  the  time  of  making  the  contract. 
Upon  the  facts  there  was  no  hesitation  in  entering  into  the  agreement, 
and  obtaining  the  premium  and  issuing  the  policy.     Had  the  defendant 

*  Passages  discussing  authorities  have  been  omitted.  —  Ed. 


r.UlT  II.,  SECT.  III.]         KESERYE    MUTUAL    IXS.    CO.    V.   KANE.  ll7 

been  as  willing  to  observe  and  fulfil  its  obligations  as  it  was  to  receive 
premiums,  then  this  case  would  have  never  occupied  the  time  of  the 
courts. 

The  judgment  should  be  affirmed.^ 


RESERVE  MUTUAL  INS.   CO.   v.  KANE. 
Supreme  Court  of  Pennsylvania,  1876.     81  Pa.  154. 

Error  to  the  District  Court  of  Philadelphia. 

This  was  an  action  of  debt,  brought  May  3,  1873,  by  James  P.  Kane 
against  the  Reserve  Mutual  Life  Insurance  Company,  on  a  policy  of 
insurance  for  62,000,  issued  April  1,  1872,  by  the  defendants  to  the 
plaintiff,  on  the  life  of  his  father,  John  Kane. 

The  case  was  tried  April  15,  1874,  before  Briggs,  J. 

The  plaintiff  gave  evidence  of  the  death  of  John  Kane  on  the  26th  of 
June,  1872.  The  father  had  come  from  Ireland  ;  had  lived  in  this  coun- 
try two  or  three  years  ;  plaintiff  paid  Si 20  for  bringing  his  father  and 
family  to  this  country ;  $50  had  been  repaid  him  by  the  mother ;  the 
father  intended  to  repay  him,  but  had  not;  the  father  was  a  laborer; 
kept  house  from  April  to  June,  1872  ;  was  fifty-five  years  old  when  he 
died  ;  left  a  widow,  three  sons,  and  a  daughter  ;  the  plaintiff  paid  through 
affection,  but  expected  the  father  would  have  paid  it  had  he  lived  ;  the 
money  paid  by  him  brought  over  the  father,  mother,  brothers,  and  sis- 
ter ;  "he  expected  the  father  would  compel  the  brothers  to  pay  their 
passage- mone}"  back. 

The  defendants'  points  were,  — 

1.  If  the  jury  find  from  the  evidence  that  the  plaintiff  was,  at  the  exe- 
cution of  the  policy  of  life  insurance,  an  adult  son  of  John  Kane,  then 
as  such  he  had  no  insurable  interest  in  the  father's  life,  and  the  verdict 
should  be  for  the  defendants.  ^  .  .  . 

The  court  refused  the  points,  and  directed  the  jury  to  render  a  ver- 
dict in  favor  of  the  plaintiff  for  the  amount  of  said  policy,  —  82,000, 
less  six  months'  premium  unpaid,  and  for  the  interest,  amounting  to 
$2,085.34.     The  jury  so  found. 

The  defendants  took  a  writ  of  error,  and  assigned  the  refusal  of  their 
points  and  the  instruction  of  the  court  for  error. 

H.  M.  Dechert,  for  plaintiffs  in  error. 

D.  C.  Harrington,  for  defelidant  in  error. 

Per  Curiam.  By  the  28th  section  of  the  Poor  Law  of  June  13, 
1876,  the  father  and  grandfather,  and  the  mother  and  grandmother,  and 
the  children  and  grandchildren  of  every  poor  person  not  able  to  work, 
shall,  at  their  own  charge,  being  of  sufficient  ability,  relieve  and  main- 

1  See  McCarthys.  Sapreme  Lodge,  153  Mass.  314  (1891);  Alexander  v.  Parkej; 
144  111.  35.5  (1893).  — Ed. 

2  Nothing  ultimately  turned  on  the  points  omitted.  —  Ed. 


lis  RESERVE   MUTUAL   INS.   CO.   V.    KANE.  [CHAP.  II. 

tain  such  poor  person,  at  snch  rate  as  the  Court  of  Quarter  Sessions  of 
the  proper  county  shall  order  and  direct.  Maintenance  of  a  father  or 
motlier  unable  to  work  is,  therefore,  a  legal  liability'.  When  we  add  to 
this  the  feelings  of  natural  affection  and  the  desire  produced  by  these 
feelings  to  provide  for  the  comforts  of  parents,  the  right  to  effect  an 
insurance  on  the  life  of  tlie  parent,  to  cany  out  these  purposes,  ought 
not  to  be  denied.  It  would  be  technical  in  the  extreme  to  say  that  a 
son  has  no  insurable  interest  in  his  father's  life.  Poverty  may  overtake 
the  father  in  his  lifetime,  and  thus  both  father  and  mother  be  cast  upon 
the  son  ;  or  if  the  father  die  before  her,  the  necessit}'  may  fall  at  once 
upon  the  son.  Wliy  then  should  he  not  be  permitted  to  make  a 
provision,  by  insurance,  to  reimburse  himself  for  his  outlays,  past 
or  future?  What  injury  is  done  to  the  insurance  company?  They 
receive  the  full  premium,  and  the}'  know,  in  such  case,  from  the  ver}' 
relationship  of  the  parties,  that  the  contract  is  not  a  mere  gambling 
adventure,  but  is  founded  in  the  best  feelings  of  our  nature,  and  on 
a  legal  duty  which  may  arise  at  any  time.  We  are  of  opinion  that 
the  polic}-  is  not  void.  Judgment  affirmed.^ 

1  Contra:  People's  Mut.  Benefit  Society  v.  Terapleton,  16  Ind.  App.  126  (1896). 

Compare  Guardian  Mut.  L.  Ins.  Co.  v.  Hogan,  80  111.  35  (1875) ;  Continental  Life 
Ins.  Co.  I'.  Volger,  89  Ind.  572  (1883). 

In  Connecticut  Mut.  L.  Ins.  Co.  v.  Schaefer,  94  U.  S.  457,  460  (1876),  Bradley, 
J.,  for  the  court,  said  :  — 

"  It  is  generally  agreed  that  mere  wager  policies  —  that  is,  policies  in  -which  the  in- 
sured party  has  no  interest  whatever  in  tlie  matter  insured,  but  only  an  interest  in  its 
loss  or  destruction  —  are  void,  as  against  public  policy.  This  was  the  law  of  England 
prior  to  the  TJevolution  of  1688.  But  after  that  period,  a  course  of  decisions  grew  up 
sustaining  wager  policies.  The  legislature  finally  interposed,  and  prohibited  such  in- 
surance: first,  with  regard  to  marine  risks,  by  statute  of  19  Geo.  II.  c.  37;  and  next, 
with  regard  to  lives,  by  the  statute  of  14  Geo.  III.  c.  48.  In  this  country,  statutes  to 
the  same  effect  have  been  passed  in  some  of  the  States ;  but  where  they  have  not  been, 
in  most  cases  either  the  English  statutes  have  been  considered  as  operative,  or  the 
older  common  law  has  been  followed.  But  precisely  what  interest  is  necessary,  in 
order  to  take  a  policy  out  of  the  category  of  mere  wager,  has  been  the  subject  of  much 
discussion.  In  marine  and  fire  insurance  the  difficulty  is  not  so  great,  because  there 
insurance  is  considered  as  strictly  an  indemnity.  But  in  life  insurance  the  loss  can 
seldom  be  measured  by  pecuniary  values.  Still,  an  interest  of  some  sort  in  the  in- 
sured life  must  exist.  A  man  cannot  take  out  insurance  on  the  life  of  a  total  stranger, 
nor  on  that  of  one  who  is  not  so  connected  with  him  as  to  make  the  continuance  of  the 
life  a  matter  of  some  real  interest  to  him. 

"  It  is  well  settled  that  a  man  has  an  insurable  interest  in  his  own  life,  and  in  that 
of  his  wife  and  children ;  a  woman  in  the  life  of  her  husband ;  and  the  creditor  in  the 
life  of  his  debtor.  Indeed,  it  may  be  said  generally  that  any  reasonable  expectation 
of  pecuniary  benefit  or  advantage  from  the  continued  life  of  another  creates  an  insur- 
able interest  in  such  life.  And  there  is  no  doubt  that  a  man  may  ef£ect  an  insurance 
on  his  own  life  for  the  benefit  of  a  relative  or  friend  ;  or  two  or  more  persons,  on  their 
joint  lives,  for  the  benefit  of  the  survivor  or  survivors.  The  old  tontines  were  based 
substantially  on  this  principle,  and  their  validity  has  never  been  called  in  question. 

"  The  essential  thing  is,  that  the  policy  shall  be  obtained  in  good  faith,  and  not 
for  the  purpose  of  speculating  upon  the  hazard  of  a  life  in  which  the  insured  has  no 
interest." 

In  Warnock  v.  Davis,  104  U.  S.  775,  779  (1881),  Field,  J.,  for  the  court,  said:  "It 
is  not  ea.sy  to  define  with  precision  what  will  in  all  cases  con.stitute  an  insurable  inter- 


PART  II.,  SECT.  III.]       KOxMBACH  V.  PIEDMONT,  ETC.  LIFE  INS.  CO.        119 

ROMBACH  I'.  PIEDMONT  AND  ARLINGTON  LIFE  INS.  CO. 

Supreme  Court  of  Louisiana,  1883.     35  La.  Ann.  233. 

Appeal  from  the  Third  District  Court  for  the  Parisli  of  Orleans. 
Monroe,  J. 

A.  (b  W.  Voorhies,  for  plaintiff  and  appellant. 

Singleton  db  Broxcne^  for  defendant  and  appellee. 

Tiie  opinion  of  the  court  was  delivered  by 

Manning,  J.  The  plaintiff  insured  the  life  of  his  mother-in-law  in 
the  defendant  company  in  February,  1873,  for  §2,000,  the  policy  recit- 
ing that  it  is  issued  "  for  the  sole  use  of  her  son-in-law,  L.  Rombach." 
His  wife,  the  daughter  of  Eliza  Geisler,  had  died  leaving  two  children 
of  tender  years.  Mrs.  Geisler  had  insured  her  own  life  a  month  before 
in  this  compan}-  for  the  benefit  of  two  of  her  own  children,  for  the  same 
sum  as  this  polic}-. 

The  agent  of  the  company-  souglit  Rombach,  and  told  him  of  the 
policy  Mrs.  Geisler  had  taken,  and  asked  if  he  did  not  want  to  take 
another,  to  which  Rombach  answered  appro vingl}*,  provided  the  con- 
sent of  Mrs.  Geisler  was  not  necessarj'.  He  avowed  his  object  to  be  the 
benefit  of  his  only  child,  one  of  them  having  died.  The  agent  assured 
him  it  was  of  no  consequence  whether  she  consented  or  not,  provided 
he  paid  the  premiums  promptly. 

The  first  quarter!}-  premium  of  S22.86  was  paid  on  the  spot.  Mrs. 
Geisler  soon  heard  of  the  matter,  and  on  March  20  she  wrote  to  the 
compau}'  expressing  strong  disapproval,  and  exhibiting  bad  feeling  to 
her  son-in-law,  and  demanding  the  cancellation  of  the  policy.  On  the 
next  day  the  agent,  by  direction  of  the  company,  offered  to  pay  back 
the  premium  to  Rombach  and  demanded  the  return  of  the  policy  for 
cancellation.     Rombach  refused  to  receive  the  money,  and  denied  the 

est,  so  as  to  take  the  contract  out  of  the  class  of  wager  policies.  It  may  be  stated 
generally,  however,  to  be  such  an  interest,  arising  from  the  relations  of  the  party  ob- 
taining the  insurance,  either  as  creditor  of  or  surety  for  the  assured,  or  from  the  ties 
of  blood  or  marriage  to  him,  as  will  justify  a  reasonable  expectation  of  advantage  or 
benefit  from  the  continuance  of  his  life.  It  is  not  necessary  that  the  expectation  of 
advantage  or  benefit  should  be  always  capaVjle  of  pecuniary  estimation ;  for  a  parent 
has  an  insurable  interest  in  the  life  of  his  ciiild,  and  a  child  in  the  life  of  his  parent,  a 
husband  iu  the  life  of  his  wife,  and  a  wife  in  the  life  of  her  husband.  The  natural 
affection  in  cases  of  this  kind  is  considered  as  more  powerful  —  as  operating  more 
efficaciously  —  to  protect  the  life  of  the  insured  than  any  other  consideration.  But  in 
all  cases  there  must  be  a  reasonable  ground,  founded  upon  the  rehitions  of  the  parties 
to  each  other,  either  pecuniary  or  of  blood  or  affinity,  to  expect  some  benefit  or  advan- 
tage from  the  continuance  of  the  life  of  the  assured.  Otherwise  the  contract  is  a  mere 
wager,  by  which  the  partv  taking  the  policy  is  directly  interested  in  the  early  death 
of  the  assured.  Such  policies  have  a  tendency  to  create  a  desire  for  the  event.  They 
are,  therefore,  independently  of  any  statute  on  the  subject,  condemned,  as  being  against 
pnblJc  policy."  —  Ed. 


120  KOMBACH   V.    PIEDMONT,    ETC.    LIFE    INS.    CO.  [CHAP.  II. 

company's  right  to  cancel  the  policy,  whereupon  the  company  cancelled 
it,  and  notified  both  Rombach  and  Mrs.  Geisler  thereof. 

Thereafter,  Rombach  on  each  quarter-day  tendered  the  premium 
then  payable  on  this  policy  to  the  company,  nntil  Mrs.  Geisler's  death 
in  December,  1877,  and  the  company  refused  to  receive  it. 

The  defendant  pleads  in  answer  that  the  policy  is  void  because  ob- 
tained through  false  and  fraudulent  representations  of  Rombach"^  viz., 
tliat  he  applied  personally  to  the  company  for  the  policy,  requesting  its 
issuance,  and  represented  that  his  mother-in-law  desired  the  policy  to 
be  taken  by  him.  We  do  not  believe  that.  Rombach's  plain,  unvar- 
nished statement  is  given  already,  and  it  is  so  perfectly  in  accord  with 
"the  habit  of  insurance  agents  that  it  carries  home  conviction  of  its 
accurac}'. 

The  additional  defence  is  that  the  policy  is  "void  for  want  of  interest 
and  consideration  —  that  there  was  no  love  and  affection  between  the 
assured  and  the  beneficiary,"  and  that  he  had  not  "  such  interest  as  the 
law  requires  to  maintain  such  a  policy." 

The  phraseology  of  this  first  quotation  from  the  answer,  as  well  as 
the  interrogatories  to  all  the  witnesses,  implies  that  the  personal  rela- 
tions of  the  parlies  —  their  affection  or  hatred  —  is  conceived  to  be  the 
test  of  insurable  interest.  They  do  not  affect  it  all.  Much  time  was 
wasted  on  both  sides  in  exhibiting  Mrs.  Geisler's  antipathy  to  her  son- 
in-law  at  one  time,  and  her  reconciliation  to  him  at  another. 

The  insurable  interest  in  the  life  of  another  is  a  pecuniary  interest. 
A  policy  of  insurance,  procured  by  one  for  his  own  benefit  upon  the 
life  of  another,  the  beneficiary  being  without  interest  in  the  continuance 
of  the  life  insured,  is  against  public  pol'cy  and  therefore  void.  It  is 
thoroughl}'  settled,  because  universally  held,  that  a  wife  has  an  in- 
surable interest  in  the  life  of  her  husband,  and  although  in  that  case 
especially'  it  might  be  assumed  that  love  and  affection  furnished  a 
sufficient  basis  for  it,  the  decisions  do  not  place  it  on  that  ground,  but 
rather  on  the  support  she  is  entitled  to  from  him.  The  books  formu- 
late the  general  principle  somewhat  in  this  way :  when  the  insurable 
interest  arises,  or  is  implied  from  relationship,  it  will  be  deemed  to 
exist  when  the  relationship  is  such  that  the  insurer  has  a  legal  claim 
upon  the  insured  for  services  or  support.  Even  though  such  legal 
claim  does  not  exist,  yet  where,  from  the  personal  relations  of  the  two, 
and  the  kindness  and  good  feeling  displayed  by  the  insured  to  the  in- 
suree,  the  latter  has  a  reasonable  right  to  expect  some  pecuniary  advan- 
tage from  the  continuance  of  the  life  of  the  former  or  to  fear  loss  from 
his  death,  an  insuralile  interest  will  be  held  to  exist.  Bliss'  Life  Ins., 
§  31 ;  May's  Life  Ins.,  §§  74,  106. 

It  was  said  in  Phenix  Mut.  Life  Ins.  Co.  v.  Bailey,  13  Wall.  616,  "  it 
is  sufficient  to  show  that  the  policy  is  not  invalid,  as  a  wager  policy,  if  it 
appears  that  the  relation  of  consanguinity  or  affinity  was  such  ...  as 
warrants  the  conclusion  that  the  beneficiary  had  an  interest,  whether 
pecuniar}-,  or  arising  from  dependence,  or  natural  affection,  in  the  life 


PART  II.,  SECT.  III.]      EOMBACH  V.  PIEDMONT,  ETC.  LIFE  INS.  CO.        121 

of  the  person  assured,"  but  this  is  a  diction  of  Clifford,  J.,  and  is  not 
in  accord  with  the  decisions  generally.  A  majority  of  the  reported 
cases  will  be  found  to  be  rested  upon  pecuniar}-  considerations  or 
expectations. 

Thus  it  has  been  held  that  a  sister  had  an  insurable  interest  in  the 
life  of  her  brother,  where  the  fact  was  that  she  had  been  supported  by 
him,  Lord  v.  Dall,  12  Mass.  115,  and  a  father  in  the  life  of  his  minor 
son,  because  entitled  to  his  earnings,  Mitchell  v.  Un.  Life  Co.,  45 
Maine,  104;  but  that  he  has  none  from  mere  relationship  to  a  son,  Hal- 
ford  V.  Kyraer,  10  Barn.  &  Cres.  724 ;  nor  does  the  mere  relation  of 
brother  suffice  to  furnish  an  insurable  interest,  Lewis  v.  Phenix  Co., 
39  Conn.  100. 

It  must  be  admitted  that  the  courts  are  not  in  accord  upon  the  kind 
or  quality  of  the  insurable  interest.  Sometimes  statutory  law  has  in- 
tervened and  prescribed  in  general  terms  what  is  insurable  interest. 
We  have  no  statute  on  the  subject,  and  therefore  are  not  hampered 
by  special  restrictions,  but  are  at  liberty  to  apply  the  general  principles 
that  underlie  the  whole  system  of  insurance  law. 

Rombach  was  in  none  of  the  categories  of  permissible  insurers.  He 
had  no  insurable  interest  in  the  life  of  his  mother-in-law.  This  is 
conceded  b}-  his  counsel,  but  inasmuch  as  he  is  natural  tutor  to  his 
child,  who  is  the  grandchild  of  Mrs.  Geisler,  it  is  claimed  that  "the 
relationship  of  plaintiff  by  affinity  to  the  deceased,  and  b}^  blood  to 
his  own  child,  and  the  latter's  relationship  by  blood,  as  a  forced  heir, 
to  both  his  father  and  grandmother,  does  constitute  a  substantial 
insurable  interest." 

This  lengthened  tie  long  drawn  out  is  too  attenuated  to  support  a 
polic}'  of  insurance. 

Besides,  the  polic}'  on  its  face  expresses  that  it  is  for  his  sole  use.  If 
he  had  died,  and  the  polic}'  was  collectible,  it  would  have  enured  to  the 
benefit  of  his  succession  —  to  his  creditors  exclusiveh',  if  he  had  died 
Insolvent.  Judgment  affirmed.^ 

1  In  Stoner  v.  Line,  16  Weekly  Notes  of  Cases,  187  (S.C.  Pa.  1885),  there  was  this 
opinion  per  curiam :  "  The  court  correctly  held  that  the  son-in-law,  in  whose  favor  the 
policy  was  taken,  had  no  insurable  interest  in  the  life  of  his  mother-in-law.  He  was 
not  a  creditor  of  hers  nor  in  any  manner  legally  liable  for  her  support  or  maintenance. 
Neither  could  inherit  from  the  other.  There  was  no  consanguinity  between  them.  The 
mere  fact  that  he  married  her  daughter  gave  him  no  such  pecuniary  interest  in  the 
preservation  of  her  life  as  to  permit  him  to  effect  a  valid  insurance  thereon  for  his 
benefit.     As  to  him  it  was  purely  a  gambling  contract." 

Ace. :  Stambaugh  v.  Blake,  15  Atl.  R.  705  (S.  C.  Fa.  1888).  — Ed. 


122  CURRIER   V.   CONTINENTAL   LIFE   INS.   CO.  [CHAP.  IL 

CURRIER  V.  CONTINENTAL  LIFE   INS.    CO. 
Supreme  Court  of  Vermont,  1885.     57  Vt.  496. 

Assumpsit  to  recover  upon  a  contract  of  life  insurance,  issued  by  the 
defendant  upon  the  life  of  Sarah  M.  Currier  for  the  benefit  of  the  plain- 
tiff. Plea,  the  general  issue,  tender,  and  offset.  Trial  by  jury,  Sep- 
tember Term,  1883.  Redfield,  J.,  presiding.  Verdict  ordered  for  the 
plaintiff.^  .  .  . 

Charles  W.  Porter^  for  the  defendant. 

S.  C.  Shurtleff,  for  the  i)laintifr. 

Taft,  J.  After  the  testimony  was  closed,  the  defendant  moved  that 
a  verdict  be  directed  in  its  favor  on  the  ground  that  the  plaintiff  had 
not  proved  an  insurable  interest  in  the  life  of  his  deceased  wife,  the 
said  Sarah  M.  Currier.  The  motion  was  denied.  The  defendant  in- 
sists that  the  plaintiff  had  no  insurable  interest  in  the  life  of  his  wife, 
and  that,  therefore,  the  contract  was  against  public  policy  and  void. 
This  objection  would  have  come  with  more  grace  from  the  defendant, 
at  the  time  it  was  asked  to  enter  into  the  contract,  and  before  the  re- 
ceipt of  nearly  $3,000  of  the  plaintiffs  money.  As  Parker,  Ch.  J., 
said  in  the  leading  case  of  Lord  v.  Dall,  12  Mass.  115,  where  a  like 
objection  was  made:  "Nor  can  it  be  easily  discerned  why  the  under- 
writers should  make  this  a  question  after  a  loss  has  taken  place,  when 
it  does  not  appear  that  anj-  doubts  existed  when  the  contract  was 
made,  although  the  same  subject  was  then  in  their  contemplation." 

Admitting  that  the  rule  as  to  the  interest  necessary  to  support  a 
contract  of  life  insurance  is,  that  the  interest  must  be  a  pecuniary  one, 
we  think  that  where  no  facts  are  shown  in  relation  to  the  wife,  the  pre- 
sumption is,  that  the  husband  has  an  insurable  pecuniary  interest  in  her 
life.  He  is  entitled  to  her  services.  There  are  many  cases  where  she 
is  the  real  support  of  her  husband  and  family,  or,  as  is  sometimes  said, 
she  is  the  "  man  of  the  house."  In  all  ordinary  cases  the  husband  has 
a  deep  interest  in  the  continued  life  of  the  wife.  Cases  may  exist 
where  the  husband  has  no  interest  whatever  in  his  wife's  life.  She 
may  be  a  btirden,—  a  hopeless  maniac,  or  invalid  ;  and  such  facts  may 
require  the  application  of  a  different  rule.  There  are  none  such  in  this 
case  ;  and  we  only  hold  that  the  presumption  is,  that  the  wife  is  a  help- 
meet, and  the  husband  has  an  interest  of  a  pecuniary  nature  in  her 
livinw.'^  .  .  .  Judgment  affirmed. 

^  The  statement  of  facts  has  heen  omitted.  The  premiums  were  paid  by  the  plain- 
tiff;  and  from  the  report  in  13  Ins.  L.  J.  737,  it  is  clear  that  the  policy  was  taken  out 
by  him.  —  Ed. 

2  The  remainder  of  the  opinion  dealt  with  other  topics. — Ed. 


PART  II.,  SECT.  III.]      BARNES   V.   LONDON,   ETC.   LIFE   INS.   CO.  123 


BARNES   V.  LONDON,   EDINBURGH,  AND   GLASGOW  LIFE 

INS.   CO. 

Queen's  Bench  Division,  1891.     '92,  1  Q.  B.  864. 

Appeal  from  a  decision  of  the  judge  of  the  Leeds  Count}'  Court. 
The  action  was  brought  to  recover  £21  10s.,  the  amount  of  a  policy 
of  insurance  effected  b}-  the  plaintiff  upon  the  life  of  her  step-sister. 
The  insurance  was  effected  in  November,  1889,  when  the  child  was  tea 
3'ears  old  ;  the  child  died  in  May,  1891.  At  the  trial  before  the  learned 
county  court  judge,  the  plaintiff  stated  in  her  evidence  that  she  had 
promised  the  child's  mother  before  she  "died  that  she  would  take  care  of 
the  child,  and  help  to  maintain  her,  and  no  evidence  was  called  to  con- 
tradict this  statement.  It  was  also  stated  that  after  her  mother's  death 
the  child  lived  near,  but  not  with,  the  plaintiff.  No  objection  was  taken 
that  the  plaintiff  had  not  in  fact  spent  an}-  money  upon  the  child,  or  as 
to  the  amount  (if  any)  expended  by  her ;  and  the  learned  judge  held 
that  the  plaintiff  had  an  insurable  interest  in  the  child's  life,  and  was 
entitled  to  recover  the  amount  of  the  policy.  Other  points,  including 
misrepresentation  on  the  part  of  the  plaintiff  as  to  the  state  of  the 
child's  health  and  misrepresentation  by  the  defendants'  agent,  were 
taken,  and  decided  in  favor  of  the  plaintiff;  but  it  is  unnecessary  in 
this  report  to  state  the  facts  upon  these  points,  as  the  question  of  insur- 
able interest  was  the  sole  question  of  law  raised  upon  the  appeal. 

F.  Dodd,  for  the  defendants. 

No  counsel  appeared  on  behalf  of  the  plaintiff. 

Lord  Coleridge,  C.  J.  I  am  of  opinion  that  this  appeal  must  be 
dismissed.  The  facts  are  simple.  The  person  insured  was  a  little  girl 
of  ten,  and  the  plaintiff,  who  effected  the  insurance  for  her  own  benefit, 
was  her  step-sister ;  the  child  had  no  mother,  though  her  father  was 
apparently  alive ;  this  is,  however,  not  clear  upon  the  evidence.  The 
evidence  of  the  plaintiff  was  to  the  effect  that  she  had  promised  her 
mother  that  she  would  maintain  and  keep  the  child  ;  and  there  was 
evidence  that  she  had  undertaken  that  burden.  That  was  a  duty  not 
cast  upon  her  by  law,  but  was  wholly  self-imposed  ;  and  in  carrying  out 
her  undertaking  the  plaintiff  might  have  had  to  pay  for  the  education 
and  maintenance  of  the  child,  possibly  also  for  its  burial.  In  that  state 
of  circumstances  it  is  said  that  the  plaintiff  had  no  insurable  interest  in 
the  child's  life.  Now,  I  agree  that  the  insurable  interest  must  be  a 
pecuniary  interest,  and  that  the  interest  must  be  in  existence  at  the 
time  when  the  policy  is  effected ;  that  is  perfectly  clear  upon  the  autho- 
rities. Is  there  such  a  pecuniary  insurable  interest  here?  I  think 
there  is.  The  expenses  to  which  the  plaintiff  undertook  to  put  herself 
for  the  maintenance  of^the  child  were,  as  I  have  said,  not  expenses 
which  she  was  bound  to  incur;  and  in  my  judgment  the  plaintiff  un- 
doubtedly had  an  insurable    interest  in  the  child's  life  so  far  as  to 


124  BARNES   V.   LONDON,   ETC.   LIFE   INS.   CO.  [CHAP.  IL 

secure  the  repiiyment  of  the  expenses  incurred  by  her.  I  cannot  find 
that  anything  has  been  said  in  any  case  to  a  contrary  effect.  Taking 
the  ordinary  course  of  business  as  the  guide  to  determine  the  law,  1 
should  have  thought  that  it  was  matter  of  common  knowledge  that 
obligations  of  this  sort  were  obligations  the  repayment  of  which  was 
habitually  secured  in  this  way.  In  my  judgment  the  plaintiff  had  an 
insurable  interest  in  the  child's  life,  at  least  up  to  the  amount  of  the 
payments  actually  made  by  her  on  the  child's  account.  No  point  was 
taken  before  the  county  court  as  to  whether  any  money  had  been  paid 
by  the  plaintiff,  or  as  to  the  amount,  if  any,  paid  by  her.  The  ques- 
tion of  amount  is,  therefore,  not  before  us  ;  and  on  the  point  of  law  we 
must  uphold  the  judgment  of  the  county  court  judge. 

A.  L.  Smith,  J.  I  am  of  the  same  opinion.  No  doubt  the  conten- 
tion of  the  defendants  is  correct,  that  unless  the  plaintiff  had  a  pecuniary 
interest  in  the  child's  life  at  the  time  the  contract  of  insurance  was 
made,  the  policy  would  be  void  under  the  provisions  of  the  statute.  I 
think,  however,  that  the  plaintiff  had  such  an  interest.  A  man  can 
insure  the  life  of  his  debtor.  For  instance,  suppose  an  agreement  by  a 
debtor  to  pay  his  creditor  £1,000  by  successive  monthly  instalments  of 
£100,  the  creditor  could  insure  his  debtor's  life,  and  at  his  death 
recover  in  an  action  on  the  policy  against  the  insurance  company.  In 
the  present  case  there  is  sufficient  evidence  of  an  undertaking  on  the 
plaintiff's  part  to  incur  expense  in  maintaining,  bringing  up,  and  per- 
haps in  burying  the  child.  This  decision  does  not  trench  on  the  cases 
in  which  it  has  been  held  that  a  father  has  no  insurable  interest  in  the 
life  of  his  son.  There  is  an  obligation  in  law  on  a  father  to  maintain 
his  son  ;  there  is  no  such  obligation  here,  but  an  undertaking  to  incur 
expense ;  and  I  can  see  no  reason  why  the  plaintiff,  having  incurred 
and  incurring  such  expense,  has  not  a  pecuniary  insurable  interest  to 
the  extent  of  each  sum  of  money  as  it  was  successively  expended  by 
her  for  the  child's  benefit  —  of  course,  so  long  as  the  total  amount  does 
not  exceed  the  amount  of  the  policy.  We  have  nothing  to  do  with 
the  question  of  amount  expended,  which  point  was  not  taken  below ; 
the  sole  point  is  whethei'  the  plaintiff  had  any  pecuniary  interest  at  the 
date  of  the  policy,  and  of  that  there  was  evidence.  The  appeal  must 
be  dismissed.  Appeal  dismissed.^ 

1  On  the  topic  of  this  section,  see  also :  — 

Hebdon  v.  West,  3  B.  &  S.  579  (1863) ; 

Rawls  V.  American  Mutual  Life  Ins.  Co.,  27  N.  Y.  282,  288-289  (1863); 

Langdon  v.  Union  Mutual  Life  Ins.  Co.,  14  Fed.  R.  272  (U.  S.  C.  C,  E.  D.  Mich. 
1882); 

U.  B.  Mutual  Aid  Soc.  v.  McDonald,  122  Pa.  324  (1888) ; 

Barton  v.  Connecticut  Mut.  L.  Ins.  Co.,  119  Ind.  207  (1889) ; 

Trinity  College  v.  Traveler's  Ins.  Co.,  113  N.  Car.  244  (1893) ; 

Carpenter  y.  U.  S.  Life  Ins.  Co.,  161  Pa.  9  (1894). 

In  examining  decisions  on  life  insurance,  it  must  be  borne  in  mind  that  in  a  few 
jurisdictions  a  beneficiary  must  have  an  insurable  interest,  and  that  an  assignee  must 
have  it  in  still  more.     See  ante,  p.  11.5,  n.  1,  and  post,  Chap.  XII.,  Sect.  III.  —  Ed. 


PAET  LJ  carter  V.   BOEHM.  125 


CHAPTER   III. 
CONCEALMENT. 


PART   I. 
THE   GENERAL  THEORY. 

CARTER  V.  BOEHM. 
King's  Bench,  1766.     3  Burr.  1905. 

This  was  an  insurance  cause  upon  a  policy  underwritten  by  Mr. 
Charles  Boehm,  of  interest  or  no  interest,  without  benefit  of  salvage. 
The  insurance  was  made  by  the  plaintiff  for  the  benefit  of  his  brother, 
Governor  George  Carter. 

It  was  tried  before  Lord  Mansfield  at  Guildhall,  and  a  verdict  was 
found  for  the  plaintiff  by  a  special  jury  of  merchants. 

On  Saturday,  the  19th  of  April  last,  Mr.  Recorder  {Eyre),  on  behalf 
of  the  defendant,  moved  for  a  new  trial. 

His  objection  was,  "That  circumstances  were  not  sufficiently 
disclosed." 

A  rule  was  made  to  show  cause ;  and  copies  of  letters  and  deposi- 
tions were  ordered  to  be  left  with  Lord  Mansfield. 

N.  B.     Four  other  causes  depended  upon  this. 

The  counsel  for  the  plaintiff,  viz.,  Mr.  Morton,  Mr.  Dunning,  and 
Mr.  Wallace,  showed  cause  on  Thursday,  the  first  of  this  month.  But 
first,  — 

Lord  Mansfield  reported  the  evidence  ;  that  it  was  an  action  on  a 
polic\'  of  insurance  for  one  3'ear,  viz.,  from  16th  of  October,  1759,  to 
16th  of  October,  1760,  for  the  benefit  of  the  governor  of  Fort  Marl- 
borough, George  Carter,  against  the  loss  of  Fort  INIarlborough,  in  the 
island  of  Sumatra,  in  the  East  Indies,  by  its  being  taken  by  a  foreign 
enemy.  The  event  happened  ;  the  fort  was  taken  by  Count  d'Estaigne 
within  the  year. 

The  first  witness  was  Cawthorne,  the  polic}'  broker,  who  produced 
the  memorandum  given  b}'  the  governor's  brother  (the  plaintiff)  to 
him  ;  and  the  use  made  of  these  instructions  was  to  show,  "That  the 


126  CARTEK  V.    BOEHM,  [CHAP.  III. 

insurance  was  made  for  the  benefit  of  Governor  Carter,  and  to  insure 
Lira  against  the  taking  of  the  fort  by  a  foreign  enemy." 

Both  sides  had  been  long  in  chancery,  and  the  chancery  evidence  on 
both  sides  was  read  at  the  trial. 

It  was  objected,  on  behalf  of  the  defendant,  to  be  a  fraud,  by  con- 
cealment of  circumstances  which  ought  to  have  been  disclosed ;  and 
particularly  the  weakness  of  the  fort,  and  the  probability  of  its  being 
attacked  by  the  French,  which  concealment  was  offered  to  be  proved 
by  two  letters.  The  first  was  a  letter  from  the  governor  to  his  brother, 
Roger  Carter,  his  trustee,  the  plaintiff  in  this  cause ;  the  second  was 
from  the  governor  to  the  East  India  Companj-. 

The  evidence  in  reply  to  this  objection  consisted  of  three  depositions 
in  chancers,  setting  forth  that  tlie  governor  had  £20,000  in  effects,  and 
only  insured  £10,000  ;  and  that  he  was  guilty  of  no  fault  in  defending 
the  fort. 

The  first  of  these  depositions  was  Captain  Tryon's,  which  proved 
that  this  was  not  a  fort  proper,  or  designed  to  resist  European  ene- 
mies, but  onl}'  calculated  for  defence  against  the  natives  of  the  island 
of  Sumatra  ;  and  also  that  the  governor's  office  is  not  military,  but 
only  mercantile ;  and  that  Fort  Marlborough  is  only  a  subordinate 
factory  to  Fort  St.  George. 

There  was  no  evidence  to  the  contrary,  and  a  verdict  was  found  for 
the  plaintiff  by  a  special  jur}-. 

After  his  lordship  had  made  his  report,  — 

The  counsel  for  the  plaintiff  proceeded  to  show  cause  against  a  new 
trial. 

They  argued  that  there  was  no  such  concealment  of  circumstances 
(as  the  weakness  of  the  fort,  or  the  probability  of  the  attack)  as  would 
amount  to  a  fraud  sufficient  to  vitiate  this  contract :  all  which  circum- 
stances were  universally  known  to  every  merchant  upon  the  exchange 
of  London.  And  all  these  circumstances,  the}'  said,  were  full}'  con- 
sidered by  a  special  jury  of  merchants,  who  are  the  proper  judges  of 
them. 

And  Mr.  Dunnwg  laid  it  down  as  a  rule,  "  That  the  insured  is  only 
obliged  to  discover  facts,  not  the  ideas  or  speculations  which  he  may 
entertain  upon  such  facts." 

Tliey  said  this  insurance  was  in  reality  no  more  than  a  wager: 
"  Whether  the  French  would  think  it  their  interest  to  attack  this  fort, 
and  if  they  should,  whether  they  would  be  able  to  get  a  ship  of  war  up 
the  river  or  not." 

Sir  Fletcher  N'orton  and  Mr.  Recorder  {Eyre)  argued  contra  for  the 
defendant  (the  under-writer). 

They  insisted  that  the  insurer  has  a  right  to  know  as  much  as  the 
insured  himself  knows. 

They  alleged,  too,  that  the  broker  is  the  sole  agent  of  the  insured. 

Tliese  are  general,  universal  principles  in  all  insurances. 

Then  thoy  proceeded  to  argue  in  support  of  the  present  objection. 


PART  I. "J  CARTER  V.   BOEHM.  127 

.The  broker  had,  they  said,  on  being  cross-examined,  owned  that  he 
did  not  believe  that  the  insurer  would  have  meddled_with^he  insurance 
if  he  had  seen  these  two  letters. 

All  the  circumstances  ought  to  be  disclosed. 

Tills  wager  is  not  only  "  Whether  the  fort  shall  be  attacked,"  but 
"  Whether  it  shall  be  attacked  and  taken." 

Whatever  really  increases  the  risk  ought  to  be  disclosed. 

Then  they  entered  into  the  particulars  which  had  been  here  kept 
concealed.  And  they  insisted  strongly  that  the  plaintiff  ought  to  have 
discovered  the  weakness  and  absolute  indefensibility  of  the  fort.  In 
this  case,  as  against  the  insurer,  he  was  obliged  to  make  such  discov- 
ery, though  he  acted  for  the  governor.  Indeed,  a  governor  ought  not, 
in  point  of  policy,  to  be  permitted  to  insure  at  all ;  but,  if  he  is  per- 
mitted to  insure,  or  will  insure,  he  ought  to  disclose  all  facts. 

It  cannot  be  supposed  that  the  insurer  would  have  insured  so  low  as 
£4  per  cent  if  he  had  known  of  these  letters. 

It  is  begging  the  question  to  say,  "  That  a  fort  is  not  intended  for 
defence  against  an  enemy."  The  supposition  is  absurd  and  ridiculous. 
It  must  be  presumed  that  it  was  intended  for  that  purpose ;  and  the 
presumption  was  "That  the  fort,  the  powder,  the  guns,  etc.,  were  in  a 
good  and  proper  condition."  If  they  were  not  (and  it  is  agreed  that 
in  fact  they  were  not,  and  that  the  governor  knew  it)  it  ought  to  have 
been  disclosed.  But  if  he  had  disclosed  this,  he  could  not  have  got  the 
insurance.  Therefore  this  was  a  fraudulent  concealment,  and  the  under- 
writer is  not  liable. 

It  does  not  follow  that  because  he  did  not  insure  his  whole  property, 
therefore  it  is  good  for  what  he  has  judged  proper  to  insure.  He  might 
have  his  reasons  for  insuring  only  a  part,  and  not  the  whole. 

Cur.  adv.  vult. 

Lord  Mansfield  now  delivered  the  resolution  of  the  court. 

This  is  a  motion  for  a  new  trial. 

In  support  of  it  the  counsel  for  the  defendant  contend,  "  That  some 
circumstances  in  the  knowledge  of  Governor  Carter,  not  having  been 
mentioned  at  the  time  the  polic}'  was  underwrote,  amount  to  a  conceal- 
ment, which  ought,  in  law,  to  avoid  the  poUcy." 

The  counsel  for  the  plaintiff  insist,  "That  the  not  mentioning  these 
particulars  does  not  amount  to  a  concealment  which  ought,  in  law,  to 
avoid  the  policy,  either  as  a  fraud,  or  as  varying  the  contract." 

1.  It  may  be  proper  to  say  something  in  general  of  concealments 
which  avoid  a  policy. 

2.  To  state  particularly  the  case  now  under  consideration. 

3.  To  examine  whether  the  verdict  which  finds  this  polic}'  good, 
although  the  particulars  objected  were  not  mentioned,  is  well  founded. 

First.     Insurance  is  a  contract  upon  speculation. 

The  special  facts,  upon  which  the  contingent  chance  is  to  be  com- 
puted, lie  most  commonly  in  the  knowledge  of  the  insured  only  ;  the 
underwriter  trusts  to  his  representation,  and  proceeds  upon  confidence 


128  CARTER  V.   BOEHM.  [CHAP.  in. 

that  he  does  not  keep  back  an}-  circumstance  in  his  knowledge  to  mis- 
lead the  underwriter  into  a  belief  that  the  circumstance  does  not  exist, 
and  to  induce  him  to  estimate  the  risk  as  if  it  did  not  exist. 

The  keeping  back  such  circumstance  is  a  fraud,  and  therefore  the 
policy'  is  void.  Although  the  suppression  should  happen  through  mis- 
take, without  any  fraudulent  intention,  yet  still  the  underwriter  is  de- 
ceived, and  the  policy  is  void,  because  the  risk  run  is  really  different 
from  the  risk  understood  and  intended  to  be  run  at  the  time  of  the 
agreement. 

The  policy  would  equally  be  void  against  the  underwriter  if  he  con- 
cealed, as  if  he  insured  a  ship  on  her  voyage  which  he  privately  knew 
to  be  arrived  ;  and  an  action  would  lie  to  recover  the  premium. 

The  governing  principle  is  applicable  to  all  contracts  and  dealings. 

Good  faith  forbids  either  party,  by  concealing  what  he  privately 
knows,  to  draw  the  other  into  a  bargain  from  his  ignorance  of  that 
fact,  and  his  believing  the  contrary. 

But  either  party  may  be  innocently  silent  as  to  grounds  open  to  both 
to  exercise  their  judgment  upon.  "  Aliud  est  celare  ;  aliud,  tacere  ; 
neque  enim  id  est  celare  quicquid  reticeas ;  sed  cum  quod  tu  scias,  id 
ignorare  emolumenti  tui  causa  velis  eos,  quorum  intersit  id  scire." 

This  definition  of*  concealment,  restrained  to  the  efficient  motives  and 
precise  subject  of  an}-  contract,  will  generall}-  hold  to  make  it  void  in 
favor  of  the  party  misled  by  his  ignorance  of  the  thing  concealed. 

There  ai'e  man}'  matters  as  to  which  the  insured  ma}'  be  innocently 
silent;  he  need  not  mention  what  the  underwriter  knows,  —  scientia 
utrinque  par  pares  contrahentes  facit. 

An  underwriter  cannot  insist  that  the  policy  is  void  because  the  in- 
sured did  not  tell  him  what  he  actually'  knew,  what  way  soever  he 
came  to  the  knowledge. 

The  insured  need  not  mention  what  the  underwriter  ought  to  know, 
what  he  takes  upon  himself  the  knowledge  of,  or  what  he  waives  being 
informed  of. 

The  underwriter  needs  not  be  told  what  lessens  the  risk  agreed  and 
understood  to  be  run  b}'  the  express  terms  of  the  polic}-.  He  needs 
not  be  told  general  topics  of  speculation,  as,  for  instance,  the  under- 
writer is  bound  to  know  ever}-  cause  which  may  occasion  natural  per- 
ils, as  the  difficulty  of  the  voyage,  the  kind  of  seasons,  the  probability 
of  lightning,  hurricanes,  earthquakes,  etc.  He  is  bound  to  know  every 
cause  which  may  occasion  political  perils,  from  the  ruptures  of  states, 
from  war,  and  the  various  operations  of  it.  He  is  bound  to  know  the 
probability  of  safety  from  the  continuance  or  return  of  peace ;  from  the 
imbecility  of  the  enemy  through  the  weakness  of  their  counsels,  or  their 
want  of  strength,  etc. 

If  an  underwriter  insures  private  ships  of  war  by  sea  and  on  shore, 
from  ports  to  ports,  and  places  to  places,  anywliere,  he  needs  not  be 
told  the  secret  enterprises  they  are  destined  upon,  because  he  knows 
some  expedition  must  be  in  view ;  and,  from  the  nature  of  his  contract, 


PART  I.]  CARTER   V.   BOEHM.  129 

without  being  told,  he  -waives  the  information.  If  he  insures  for  three 
vears,  he  needs  not  be  told  any  circumstance  to  show  it  may  be  over 
in  two  ;•  or  if  he  insures  a  voyage,  with  liberty  of  deviation,  he  needs 
not  bo  told  what  tends  to  show  there  will  be  no  deviation. 

Men  argue  differently  from  natural  phenomena  and  political  appear- 
ances ;  they  have  different  capacities,  different  degrees  of  knowledge, 
and  different  intelligence.  But  the  means  of  information  and  judging 
are  open  to  both  :  each  professes  to  act  from  his  own  skill  and  sagacity, 
and  therefore  neither  needs  to  communicate  to  the  other. 

The  reason  of  the  rule  which  ol)ligcs  parties  to  disclose  is  to  prevent 
fraud  and  to  encourage  good  faith.  It  is  adapted  to  such  facts  as 
vary  the  nature  of  the  contract,  wliich  one  privately  knows,  and  the 
other  is  ignorant  of  and  has  no  reason  to  suspect. 

The  question,  therefore,  must  always  be  ''  Whether  there  was,  under 
allthe  circumstances  at  the  time  the  policy  was  undej;written,  a  fair 
representation  or  a  concealment, — fraudulent,  if  desi^nedTor.  though 
noUlesigned,  varying  materially  the  object  of  the  policy-,  jiid  changing 
the  risjtjjndcrstQtuLto  be  rmb" 

Thisn)rings  me,  in  the  second  place,  to  state  the  case  now  under 
consideration. 

The  policy  is  against  the  loss  of  Fort  Marlborough  from  being  de- 
stroyed by,  taken  by,  or  surrendered  unto,  any  European  enemy 
betv^eon  the  1st  of  October,  1759,  and  1st  of  October,  17 GO.  It  was 
umlerwritten  on  tlie  9th  of  May,  1760. 

The  underwriter  knew  at  the  time  that  the  policy  was  to  indemnify 
to  tliat  amount  Roger  Carter,  the  governor  of  Fort  Marlborough,  iu 
case  tlie  event  insured  against  should  happen.  The  governor's  instruc- 
tions for  the  insurance,  bearing  date  at  Fort  Marlborough,  the  22d  of 
.September,  1759,  were  laid  before  the  underwriter.  Two  actions  upon 
this  policy  were  tried  before  me  in  the  year  1762.  The  defendants 
then  knew  of  a  letter  written  to  the  East  India  Company,  which  the 
company  offered  to  put  into  my  hands,  but  would  not  deliver  to  the 
parties,  because  it  contained  some  matters  which  the}'  did  not  think 
proper  to  be  made  public. 

An  objection  occurred  to  me  at  the  trial,  "  Whether  a  policy  against 
the  loss  of  Fort  Mai'lborough,  for  the  benefit  of  the  governor,  was 
good,"  upon  the  principle  which  does  not  allow  a  sailor  to  insure  his 
wages. 

But  considering  that  this  place,  though  called  a  fort,  was  really  but 
a  factory  or  settlement  for  trade,  and  that  he,  though  called  a  gov- 
ernor, was  really  but  a  merchant.  —  considering,  too,  that  the  law  al- 
lows the  captain  of  a  ship  to  insure  goods  which  he  has  on  board,  or 
his  share  in  the  ship,  if  he  be  a  part  owner;  and  the  captain  of  a  pri 
vateer,  if  he  be  a  part  owner,  to  insure  his  share,  —  considering,  too, 
that  the  objection  did  not  lie  upon  any  ground  of  justice  in  the  mouth  of 
the  underwriter,  who  knew  him  to  be  the  governor  at  the  time  he  took 
the  premium.    And  as,  with  regard  to  principles  of  public  convenience, 


130  CARTER  V.    BOEHM.  [CHAP.  III. 

the  case  so  seldom  happens  (I  never  saw  one  before),  an}'  danger  from 
the  example  is  little  to  be  apprehended,  —  I  did  not  think  m3self  war- 
ranted upon  that  point  to  nonsuit  the  plaintiff,  especiall}',  too,  as  the 
objection  did  not  come  from  the  bar. 

Though  this  point  was  mentioned,  it  was  not  insisted  upon  at  the 
last  trial ;  nor  has  it  been  seriously'  argued,  upon  this  motion,  as  suffi- 
cient alone  to  vacate  the  policy  ;  and  if  it  had,  we  are  all  of  opinion 
"  Tliat  we  are  not  warranted  to  say  it  is  void  upon  this  account." 

Upon  the  plaintiff's  obtaining  these  two  verdicts,  the  underwriters 
went  into  a  court  of  equity,  where  they  have  had  an  opportunity  to  sift 
everything  to  the  bottom,  to  get  ever}-  discovery  from  the  governor  and 
his  brother,  and  to  examine  any  witnesses  who  were  upon  the  spot. 
At  last,  after  the  fullest  investigation  of  every  kind,  the  present  action 
came  on  to  be  tried  at  the  sittings  after  last  term. 

The  plaintiff,  proved,  without  contradiction,  that  the  place  called 
Bencoolen,  or  Fort  Marlborough,  is  a  factory  or  settlement,  but  no 
militar}'  fort  or  fortress ;  that  it  was  not  established  for  a  place  of 
arms  or  defence  against  the  attacks  of  an  European  enemy,  but  merely 
for  the  purpose  of  trade  and  of  defence  against  the  natives  ;  that  the 
fort  was  only  intended  and  built  witli  an  intent  to  keep  off  the  country' 
blacks  ;  that  the  onl}'  securit}'  against  European  ships  of  war  consisted 
in  the  difficulty  of  the  entrance  and  navigation  of  the  river  for  want  of 
proper  pilots  ;  that  the  general  state  and  condition  of  the  said  fort,  and 
of  the  strength  thereof,  was  in  general  well  known  by  most  persons 
conversant  or  acquainted  with  Indian  affairs,  or  the  state  of  tUe  com- 
pany's factories  or  settlements,  and  could  not  be  kept  secret  or  con- 
cealed from  persons  who  should  endeavor  by  proper  inquiry  to  inform 
themselves  ;  that  there  were  no  apprehensions  or  intelligence  of  any 
attack  by  the  French  until  they  attacked  Nattal  in  Februarj',  1760; 
that  on  the  8th  of  February,  1760,  there  was  no  suspicion  of  any  de- 
sign b}'  the  French ;  that  the  governor  then  bought  from  t-he  witness 
goods  to  the  value  of  £4,000,  and  had  goods  to  the  value  of  above 
£20,000,  and  then  dealt  for  £50,000  and  upwards  ;  that  on  the  1st  of 
April,  1760,  the  fort  was  attacked  b}'  a  French  man-of-war  of  sixt}-- 
four  guns,  and  a  frigate  of  twenty  guns,  under  the  Count  D'Estaigne, 
brought  in  by  Dutcii  pilots,  unavoidably  taken,  and  afterwards  deliv- 
ered to  the  Dutch,  and  the  prisoners  sent  to  Batavia. 

On  the  part  of  the  defendant.  —  After  all  the  opportunities  of  in- 
quir}',  no  evidence  was  offered  that  the  French  ever  had  any  design 
upon  Fort  Marli)orough  before  the  end  of  March,  1760,  or  that  tliere 
was  the  least  intelligence  or  alarm  "That  the}-  might  make  the  at- 
tempt," till  the  taking  of  Nattal  in  the  year  1760. 

Thej'  did  not  offer  to  disprove  the  evidence  that  the  governor  had 
acted  as  in  full  security  long  after  the  montli  of  September,  1759,  and 
had  turned  his  money  into  goods  so  late  as  the  8th  of  February,  1760. 
Tliere  was  no  attempt  to  show  that  he  had  not  lost  by  the  capture  very 
coasidcrably  beyond  the  value  of  the  insurance. 


PAKT  I.]  CARTER    V.    BOEHM.  131 

But  the  defendant  relied  upon  a  letter,  written  to  the  East  India 
Company,  bearing  date  the  IGth  of  September,  1759,  which  was  sent 
to  England  b3-  the  "  Pitt,"  Captain  Wilson,  who  arrived  in  May,  1760, 
together  with  the  instructions  for  insuring ;  and  also  a  letter  bearing 
date  tlie  22d  of  September,  1759,  sent  to  the  plaintiff  by  the  same  con- 
veyance and  at  the  same  time  (which  letters  his  lordship  repeated  ^). 

They  relied,  too,  upon  the  cross-examination  of -the  broker  who  ne- 
gotiated the  policy,  "That,  in  his  opinion,  these  letters  ought  to  have 
been  shown,  or  the  contents  disclosed ;  and  if  they  bad,  the  policy 
would  not  have  been  underwritten." 

The  defendant's  counsel  contended  at  the  trial,  as  they  have  done 
upon  this  motion,  "  That  the  policy  was  void." 

1.  Because  the  state  and  condition  of  the  fort,  mentioned  in  the  gov- 
ernor's letter  to  the  East  India  Company,  was  not  disclosed. 

2.  Because  he  did  not  disclose  that  the  French,  not  being  in  a  con- 
dition to  relieve  their  friends  upon  the  coast,  were  more  likely  to  make 
an  attack  upon  this  settlement  rather  than  remain  idle. 

3.  That  he  had  not  disclosed  his  having  received  a  letter  of  the  4th 
of  February,  1759,  from  which  it  seemed  that  the  French  had  a  design 
to  take  this  settlement  by  surprise  the  year  before. 

They  also  contended  that  the  opinion  of  the  broker  was  almost 
decisive. 

The  whole  was  laid  before  the  jur}-,  who  found  for  the  plaintiff. 

Thirdly,  it  remains  to  consider  these  objections,  and  to  examine 
"  Whether  this  verdict  is  well  founded." 

To  this  purpose,  it  is  necessary  to  consider  the  nature  of  the  contract 
at  the  time  it  was  entered  into. 

The  policy  was  signed  in  May,  1760.  The  contingency  was, 
"  Whether  Fort  Marlborough  was  or  would  be  taken  by  an  European 
enemy  between  October,  1759,  and  October,  1760." 

Tlie  computation  of  the  risk  depended  upon  the  chance,  "Whether 
any  European  power  would  attack  the  place  by  sea."  If  the}'  did,  it 
was  incapalde  of  resistance. 

Tlie  underwriter  at  London  in  May,  1760,  could  judge  much  better 
of  the  probability  of  the  contingency  than  Governor  Carter  could  at 
Fort  ]\Iarlborough  in  September,  1759.  He  knew  the  success  of  the 
operations  of  tlie  war  in  Europe.     He  knew  what  naval  force  the  Eng- 

^  The  former  of  them  notifies  to  the  East  India  Company,  that  the  French  had 
the  preceding  year,  a  design  on  foot  to  attempt  taking  that  settlement  by  surprise  • 
and  that  it  was  very  prohalde  they  might  revive  that  design.  It  confesses  and  repre- 
sents the  weakness  of  the  fort ;  its  being  badly  supplied  with  stores,  arms,  and  am- 
munition; and  the  impracticability  of  maintaining  it  (in  its  then  state)  against  an 
European  enemy. 

Tiie  latter  letter  (to  his  brother)  owns  that  he  is  "now  more  afraid  than  formerly 
that  the  French  should  attack  and  take  the  settlement ;  for,  as  they  cannot  muster  a 
force  to  relieve  their  friends  at  the  coast,  they  may.  rather  than  remain  idle,  pay  us 
a  visit.  It  seems  they  had  such  an  intention  last  year."  And  therefore  he  desires  his 
brother  to  get  an  insurance  made  upon  his  stock  there.  —  Rep. 


132  CARTEE  V.   BOEHM.  [CHAP.  III. 

lish  and  French  had  sent  to  the  East  Indies.  He  knew,  from  a  com- 
parison of  that  force,  whether  the  sea  was  open  to  an}-  such  attempt  by 
the  French,  He  knew,  or  might  know,  everything  which  was  known 
at  Fort  Marlborough  in  September,  1759,  of  the  general  state  of  affaira 
in  the  East  Indies,  or  the  particular  condition  of  Fort  Marlborough,  by 
the  ship  which  brought  the  orders  for  the  insurance.  He  knew  that 
ship  must  have  brought  many  letters  to  the  East  India  Compan}-,  and 
particularly  from  the  governor.  He  knew  what  probability  there  was 
of  the  Dutch  committing,  or  having  committed,  hostilities. 

Under  these  circumstances,  and  with  this  knowledge,  he  insures 
against  the  general  contingency  of  the  place  being  attacked  b}'  an 
European  power. 

If  there  had  been  any  design  on  foot,  or  any  enterprise  begun,  in 
September,  1759,  to  the  knowledge  of  the  governor,  it  would  have 
varied  the  risk  understood  by  the  underwriter ;  because,  not  being  told 
of  a  particular  design  or  attack  then  subsisting,  he  estimated  the  risk 
upon  the  foot  of  an  uncertain  operation  which  might  or  might  not  be 
attempted. 

But  the  governor  had  no  notice  of  any  design  subsisting  in  September, 
1759.  There  was  no  such  design  in  fact;  the  attempt  was  made  with- 
out premeditation,  from  the  sudden  opportunity  of  a  favorable  occasion, 
by  the  connivance  and  assistance  of  the  Dutch,  which  tempted  Count 
D'Estaigne  to  break  his  parol. 

These  being  the  circumstances  under  which  the  contract  was  entered 
into,  we  shall  be  better  able  to  judge  of  the  objections  upon  the  foot  of 
concealment. 

The  first  concealment  is  that  he  did  not  disclose  the  condition  of  the 
place. 

The  underwriter  knew  the  insurance  was  for  the  governor.  He  knew 
the  governor  must  be  acquainted  with  the  state  of  tlie  place.  He  knew 
the  governor  could  not  disclose  it  consistent  with  his  duty.  He  knew  tlie 
governor  b}'  insuring  apprehended  at  least  the  possibility  of  an  attack. 
With  tills  knowledge,  without  asking  a  question,  he  underwrote. 

By  so  doing,  he  took  the  knowledge  of  the  state  of  the  place  upon 
himself.  It  was  a  matter  as  to  which  he  might  be  inforaied  various 
wa3's ;  it  was  not  a  matter  within  the  private  knowledge  of  the  gov- 
ernor only. 

But,  not  to  rel}'  upon  that,  the  utmost  which  can  be  contended  is, 
that  the  underwriter  trusted  to  the  fort  being  in  the  condition  in  which 
it  ought  to  be :  in  like  manner,  as  it  is  taken  for  granted  that  a  ship 
i::sured  is  seaworth}'. 

What  is  that  condition?  All  the  witnesses  agree  "  That  it  was  only 
to  resist  the  natives,  and  not  an  European  force."  The  policy  insures 
against  a  total  loss,  taking  for  granted  "  That  if  the  place  was  attacked 
it  would  be  lost.'* 

The  contingenc}',  therefore,  which  the  underwriter  has  insured  against 
is,  "  Whether  the  place  would  be  attacked  by  an  European  force,"  and 


PART  1.1  CARTER  V.    BOEHM.  133 

not,  "  AVhether  it  would  be  able  to  resist  such  an  attack  if  the  ships 
could  get  up  the  river." 

It  was  particularly  left  to  the  jury  to  consider  "Whether  this  was 
the  contingency  in  the  contemplation  of  the  parties ; "  they  have  found 
that  it  was. 

And  we  are  all  of  opinion  "That,  in  this  respect,  their  conclusion  is 
agreeable  to  the  evidence." 

In  this  view,  the  state  and  condition  of  the  place  was  material  only 
in  case  of  a  land  attack  by  the  natives. 

The  second  concealment  is  his  not  having  disclosed  that,  from  the 
French  not  being  able  to  relieve  their  friends  upon  the  coast,  they 
might  make  them  a  visit. 

This  is  no  part  of  the  fact  of  the  case  ;  it  is  mere  speculation  of  the 
governor's  from  the  general  state  of  the  war.  The  conjecture  was  dic- 
tated to  him  from  his  fears.  It  is  a  bold  attempt  for  the  conquered  to 
attack  the  conqueror  in  his  own  dominions.  The  practicability  of  it  in 
this  case  depended  upon  the  English  naval  force  in  those  seas,  which 
the  underwriter  could  better  judge  of  at  London  in  May,  17G0,  than  the 
governor  could  at  Fort  Marlborough  in  September,  1759. 

The  third  concealment  is  that  he  did  not  disclose  the  letter  from 
Mr.  Winch,  of  the  4th  of  February,  1759,  mentioning  the  design  of 
the  French  the  year  before. 

What  the  letter  was,  how  he  mentioned  the  design,  or  upon  what 
authority  he  mentioned  it,  or  by  whom  the  design  was  supposed  to  be 
imagined,  does  not  appear.  The  defendant  has  had  every  oi)portunity 
of  discovery,  and  nothing  has  come  out  upon  it,  as  to  this  letter,  which 
he  thinks  makes  for  his  purpose. 

The  plaintiff  offered  to  read  the  account  Winch  wrote  to  the  East 
India  Company,  which  was  objected  to,  and  therefore  not  read.  The 
nature  of  that  intelligence  therefore  is  very  doubtful.  But,  taking 
it  in  the  strongest  light,  it  is  a  report  of  a  design  to  surprise  the  year 
before,  but  then  dropped. 

This  is  a  topic  of  mere  general  speculation,  which  made  no  part  of 
the  fact  of  the  case  upon  which  the  insurance  was  to  be  made. 

It  was  said  if  a  man  insured  a  ship,  knowing  that  two  privateers 
were  lying  in  her  way,  without  mentioning  that  circumstance,  it  would 
be  a  fraud  ;  I  agree  it.  But  if  he  knew  that  two  privateers  had  been 
there  the  year  before,  it  would  be  no  fraud  not  to  mention  that  circum- 
stance, because  it  does  not  follow  that  they  will  cruise  this  year  at  the 
same  time  in  the  same  place,  or  that  they  are  in  a  condition  to  do  it 
If  the  circumstance  of  "  this  design  laid  aside"  had  been  mentioned, 
it  would  have  tended  rather  to  lessen  the  risk  than  increase  it ;  for  the 
design  of  a  surprise  which  has  transpired,  and  been  laid  aside,  is  less 
likely  to  be  taken  up  again,  especially  by  a  vanquished  enemy. 

The  jury  considered  the  nature  of  the  governor's  silence  as  to  these 
particulars  ;  they  thought  it  innocent,  and  that  omission  to  mention 
them  did  not  vary  the  contract.  And  we  are  all  of  opinion  "That,  m 
this  respect,  they  judged  extremely  right." 


134  CARTER  V.    BOEHM.  [CHAP.  III. 

There  is  a  silence,  not  objected  to  at  the  trial  nor  upon  this  motion, 
which  might  with  as  much  reason  have  been  objected  to  as  the  two  last 
omissions,  rather  more. 

It  appears,  b}'  the  governor's  letter  to  the  plaintiff,  "That  he  was 
principally  apprehensive  of  a  Dutch  war."  He  certainly  had  what  he 
thought  good  grounds  for  this  apprehension.  Count  D'Estaigne  being 
piloted  b}'  tlie  Dutch,  delivering  the  fort  to  the  Dutch,  and  sending  the 
prisoners  to  Batavia,  is  a  confirmation  of  those  grounds.  And  prob- 
al)ly  the  loss  of  the  place  was  owing  to  the  Dutch.  The  French  could 
not. have  got  up  the  river  without  Dutch  pilots,  and  it  is  plain  tlie 
whole  was  concerted  with  them.  And  yet,  at  the  time  of  underwriting 
the  polic}',  there  was  no  intimation  about  the  Dutch. 

The  reason  whj-  the  counsel  have  not  objected  to  his  not  disclosing 
the  grounds  of  this  apprehension  is,  because  it  must  have  arisen  from 
political  speculation  and  general  intelligence  ;  therefore  they  agree  it  is 
uot  necessary  to  communicate  such  things  to  an  underwriter. 

Lastl}-,  great  stress  was  laid  upon  the  opinion  of  the  broker. 

But  we  all  think  the  jurj'  ought  not  to  pay  the  least  regard  to  it.  It 
is  mere  opinion,  which  is  not  evidence.  It  is  opinion  after  an  event. 
It  is  opinion  without  the  least  foundation  from  anj'  previous  precedent 
or  usage.  It  is  an  opinion  which,  if  rightl}'  formed,  could  only  be 
drawn  from  the  same  premises  from  which  the  court  and  jurj'  were  to 
determine  the  cause,  and  therefore  it  is  improper  and  irrelevant  in  the 
mouth  of  a  witness. 

There  is  no  imputation  upon  the  governor  as  to  any  intention  of 
fraud.  B}-  the  same  conveyance  which  brought  his  orders  to  insure, 
he  wrote  to  the  company  everything  wliich  he  knew  or  suspected ;  he 
desired  nothing  to  be  kept  a  secret  which  he  wrote  either  to  them  or 
his  brother.  His  subsequent  conduct,  down  to  the  8th  of  Februar}-, 
1760,  showed  that  he  thought  the  danger  very  improbable. 

The  reason  of  the  rule  against  concealments  is  to  prevent  fraud  and 
encourage  good  faith. 

If  tlie  defendant's  objections  were  to  prevail  in  the  present  case,  the 
rule  would  be  turned  into  an  instrument  of  fraud. 

The  underwriter  here,  knowing  the  governor  to  be  acquainted  with 
the  state  of  the  place,  knowing  that  he  apprehended  danger,  and  must 
have  some  ground  for  his  apprehension,  being  told  nothing  of  either, 
signed  this  polic}'  without  asking  a  question. 

If  the  objection  "  That  he  was  not  told  "  is  sufficient  to  vacate  it,  he 
took  the  premium,  knowing  the  policj'  to  be  void,  in  order  to  gain,  if 
the  alternative  turned  out  one  wa}',  and  to  make  no  satisfaction  if  it 
turned  out  the  other ;  he  drew  the  governor  into  a  false  confidence, 
''That,  if  the  worst  should  happen,  he  had  provided  against  total 
ruin,"  knowing  at  the  same  time  "That  the  indemnitj-  to  which  the 
governor  trusted  was  void." 

There  was  not  a  word  said  to  him  of  the  affairs  of  India,  or  the  state 
of  the  war  there,  or  the  condition  of  Fort  Marlborough.     If  he  thought 


PART  I.]  CARTER  V.    BOEHM.  135 

that  omission  an  objection  at  the  time,  be  onglit  not  to  have  signed  the 
policy  witli  a  secret  reserve  in  his  own  mind  to  make  it  void :  if  he  dis- 
pensed with  the  information,  and  did  not  think  this  silence  an  objection 
then,  he  cannot  take  it  up  now  after  the  event. 

"What  has  often  been  said  of  the  statute  of  frauds  may,  witli  more 
propriety,  be  applied  to  every  rule  of  law,  drawn  from  principles  of 
natural  equity,  to  prevent  fraud,  "That  it  should  never  be  so  turned, 
construed,  or  used,  as  to  protect,  or  be  a  means  of,  fraud." 

After  the  fullest  deliberation,  we  are  all  clear  that  the  verdict  is  well 
founded,  and  there  ought  not  to  be  a  new  trial ;  consequentl}',  that  the 
rule  for  that  purpose  ought  to  be  discharged. 

Hule  discharged. 


136  SEAMAN  V.   FONEEEAU.  [CHAP.  III. 

PART  n. 

THE  APPLICATION  OF  THE  THEORY. 

SECTION  I. 
Marine  Insurance. 

DE  COSTA  V.  SCANDRET. 
Chancery,  Lord  Macclesfield,  C,  1723.     2  P.  Wms.  170. 

One  having  a  doubtful  account  of  bis  sbip  tbat  was  at  sea,  viz.  that 
a  ship  described  like  bis  was  taken,  insured  her  without  giving  any 
information  to  the  insurers  of  what  he  liad  beard,  either  as  to  the 
hazard,  or  circumstances  which  might  induce  him  to  believe  tbat  bis 
ship  was  in  great  danger,  if  not  actually  lost. 

The  insurers  bring  a  bill  for  an  injunction,  and  to  be  relieved  against 
the  insurance  as  fraudulent. 

Lord  Chancellor.  The  insured  has  not  dealt  fairly  with  the 
insurers  in  this  case ;  he  ougiit  to  have  disclosed  to  them  what  intel- 
ligence he  had  of  the  ship's  being  in  danger,  and  which  might  induce 
him,  at  least,  to  fear  that  it  was  lost,  though  he  had  no  certain  account 
of  it ;  for  if  this  had  been  discovered,  it  is  impossible  to  think  that 
the  insurers  would  have  insured  the  ship  at  so  small  a  premium  as  they 
have  done,  but  either  would  not  have  insured  at  all,  or  would  have 
insisted  on  a  larger  premium,  so  that  the  concealing  of  this  intelligence 
is  a  fraud. 

Wherefore  decree  the  policy  to  be  delivered  up  with  costs,  but  the 
premium  to  be  paid  back,  and  allowed  out  of  the  costs. 


SEAMAN  V.  FONEREAU. 

Nisi  Prius,  King's  Bench,  1743.     2  Str.  1183. 

On  25th  August,  1740,  the  defendant  underwrote  a  policy  from 
Carolina  to  Holland.  It  appeared  the  agent  for  the  plaintiff  had  on 
23(1  August  received  a  letter  from  Cowes  dated  21st  August,  wherein 
it  is  said,  "  The  12th  of  this  month  I  was  in  company  with  the  ship 
'  Davy  '  (the  ship  in  question),  at  twelve  in  the  night  lost  sight  of  her  all 
at  once  ;  the  captain  spoke  to  me  the  day  before  that  he  was  leaky,  and 


rAl;T  II.,  SECT.  I.]      LOCKE   V.    NORTH   AMEEICAN   INS.   CO.  137 

the  next  daj-  we  had  a  hard  gale."  The  ship,  however,  continued  her 
voyage  till  19th  August,  when  she  was  taken  by  the  Spaniards;  and 
there  was  no  pretence  of  any  knowledge  of  the  actual  loss  at  the  time 
of  the  insurance,  but  it  was  made  in  consequence  of  a  letter  received 
that  day  from  the  plaintiff  abroad,  dated  27th  June  before. 

Several  brokers  were  examined,  and  proved  that  the  agent  ought  to 
have  disclosed  the  letter;  for  either  the  defendant  would  not  have 
underwrote,  or  insisted  on  a  higher  premium.  And  the  Chief  Jus- 
tice^ was  of  that  opinion,  and  declared  that  as  these  are  contracts  upon 
chance,  each  party  ought  to  know  all  the  circumstances.  And  he 
thought  it  not  material  that  the  loss  was  not  such  an  one  as  the  letter 
imported ;  for  those  things  are  to  be  considered  in  the  situation  of 
them  at  the  time  of  the  contract,  and  not  to  be  judged  of  by  subse- 
quent events  ;  ^  he  therefore  thought  it  a  strong  case  for  the  defendant, 
and  the  jury  found  accordingly. 


LOCKE  V.   THE  NORTH  AMERICAN  INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1816.     13  Mass.  61. 

This  was  assumpsit  on  a  policy  of  insurance,  dated  the  19th  of 
February,  1813,  by  which  the  defendants  cause  the  said  "Joseph 
Locke,  by  Jolin  Barnard,  to  be  assured  $2,300  on  property  on  the 
sloop  '  General  Greene,'  at  and  from  Boston  to  Albany."  A  total  loss 
is  averred  by  capture  by  the  public  enemy  on  the  8th  of  March, 
1813. 

The  cause  was  tried  upon  the  general  issue,  November  term,  1814, 
before  Jackson,  J.,  when  it  appeared  that  the  plaintiff,  in  February, 
1813,  was  about  purchasing  a  quantity  of  fish  to  be  sent  to  Albany  for 
sale,  and  applied  to  the  said  John  Barnard  for  a  loan  of  money,  to  en- 
able him  to  make  the  said  purchase.  It  was  thereupon  agreed  between 
the  plaintiff  and  the  said  Barnard  that  the  latter  should  advance  about 
82,300  for  that  purpose;  that  the  plaintiff  should  purchase,  in  Boston, 
fish  to  that  value,  to  be  sent  to  Albany,  and  that  the  property  should 
be  assigned  to  Barnard,  and  shipped  in  his  name  as  security  for  said 
loan.  Tliis  sura,  with  interest,  and  the  amount  of  the  premium  upon 
this  policy,  and  Barnard's  commission,  were  to  be  repaid  him  by  the 
consignees  at  Albany  ;  and,  in  case  of  a  loss,  he  was  to  receive  the  sum 
insured  towards  the  same  object. 

The  assignment  and  insurance  were  to  be  merely  a  pledge  or  securit}" 
for  his  debt ;  and  if  he  did  not  i-ealize  the  whole  amount  from  those 

^  Sir  William  Lee.  —  Ed. 

2  Ace:  Lynch  v.  Hamilton,  .3  Taunt.  .37  (1810);  s.  c.  on  error,  sub  nom.  Lynch  v 
Dunsford,  14  East,  494  (1811).    In  that  case  the  rumor  proved  to  be  untrue.  —  Ed. 


138  LOCKE   V.   NORTH   AMERICAN    INS.    CO.  [CHAP.  III. 

sources,  the  plaintiff  was  to  pay  him  the  balance ;  if  the  goods  should 
produce  at  Albany  more  than  sufficient  for  that  purpose,  the  plaintiff 
was  to  receive  the  residue  for  his  own  use. 

In  pursuance  of  this  agreement,  the  plaintiff  purchased  fish  to  the 
amount  of  $2,315,  and  received  that  sum  from  Barnard  to  pay  for  it. 
He  then  shipped  it  on  board  the  said  vessel,  and  took  from  the  master 
a  bill  of  lading  of  the  fish,  as  shipped  by  Barnard.  This  bill  of  lading 
was  dated  the  22d  of  February,  1813.  The  invoice,  also,  which  accom- 
panied the  goods,  purported  that  they  were  shipped  on  the  account  and 
risk  of  Barnard.  The  plaintiff  also  made  a  bill  of  parcels  of  the  fish, 
purporting  to  be  an  absolute  sale  thereof  to  Barnard,  for  the  price  above 
mentioned,  with  a  receipt  therefor.^  .  .  . 

A  verdict  was  taken  by  consent  for  the  plaintiff  for  $2,566.88,  sub- 
ject to  the  opinion  of  the  court,  on  the  facts  appearing  at  the  trial.  .  .  . 
J.  T.  Austin,  for  the  defendants. 
Frescott,  for  the  plaintiff. 

Parker,  C.  J.  ...  On  the  next  question,  which  respects  the  insur- 
able interest  in  the  plaintiff,  we  think  there  can  be  no  doubt.  The  prop- 
erty was  really  his,  although  the  legal  control  of  it  was  in  Barnard  ;  it 
was  shipped  on  his  account  and  risk  ;  and  he  merely  owed  a  debt  to 
Barnard,  which  this  property  was  pledged  to  secure.  His  interest  is  the 
same  as  it  would  have  been  had  the  purchase  been  made  in  his  own 
name,  and  the  bill  of  lading  in  his  ftivor,  and  he  had  then  indorsed  the 
bill  of  lading,  and  signed  other  papers  necessary  to  transfer  the  prop- 
erty as  a  pledge  to  Barnard. 

It  is  not  now  to  be  disputed  that  several  persons,  having  several  in- 
terests in  property,  may  insure  to  the  full  value  of  that  interest.  There 
are  numerous  cases  settling  this  point.  But  the  great  question  is, 
whether  one  having  an  equitable  interest  in  property-,  the  legal  title  of 
which  is  in  another,  may  make  insurance  upon  the  property  generally, 
without  representing  the  interest  he  has,  so  that  the  underwriters  may 
know  the  exact  state  of  the  subject-matter  of  their  contract ;  and  whether, 
if  such  representation  is  not  made,  there  is  not  a  concealment  of  mate- 
rial facts,  which  will  avoid  the  policy. 

It  seems  to  us  that,  upon  general  principles,  it  would  be  right  that 
such  should  be  the  law  ;  but  we  are  to  inquire  what  has  been  settled  and 
practised  upon,  according  to  usages  and  judicial  decisions,  in  order  to 
ascertain  the  law  of  mercantile  contracts. 

As  the  contingency  of  damage  to  property  insured,  which  may  justify 
an  abandonment  and  a  claim  for  a  total  loss,  although  the  subject- 
matter  of  the  contract  remains  entire,  is  too  frequent  not  to  enter  into 
the  contemplation  of  the  contracting  parties,  it  would  seem  that,  when 
a  man  causes  insurance  upon  property  in  which  he  has  an  interest,  but 
not  such  a  title  as  will  authorize  him  to  transfer  it  by  abandonment, 
this  fact  ought  to  be  made  known,  that  the  underwriter  may  determine 

1  In  the  statement  and  the  opinion  passages  foreign  to  concealment  have  been 
omitted.  —  Ed. 


PART  II.,  SECT.  I.]      LOCKE   V.   NORTH   AMERICAN   INS.   CO.  139 

whether  he  will  take  the  risk  under  such  circumstances  or  not.  Still, 
we  do  not  find  that  such  representation  has  been  deemed  essential  in 
England,  in  the  several  cases  where  insurance  upon  qualified  property 
has  been  established,  nor  in  this  State,  although  several  cases  have  oc- 
curred which  seemed  necessarily  to  present  such  a  question  to  the  court. 
Livermore  v.  Newburyport  Insurance  Company,  1  Mass.  264  ;  Holbrook, 
Adm.  V.  Brown,  2  Mass.  288;  Toppan  v.  Atkinson,  id.  365;  Oliver  u 
Green,  3  Mass.  133;  Wolff  et  uL  v.  Horncastle,  1  B.  «&  P.  316  ;  Hill 
et  al.  V.  Secretan,  id.  315;  Crawford  et  ah  v.  Hunter,  8  D.  &  E.  13; 
Boehm  et  al.  v.  Bell,  id.  154 ;  Hibbert  et  al.  v.  Carter,  1  D.  &  E.  745  ; 
Thompson  v.  Taylor,  6  D.  &  E.  478;  Grant  i\  Parkinson,  Park,  267. 

Under  these  circumstances,  we  do  not  feel  ourselves  authorized  to 
introduce  what  may  be  deemed  a  new  principle,  however  useful  it  might 
have  been,  if  early  introduced  into  the  law  of  insurance.  We  are  satis- 
fied, as  the  law  stands,  that  a  honajide  equitable  interest  in  propert3-, 
of  which  the  legal  title  is  in  another,  may  be  insured  under  the  general 
name  of  property,  or  by  a  description  of  the  thing  insured ;  unless 
there  siiould  be  a  false  affirmation  or  representation,  or  a  concealment, 
after  inquiry,  of  the  true  state  of  the  property'. 

We  are  the  less  disposed  to  depart  from  what  appears  to  have  been 
generally  understood  and  received  as  the  law  and  practice  upon  this 
subject,  fiom  a  persuasion  that  underwriters  can,  in  no  event,  be  injured 
thereb}'.  For  the  assured,  when  he  cannot,  by  abandoning,  transfer 
the  legal  title  to  the  underwriters,  will  be  confined  to  an  actual  indem- 
nity-. Thus,  if  there  should  be  salvage,  which  the  person  having  the 
legal  title  to  the  property,  or  those  who  may  have  insured  it  for  him, 
shall  claim  as  belonging  to  them,  the  underwriter  for  him,  who  has  the 
equitable  interest,  will  be  holden  to  pay  only  what  is  actually  lost ;  the 
assured  being  in  that  case  indemnified  for  the  residue  by  the  salvage, 
which  is  in  fact  received  to  his  use,  by  the  part}'  to  whom  he  is 
indebted.   .  .  . 

We  have  before  observed,  that  an  actual,  designed  concealment  of 
the  nature  of  the  interest  insured  would  avoid  the  polic}'.  But  we  think 
that  this  cannot  be  considered  as  proved,  with  respect  to  this  particular 
subject  of  insurance,  without  a  direct  false  affirmation  as  to  the  nature 
of  the  property,  or  a  refusal  to  answer  trul}-  upon  inquir}'.  In  most 
cases  it  is  entirely  immaterial  to  the  underwriter  ;  and  if  it  is  important 
to  him  to  know,  he  ma}-  always  insist  upon  a  satisfactory  exhibition  of 
title,  or  refuse  to  enter  into  the  contract. 

Upon  these  grounds  we  are  of  opinion  that  the  verdict  is  right ;  and 
judgmeiit  must  accordingly  be  entered  upon  it.^ 

1  Ace:  Bartlet  i-.  Walter,  13  Mass.  267  (1816) ;  Wells  v.  Philadelphia  Tns.  Co.,  9 
S.  &  R.  103  (1822);  Crowley  v.  Cohen,  3  B.  &  Ad.  478  (1832)  ;  Mackenzie  v.  Whit- 
worth,  1  Ex.  D.  35  (C.  A.  1875). 

And  see  Buck  v.  Chesapeake  Ins.  Co.,  I  Pet.  151  (1828).  —  Ed. 


140  GENEKAL  INTEREST   INS.   CO.   V.   RUGGLES.        [CHAP.  III. 


GENERAL  INTEREST  INS.  CO.,  Plaintiffs  in  Error,  v. 
RUGGLES,  Defendant  in  Error. 

Supreme  Court  of  the  United  States,  1827.     12  Wheat.  408. 

This  cause  was  argued  b}'  Mr.  D.  H.  Ogden  and  Mr.  Wheaton^  for 
the  phvintiffs  in  error,  and  by  Mr.  Webster  and  Mr.  Bliss,  for  the 
defendant  in  error. 

Mr.  Justice  Thompson  delivered  the  opinion  of  the  court. 

This  is  an  action  on  a  policy  of  insurance,  bearing  date  the  9tli  of 
February,  1824,  for  $3,000,  on  the  sloop  "Harriet,"  lost  or  not  lost, 
at  and  from  Newport,  Rhode  Island,  to,  at,  and  from  all  ports  and 
places  to  which  she  ma}'  proceed  in  the  United  States,  during  the  term 
of  six  months,  beginning  on  the  12th  of  January,  1824.  And  also 
$600  propert}'  on  board  said  sloop,  at  and  from  Newport  to  Charleston 
or  Savannah,  or  both.  The  sloop,  whilst  proceeding  on  her  voyage, 
and  within  the  term  of  six  months,  to  wit,  on  the  19th  of  January,  was 
wrecked  on  Cape  Hatteras,  and  both  vessel  and  cargo  wholly  lost.  Au 
abandonment  was  in  due  time  made,  and  a  total  loss  claimed. 

The  case  comes  before  this  court  upon  a  bill  of  exceptions  taken  to 
the  directions  given  b}'  the  Circuit  Court  for  the  District  of  Massachu- 
setts to  the  jury  upon  the  law  of  the  case.^ 

1  In  the  Circuit  Court,  where  the  case  is  reported  suh  nom.  Ruggles  v.  General  In- 
terest Ins.  Co.,  4  Mason,  74  (1825),  Story,  J.,  said :  — 

"  It  is  argued  .  .  .  that,  after  tlie  loss,  the  master  wilfully  omitted  to  communi- 
cate intelligence  of  it  to  the  owner,  with  the  fraudulent  design  to  enable  him  to 
make  insurance,  which  conduct,  although  the  owner  be  entirely  innocent  and  unknow- 
ing of  the  act  or  intent  of  the  master,  and  of  the  loss,  avoided  the  policy  bond  Jide 
made  by  the  owner  after  the  loss. 

"  In  support  of  this  doctrine  various  cases  are  cited.  .  .  .  [Here  were  stated  nnd 
distinguished  these  cases:  Fitzherbert  v.  Mather,  post,  p.  221  (1785);  Gladstone  v. 
Kin!,',  1  M.  &  S.  35  (1813)  ;  Andrews  v.  Marine  Ins.  Co.,  9  Johns.  32  (1812) ;  Stewart 
V.  Dunlop,  4  Bro.  P.  C.  (Toral.  ed.)  483  (1785).] 

"  The  principle  contended  for  is  new.  If  well  founded,  it  must  have  often  occurred. 
The  general  silence,  therefore,  is  against  it,  but  not  decisive  of  its  merits.  Upon 
what  grounds  does  it  stand  ?  Not  upon  the  ground  of  agency,  for  the  master  was  not 
the  agent  as  to  the  insurance.  Not  upon  the  ground  of  imputed  knowledge  or  fraudu- 
lent concealment,  for  that  is  excluded  by  the  argument.  It  must  then  be  upon  the 
ground  that  the  act  of  the  master  binds  the  owner ;  and  that  an  omission  of  duty  to 
his  owner,  by  which  tliird  persons  are  prejudiced,  destroys  the  rights  of  his  owner, 
however  innocent  he  may  be.  There  is  certainly  no  public  policy  or  convenience  in 
such  a  principle.  The  owner  does  not  guaranty  the  fidelity  of  the  master  to  all  tlie 
world,  or  to  the  insurer  in  particular.  On  the  contrary,  tlie  insurer  sometimes  insures 
against  tlie  misconduct  of  the  master.  In  England  it  is  generally  so  as  to  barratry,  and 
in  some  cases  as  to  negligence.  For  what  reason  should  the  law  interfere  between 
two  innocent  persons  to  change  a  loss,  which,  by  contract,  one  has  enL'aged  to  bear  ? 

"  It  is  said  that  he  who  reposes  the  confi<lence  in  such  a  one  should  bear  the  loss. 
But  underwriters,  etjually  with  owners,  repose  confidence  in  the  masters.  The  master 
is  the  agent  for  all  concerned.     In  case  of  loss,  he  acts  for  all  concerned.     In  the  case 


PART  II.,  SECT.  I.]       GENERAL    INTEREST    INS.    CO.    V.    RUGGLES.         141 

The  loss,  it  will  be  seen,  happened  on  the  19th  of  January,  and  the 
polic}'  was  not  effected  until  the  9th  of  Februar}-.  And  the  question 
upon  the  trial  turned  upon  the  legal  effect  and  operation  of  the  miscon- 
duct of  the  master  after  the  loss  occurred.  It  was  proved  that  the 
master,  imniediatel}-  after  the  loss,  for  the  pui'pose  and  with  the  design 
that  the  owner,  not  hearing  of  the  loss  of  the  vessel,  might  effect  in- 
surance thereon,  did  express  his  intention  not  to  write  to  the  owner, 
and  took  measures  to  prevent  the  fact  of  the  loss  being  known  ;  and 
that,  by  the  conduct  of  the  master  in  this  particular,  and  in  conse- 
quence of  the  measures  adopted  by  him  to  su[)press  intelligence  of  the 
loss,  knowledge  thereof  had  not  reached  the  parties  at  the  time  the 
policy  was  underwritten. 

Upon  these  facts  the  court  instructed  the  jury  that,  although  it  was 
the  dut\-  of  the  master  to  give  information  of  the  loss  to  his  owner  as 
soon  as  he  reasonably  could,  yet  that,  in  the  present  case,  when  there 
had  been  an  abandonment  in  due  time  for  a  loss  really  total,  if  the 
owner  at  the  time  of  procuring  the  insurance  had  no  knowledge  of  the 
loss,  but  acted  with  entire  good  faith,  he  was  not  precluded  from  a 
recover}-.  Nor  was  the  policy  void  b}-  the  omission  of  the  master  to 
communicate  the  information  ;  or  b}-  his  acts  in  suppressing  intelli- 
gence of  the  loss,  although  such  omission  and  acts  were  wilful,  and 
resulted  from  the  fraudulent  design  to  enable  the  owner  to  make  in- 

of  an  abandonment,  he  is  retroactively  the  agent  of  the  underwriter,  from  the  time 
of  the  loss  on  which  the  abandonment  is  founded.  Wliat  reason  is  there  why  owners, 
acting  innocently,  may  not  insure  against //ona  ^c/e  losses  of  which  the  master  with- 
holds the  knowledge  ? 

"  It  is  said  it  may  encourage  fraud.  But  this  argument  supposes  too  much. 
Most  losses  in  this  age  must  be  public.  The  first  port  of  arrival  brings  all  out.  The 
crew  and  officers,  and  other  persons,  are  not  bound  to  silence.  In  fact,  but  few  cases 
of  this  defence  have  yet  occurred.  But  suppose  it  to  be  so.  If  there  may  be  frauds, 
mav  there  not  be  also  ruinous  losses  to  innocent  owners  1  Is  it  a  good  puldic 
policy  to  endanger  the  interests  of  commerce  by  new  implied  warranties  1  The  under- 
writer can  require  a  warranty,  or  except  the  master's  acts,  or  require  his  negli- 
gence to  be  fatal.  This  very  ca.se  shows  how  difficult  it  is  to  conceal  the  facts  even 
in  an  obscure  place.  They  were  universally  known  in  twenty  days,  and  reported  in  a 
loose  rumor  in  twelve  days. 

"The  court  is  called  upon  to  lay  down  a  new  principle,  to  extend  the  present 
boundaries.  But  I  see  no  analogies  to  lead  me  farther,  and  no  public  policy  indis- 
pensahlv  requiring  a  stricter  rule.  If  a  fraudnlent  omission  avoids  the  insurance,  so 
would  negligence  (1  Maule  &  Selw.).  I  am  ready  to  declare  my  opinion  against  the 
general  principle,  as  argued  by  the  defendant.  But  as  the  plaintiff  has  in  his  argu- 
ment restricted  it  to  the  facts  of  the  present  case,  I  do  not  wish  to  go  beyond  them. 
My  opinion  is.  that  in  the  present  case,  where  there  has  been  an  abandonment  in 
due  time  for  a  loss  really  total,  if  the  owner,  at  the  time  of  procuring  the  insurance, 
had  no  knowledge  of  the  lf)ss,  but  acted  with  entire  good  faith  in  procuring  the 
insurance,  he  is  not  precluded  from  a  recovery,  nor  is  the  policy  void  by  the  omission 
of  the  master  to  communicate  intelligence  of  the  loss,  although  sncli  omission  was 
wilful  and  witli  the  fraudulent  design  to  enable  the  owner  to  make  insurance  after 
the  total  loss,  the  owner  not  being  conusant  of  any  such  a^t  or  design  at  the  time  of 
such  insurance.  My  opinion  also  is,  that  it  was  the  duty  of  the  master  to  give  infor- 
mation of  the  loss  to  his  owner  as  soon  as  he  reasonably  could,  and  that  his  omission 
was  a  plain  departure  from  his  duty."  —  Ed. 


142  GENERAL    INTEREST   INS.    CO.    V.   RUGGLES.         [CIIAR  III. 

siirance  after  the  loss,  —  the  owner  himself  not  being  conusant  of  such 
acts  and  design  at  the  time  of  procuring  the  insurance. 

And  under  this  direction  a  verdict  was  found  for  the  plaintiff  for  a 
total  loss. 

The  statement  of  the  case  admits  fraudulent  misconduct  on  the  part 
of  the  master,  by  reason  whereof  the  policy  was  effected  before  any 
knowledge  of  the  loss  reached  the  assured  or  the  underwriters  ;  but 
that  the  assured  was  entirely  ignorant  of  this  misconduct  in  the  master, 
and  that  on  his  part  there  was  the  most  perfect  good  faith  in  procuring 
the  policy.  Here,  then,  is  a  loss  thrown  upon  one  of  two  innocent  par- 
ties, and  the  question  is  by  which  is  it  to  be  borne.  The  determination 
of  this  question  must  depend  in  a  great  measure,  if  not  entirely,  upon 
the  relation  in  which  the  master  stood  to  the  respective  parties  when 
this  misconduct  occurred.  If  the  loss  of  the  vessel  had  been  occa- 
sioned by  any  misconduct  of  the  master  sh(M-t  of  barratry  whilst  in  the 
prosecution  of  the  voyage,  and  before  the  loss  happened,  or  if  at  the 
time  this  misconduct  is  alleged  against  him  he  was  the  exclusive  agent 
of  the  owner  for  any  purposes  connected  with  procuring  the  insurance, 
the  owner  must  bear  the  loss.  But  if  after  the  loss  tlie  agency  of  the 
master  ceased,  and  was  at  an  end,  or  if  ho  in  judgment  of  law  became 
the  agent  of  the  underwriters,  his  misconduct  cannot  be  chargeable  to 
the  assured. 

The  researches  of  counsel  liave  not  furnished  the  court  with  any  ad- 
judged cases,  either  in  the  English  or  American  courts,  which  seem  to 
have  decided  this  question.  Some  have  been  referred  to  which  have 
been  urged  as  having  a  strong  bearing  upon  the  point,  but  which,  on 
examination,  will  be  found  distinguishable  in  some  material  facts  and 
circumstances. 

Tlie  precise  point,  therefore,  now  before  the  court  may  be  consid- 
ered new,  but  we  apprehend  is  to  be  governed  by  the  application  of 
principles  understood  to  be  well  settled  in  the  law  of  insurance. 

It  is  important  to  understand  with  precision  and  accuracy  the  rela- 
tion in  which  the  master  stood  to  the  owner  of  the  vessel  at  the  time 
when  he  was  guilty  of  the  fraud  and  misconduct  imputed  to  him.  It 
was  after  the  loss  occurred,  and  at  a  time  when  there  had  been  a  total 
destruction  of  the  subject  insured,  over  which  the  master's  agency  had 
extended. 

The  case  has  been  argued  on  the  part  of  the  underwriters  as  if  the 
agency  growing  out  of  the  relation  of  master  and  owner  of  the  vessel 
existed  at  this  time  ;  and  that  the  assured  was  responsible  for  all  con- 
sequences arising  from  the  misconduct  of  the  master;  and  that  the  law 
would  presume  that  whatever  was  known  to  the  master  must  be  consid- 
ered as  impliedly  known  to  the  owner.  These  propositions  may  be 
true  when  applied  to  a  state  of  facts  properly  admitting  of  such  appli- 
cation, but  cannot  be  true  to  the  extent  to  which  they  have  been  urged 
in  the  present  case.  If  the  owner  is  presumed  to  know  whatever  is 
known  to  the  master,  there  could  be  no  valid  policy  effected  upon  a 


PART  II.,  SECT.  I.]       GENERAL    INTEREST    IXS.    CO.    V.    EUGGLES.         143 

vessel  after  she  was,  in  point  of  fact,  lost.     Such  loss  must  be  known 
to  the  master;  and  if  it  follows,  as  a  legal  conclusion,  that  it  is  known 
to  the  owner,  the  policy  would  be  void.     Nor  upon  this  doctrine  could 
there  ever  be  an}-  insurance  against  barratry,  or  anj-  other  misconduct 
of  the  master  ;  for  his  own  acts  must  necessarily  be  known  to  himself. 
And,  indeed,  the  principle  pressed  thus  far  would  render  it  impractica- 
ble ever  to  have  any  guaranty*  whatever  against  the  fraud  or  misconduct 
of  an  agent  any  more  than  against  that  of  the  principal  himself.     The 
knowledge  of  the  agent,  therefore,  with  respect  to  the  fact  of  loss,  can- 
not affect  the  insurance  ;  nor  could  the  knowledge  of  the  owner  himself, 
with  respect  to  such  loss,  affect  the  insurance  in  all  cases.     Suppose  the 
owner  should  himself  be  the  master,  or  be  on  board,  having  left  orders 
with  an  agent  to  procure  insurance  in  a  given  time,  unless  he  should 
hear  from  him,  or  have  information  of  the  arrival  of  the  vessel  at  her 
port  of  destination,  and  the  vessel  should  be  lost  the  day  before  the 
policy  was  underwritten,  and  at  a  distance  that  rendered  it  impossible 
that  information  thereof  could  reach  the  agent,  would  such  a  polic}'  be 
void?     No  one  could  certainly  maintain  sucli  a  proposition.     And  it  is 
by  no  means  an  unfrequent  practice  to  obtain  insurance  in  this  wa}'. 
It  is  not  therefore  true,  as  a  universal  rule,  that  either  the  fact  of  loss, 
or  the  knowledge  of  such  fact  by  the  agent  or  the  principal  at  the  time 
the  polic}'  is  procured,  will  vacate  it.     But  such  knowledge  must  be 
brought  home  to  some  of  the  parties  or  agents  connected  with  the  busi- 
ness of  procuring  the  insurance ;  and  then  the  rule  properh'  api)lies 
which  puts  the  principal  in  place  of  the  agent,  and  makes  him  respon- 
sible for  his  acts.     There  is,  then,  the  relation  of  principal  and  agent 
in  the  subject-matter  of  the  contract.     But  tlie  master,  in  his  character 
as  master,  has  no  authorit}-  to  procure  insurance,  nor  is  he  in  an}'  sense 
an  agent  for  such  purpose,  or  in  any  way  connected  with  it.     There 
may,  undoubtedh",  be  superadded  to  his  powers  and  duties  as  master 
an  agency  in  other  matters,  to  effect  insurance,  or  any  other  lawful 
business  ;  but  in  his  appropriate  character  of  master,  the  law  considers 
him  an  agent  only  for  the  navigation  of  the  vessel,  and  in  such  matters 
as  are  connected  with  and  incident  to  such  employment.     And  when 
the  books  speak  of  the  master's  being  agent  of  the  owner,  they  are  to 
be  understood  in  this  sense.     He  is  not  to  be  considered  as  the  general 
agent  of  the  owner  for  all  purposes  whatsoever  that  may  have  connec- 
tion with  the  vo\-age.     He  is  a  special  agent  for  navigating  the  vessel, 
and  can  neither  bind  nor  prejudice  his  principal  by  any  act  not  coming 
properly  within  the  scope  and  object  of  such  employment.     Unless  the 
powers  of  agents  are  tlius  limited,  no  man  could  be  safe  in  the  trans- 
action of  any  business  through  the  agency  of  another.     The  master,  iu 
his  character  as  such,  had  certain!}-  no  authority  to  procure  insurance. 
He  could  not  bind  the  owner  b}-  such  a  contract ;  and  if  he  could  not, 
why  should  his  acts,  totally  unconnected  with  the  business  of  procuring 
the  insurance,  render  void  a  contract  entered  into  in  good  faith  in  all 
parties  having  an}*  concern  in  the  transaction  ?     It  is  a  general  rule, 


144  GENEEAL   INTEREST    INS.    CO.    V.   RUGGLES.         [CHAP.  III. 

applicable  to  agencies  of  every  description,  that  the  agent  cannot  bind 
his  principal,  except  in  matters  coming  within  the  scope  of  his  author- 
ity ;  and  this  rule  applies  particularly  to  a  master  and  owner  of  a  ves- 
sel, and  is  construed  with  considerable  strictness.^  .   .  . 

It  is  a  little  difficult  to  perceive  how,  in  any  legal  sense,  the  relation 
of  principal  and  agent  could  exist  at  the  time  when  the  misconduct  of 
tlie  master  is  alleged  to  have  taken  place.  So  far  as  he  was  agent  for 
navigating  the  vessel,  it  had  terminated  by  the  al)solute  destruction  of 
the  subject.  The  agency  would  seem  to  have  ceased  from  necessity. 
There  was  nothing  upon  which  it  could  act.  Had  there  not  been  a 
total  loss  of  the  vessel,  there  would  have  remained  a  duty  and  legal 
obligation  on  the  part  of  the  master  to  use  his  best  exertions  to  save 
■what  he  could  from  the  wreck.  But  when  the  subject-matter  of  the 
agency  becomes  extinct,  it  is  not  easy  to  understand  how  in  any  just 
sense  the  agency  can  be  said  to  survive.  There  might  be  a  moral  duty 
resting  on  the  master  to  communicate  information  of  the  loss  to  his 
ow^ier.  But  how  could  there  have  been  any  legal  obligation  binding 
upon  him  to  do  it?  The  information  could  neither  benefit  nor  prejudice 
the  owner.  It  is  a  general  rule  of  law  that,  if  an  injury  arises  to  a 
principal  in  consequence  of  the  misconduct  of  his  agent,  an  action  may 
be  sustained  against  him  for  the  damage.  Could  an  action  in  this  case 
be  sustained  by  the  owner  against  the  master  for  not  giving  him  infor- 
mation of  the  loss?  And  if  not,  it  would  seem  to  follow  as  a  necessary 
consequence  that  the  owner  could  not  be  prejudiced  by  his  acts. 

But  suppose  the  agency  of  the  master  not  to  have  terminated,  but 
that  in  judgment  of  law  he  was  the  agent  of  some  one.  The  question 
recurs,  whose  agent  was  he?  The  answer  cannot  admit  of  a  doubt.  If 
agent  at  all,  he  was  by  operation  of  law  the  agent  of  the  underwriters. 

The  polic}',  taking  the  risk  on  the  vessel  and  cargo,  lost  or  not  lost, 
although  effected  after  the  loss  happened,  related  back;  and  by  the 
abandonment  the  underwriters  were  substituted  in  the  place  of  the  as- 
sured, and  the  master,  although  the  agent  of  the  owner  until  the  loss 
occurred,  became,  upon  the  abandonment,  the  agent  of  the  under- 
writers. The  law  upon  this  subject  is  well  settled,  where  there  is  only 
a  technical  total  loss,  and  any  part  of  the  subject  insured  rcnains.  The 
interest  in  the  salvage,  whatever  it  may  be,  becomes  transferred  to  the 
underwriters,  and  tlie  agency  is,  of  course,  transferred  with  the  sub- 
ject, and  the  agent  thereafter  becomes  responsible  to  the  underwriters 
for  the  faitliful  discharge  of  his  trust.  No  action  could  be  sustained 
against  him  by  the  assured  for  the  proceeds,  or  any  misconduct  in  the 
management  thereof.  This  is  not  only  the  settled  rule  of  law,  but  a 
contrary  doctrine  would  involve  the  greatest  absurdity.  It  would  be 
placing  the  absolute  interest  in  the  property  in  one  party,  and  making 
the  agent  accountable  for  its  management  to  another.  No  action  could 
be  sustained  by  the  assured,  for  the  plain  reason  that  he  would  have  no 
interest  in  the  subject  of  the  agency. 

1  Here  was  stated  Boucher  v.  Lawsou,  Cas.  temp.  Hardwicke,  85  (1734).  —  Ed. 


PART  II.,  SECT.  I.]       GENERAL    INTEREST    INS.    CO.    V.    RUGGLES.  145 

And  if  such  would  be  the  effect  of  an  abandonment  in  case  of  a 
technical  total  loss,  there  can  be  no  good  reason  assigned  why  the  rule 
should  not  be  applied  to  a  loss  really  total,  so  far  as  to  transfer  what- 
ever agency  could  remain.  So  that  whether  the  agency  terminated  by 
the  total  destruction  of  the  subject,  or  was  transferred  b}  the  abandon- 
ment to  the  underwriters,  the  misconduct  of  the  master  could  not  preju- 
dice the  rights  of  the  owner.  The  connection  of  principal  and  agent 
was  dissolved,  and  they  stood  towards  each  other  as  mere  strangers,  so 
far  as  any  legal  responsibility  could  be  involved  in  the  conduct  of  the 
master.  Such  we  apprehend  to  be  the  result  of  the  application  of  well- 
settled  principles  of  law  to  the  facts  and  circumstances  presented  bj- 
the  bill  of  exceptions,  in  the  absence  of  any  authority-  to  govern  the 
case.^  .   .  . 

It  is  no  doubt  true,  with  respect  to  policies  of  insurance,  as  well  as 
to  all  other  contracts,  that  the  principal  is  responsible  for  the  acts  of 
his  agent ;  and  that  an}-  misrepresentation,  or  material  concealment 
by  the  agent,  is  equally  fatal  to  the  contract  as  if  it  had  been  the  act 
of  the  principal  himself.  But  such  responsibility  must  of  necessitj'  be 
limited  to  cases  where  the  agent  acts  within  the  scope  of  liis  authority. 
In  the  present  case,  the  master  was  clothed  with  no  authorit}-  or  agenc}' 
in  any  manner  connected  with  procuring  insurance.  The  misconduct 
charged  against  him  occurred,  not  whilst  he  was  acting  as  master,  but 
at  a  time  when  the  relation  of  master  and  owner  ma^-  well  be  consid- 
ered as  dissolved  from  necessit}',  by  reason  of  a  total  destruction  of  the 
whole  subject-matter  of  the  agency  ;  and  if  not,  the  master,  by  the  legal 
operation  of  the  abandonment,  became  the  agent  of  the  undei'writei's, 
and  was  their  agent  at  the  time  of  his  alleged  misconduct. 

It  is  said  that  if  this  is  a  new  question,  the  court  should  adopt  such 
rule  as  is  best  calculated  to  preserve  good  faith  in  effecting  policies  of 
insurance.  But  it  is  by  no  means  clear  that  this  end  would  be  best 
promoted  by  adopting  the  rule  contended  for  on  the  part  of  the  under- 
writers. Cases  ma}'  very  easil}'  be  supposed  where  negligence  or  mis- 
conduct in  agents  of  underwriters,  as  to  matters  not  immediately 
connected  with  effecting  a  polic}',  will  still  have  a  remote  influence, 
which  may  have  a  tendenc}'  to  prejudice  the  interest  of  the  assured. 
Such  cases,  however,  as  well  as  those  of  the  description  now  under 
consideration,  will  most  likely  be  of  rare  occurrence,  and  nice  and 
minute  distinctions  practicall}'  operate  unfavorably  on  the  business  of 
insurance. 

If  underwriters  feel  themselves  exposed  to  fraudulent  practices  in 
such  cases,  the  protection  is  in  their  own  hands  b}'  not  assinning  any 
losses  that  ma}'  have  happened  prior  to  the  date  of  the  policy.  It  is 
considered  a  hazardous  undertaking  to  insure,  lost  or  not  lost,  and  a 
propoitionate  premium  is  demanded,  according  to  the  circumstances 

1  Here  these  cases  were  stated  and  distinguished  :  Fitzherbert  v.  Mather,  1  T.  K. 
12  (1785) ;  Stewart  v.  Dunlop,  4  Bro.  P.  C.  (Toml  ed.)  483  (1785) ;  Andrews  r.  Marine 
Ins.  Co.,  9  Johns.  32  (1812) ;  and  Gladstone  v.  King,  1  M.  &  S.  35  (1813).  —Ed. 

10 


146  NEPTUNE   INS.   CO.   V.   EOBINSON.  [CHAP.  III. 

stated,  to  show  the  probability  or  improbability  of  the  safety  of  the 
subject  insured. 

Although  no  adjudged  cases  directly  applicable  to  the  one  before 
us  have  been  found,  we  do  not  consider  this  decision  as  establishing 
an}'  new  principle  in  the  law  of  insurance,  but  as  grounded  on  the 
application  of  principles  already  settled,  to  a  new  combination  of 
circumstances.  Judgment  affirmed.^ 


NEPTUNE  INS.  CO.  v.  ROBINSON. 
Court  of  Appeals  of  Maryland,  1840.     11  G.  &  J.  256. 

Appeal  from  Baltimore  Count}'  Court. ^ 

This  was  an  action  of  assumpsit,  brought  by  the  appellee  against 
the  appellant,  on  its  policies  of  insurance,  by  which  it  undertook  to 
assure  the  appellee,  lost  or  not  lost,  at  and  from  Richmond,  Va. ,  to 
Portland,  Me.,  $3,000  on  the  good  schooner  "  Wildee,"  and  $350  on 
her  freight. 

The  plaintiff  declared  for  a  total  loss,  and  the  defendant  pleaded  non 
assumpsit. 

The  case  was  submitted  to  the  county  court  on  a  statement  of  facts, 
in  which  the  material  points  were  these :  — 

Benjamin  Robinson,  the  plaintifif,  owner  of  the  schooner  "  Wildee," 
effected  the  insurance  with  the  defendant  company  on  April  20,  1837. 
The  schooner  left  Richmond  on  April  16.  On  April  17  the  winds  and 
currents  drove  her  on  Goods  Rocks,  whereby  by  the  perils  of  the  sea  she 
was  totally  lost,  notwithstanding  all  due  efforts  of  the  captain  and  crew 
to  save  her.  On  April  17  the  captain  addressed  to  the  plaintiff  a  letter, 
which  stated  that  the  vessel  had  run  on  Goods  Rocks  and  did  not  appear 
to  be  damaged,  although  the  cargo  no  doubt  was.  This  letter  was  de- 
livered at  the  post-office  in  Richmond  in  the  afternoon  of  April  17.  It 
arrived  at  the  post-office  in  Baltimore  on  April  20,  between  three  and 
four  o'clock  in  the  morning,  and  could  have  been  had  at  the  post-office, 
if  applied  for,  at  seven  o'clock.  The  plaintiff  was  a  resident  of  Balti- 
more. He  was  not  a  merchant,  and  he  had  no  place  of  business  other 
than  his  private  dwelling.  His  letters  were  not  taken  to  him  by  a  letter- 
carrier,  but  were  called  for  by  him  at  the  post-office  or  sent  for  thence 
by  him.  He  did  not  call  at  the  post-office  until  April  24,  and  then  he 
received  the  letter  of  April  17.     On  April  19  he  had  called  at  the  post- 

1  See  Patton  I'  Janney,  2  Cranch  C.  C.  71  (1813);  Clement  v.  Pheiiix  Ins.  Co., 
6  Blatch.  481  (1809)  ;  Folsom  v.  Mercantile  Mut.  Ins.  Co.,  8  Blatch.  170  (1871). 

See  also  1  Phillips  on  Ins.  (5th  ed.),  §§  549,  564  ;  2  Duer  on  Mar.  Ins.,  418-421, 
788-796  ;  1  Parsons  on  Mar.  Ins.,  455-458.  —  Ed. 

2  The  statement  lias  been  rewritten.  —  Ed. 


PAKT  II.,  SECT.  I.]       NEPTUNE    IXS.    CO.    V.    ROBINSON.  147 

office,  and  had  received  a  letter  dated  April  14,  wherein  the  captain 
stated  that  the  "Wildee"  would  probably  sail  on  April  16  or  17.  On 
April  20  the  plaintitf  applied  for  the  insurance.  The  defendant  com- 
pans's  answer,  staling  terms,  was  given  at  two  o'clock  that  afternoon  ; 
and  the  terms  were  accepted  before  five  o'clock.  The  information  in 
tlie  letter  of  April  17,  if  known  to  plaintiff,  would  have  been  material  to 
the  risk.  If  the  court  shall,  on  these  stated  facts,  be  of  opinion  that 
tlie  plaintiff  had  notice,  either  actual  or  constructive,  of  the  loss  of  the 
schooner  "  Wildee,"  or  of  the  contents  of  said  letter  of  April  17,  prior  to 
the  making  of  said  insurance,  or  shall  be  of  opinion  that  the  plaintiff  was 
guilt}-  of  such  laches  in  not  caUing  regularh-  for  his  letters  at  the  post- 
office  and  receiving  the  intelligence  of  the  loss  communicated  by  said 
letter,  as  will  vitiate  said  insurance,  then,  and  in  either  case,  their  judg- 
ment must  be  for  tlie  defendant ;  otherwise  for  tlie  plaintiff,  for  the 
sum  of  62,851.64,  with  interest  from  Aug.  14,  1837,  and  costs. 

The  county  court  rendered  judgment  for  the  plaintiff,  and  the  insur- 
ance company  appealed  to  this  court. 

Mayer,  for  the  appellant. 

McMahon,  for  the  appellee. 

Chambers,  J.  The  claim  of  the  appellee  upon  this  polic}-  of  insurance 
has  been  resisted,  on  the  ground  that  under  the  circumstances  of  this 
case  he  is  to  be  charged  with  notice  of  the  loss  prior  to  the  insurance, 
or  at  least  with  such  neglect  as  will  vitiate  the  policy.  That  the  con- 
tents or  existence  of  the  letter  of  17th  April  were  known  to  him  in  fact 
is  not  alleged  in  the  statement  of  facts,  nor  could  it  by  any  just  inference 
be  deduced  therefrom,  if  indeed  the  court  could  make  inferences  of  fact, 
which  is  certainly  not  the  case.  The  statement  in  reference  to  this  mat- 
ter is,  that  the  ap[)ellee  on  the  19th  of  April  applied  at  the  post-office 
(where  his  letters  remained  till  he  called  for  them)  and  received  the  let- 
ter of  14th  of  April,  and  on  the  following  da}-,  the  20th,  effected  the  in- 
surance :  and  that  he  did  not  call  again  at  the  post-office  until  24th 
April,  when  he  received  the  letter  of  17th,  informing  him  of  the  loss. 
It  being,  then,  conceded  that  the  facts  stated  do  not  prove  actual  knowl- 
edge of  the  letter  of  17th  of  April,  and  consequently  of  the  loss  of  the 
schooner,  we  are  to  decide  whether  they  make  a  case  from  which  the 
law  will  impute  the  consequences  of  knowledge,  and  impU*  conceal- 
ment, suppression,  or  negligence  on  the  part  of  the  assured,  to  vitiate 
tlie  policy. 

The  principles  advanced  on  the  part  of  the  appellant,  on  the  authoi  i- 
ties  cited,  may  all  be  admitted,  and  yet  we  do  not  think  they  will  funii-li 
an  affirmative  answer  to  this  question.  That  the  assured  acted  with  en- 
tire good  faith,  and  without  any  design  to  impose  upon  himself  a  con- 
dition of  ignorance,  the  facts  afford  sufficient  evidence  to  prove.  It  is 
very  true  that  in  many  instances  negligence  will  be  visited  with  the  same 
penalt}'  as  wilful  desire  to  do  wrong.  Thus,  if  a  party,  with  knowledge 
that  his  agent  is  in  treat}'  for  insurance,  obtains  information  of  a  mate- 
rial fact,  he  is  bound  promptly  to  use  the  means  of  communicating  it. 


148  BATES   V.   HEWITT.  [CilAP.  III. 

The  impossibility  of  fixing  a  definite  limit  between  prompt  attention 
and  unreasonable  delay,  and  the  difficulty  of  certainly  ascertaining  the 
motives  afid  excuses  for  all  intervening  grades  of  despatch  in  perform- 
ing an  admitted  duty,  make  such  a  rule  imperatively  necessary.  When 
the  principles  of  fair  dealing,  as  well  as  the  rules  of  law,  require  a  fact 
to  be  communicated,  if  known,  and  time  enough  had  elapsed  within 
which  to  communicate  it,  and  a  means  of  conveying  it  had  presented,  it 
would  be  fatal  to  the  rights  of  the  party  to  require  him  to  prove  bad 
motives  for  the  delay.  Justice  requires  the  same  standard  in  this  re- 
spect for  the  man  of  active  industry  as  for  the  habitually  indolent,  and 
wisely  says,  what  a  man  is  thus  obliged  to  do  he  must  do  promptly  and 
diligently,  or  bear  the  consequences  of  his  neglect. 

But  we  do  not  think  the  case  before  us  is  one  where  the  party  has 
neglected  a  dut}'. 

He  was  under  no  obligation  to  go  to  the  post-office,  nor  had  he,  as 
far  as  the  facts  are  disclosed,  any  cause  to  expect  information.  In 
point  of  fact,  it  was  solely  in  consequence  of  the  loss  of  the  schooner 
that  the  captain  did  write. 

The  principle  relied  on  by  the  appellant  is,  that  the  assured  is  bound 
to  use  all  accessible  means  of  information,  at  the  very  last  instant  of 
time,  to  ascertain  the  condition  of  the  property  insured. 

We  do  not  think  this  principle  recognized  b}-  any  adjudged  case,  and 
if  carried  out  to  its  legitimate,  indeed,  necessary  results,  would  embar- 
rass the  whole  doctrine  of  insurance  with  complicated  and  endless 
difficulties. 

We  approve  the  opinion  expressed  by  the  county  court  of  Baltimore, 
and  affirm  the  judgment.  Judgment  affirmed. 


PATES   V.   HEWITT. 
Queen's  Bench,  1867.     L.  R.  2  Q.  B.  595. 

Declaration  on  a  policy  of  marine  insurance,  for  six  calendar 
months,  on  the  screw  steamer,  "  Georgia,"  subscribed  by  the  defend- 
ant for  £100,  claiming  a  total  loss. 

Plea,  that  the  defendant  was  induced  to  effect  the  insurance,  and  tf^ 
subscribe  the  policy,  b\'  the  wrongful  and  improper  concealment,  by 
the  plaintiff  and  his  agents,  from  the  defendant  of  certain  material 
information,  then  known  to  the  plaintiff  and  his  agents,  and  unknown 
to  tlie  defendant,  and  which  ought  to  have  been  communicated  to  the 
defendant. 

Issue  joined. 

At  the  trial  before  Cockburn,  C.  J.,  at  the  sittings  in  London,  after 
IMichaelmas  Term,  1866,  the  following  facts  were  proved:  The  plain- 
tiff is  a  shipowner  at  Liverpool,  and  the  defendant  is  an  underwriter  at 


PART  II.,  SECT.  I.]  BATES   V.    HEWITT.  149 

Lloyd's.  A  vessel  called  the  "Japan"  was  built  at  Dumbarton  in 
18G3.  Shortly  afterwards  she  was  fitted  out  as  a  vessel  of  war,  on 
belialf  of  the  government  of  the  Confederate  States  of  America,  and 
her  name  was  changed  to  the  "  Georgia."  For  about  a  year  she  was 
employed  as  a  cruiser,  and  became  very  notorious  in  this  service  ;  but 
on  the  2d  of  May,  1864,  she  put  into  Liverpool,  and  was  there  dis- 
mantled ;  this  was  a  fact  of  general  notoriety  at  the  time.  She  was 
put  up  to  sale  by  public  auction,  and  purchased  by  the  plaintiff  for 
£15,000.  The  plaintiff  fitted  her  out  as  a  merchant  vessel,  at  an 
expense  of  cfil.OOO  or  £5,000 ;  and  chartered  her  on  the  28th  of  July, 
1864,  to  the  agent  of  the  Portuguese  government  for  a  period  of  four 
months,  to  trade  from  Liverpool  to  Lisbon,  and  from  thence  to  the 
Cape  de  Verde  Islands  and  the  Western  Coast  of  Africa. 

On  the  27th  of  July,  18G4,  the  plaintiff  wrote  from  Liverpool  to 
Bradford  &  Co.,  insurance  brokers,  in  London:  — 

"  At  what  rate  can  you  do  me  the  hull  of  the  S.S.  '  Georgia'  for 
four  months,  chartered  to  proceed  on  the  following  voyages  :  —  From 
Liverpool  to  Lisbon,  and  from  thence  to  Cape  de  Verde,  Principe,  St. 
Thome,  Benguela,  Loando,  Massamade,  Anibriz,  and  return  to  Lisbon, 
calling  at  all  ports -as  ordered." 

To  which  Bradford  &  Co.  replied  :  — 

"We  presume  the  'Georgia'  is  the  Confederate  boat  and  the 
voyage  the  Portuguese  mail  service  ;  if  so,  we  should  think  the  four 
months  would  be  from  three  to  four  guineas  per  cent,  but  it  is  rather 
a  guess  on  our  part.  The  company's  steamers  doing  that  work  were 
insured  at  seven  guineas  the  year,  but  there  was  a  batch  of  them, 
whereas  this  is  a  single  matter.  Wc  should  be  glad  to  secure  you  the 
best  possible  terms,  and,  if  you  send  an  order,  please  say  all  you  can 
of  the  vessel's  condition,  and  any  particulars  that  may  assist  us." 

On  the  1st  of  August,  1864,  the  plaintiff  wrote  to  Bradford  &  Co.: 
"  Annexed  I  beg  to  hand  you  particulars  of  the  voyage  of  the  '  Geor- 
gia;' if  you  can  insure  her  at  3h  guineas  per  cent,  for  six  months, 
please  do  so  to  the  extent  of  £23,000.  Captain  Wiltycombe,  who  is 
to  command,  has  been  master  at  times  of  nearly  all  my  ships,  and  is  at 
present  overlooking  hei-. 

"  'Georgia,'  S.S.  Built  by  Denny  &  Co.,  at  Dumbarton,  in  1863, 
427  tons  register,  200-horse  power,  Captain  Wittycombe,  —  for  and 
duiing  the  space  of  six  calendar  months,  commencing  on  the  7th  of 
August,  1864,  at  all  times  and  in  all  places,  and  on  all  lawful  service, 
Liverpool  to  Lisbon,  there  and  thence  to  Cape  de  Verde,  Principe,  St. 
Thome,  Benguela,  Loando,  Massamade,  Ambriz,  and  back  to  Lisbon 
^  Liverpool,  calling  at  above-named  places  on  the  return  voyage  — 
ship  valued  at  £23,000. 

"I  think  the  underwriters  know  W.  F.  Wittycombe  very  well.  He 
has  been  master  in  my  ships  for  sixteen  years,  built  many  of  them,  and 
up  to  this  moment  has  never  cost  underwriters  on  his  ship  a  shilling. 
If  not  done,  telegraph  to  me." 


150  BATES    V.   HE'.YITT.  [CHAP.  III. 

Bradford  &  Co.  telegraphed  to  the  plaintiff  that  the}'  could  not  insure 
the  "  Georgia"  at  his  limit,  but  could  do  so  at  four  guineas.  Eventu- 
ally they  effected  (amongst  other  policies)  an  insurance  at  Lloyd's,  ou 
the  6th  of  August,  for  £G,000,  on  the  "Georgia"  steamer,  for  six 
months  from  her  sailing,  at  four  guineas  per  cent.,  of  which  the  defend- 
ant underwrote  £100.  It  is  customary  for  time  policies  effected  at 
Lloyd's  to  contain  a  memorandum  that  the  insurance  is  free  of  capture 
and  seizure,  but  this  clause  was  omitted  in  the  present  policy.  The 
letters  of  the  27th  of  July,  and  of  the  1st  of  August,  with  the  particulars, 
were  shown  to  the  defendant  and  the  other  underwriters  at  the  time 
they  underwrote  the  policy. 

The  defendant  stated,  at  the  trial,  that  he  knew  that  a  vessel  called 
the  "  Georgia"  had  been  in  the  Confederate  service  as  a  war  steamer, 
and  that  she  had  been  sold  at  Liverpool ;  but  that  these  facts  were  not 
present  to  his  mind  at  the  time  he  underwrote  the  policy,  and  that  he 
did  not  know  that  he  was  asked  to  insure  and  was  insuring  the  Con- 
federate "Georgia;"  and  had  he  known  that  the  vessel  in  question 
was  the  "Georgia"  which  had  been  in  the  Confederate  service,  he 
would  not  have  insured  her.  He  also  admitted  that  he  did  not  observe 
that  the  policy  was  not  free  of  capture  and  seizure ;  and  he  stated 
that  Bradford  &  Co.  were  the  brokers  for  a  company  who  had  steamers 
running  to  the  Mediterranean,  and  being  under  the  impression  that  he 
was  insuring  one  of  these  steamers,  he  did  not  give  much  attention  to 
the  plaintiff's  letters  and  particulars. 

Tiie  vessel  sailed  from  Liverpool,  upon  her  vovage,  on  the  8th  of 
August,  and  was  captured  on  the  loth  by  a  frigate  of  the  United  States 
of  America. 

The  following  is  the  statement  furnished  to  the  parties  by  the  Chief 
Justice,  of  his  direction,  and  the  questions  he  left  to  the  jury  and  their 
finding :  — 

"  I  direct  the  jur}- : 

"1.  That  the  fact  of  the  'Georgia'  having  been  a  Confederate 
war  steamer  was  a  material  fact. 

"  2.  Tiiat  that  fact  not  having  been  communicated  to  the  insurer, 
the  verdict  must  be  for  the  defendant,  unless  defendant  knew  the  fact, 
or  had  the  means  of  knowledge  of  which  he  ought  to  have  availed  him- 
self (this  point,  however,  being  subject  to  the  leave  reserved). 

"  3.  Tiiat  it  is  immaterial  that  the  defendant  may  have  previously 
been  aware  that  the  Confederate  steamer  '  Georgia'  was  at  Liverpool, 
so  that  if  he  had  remembered  it  he  would  have  known  the  vessel  pro- 
posed to  be  insured  was  the  same,  if  he  had  forgotten  his  former  knowl- 
edge :  as  the  knowledge  must  be  not  a  past  but  a  present  one. 

•'  I  leave  to  the  jury  : 

"  1.  Whether  the  defendant  had  a  present  knowledge  of  the  identity 
of  the  vessel. 

•'  2.  If  not.  whether  taking  the  previous  knowledge  of  defendant  as 
to  the  Confederate  'Georgia'  being  at  Liverpool,  and  the  particulars 


PAKT  II.,  SECT.  I.]  BATES   V.    HEWITT.  151 

disclosed  b}'  the  slip  and  memorandum  accompanying  it,  defendant  by 
the  exercise  of  ordinar}'  intelligence  and  knowledge  of  his  business, 
might  have  known  that  this  was  the  Confederate  '  Georgia.' " 

"Verdict:  Tiie  jury  are  not  satisfied  that  defendant  was  aware 
of  the  fact  that  the  '  Georgia'  proposed  for  insurance  was  the  former 
Confederate  cruiser ;  but  their  verdict  is,  that  he  had  abundant  means 
of  identifying  the  ship  at  the  time  of  underwriting  the  ship. 

"  In  answer  to  a  question  from  me,  the  jury  added  that  tlie  means  of 
knowledge  referred  to  were  to  be  found  in  the  slip  itself.  On  this  find- 
ing I  directed  the  verdict  to  be  entered  for  defendant,  subject  to  leave 
reserved." 

A  rule  was  accordingly  obtained  to  enter  a  verdict  for  the  plaintiflT, 
on  the  ground  that  on  the  finding  of  the  jury  the  plaintiff  was  entitled 
to  have  the  verdict  entered  for  him. 

A  cross  rule  was  obtained  on  behalf  of  the  defendant  for  a  new  trial 
(in  the  event  of  this  court,  or  a  court  of  appeal,  holding  that  the  find- 
ing of  the  jury  amounted  to  a  verdict  for  the  plaintiff;,  on  the  ground 
that  the  verdict  was  against  the  evidence. 

James,  Q  C,  T.  Jones,  Q.  C,  and  aSVV  G,  Ilonyman,  Q.  C,  for  the 
defendant,  showed  cause  against  the  rule  to  enter  the  verdict  for  the 
plaintiff. 

Mihcard,  Q.  C,  and  Potter,  in  support  of  the  rule. 

CocKBURN,  C.  J.^  .  .  .  I  think  what  passed  between  the  jury  and 
myself  must  be  taken  to  amount  to  a  finding  by  the  jury  in  the  affirma- 
tive of  the  question  I  put  to  them,  whether,  taking  the  previous  knowl- 
edge of  the  defendant  as  to  the  Confederate  steamer  "  Georgia"  being 
at  Liverpool,  and  the  particulars  disclosed  by  the  slip  and  memoran- 
dum, the  defendant,  by  the  exercise  of  ordinary  intelligence  and 
knowledge  of  his  business,  might  have  known  that  this  vessel  was  the 
Confederate  steamer  "  Georgia."  The  jury  did  not,  in  fact,  directly 
find  the  affirmative  or  the  negative  of  the  question,  but  they  found  that 
the  defendant  liad  abundant  means  of  identifying  the  ship  at  the  time 
of  his  underwriting  the  policy  ;  and,  inasmuch  as  the  abundant  means 
might  have  been  something  extrinsic  to  the  particulars  communicated 
by  the  plaintiff  to  tlie  defendant,  I  asked  the  jury  whether  they  meant 
bv  their  answer  to  say  that,  taking  the  previous  knowledge  and  the 
particulars  afforded  by  the  plaintiff,  the  defendant  had  the  means  of 
knowledge,  or  whether  they  meant  to  say  that,  looking  at  the  particu- 
lars, if  he  had  made  further  inquiry  he  must  have  acquired  a  knowl- 
■  edge  extrinsieally  ;  and  their  answer  amounts  to  this,  coupling  what 
was  contained  in  the  particulars  supplied  by  the  plaintiff  with  the  de- 
fendant's previous  knowledge,  he  had  abundant  means  of  identifying 
the  vessel  as  the  Confederate  steamer. 

Now  the  question  is  whether  tlie  finding  of  the  jury  entitles  the  plain- 
tiff to  the  verdict ;  and  I  am  of  opinion  that  it  does  not. 

1  After  St  itiuff  the  case.  —  Ed. 


152  BATES    V.    HEWITT.  [CHAP.  III. 

No  proposition  of  insurance  law  can  be  better  established  than  this, 
viz.,  that  the  party  proposing  the  insurance  is  bound  to  communicate 
to  the  insurer  all  matters  which  will  enable  him  to  determine  the  extent 
of  the  risk  against  which  he  undertakes  to  guarantee  the  assured.  It 
is  true,  if  matters  are  common  to  the  knowledge  of  both  parties,  such 
matters  need  not  be  communicated.  It  is  also  true  that  when  a  fact  is 
one  of  public  notoriety,  as  of  war,  or  where  it  is  one  which  is  matter  of 
inference,  and  the  materials  for  informing  the  judgment  of  the  under- 
writer are  common  to  botli,  the  party  proposing  the  insurance  is  not 
bound  to  communicate  what  he  is  fully  warranted  in  assuming  the  un- 
derwriter already  knows.  Sliort  of  these  things,  the  party  proposing 
the  insurance  is  bound  to  make  known  to  the  insurer  whatever  is  neces- 
sary and  essential  to  enable  him  to  determine  what  is  the  extent  of  the 
risk  against  which  he  undertakes  to  insure  ;  and  I  apprehend  that,  as 
to  the  matters  which  the  party  proposing  the  iusurivuce  is  bound  to 
communicate  to  the  insurer,  there  is  no  answer  to  be  made,  except  that 
the  insurer  had,  at  the  time  of  enteiing  upon  the  contract,  knowledge 
of  the  particular  fact.  I  do  not  mean  to  say  that,  if  the  insurer  choose 
to  neglect  the  information  which  he  receives,  he  can  take  advantage  of 
his  wilful  blindness  or  negligence  ;  if  he  shuts  his  eyes  to  the  light,  it 
is  his  own  fault,  —  provided  sufficient  information,  as  far  as  the  assured 
is  concerned,  has  been  placed  at  his  disposal.  If,  indeed,  tiie  insurer 
knows  the  fact,  the  omission  on  the  part  of  tlie  assured  to  communicate 
it  will  not  avail  as  a  defence  in  an  action  for  a  loss ;  not  because  the 
assured  will  have  complied  with  the  obligations  which  rested  on  him  to 
communicate  that  which  was  material,  but  because  it  will  not  lie  in  the 
mouth  of  the  underwriter  to  say  that  a  material  fact  was  not  communi- 
cated to  him  which  he  had  present  to  his  u)ind  at  the  time  he  accepted 
the  insurance;  the  law  will  not  lend  itself  to  a  defence  based  upon 
fraud;  it  will  not  allow  the  underwriter  to  say,  '^  I  have  taken  the 
premium  with  the  knowledge  of  the  particular  fact,  but  because  the 
assured  has  not  communicated  it  to  me  I  will  not  make  good  the  loss." 
Therefore,  if  the  fact  be  known  to  the  underwriter,  he  cannot  avail 
himself  of  the  circumstance  that  it  was  not  communicated  by  the  as- 
sured ;  but  putting  that  aside,  it  is  the  duty  of  the  assured  to  make 
known  to  the  insurer  whatever  is  material  with  regard  to  the  extent  of 
the  risk. 

It  is  admitted  that  a  fact  was  not  communicated  to  the  underwriter 
in  such  a  shape,  or  in  such  an  abstract  form,  as  that,  independenllv  of 
something  extrinsic  to  the  communication  itself,  it  would  afford  him 
the  necessary  information.  But  it  is  said:  "The  underwriter  had 
previous  knowledge  of  the  fact  of  the  Confederate  steamer  'Georgia' 
l)eing  at  Liverpool ;  he  also  knew  she  was  there  for  the  purpose  of 
being  dismantled  and  sold."  We  must,  however,  take  it  on  the  oath 
of  the  defendant,  and  the  finding  of  the  jury,  that  those  facts  were  not 
piesent  to  the  defendant's  mind  at  the  time  he  underwrote  the  policy. 
The  case  may  be  put  in  two  ways:  either,  that  if  the  previous  knowl- 


PART  II.,  SECT.  I.]  BATES   V.    HEWITT.  153 

edo"e  which  the  defenrlant  had  with  reference  to  the  vessel  had  been 
present  to  his  mind,  that  with  the  particulars  before  him  would  have 
brought  to  his  mind  the  fact  that  he  was  asked  to  insure  the  Confed- 
erate steamer  "  Georgia  ;  "  or  that  if  he  had  carefully  studied  the  par- 
ticulars stated  in  the  memorandurii,  those  particulars  would  have 
brought  back  to  his  mind  the  knowledge  which  had  been  previousl}' 
present  to  it,  which  for  the  moment  had  been  forgotten,  and  the  com- 
bination of  the  knowledge  thus  resuscitated  and  revived  with  the  par- 
ticulars contained  in  the  memorandum  would  have  led  him  to  the 
conclusion  that  the  vessel  offered  for  insurance  was  the  Confederate 
steamer.  But  the  facts  are  to  the  contrary  ;  the  previous  knowledge 
that  the  defendant  may  have  had  was  not  present  to  his  mind ;  and 
what  the  defendant  swore  was  that  the  particulars  did  not  bring  that 
knowledge  back  to  his  mind.  The  result  was,  as  the  jury  have  found, 
that  at  the  time  he  underwrote  the  policy  of  insurance,  the  defendant 
did  not  know  that  the  vessel  was  the  Confederate  steamer. 

I  think  that  we  should  be  sanctioning  an  encroachment  on  a  most 
important  principle,  and  one  that  is  vital  in  keeping  up  the  full  and 
perfect  faith  which  there  ought  to  be  in  contracts  of  marine  insurance, 
if  we  were  to  hokl  that  a  party  —  who  is  under  an  obligation  to  com- 
municate the  material  conditions  and  facts  which  constitute  the  basis 
of  the  contract  into  which  he  invites  another  to  enter  —  may  speculate 
as  to  what  may  or  may  not  be  in  the  mind  of  tlie  underwriter,  or  as  to, 
what  may  or  may  not  be  brought  to  his  mind  by  the  particulars  dis-; 
closed  to  him  by  the  assured,  if  those  particulars  fall  short  of  the  fact 
which  the  assured  is  bound  to  communicate.  If  we  were  to  sanction 
such  a  course,  especially  in  these  days,  when  parties  frequently  forget 
the  old  rules  of  mercantile  faith  and  honor  which  used  to  distinguish 
this  country  from  any  other,  we  should  be  lending  ourselves  to  inno- 
vations of  a  dangerous  and  monstrous  character,  which  I  think  we 
ought  not  to  do. 

The  rule  we  find  established  is  this :  that  the  person  who  proposes 
an  insurance  should  communicate  every  fact  which  he  is  not  entitled  to 
assume  to  be  in  the  knowledge  of  the  other  party ;  and  the  assured  is 
bound  to  communicate  every  fact  to  enable  the  insurer  to  ascertain  the 
extent  of  the  risk  against  which  he  undertakes  to  protect  the  assured. 
True,  if  it  can  be  established  that  tlie  insurer  did  know  the  fact,  it  will 
not  lie  in  his  mouth  to  say,  the  fact  of  which  he  had  previous  knowl- 
edge was  not  communicated  ;  if  it  can  be  established  that  the  under- 
writer had  knowledge  of  the  fact,  the  assured  would  be  protected 
against  the  fraud  of  the  underwriter  in  seeking,  under  such  circum- 
stances, to  avoid  the  insurance.  And  it  is  alsQ  well-established  law, 
that  it  is  immaterial  whether  the  omission  to  communicate  a  material 
fact  arises  from  intention,  or  indifference,  or  a  mistake,  or  from  it  not 
being  present  to  the  mind  of  the  assured  that  the  fact  was  one  which  it 
was  material  to  make  known.  I  think  that  there  is  every  reason  to 
believe  that  both  parties  imagined  that  the  fact  that  the  vessel  had 


154  BATES   V.    HEWITT.  [CHAP.  III. 

been  a  Confederate  war  steamer  was  not  a  material  circumstance,  and 
the  plaintiff  must  be  exonerated  from  any  imputation  of  liaving  wilfully 
and  intentionally  kept  back  that  material  fact ;  because  he  had  only  a 
short  time  before  bought  the  vessel  for  £15,000,  and  laid  out  £4,000  or 
£5,000  on  her,  and  it  is  extremely  improbable  that  he  would  have  ex- 
pended this  large  sum  of  money  on  her  if  he  had  supposed  she  was  a 
vessel  liable  to  seizure  by  the  United  States  Government.    He  probably 
thought  that  when  she  \vas  bought  by  a  British  subject,  and  had  a 
British  flag  flying  aboard,  she  was  safe  from  capture.     That  turned  out 
to  be  a  mistake  ;  and  it  is  now  admitted  that  the  fact  of  her  being  thus 
exposed  to  the  danger  of  seizure,  was  a  material  fact  to  be  communi- 
cated, though  the  non-communication  of  it  may  have  arisen  from  per- 
fect innocence  on  the  part  of  the  plaintiff,  and  from  his  thinking  that  it 
was  not  a  material  fact.     It  is  clear  that  there  was  an  obligation  on 
the  part  of  the  plaintiff  to  communicate  this  fact ;  it  is  clear  that  he 
did  not  communicate  it;    that  he  had  disclosed  partial  information, 
which,  by  possibility,  if  it  had  brought  back  to  the  defendant's  mind 
what  had    previously  been  known   to  him,   would    have    led    him    to 
the  knowledge  that  this  was  the  Confederate  steamer  "  Georgia;"  or 
if,  on  the  other  hand,  he  had  the  knowledge  present  in  his  mind,  he 
might  have  read  the  particulars  communicated  to  him  in  a  different 
light  from  that  in  which  he  read  them.     It  is  laid  down  as  a  general 
proposition,  that  the  party  proposing  the  insurance,  if  he  has  omitted  a 
material  fact,  can  only  enforce  the  insurance  which,  from  the  omission 
to  communicate  the  fact,  would  otherwise  be  avoided,  in  the  event  of 
the  jury  finding  by  their  verdict  that  by  means  of  what  he  did  communi- 
cate coupled  wkh  any  other  fact  that  then  might  be  present  to  the  mind 
of  the  insurer,  the  latter  knew  at  the  time  he  granted  the  insurance  the 
fact  which  it  was  the  duty  of  the  assured  to  communicate. 

Taking,  therefore,  the  finding  of  the  jury  in  the  most  favorable  sense 
for  the  plaintiff,  we  think  that  the  verdict  entered  for  the  defendant 
is  right,  and  should  not  be  disturbed,  and  that  this  rule  should  be 
discharged. 

Mei.lor,  J.  I  am  of  the  same  opinion.  I  think  the  verdict  entered 
for  the  defendant  must  stand.  It  is  of  the  greatest  importance  to  abide 
by  the  cardinal  rules  which  have  prevailed  on  this  subject  since  the 
judgment  delivered  by  Lord  Mansfield  in  the  case  of  Carter  v.  Boehm, 
3  B°n-r.  1905  ;  and  it  would  be  most  dangerous,  as  it  appears  to  me,  to 
allow  those  well-estal)lishod  rules  to  be  frittered  away  by  the  introduc- 
tion of  doubtful  e(iuivalents.  I  cannot  help  thinking  that  to  enable 
a  person  proposing  an  insurance  to  speculate  upon  the  maximum  or 
minimum  of  information  he  is  bound  to  communicate,  would  be  iutio- 
ducing  a  most  dangerous  principle  into  the  law  of  insurance.^  .  .  . 
So ''far  as  I  know,  the  judgment  of  Lord  Mansfield  has  never  been 

'   Here  folluwed  a  statement  of  the  principal  case,  and  then  quotations  from  Carter 
>:.  Boehm,  ante,  p.  125  (ITG'l).  —  Kd. 


PART  II.,  SECT.  I.]  BATES   V.    HEWITT.  155 

qualified  or  questioned.  The  onl}'  paft  of  it  upon  which  any  doubt  has 
been  raised  is.  as  to  the  admissibilit}-  in  evidence  of  the  opinions  of 
broilers,  who  are  in  the  habit  of  negotiating  policies  of  insurance,  as  to 
the  materiality  of  facts  not  communicated.^  That  judgment  rests  on  a 
sound  principle  and  has  always  been  considered  as  laying  down  the 
true  rules  which  govern  the  law  of  insurance. 

Shee,  J.  I  am  of  the  same  opinion.  The  principle  on  wliich  the 
law  of  concealment,  as  it  relates  to  marine  insurance,  rests,  is,  that  in 
bargaining  for  an  insurance,  the  person  proposing  the  insurance  sliould 
take  care  that  the  underwriter  is  as  well  informed  as  he  himself  is  of  all 
those  circumstances  which  would  increase  the  risk  which  be  offers  to 
the  underwriter.  He  is  not  bound  to  communicate  things  which  are 
well  known  to  both.  He  is  not  bound  to  communicate  facts  or  circum- 
stances which  are  within  the  ordinar}"  professional  knowledge  of  an 
underwriter.  He  is  not  bound  to  communicate  facts  relating  to  the 
general  course  of  a  particular  trade  ;  because  all  these  things  are 
supposed  to  be  within  the  knowledge  of  the  person  carrying  on  the 
business  of  insurance,  and  which,  therefore,  it  is  not  necessary  for  him 
to  be  specially  informed  of.  But  the  person  proposing  the  insurance 
is  bound  to  communicate  to  the  person  whom  he  asks  to  undertake  the 
insurance  everything  within  his  knowledge,  which  is  of  a  nature  to 
increase  the  risk  wliich  the  underwriter  is  asked  to  undertake. 

In  this  case,  there  was  a  fact  esi)ecially  within  the  knowledge  of 
plaintiff;  viz.,  that  this  vessel  had  been  a  Confederate  cruiser.  The 
plaintiff  did  not  know  that  that  fact  was  of  a  nature  to  increase  the 
risk  :  it  was,  however,  of  a  nature  to  increase  the  risk,  because  the 
vessel  was,  frojn  having  been  a  Confederate  cruiser,  liable  to  seizure 
b}-  the  government  of  the  United  States  ;  that  was  a  fact  material  to 
the  risk,  which  the  person  proposing  the  insurance  knew,  and  which 
the  person  to  whom  the  insurance  was  proposed  did  not  know.  The 
parties,  therefore,  while  they  were  considering  what  one  would  be 
willing  to  give  for  the  protection  which  he  desired,  and  what  the  other 
would  be  willing  to  take  for  giving  him  that  protection,  were  not  upon 
equal  terms  ;  they  had  not  an  equal  amount  of  knowledge  ;  and  the 
reason  that  they  had  not  an  equal  amount  of  knowledge  was,  that  the 
plaintiff  kept  back  a  material  fact  which  he  well  knew. 

It  was  argued  V)y  the  plaintiff's  counsel,  that  it  is  enough  if  the  person 
to  whom  the  insurance  was  proposed  had  the  means  of  knowing  the 
material  fact.  No  authorit}'  was  cited  for  that  proposition.  No  doubt 
there  are  cases  in  which  it  has  been  held,  where  the  underwriter  has 
the  means,  b}-  merely  looking  at  lists  which  are  hung  up  in  the  room 
where  the  insurance  is  effected,  of  ascertaining  a  particular  fact,  it  is 
not  necessar}'  that  it  should  be  communicated.  In  Friere  v.  Wood- 
house,  Holt,  N.  P.  572,  it  was  ruled  that  information  contained  in 
Lloyd's  lists  need  not  be  communicated  to  the  underwriter,  as  by  fair 

1  See  the  notes  to  Carter  v.  Boehm,  1  Sm.  L.  C.  4th  ed.  422.  —  Rep. 


156  PROUDFOOT   V.   MONTEIIORE.  [CHAF.  III. 

inquiry  and  due  diligence  in  his  b\isiness  he  could  have  ascertained  the 
facts  tlie}-  contained.  But  the  facts  of  the  present  case  are  very  differ- 
ent. The  underwriter  had  no  means  of  presently  knowing  the  fact  not 
communicated  to  hira  ;  he  might  by  possibilit}',  if  he  had  instituted 
inquiries,  have  found  it  out :  but  that  he  is  not  obliged  to  do.  The 
person  who  proposed  the  insurance  knew  the  fact,  and  it  was  a  fact 
material  to  the  estimate  of  the  risk,  and  he  ought  to  have  communi- 
cated it.  For  these  reasons,  it  appears  to  me  that  the  plaintiff  was 
guilty  of  concealment,  and  the  verdict  ought  not  to  be  disturbed. 

Rule  discharged. 


PROUDFOOT  V.  MONTEFIORE. 
Queen's  Bench,  1867.     L.  R.  2  Q.  B.  511. 

Declaration  against  the  defendant  as  chairman  of  the  Alliance 
Marine  Assurance  Company,  claiming  damages  from  the  company  in 
respect  of  the  company  not  having  delivered  to  the  plaintiff  a  policy 
of  insurance  on  certain  goods  shipped  on  board  a  ship  called  the  "  Anne 
Duncan,"  pursuant  to  an  agreement  alleged  by  the  plaintiff  to  have 
been  entered  into  between  the  plaintiff  and  the  company,  and  in  re- 
spect of  the  company  not  having  paid  the  sum  of  money  which  the 
plaintiff  alleged  would  have  become  due  on  such  policy  if  the  same  had 
been  so  delivered. 

The  third  plea  stated,  in  substance,  that  the  alleged  agreement  was 
obtained  from  the  company  by  the  wrongful  and  improper  concealment 
bv  the  plaintiff  from  the  company  of  certain  facts  and  information 
w-liich  the  plaintiff  knew  as  to  the  ship  having  run  ashore  on  or  about 
the  23d  of  January,  1861,  which  matters  so  concealed  were  unknown  to 
the  company ;  that  the  matters  which  were  so  wrongfully  and  improp- 
erly concealed  were  at  the  time  of  the  making  of  the  promise  material 
to  be  known  to  the  company,  and  material  to  the  risks  against  which 
the  company  made  the  promise  to  indemnify  the  plaintiff. 

The  cause  was  tried  at  the  Liverpool  summer  assizes,  1861,  before 
Ckompton,  J.,  when  a  verdict  was  found  for  the  plaintiff.  On  the  27th 
of  June,  1862,  a  rule  for  a  new  trial,  obtained  at  the  instance  of  ih% 
defendant,  was  made  absolute.  The  cause  was  tried  a  second  time  at 
the  Liverpool  summer  assizes,  1863,  l)ofore  Mellou,  J.  At  the  second 
trial  it  was  agreed  that  the  case  should  be  left  to  the  jury  on  the  ques- 
tion, whether  or  not  the  plaintiff,  before  the  instructions  were  given 
for  tiie  insurance  and  before  it  was  effected,  had  actual  knowledge  of 
the  ship  or  cargo  having  been  lost,  or  of  any  misfortune  having  hap- 
pened to,  or  of  anything  being  amiss  with,  the  ship  or  cargo,  or  of  tlie 
ship  or  cargo  having  sustained  any  injury.  The  jury  found  for  the 
plaintiff.     A  judge's  order  was  made,  before  the  jury  returned  their 


PAKT  II.,  SECT.  I.]        PROUDFOOT   V.   MONTEFIORE.  157 

verdict,  that,  in  tlie  event  of  tlie  juiy  finding  for  the  plaintiff,  the  ver- 
dict should  be  entered  for  the  sum  of  £1,200,  plus  interest  to  the  da}' 
of  signing  judgment,  less  the  amount  of  the  premium  and  salvage,  and 
subject  to  a  special  case  to  be  stated  from  the  notes  taken  by  Cromp- 
TON,  J.,  with  the  addition  of  the  evidence  of  Rees  taken  b}'  Mellor,  J., 
and  the  letters  therein  referred  to.  The  court  were  to  draw  any  infer- 
ences of  fact  they  thought  proper. 

The  facts,  so  far  as  they  are  material,  sufficiently  appear  from  the 
judgment  of  the  court. 

Jones^  Q.  C.  {^Temple^  Q.  C,  with  him),  for  the  plaintiff. 

Cohen^  for  the  defendant. 

Cu7\  ado.  vult. 

CocKBURN,  C.  J.^  .  .  .  The  agreement  was  for  insurance  on  a  cargo 
of  madder,  lost  or  not  lost,  shipped  at  Smyrna,  on  a  voyage  from 
Smyrna  to  Liverpool,  on  board  the  ship  "Anne  Duncan,"  for  and  on 
account  of  the  plaintiff,  and  consigned  to  him  by  one  T.  B.  Rees,  of 
Smyrna. 

The  plaintiff,  a  merchant  at  Manchester  and  Liverpool,  dealt  largely 
in  madders  in  the  Smyrna  market,  and  Rees,  being  resident  at  Smyrna, 
was  employed  by  him  at  a  salary  of  £800  a  year  to  make  purchases  of 
madder  on  his  account,  and  to  ship  and  consign  the  cargoes  to  him. 
The  cargo  in  question  was  purchased  and  shipped  by  Rees  in  the  course 
of  his  employment  as  such  agent.  The  ship,  with  the  cargo  on  board, 
sailed  from  Smyrna  on  the  21st  of  January,  1861,  but  again  brought 
up  in  the  Gulf  of  Smyrna  on  the  same  day.  She  set  sail  again  on  the 
23d,  but  was  stranded  in  the  course  of  that  day,  and  became  a  wreck. 
The  cargo  became  a  total  loss.  Intelligence  of  the  stranding  of  the 
ship  was  communicated  to  Rees  on  the  morning  of  the  24th.  On  the 
26th,  which  was  the  first  post  day,  he  communicated  by  letter  to 
the  plaintiff  the  loss  of  the  vessel ;  and  the  fact  that  though  the  cargo 
had  been  got  out,  yet,  as  the  vessel  had  had  twelve  feet  of  water  in  the 
hold,  the  greater  part  of  the  cargo  would  be  seriously  damaged.  Hav- 
ing communicated  this  information,  the  letter  proceeds  thus  :  "I  hope 
to  goodness  you  are  fully  insured.  On  the  12th  instant  I  forwarded 
you  invoice  and  weights  of  the  shipment  by  her,  which  gave  you  plenty 
of  time  to  effect  insurance.  Lloyd's  agents  have  telegraphed  the  dis- 
aster, which  will  reach  London  before  my  letter  of  the  19th  instant, 
enclosing  bill  of  lading.^  I  did  not  dare  telegraph  to  you,  for  when 
once  you  had  the  intelligence  in  hand  you  were  prevented  from  insur- 
ing."' On  the  31st  of  January  the  plaintiff,  after  receipt  of  the  letters 
from  Rees  of  the  12th  and  19th  of  January,  but  prior  to  the  receipt  of 
that  of  the  26th,  gave  instructions  to  effect  the  policy,  and  the  slip  was 
signed  on  the  same  day  by  the  company's  agent  at  Manchester. 

There  was,  therefore,  no  fraud  or  undue  concealment  by  the  plaintiff 

1  After  describing  the  nature  of  the  action.  —  Ed. 

2  The  telegram  was  received,  and  the  loss  published  in  Lloyd's  list  of  the  29th  of 
January  ;  but  neither  the  plaintiff  nor  the  company's  agent  was  aware  of  it.  —  Rep 


158  PROUDFOOT   V.    MONTEFIORE.  [CHAP.  III. 

of  a  material  fact  within  his  personal  knowledge.  On  the  other  hand, 
it  is  clear  that  the  fact  of  the  loss  of  the  vessel  and  damage  to  the 
cargo  might  have  been  communicated  to  him  by  Rees  b}-  means  of  the 
telegraph,  but  was  purposely  kept  back  by  the  agent  for  the  fraudulent 
purpose  of  enabling  the  plaintiff  to  insure.  We  think  it  clear,  looking 
to  the  position  of  Rees  as  agent  to  purchase  and  ship  the  cargo  for  the 
plaintiff,  that  it  was  his  dut}-  to  communicate  to  his  principal  the  dis- 
aster wliich  had  happened  to  the  cargo  ;  and,  looking  to  tlie  now  gen- 
eral use  of  the  electric  telegraph,  in  matters  of  mercantile  interest, 
between  agents  and  their  employers,  we  think  it  was  the  duty  of  the 
agent  to  communicate  with  his  employers  by  this  speedier  means  of 
communication.  From  the  letter  of  the  agent  it  appears  that,  but  for 
the  fraudulent  motive  for  his  silence,  he  would,  in  the  ordinary-  course 
of  his  duty,  have  conveyed  the  intelligence  of  the  loss  to  his  employer, 
and  would  have  availed  himself  of  the  telegraph  for  that  purpose. 

Upon  the  above  facts,  the  question  arises  whether  the  plaintiff,  the 
assured,  is  so  far  affected  by  the  knowledge  of  his  agent  of  the  loss  of 
the  vessel  and  damage  to  the  cargo  as  that  the  fraud  thus  committed 
on  the  underwriter,  through  the  intentional  concealment  of  the  agent, 
though  innocently  committed  so  far  as  the  plaintiff  is  concerned,  will 
afford  a  defence  to  the  underwriter  on  a  claim  to  enforce  the  polic}-. 

Two  cases  decided  in  this  court,  one  in  the  time  of  Lord  Mansfield, 
the  otiier  in  that  of  Lord  EUenborough,  establish  tlie  affirmative  of  this 
proposition.  In  the  case  of  Fitzherbert  v.  Matlier,  1  T.  R.  12,  16, 
where  an  agent  of  the  assured  was  employed  to  ship  a  cargo  of  oats, 
and  to  communicate  the  shipment  to  another  agent  who  was  emplo3'ed 
to  effect  an  assurance,  an  omission  on  the  part  of  the  former,  who  had 
written  to  announce  the  sailing  of  the  ship,  on  the  ship  iiaving  after- 
wards got  on  shore,  to  communicate  that  fact,  which  he  might  have 
done  by  the  same  post,  was  held  fatal  to  the  insurance.  Ashurst,  J., 
observes  :  "  On  general  principles  of  policy,  the  act  of  the  agent  ought 
to  bind  the  principal ;  l)ecause  it  must  be  taken  for  granted  that  the 
principal  knows  whatever  the  agent  knows.  And  there  is  no  hardship 
on  the  plaintiff;  for  if  the  fact  had  been  known,  the  policy  could  not 
have  been  effected."  Duller,  J.,  says:  "Though  the  plaintiff  be  inno- 
cent, yet  if  he  build  Iiis  information  on  that  of  his  agent,  and  his  agent 
be  guilty  of  a  misrepresentation,  the  principal  must  suffer.  It  is  the 
common  question  every  day  at  Guildhall,  when  one  of  two  innocent 
persons  must  suffer  by  the  fraud  or  negligence  of  a  third,  which  of  the 
two  gave  credit.  Here  it  appears  tliat  the  plaintiff  trusted  Thomas 
(the  agent),  and  he  must  therefore  take  tiie  consequences." 

In  the  case  of  Gladstone  v.  King,  1  M.  &  S.  35,  38,  which  was  an 
action  on  a  pollc}'  on  a  ship,  "  lost  or  not  lost,"  the  master  had  omitted 
to  communicate,  when  writing  to  his  owners,  the  fact  of  the  ship  hav- 
ing been  driven  on  a  rock,  —  a  fact  as  to  which,  on  arriving  at  the  port 
of  discharge,  he  made  a  protest,  detailing  the  accident,  and  stiting  that 
the  shi[)'s  bottom  must  have  been  chafed  ;  and  the  owners,  in  ignorance 


TART  II.,  SECT.  I.]        PROUDFOOT   V.    MONTEFIOEE.  159 

of  the  accident,  had  effected  an  insurance.  On  these  facts  it  was  held 
that  the  captain  was  bound  to  communicate  the  fact,  and,  for  want  of 
such  communication,  the  antecedent  damage  was  an  implied  exception 
from  the  insurance,  and  the  plaintiffs  could  not  recover  the  loss  arising 
from  the  repairs  rendered  necessary  by  the  accident.  "  If,"  says  Lord 
Elleul)orough,  "  the  captain  might  be  permitted  to  wink  at  these  cir- 
cumstances without  hazard  to  the  owners,  the  latter  would  in  all  such 
cases  instruct  their  captain  to  remain  silent ;  by  which  means  the  un- 
derwriter at  the  time  of  subscribing  the  policy  would  incur  a  certaint}' 
of  being  liable  for  an  antecedent  average  loss.  To  pi'event  such  a  con- 
sequence, and  considering  that  what  is  known  to  the  agent  is  impliedly 
known  to  the  principal,  and  that  the  captain  knew,  and  might  have 
actually  communicated  to  the  plaintiffs  the  cause  of  damage,  so  as  to 
Lave  apprised  them  of  it  before  the  time  of  effecting  the  policy,  I  think 
that  no  mischief  will  ensue  from  holding  in  this  case  that  the  antece- 
dent damage  was  an  implied  exception  out  of  the  policy.  If  the  prin- 
ciple be  new,  it  is  consistent  with  justice  and  convenience ;  and  there 
being  no  fraud  imputed  to  the  captain  in  the  concealment  will  not  alter 
the  case." 

An  eminent  authority,  the  late  Mr.  Justice  Story,  has,  however,  de- 
clined to  be  bound  by  these  decisions.  In  a  case  (Ruggles  v.  General 
Interest  Insurance  Company,  4  Mason's  Rop.  74)  tried  before  him  on  a 
policy  of  insurance  effected  after  a  total  loss,  where  tlie  master  had 
omitted  to  give  intelligence  of  the  loss  to  his  owner,  with  the  fraudulent 
design  of  enabling  him  to  make  an  insurance,  and  the  insurance  had 
been  effected  by  the  owner  in  ignorance  of  the  loss,  that  learned  judge 
held  that,  as  the  owner  at  the  time  of  procuring  the  insurance  had  no 
knowledge  of  the  loss,  but  acted  with  an  entire  good  faith,  he  was  not 
precluded  from  recovering,  and  that  the  policy  was  not  rendered  void 
by  the  omission  of  the  master  to  communicate  intelligence  of  the  loss, 
although  such  omission  was  wilful  and  fraudulent.  The  case  being 
taken  to  a  court  of  error  (12  Wheaton,  408),  the  latter  upheld  the  de- 
cision ;  not,  indeed,  on  the  grounds  taken  by  Mr.  Justice  Story,  but  on 
the  very  unsatisfactory,  and,  as  we  think,  untenable  ground,  that  by 
the  total  loss  of  the  vessel  the  master  had  wholly  ceased  to  be  the  agent 
of  the  owner,  and  had  become  the  agent  of  the  underwriters.  From  the 
language  of  the  judgment,  it  may  be  inferred  that  if  the  court  had  con- 
sidered that  the  relation  of  the  master  to  his  owners  had  not  been  inter- 
rupted by  the  loss  of  the  vessel,  they  would  not  have  upheld  tiie  decision 
appealed  from.  The  ruling  of  Mr.  Justice  Story  has  been  discussed  by 
Mr.  Duer  in  his  admirable  work  on  insurance,  vol.  ii.  p.  418,  and  we 
think  the  reasoning  of  the  learned  writer  fully  establishes  his  conclusion 
as  to  the  ruling  having  been  erroneous.  Notwithstanding  the  dissent 
of  so  eminent  a  jurist  as  Mr.  Justice  Story,  we  are  of  opinion  that  the 
cases  of  Fitzherbert  v.  Mather  and  Gladstone  v.  King  were  well  decided  ; 
and  that  if  an  agent,  whose  duty  it  is  in  the  ordinnry  course  of  business 
to  cjmraunicate  information  to  his  principal  as  to  the  state  of  a  ship 


IQQ  PROUDFOOT   V.    MONTEFIORE.  [CHAP.  III. 

aud  cargo,  omits  to  discharge  such  duty,  and  the  owner,  in  the  absence 
of  information  as  to  any  fact  material  to  be  communicated  to  the  under- 
writer, effects  an  insurance,  such  insurance  will  be  void,  on  the  ground 
of  concealment  or  misrepresentation.  The  insurer  is  entitled  to  assume, 
as  the  basis  of  the  contract  between  him  and  the  assured,  that  the  latter 
will  communicate  to  him  every  material  fact  of  which  the  assured  has, 
or  in  the  ordinary  course  of  business  ought  to  have,  knowledge  ;  and 
that  the  latter  will  take  the  necessary  measures,  by  the  employment  of 
competent  and  honest  agents,  to  obtain,  through  the  ordinary  channels 
of  intelligence  in  use  in  the  mercantile  world,  all  due  information  as  to 
the  subject-matter  of  the  insurance.  This  condition  is  not  complied 
with  where,  by  the  fraud  or  negligence  of  the  agent,  the  party  proposing 
the  insurance  is  kept  in  ignorance  of  a  material  fact  which  ought  to 
have  been  made  known  to  the  underwriter,  and  through  such  ignorance 
fails  to  disclose  it. 

It  has  been  said,  indeed,  that  a  party  desiring  to  insure  is  entitled, 
on  paying  a  corresponding  premium,  to  insure  on  the  terras  of  receiving 
compensation  in  the  event  of  the  subject-matter  of  the  insurance  being 
lost  at  the  time  of  the  insurance,  and  that  he  ought  not  to  be  deprived 
of  the  advantage,  which  he  has  paid  to  secure,  by  the  misconduct  of  his 
agent.  But  to  this  there  are  two  answers:  First,  that  as  we  have 
already  pointed  out,  the  implied  condition  on  which  the  underwriter 
undertakes  to  insure  —  not  only  that  every  material  fact  which  is,  but 
also  that  every  fact  which  ought  to  be,  in  the  knowledge  of  the  assured 
shall  be  made  known  to  him  — is  not  fulfilled;  secondly,  as  was  said 
by  the  court  in  Fitzherbert  v.  Mather,  where  a  loss  must  fall  on  one  of 
two  innocent  parties  through  the  fraud  or  negligence  ^a  third,  it  ought 
to  be  borne  by  the  party  by  whom  the  person  guilty  of  t^he  fraud  or 
negligence  has  been  trusted  or  employed.  » 

By  thus  holding,  we  shall  prevent  the  tendency  to  fraudulent  con- 
cealment on  the  part  of  masters  of  vessels  and  agents  at  a  distance,  in 
matters  on  which  they  ought  to  communicate  information  to  their  prin- 
cipals, as  also  any  tendency  on  the  part  of  principals  to  encourage  their 
servants  and  agents  so  to  act.  For  these  reasons  our  judgment  must 
be  for  the  defendant.  Judgment  for  the  defendant.^ 

1  Compare  Stribley  v.  Imperial  Marine  lus.  Co.,  1  Q.  B.  D.  507  (1876).  — Ed. 


PART  II.,  SECT.  I.]      BLACKBURN,   LOW,    AND    CO.    V.   VIGORS.  161 


BLACKBURN,  LOW,  &  CO.,  Appellants,  v.  VIGORS,  Respondekt. 
House  of  Lords,  1887.     12  App.  Cas.  531. 

Appeal  from  the  Court  of  Appeal. 

The  facts  are  stated  in  the  judgments  of  Lord  Esher,  M.  R.,  and 
LiNDLEY,  L.  J.,  17  Q.  B.  D.  553.^  The  following  outline  will  suffice  for 
this  report. 

The  appellants  having  brought  an  action  against  the  respondent  upon 
a  policy  of  re-insurance  subscribed  by  hitn  for  £50,  claiming  for  a  total 
loss  b}'  perils  of  the  sea,  the  substantial  defence  was  that  the  defendant 
was  induced  to  subscribe  the  policy  by  the  wrongful  concealment  by  the 
plaintiffs  and  their  agents  of  certain  material  facts  known  to  the  plain- 
tiffs or  their  agents  and  unknown  to  the  defendant. 

At  the  trial  before  Day,  J.,  and  a  special  jury,  in  July,  1885,  the 
following  facts  were  proved  or  admitted. 

The  plaintiffs,  underwriters  and  insurance  brokers  at  Glasgow,  had 
underwritten  the  steamship  "  State  of  Florida"  for  £1.500,  the  policy 
having  been  effected  by  the  usual  brokers  for  the  ship.  Rose,  Murison, 
&  Thomson,  who  were  underwriters  and  insurance  brokers  in  Glasgow. 
The  ship  had  left  New  rork  on  the  11th  of  April,  1884,  bound  for 
Glasgow,  where  she  was  due  about  the  24th  or  25th.  On  the  30th  the 
plaintiffs  tried  to  re  insure  through  their  London  brokers,  Roxburgh, 
Currie,  and  Co.,  but  the  terras  asked  were  higher  than  the  plaintiffs 
would  give.  On  the  next  day,  May  1st,  the  plaintiffs  asked  Rose, 
Murison,  &  Thomson  to  effect  a  re-insurance  for  £1,500  at  fifteen 
guineas  through  Rose,  Thomson.  Young,  &  Co.,  the  London  agents  of 
Rose,  Murison,  &  Thomson.  The  latter  telegraphed  accordingly  to 
Rose,  Thomson,  Young,  &  Co.  After  the  telegram,  and  before  any 
answer  came,  Murison,  a  member  of  the  firm  of 'Rose,  Murison,  & 
Thomson,  became  aware  of  certain  facts  concerning  the  ship  which 
were  material  to  the  risk,  but  these  facts  were  never  communicated 
to  the  plaintiffs  or  to  Roxburgh,  Currie,  &  Co,  After  learning  these 
facts,  Rose,  Murison,  &  Thomson  received  tlie  following  answer  to 
their  telegram:  ^'Twenty  guineas  paying  freely,  and  market  very 
stiff;  likely  to  advance  before  day  is  out."  This  answer  they  showed 
to  the  plaintiffs,  and  then  sent  in  the  plaintiffs'  names  the  following 
telegram  to  Rose,  Thomson,  Young,  *&  Co.  :  "  Pay  20  guineas."  The 
answer  to  this  was   sent   direct  to  the   plaintiffs,  who   ultimately  re- 

1^  It  there  appears  that  the  policy  of  re-insurance  wa.s  on  the  ship,  "  lost  or  not  lost," 
that  all  parties  knew  the  ship  was  overdue,  that  "a  Mr.  Murray  gave  Murison  impor- 
tant information  hrought  to  Glasgow  by  another  ship,  .  ,  .  calculated  to  excite  sus»- 
picion  of  the  loss  of  the  '  Florida '  some  days  previously,"  and  that  the  ship  was  in  fact 
already  lost. — Ed. 

11 


162  BLACKBURN,   LOW,   AND   CO.   V.   VIGORS,  [CHAP.  IIL 

insured  for  £800  at  25  guineas  through  Rose,  Thomson,  Young,  &  Co. 
This  was  not  the  policy  sued  on. 

On  the  2d  of  Ma}-  the  plaintiffs,  through  Roxburgh,  Currie,  &  Co., 
effected  a  policy  of  re-insurance  for  £700  at  30  guineas,  lost  or  not 
lost.  This  was  the  polic}-  sued  on.  The  ship  had  in  fact  been  lost 
some  days  before  the  plaintiffs  tried  to  re-insure.  It  was  admitted 
that  the  plaintiffs  and  Roxl)urgh,  Currie,  &  Co.  acted  in  good  faith 
throughout. 

The  jury  having  been  dischai'ged  b}'  consent,  Day,  J.,  gave  judgment 
for  tlie  plaintiffs  for  the  amount  claimed. 

The  Court  of  Appeal  (Lindley  and  Lopes,  L.  JJ.,  Lord  Esher, 
M.  R.,  dissenting)  reversed  this  decision,  and  gave  judgment  for  the 
defendant. 

Against  this  judgment  the  plaintiffs  appealed. 

Sir  C.  Russell,  Q.  C. ,  and  Ilollams^  for  the  appellants. 

Sir  R.  Webster,  A.  G.,  and  J.  G  or  ell  Barnes,  for  the  respondent. 

The  House  took  time  for  consideration. 

Lord  Halsbury,  L.  C.  My  Lords,  in  this  case  the  plaintiffs  sue 
upon  a  policy  of  marine  insirrance,  and  the  only  question  arises  upon 
tlie  statement  of  defence  that  tlie  defendant  was  induced  to  enter  into 
the  contract  by  concealment  of  material  facts  b}-  the  plaintiffs  and  their 
agents. 

The  facts  are  not  in  dispute.  Neither  the  plaintiffs  nor  the  agent 
through  whom  the  polic}-  was  effected  had  an}'  knowledge  of  the  mate- 
rial fact  the  concealment  or  non-disclosure  of  which  is  relied  on  as 
vitiating  the  policy  ;  but  an  agent,  who  did  not  effect  the  policy,  at  an 
earlier  period  received  information  admitted  to  be  material,  while  he 
was  acting  as  agent  to  effect  an  insurance  for  the  plaintiffs,  which 
he  did  not  communicate. 

Day,  J.,  before  whom  the  case  was  decided  without  a  jur}',  held  that 
this  did  not  affect  the  validity  of  the  polic}'.  A  majority  of  the  Court 
of  Appeal  reversed  Day,  J.'s  judgment,  and  held  that  the  non-disclosure 
•was  fatal  to  ttie  plaintiffs'  claim. 

So  far  as  I  can  understand  the  judgment  of  the  Court  of  Appeal,  it 
is  intended  to  la}'  down  a  principle  that  would  not,  I  think,  be  con- 
tested ;  but  it  applies  that  principle  to  a  state  of  facts  to  which  I  think 
it  is  inapplicable.  Lindley,  L.  J.,  says,  I  think  correctly:  "It  is  a 
condition  of  the  contract  that  there  is  no  misrepresentation  or  conceal- 
ment, either  by  the  assured  or  by  any  one  who  ought,  as  a  matter  of 
business  and  fair  dealing,  to  have  stated  or  disclosed  the  facts  to  him 
or  to  the  underwriter  for  him."  17  Q.  B.  D.  578.  And  Lopes,  L.  J., 
after  stating  the  principle  upon  which  the  knowledge  of  the  agent  is  the 
knowledge  of  the  principal,  explains  it  to  mean  that  the  principal  is  to 
be  as  responsible  for  any  knowledge  of  a  material  fact  acquired  by  his 
agent  employed  to  obtain  the  insurance  as  if  he  had  acquired  it  himself. 
17  Q.  B.  D.  579.  To  the  propositions  thus  stated  I  think  no  objection 
could  be  made  ;  but  it  is  obvious  that  the  words  in  the  one  judgment, 


PAKT  II.,  SECT.  I.]       BLACKBURN,    LOW,    AND    CO.    V.    VIGORS.  163 

"agent  emplo3-ecl  to  obtain  the  insurance,"'  or  in  the  other  judgment,  the 
words,  "  the  underwriter/'  import  that  the  particular  contract  obtained 
was,  in  the  language  of  tlie  statement  of  defence,  a  policy  which  the  de- 
fendant was  induced  to  subscribe  by  the  wrongful  concealment  by  the 
plaintiffs  and  their  agents  of  certain  facts  then  known  to  the  plaintiffs 
or  their  agents,  and  unknown  to  the  defendant,  and  which  were  mate- 
rial to  the  risk. 

I  doubt  very  much  whether  the  solution  of  the  controversy  as  to  what 
is  the  true  principle  upon  which  the  contract  of  insiu'ance  is  avoided  by 
concealment  or  misrepresentation,  whether  b}'  considering  it  fraudulent 
or  as  an  implied  term  of  the  contract,  helps  one  very  much  in  deciding 
the  present  case.  If  one  were  to  adopt  in  terms  the  language  of  Lord' 
Ellenborough  in  Gladstone  r.  King,  1  M.  &  S.  35,  I  do  not  think  it 
could  justify  the  judgment  of  the  majcjrity  of  the  Court  of  Appeal.  In 
that  case  a  policy  lost  or  not  lost  was  effected  on  the  25th  of  October. 
On  the  previous  25th  of  July  the  ship  had  run  upon  a  rock.  On  the  5tli 
of  August  the  captain  wrote  to  his  owners,  the  plaintiffs  ;  they  received 
bis  letter  on  the  5th  of  October.  Whatever  may  be  said  of  the  logic  of 
that  case,  which  acquitted  the  captain  of  all  ill  intention,  but  decided 
upon  the  ground  that  otherwise  owners  might  direct  their  captains  to 
remain  silent,  and  which  upon  a  policy  lost  or  not  lost  assumes  any 
antecedent  damage  to  have  been  an  implied  exception  out  of  the  polic}-, 
it  does  not  proceed  upon  any  such  ground  as  the  Court  of  Appeal  ap- 
pear to  rely  on  here.  Lord  Ellenborough  says:  "No  mischief  will 
ensue"  (a  somewhat  strange  mode  of  enunciating  a  proposition  of  law) 
"  from  holding  in  this  case  that  the  antecedent  damage  was  an  implied 
exception  out  of  the  policy.  If  the  principle  be  new,  it  is  consistent 
with  justice  and  convenience."  Unfortunately,  his  Lordship  does  not 
state  what  is  the  principle  which  he  apparently  admits  to  be  new.  I 
can  quite  understand  that  when  a  man  comes  for  an  insurance  upon  his 
ship  he  may  be  expected  to  know  both  the  then  condition  and  the  history 
of  the  ship  he  seeks  to  insure.  If  he  takes  means  not  to  know,  so  as  to 
be  able  to  make  contracts  of  insurance  without  the  responsiliility  of 
knowledge,  this  is  fraud.  But  even  without  fraud,  such  as  I  tiiink  this 
would  be,  the  owner  of  the  ship  cannot  escape  the  necessity  of  being 
acquainted  with  his  ship  and  its  history  because  he  has  committed  to 
others  —  his  captain,  or  his  general  agent  for  the  management  of  his 
shipping  business  —  the  knowledge  which  the  underwriter  has  a  right 
to  assume  the  owner  possesses  when  he  comes  to  insure  his  ship. 

With  respect  to  agency  so  limited,  I  am  not  disposed  to  differ  with  tlic 
proposition  laid  down  by  Cockburn,  C.  J.,  in  Proudfoot  v.  Montefioie, 
Law  Rep.  2  Q.  B.  511,  521.  A  part  of  the  proposition  is  "  that  the  in- 
surer is  entitled  to  assume,  as  the  basis  of  the  contract  between  him 
and  the  assured,  that  the  latter  will  communicate  to  him  every  material 
fact  of  which  the  assured  has,  or  in  the  ordinary  course  of  business 
ought  to  have,  knowledge."  I  think  these  last  are  the  cardinal  words, 
and  cnnlemplate  such  an  agency  as  I  have  described  above.     I  am  un 


164  BLACKBURN,   LOW,    AND    CO.    V.   VIGORS.  [cilA?.  III. 

able,  liowever,  to  see  that  the  present  case  is  governed  b\'  any  such 
principle. 

A  broker  is  employed  to  effect  a  particular  insurance.  While  so  em- 
ployed he  receives  material  information  ;  he  does  not  effect  the  insurance, 
and  he  does  not  communicate  tlie  information.  How  is  it  possible  to 
suggest  that  the  insurer  could  rely  upon  the  communication  to  the  prin- 
cipal of  every  piece  of  information  acquired  by  any  agent  through  whom 
the  assured  has  unsuccessfully  endeavored  to  procure  an  insurance?  I 
am  unable  to  accept  the  criticism  by  the  Master  of  the  Rolls  upon  the 
proposition  that  the  knowledge  of  the  agent  is  the  knowledge  of  the 
principal.  AVIien  a  person  is  the  agent  to  know,  his  knowledge  does 
bind  the  principal.  But  in  this  case  I  tiiink  the  agency  of  the  broker 
had  ceased  before  the  policy  sued  upon  was  effected.  The  principal  him- 
self and  the  broker  through  whom  the  policy  sued  on  was  effected  were 
both  admitted  to  be  unacquainted  with  any  material  fact  which  was  not 
disclosed.  I  cannot  but  think  that  the  somewliat  vague  use  of  the 
word  "  agent"  leads  to  confusion.  Some  agents  so  far  represent  the 
principal  that  in  all  respects  their  acts  and  intentions  and  their  knowl- 
edge may  truly  be  said  to  be  the  acts,  intentions,  and  knowledge  of 
the  principal.  Other  agents  may  have  so  limited  and  narrow  an  author- 
ity, both  in  fact  and  in  the  common  understanding  of  their  form  of  em- 
ployment, that  it  would  be  quite  inaccurate  to  say  that  such  an  agent's 
knowledge  or  intentions  are  the  knowledge  or  intentions  of  his  prin- 
cipal ;  and  whether  his  acts  are  the  acts  of  his  principal  depends  upon 
the  specific  authority  he  has  received. 

In  Fitzherbert  v.  Mather,  1  T.  R.  12,  the  consignor  and  shipper  of 
the  goods  insured  was  the  agent  whose  knowledge  was  in  question. 
In  Gladstone  v.  King,  1  M.  &  S.  35,  tlife  master  of  the  ship  was  the 
agent :  and  in  Proudfoot  v.  Montefiore,  Law  Rep.  2  Q.  B.  511,  the  agent 
was  the  accepted  representative  of  the  principal,  in  effect  trading  and 
acting  for  him  in  Smyrna,  the  owner  himself  carrying  on  business  in 
INfauchester.  And  though  the  decision  in  Ruggles  v.  General  Insurance 
Co.,  12  Wheatou,  408,  before  the  Supreme  Court  of  the  United  States, 
may  not  be  very  satisfactory  in  what  they  held  under  the  circumstances 
of  that  case  to  be  the  relation  Iietween  the  captain  of  the  ship  and  his 
owners,  the  principle  upon  whicli  that  case  svas  decided  was  the  sup- 
posed termination  of  the  agencT  between  them. 

Where  the  employment  of  the  agent  is  such  that  in  respect  of  tho 
particular  matter  in  question  he  really  does  represent  the  principal,  the 
formula  that  the  knowledge  of  the  agent  is  his  knowledge  is,  I  think, 
correct;  but  it  is  obvious  that  that  formula  can  only  be  applied  when 
the  words  "  agent"  and  "  principal"  are  limited  in  their  application. 

To  lay  down  as  an  abstract  proposition  of  law  that  every  agent,  no 
matter  how  limited  the  scope  of  his  agency,  would  bind  every  principal 
even  by  his  acts,  is  obviousl}'  and  upon  the  face  of  it  absurd  ;  and 
yet  it  is  by  the  fallacious  use  of  the  word  "agent"  that  plausibility 
h  given  to  reasoning  which  requires  the  assumption  of  some  such 
proposition. 


PAKT  II.,  SECT.  I.]       BLACKBURN,    LOW,    AND    CO.    V.    VIGORS.  165 

"What,  then,  is  the  position  of  the  broker  in  this  ease,  whoso 
knowledge,  though  not  communicated,  is  held  to  be  that  of  tlie 
principal? 

He  certainly  is  not  emplojed  to  acquire  such  knowledge,  nor  can 
an}'  insurer  suppose  that  he  has  knowledge  in  the  ordinary  course  of 
employment,  like  the  captain  of  a  ship,  or  the  owner  himself,  as  to  the 
condition  or  history  of  the  ship.  In  this  particular  case  the  knowledge 
was  acquired,  not  because  he  was  the  agent  of  the  assured,  but  from 
the  accident  that  he  was  general  agent  for  another  person.  The  reason 
why,  if  he  had  effected  the  insurance,  his  knowledge,  unless  he  com- 
municated it,  would  have  been  fatal  to  the  policy,  is  because  his  agency 
was  to  effect  an  insurance,  and  the  autliority  to  make  the  contract  drew 
with  it  all  the  necessary  powers  and  responsibilities  which  are  involved 
in  such  an  employment ;  but  he  had  no  general  agency,  —  he  had  no 
other  authority  than  the  autliority  to  make  the  particular  contract,  and 
his  authority  ended  before  the  contract  sued  on  was  made.  When  it 
was  made,  no  relation  between  him  and  the  shipowner  existed  which 
made  or  continued  him  an  agent  for  whose  knowledge  his  former  prin- 
cipal was  responsible.  There  was  no  material  fact  known  to  any  agent 
which  was  not  disclosed  at  the  point  of  time  at  which  the  contract  was 
made  ;  there  was  no  one  possessed  of  knowledge  whose  duty  it  was  to 
communicate  such  knowledge. 

For  these  reasons,  I  am  of  opinion  that  the  judgment  of  the  Court 
of  Appeal  should  be  reversed,  and  the  judgment  of  Day,  J.,  restored; 
and  I  move  vour  Lordships  accordingly. 

Lord  Watson.  My  Lords,  tliis  is  a  case  of  considerable  nicety  ;  but 
I  have  ultimately  come  to  the  conclusion,  for  the  reasons  already  stated 
by  the  Lord  Chancellor,  that  the  appeal  ought  to  be  allowed. 

It  is,  in  my  opinion,  a  condition  precedent  of  every  contract  of  marine 
insurance  that  the  insured  shall  make  a  full  disclosure  of  all  facts  ma- 
terially affecting  the  risk  which  are  within  iiis  personal  knowledge  at 
the  time  when  tlie  contract  is  made.  Where  an  insurance  is  effected 
through  the  medium  of  an  agent,  the  ordinary  rule  of  law  applies,  and 
non  disclosure  of  material  facts,  known  to  the  agent  only,  will  affect  his 
principal  and  give  the  insurer  good  ground  for  avoiding  the  contract. 

In  tlie  case  of  insurance  by  a  shipowner,  it  has  been  decided  that  he 
is  affected  by  the  knowledge  of  a  class  of  agents  other  than  those  whom 
he  employs  to  insure.  In  the  ordinary  course  of  business,  the  owner  of 
a  trading  vessel  employs  a  master  and  ship  agents,  whose  special  func- 
tion it  is  to  keep  their  employer  duly  informed  of  all  casualties  encoun- 
tered by  his  ship,  which  would  materially  influence  the  judgment  of  an 
insurer.  On  that  ground  it  has  been  ruled  that  the  insurer  must  be 
held  to  have  transacted  in  reliance  upon  the  well-known  usage  of  the 
shipping  trade,  and  that  he  is  consequently  entitled  to  assume  that 
every  circumstance  material  to  the  risk  insured  has  been  communicated 
to  him,  which  ought  in  due  course  to  have  been  made  known  to  the 
shipowner  before  the  insurance  was  effected.  Accordingly,  if  a  master 
or  ship  agent,  whether  wilfully  or  unintentionally,  fail  in  their  duty  to 


166  BLACKBURN,    LOW,    AND   CO.    V.    VIGORS.  [CHAP.  IIL 

tlieir  einpluver,  their  suppression  of  .a  material  fact  will,  notwithstanding 
his  ignorance  of  the  fact,  vitiate  his  contract. 

I  do  not  think  it  necessary-  to  notice  in  detail  the  authorities  which 
bear  on  this  point.  I  desire  to  say,  however,  tliat  I  have  difficulty  in 
comprehending  the  principle  upon  which  the  court,  in  Gladstone  v.  King, 
1  M.  &  S.  35,  and  Stribley  v.  Imperial  Marine  Insurance  Company, 
1  Q.  B,  D.  507,  held  that  the  innocent  non-communication  of  a  material 
fact  by  an  agent  who  was  the  alter  ego  of  the  shipowner  merely  created 
an  exception  from  the  poli?}'.  In  both  these  cases  the  court  ai)pears  to 
me  to  have  undertalien  the  somewhat  perilous  task  of  settling  the  terms 
of  the  contract  which  the  insurer  would  have  made  for  himself  if  the 
fact  had  been  communicated  to  him. 

In  the  present  case  it  is  sought  to  extend  the  imputed  knowledge  of 
the  insured  to  all  facts  which  during  the  period  of  his  employment  be- 
came known  to  any  agent,  other  than  the  agent  effecting  the  policy  in 
question,  who  was  employed  at  anytime,  successfuU}' or  unsuccessfullv, 
to  insure  the  whole  or  part  of  the  same  risk  with  that  covered  by  the 
polic}'.  This  is  a  case  of  re-insurance  ;  but  it  is  obvious  that  the  prin- 
ciple, if  admitted,  would  be  equally  applicable  to  the  original  contract. 

I  am  of  opinion,  with  your  Lordships,  that  the  responsibility  of  an 
innocent  insured  for  the  non-communication  of  facts  which  happen  to 
be  within  the  private  knowledge  of  i)ersons  whom  he  merely  employs  to 
obtain  an  insurance  upon  a  particular  risk,  ought  not  to  be  carried  be- 
yond tlie  person  who  actuall}-  makes  the  contract  on  his  behalf  There 
is  no  authority  wliatever  for  enlarging  his  responsibility  beyond  that 
limit,  unless  it  is  to  be  found  in  the  decisions  which  relate  to  captains 
and  ship  agents  ;  and  these  do  not  appear  to  me  to  liave  any  analog}' 
to  the  case  of  agents  employed  to  efllect  a  policy.  There  is  a  material 
ditference  in  the  relations  of  tliese  two  classes  of  agents  to  their  em- 
ployer. The  one  class  is  specially  employed  for  tlie  purpose  of  com- 
municating to  him  the  very  facts  which  the  law  requires  him  to  divulge 
to  his  insurer;  the  other  is  employed,  not  to  procure  or  furnish  infor- 
mation concerning  the  ship,  but  to  effect  an  insurance.  There  is  also, 
as  the  Master  of  tlie  Rolls  pointed  out,  an  important  difference  in  the 
positions  of  those  two  classes  with  respect  to  the  insurer.  He  is  en- 
titled to  contract,  and  does  contract,  on  the  basis  that  all  material  facts 
connected  with  the  vessel  insured,  known  to  the  agent  employed  for 
tliat  purpose,  have  been  by  him  communicated  in  due  course  to  his 
principal.  So,  also,  when  an  agent  to  insure  is  brought  into  contract 
with  an  insurer,  the  latter  transacts  on  the  footing  that  the  agent  has 
disclosed  every  material  circumstance  within  his  personal  knowledge, 
whether  it  be  known  to  his  principal  or  not ;  but  it  cannot  be  reasonably 
suggested  that  the  insurer  relies  to  any  extent  upon  the  private  infor- 
mation possessed  by  persons  of  whose  existence  he  presumably  knows 
nothing. 

In  the  circumstances  of  this  case,  I  have  come  to  the  conclusion  that 
whilst  it  might  be  the  moral  duty  of  Mr.  Murison  to  communicate  to 
the  appellants  the  information  which  he  received  on  the  forenoon  of 


PART  II.,  SECT.  I.]       BLACKBURN,    LOW,   AND    CO.    V.    VIGORS.  167 

the  1st  of  Maj',  1884,  he  was  under  no  legal  obligation  to  do  so.  There 
mav  be  circumstances  which  impose  upon  agents  in  the  position  of 
Mr.  Murisou  an  express  or  implied  dut}'  to  communicate  their  own  in- 
formation to  their  principal ;  but  nothing  of  that  sort  occurs  here.  I 
must,  in  fairness  to  Mr.  Murisou,  say  that  I  can  find  no  warrant  for  the 
inference  of  fact  drawn  by  Lindley,  L.  J.,  that  he  purposely  omitted 
to  impart  his  knowledge  to  the  appellants,  in  order  that  they  might  re- 
insure on  more  favorable  terms.  No  such  imputation  was  made  at  the 
trial ;  and  if  it  had  been  made,  it  ouglit  to  have  been  submitted  to  the 
jury,  and  their  verdict  taken  upon  it. 

i  concur,  therefore,  in  the  judgment  which  has  been  moved. ^ 

Order  a2)pealed  from   recersed;'^  judgment  of  Day,   J.,  re- 
stored; cause  remitted  to  the  Queen'' s  Bench  Division. 

1  Concurring  opinions  by  Lord  FitzGerald  and  Lord  Macnaghten  have  been 
omitted.  —  Ed. 

^  Compare  Blackburn  v.  Haslam,  21  Q.  B.  T>.  144  (1888). 

In  Moans  r.  Heyworth,  10  M.  &  W.  147,  157-158  (1842),  an  action  for  deceit  in 
representing  falsely  the  quality  of  goods  sold,  Parke,  B.,  said  :  "  To  give  a  right  of 
action  for  that  representation,  it  was,  I  tliink,  essential  to  prove  that  ...  it  was  made 
falsehj,  and  for  tlie  improper  purpose  of  inducing  the  plaintiffs  to  purchase  the  goods. 
...  I  think  it  essential  that  there  should  be  moral  fraud,  and,  indeed,  all  the  cases 
show  that  it  is,  thougli  the  word  legal  fraud  is  used.  .  .  .  The  case  of  a  policy  of 
insurance  does  not  appear  to  me  to  be  analogous  to  the  present ;  those  instruments 
are  made  upon  an  implied  contract  between  the  parties,  that  everything  material 
known  to  the  assured  should  be  disclosed  by  them.  That  is  the  basis  on  which  the 
contract  proceeds  ;  and  it  is  material  to  see  that  it  is  not  obtained  by  means  of  untrue 
representation  or  concealment  in  any  respect." 

In  North  British  Ins.  Co.  v.  Lloyd,  10  Ex.  523,  531  (1854),  an  action  on  a  guaranty, 
where  the  defendant  relied  upon  non-disclosure,  Parke,  B.,  in  the  course  of  the  argu- 
ment, said  :  "  This  subject  has  beeu  very  ably  treated  by  an  American  writer,  in  which 
he  states  that  the  necessity  of  the  disclosure  of  all  material  circumstances  in  cases  of 
insurance  is  founded  upon  mercantile  usage,  and  not  upon  fraud."  The  reporters 
suggest  that  the  allusion  was  to  Duer  on  Marine  Insurance.  And  at  p.  533,  Pol- 
lock,* C.  B.,  for  the  court,  said:  "It  seems  to  us  an  incorrect  proposition  that  the 
same  rule  prevails  in  the  case  of  guarantees  as  in  assurances  upon  ships  or  lives,  in 
which  it  is  a  settled  rule  that  all  material  circumstances  known  to  the  assured  are  to 
be  disclosed,  though  there  be  no  fraud  in  the  concealment.  This  is  peculiar  to  the 
nature  of  such  contracts,  in  which  in  general  the  assured  knows,  and  the  underwriter 
does  not  know,  the  circumstances  of  the  voyage  or  the  state  of  health." 

In  lonides  r.  Pender,  L.  R.  9  Q.  B.  531,  539  (1874),  Blackbuex,  J.,  for  the  court, 
said  :  "  It  is  perfectlv  well  established  that  the  law  as  to  a  contract  of  insurance  differs 
from  that  as  to  other  contracts,  and  that  a  concealment  of  a  material  fact,  though 
made  without  anv  fraudulent  intention,  vitiates  the  policy.  In  Duer  on  Insurance, 
vol.  ii.  p.  388,  it  is  said  :  '  The  terms  in  which  the  general  rule  is  usually  stated  are 
that  it  is  the  dutv  of  the  assured  to  communicate  all  facts  that  are  material  to  t_he 

«'  5,  and  which  are  not  known  or  presumed  to  be  known  to  the  underwriter ;  but 
e  terms  are  ambiguous,  and  the  first  and  necessary  inquiry  is,  by  what  criterion 
materialitv  of  the  facts  alleged  to  have  been  concealed  is  proper  to  be  determined. 
Is  the  oblio-ation  of  a  disclosure  limited  to  the  facts  that  are  material  to  the  risks  con- 
sidered in  their  own  nature  1  Or  does  it  extend  to  all  that  may  be  deemed  material 
bv  the  insurer  and  would  probably  influence  his  ultimate  decision  ? '  He  admits  that 
a'knowinclv  false  representation  of  a  matter  which,  though  extraneous  to  the  risks, 
mav  affec't  the  judtcment  of  the  underwriter,  will  vitiate,  and  that  the  case  of  Sibbnld 
V.  Hill,  2  Dow,"2G3l  is  an  express  decision  of  the  House  of  Lords  to  that  effect.     But 


1G8  BLACKBUEN.    LOW,   AND    CO.    V.    VIGORS.  [CHAP.  III. 

he  lays  it  down  as  beiug  '  tlie  most  reasonable  opinion  .  .  .  that  those  facts  only  are 
necessary  to  be  disclosed  which,  as  material  to  the  risks  considered  in  their  own  nature, 
a  prudent  and  experienced  underwriter  would  deem  it  proper  to  consider.'  The  cases 
and  proofs  in  support  of  his  position  are  collected  by  Duer,  at  p.  518.  .  .  .  It  would 
be  too  much  to  put  on  the  assured  the  duty  of  disclosing  everything  wliich  might 
influence  the  mind  of  an  underwriter.  Business  could  hardly  be  carried  on  if  this 
was  required.  But  the  rule  laid  down  in  Parsons  on  Insurance,  vol.  i.  p.  495,  that 
all  should  be  disclosed  wliich  would  affect  the  judgment  of  a  rational  underwriter 
governing  himself  by  the  principles  and  calculations  on  which  underwriters  do  in 
practice  act,  seems  to  us  a  sound  one." 

In  Browulie  v.  Campbell,  5  App.  Cas.  925,  954  (1880),  a  Scotch  conveyancing  case, 
Lord  Blackburn  said :  "  In  policies  of  insurance,  whether  marine  insurance  or  life 
insurance,  there  is  an  understanding  that  the  contract  is  uberrima  Jides,  that  if  you 
know  any  circumstance  at  all  that  may  influence  the  underwriter's  opinion  as  to  the 
risk  he  is  incurring,  and  consequently  as  to  wliether  he  will  take  it,  or  what  premium 
he  will  charge  if  he  does  take  it,  you  will  .state  wliat  you  know.  There  is  an  obligation 
tiiere  to  disclose  what  you  know  ;  and  the  concealment  of  a  material  circumstance 
known  to  you,  whether  you  thought  it  material  or  not,  avoids  the  policy.  But  in  other 
contracts  it  is  not  so." 

In  Rivaz  v.  Gerussi,  6  Q.  B.  D.  222,  229  (C.  A.,  1880),  Brett,  L.  J.,  said :  "  The 
true  proposition,  I  think,  is  laid  down  in  Phillips  on  Insurance,  sec.  531,  when 
exijlained  by  Parsons.  .  .  .  The  concealment  which  is  to  vitiate  a  policy  is  a  con- 
cealment at  the  time  of  the  negotiation  of  the  policy  of  a  material  fact,  which, 
if  communicated,  would  affect  the  judgment  of  a  rational  underwriter  in  considering 
whether  he  would  enter  into  the  contract  at  all,  or  enter  into  it  at  one  rate  of  pre- 
mium or  at  another." 

In  Asfar  i'.  Bluudell,  '96,  1  Q.  B.  123,  129-130  (C.  A.,  1895),  Lord  Esuer  said  :  "  The 
assured  is  bound  to  disclose  every  material  fact  which  is  within  his  knowledge,  and 
which  is  not  to  be  taken  as  being  within  the  knowledge  of  the  underwriters.  If  he 
fails  to  do  so,  he  is  guilty  of  what  is  called  in  insurance  law  concealment,  which 
may  in  fact  be  either  innocent  or  fraudulent.  But  it  is  not  necessary  to  disclose 
minutely  every  material  fact ;  assuming  that  there  is  a  material  fact  which  he  is  bound 
to  disclose,  the  rule  is  satisfied  if  he  disclo.'ies  sufficient  to  call  tlie  attention  of  the 
underwriters  in  such  a  manner  that  they  can  see  tliat  if  they  require  further  informa- 
tion they  ought  to  ask  for  it.  In  this  case  the  plaintiffs  disclosed  that  tliere  was  a 
charter  party  in  existence,  for  one  of  tlie  parts  of  the  subject-matter  of  insurance 
was  chartered  freiglit ;  and,  furtiier,  that  the  subject-matter  which  the  underjvriters 
were  asked  to  insure  was  the  difference  between  the  chartered  freiglit  payable  by  the 
assured  to  the  shipowner,  and  the  bill  of  lading  freights  which  tliey  were  to  obtain 
from  the  consignees  of  the  goods.  But  having  given  this  information,  they  did  not 
tell  the  underwriters  whether  the  cliartered  freight  was  a  lump  sum,  or  whether  it  was 
a  toimage  freight  depending  upon  the  delivery  of  the  goods  to  the  consignees.  But 
that  the  freight  must  be  a  lump  sum  was  almost  certain  ;  and  if  the  underwriters 
wanted  to  be  sure  on  tiie  point,  they  could  have  immediately  acquired  the  knowledge 
by  asking  the  question  ;  the  question  ought  to  have  been  present  to  their  minds.  I 
think,  therefore,  tliat  suflScient  was  disclosed  by  the  plaintiffs  to  satisfy  the  rule  that 
the  assured  must  make  a  disclosure  of  the  material  facts." 

Interesting  applications  of  the  doctrine  of  concealment  in  marine  insurance  are 
found  in  the  following  cases :  — 

narrower  v.  nutchin.son,  L.  B.  5  Q.  B.  584  (Ex.  Ch.  1870) ; 

Merchants'  Ins.  Co.  v.  Paige,  60  111.  448  (1871)  ; 

Cory  V.  Patton,  L.  R.  7  Q.  B.  304  (1872)  ; 

Morrison  v.  Universal  Marine  Ins.  Co.,  L.  R.  8  Ex.  197  (Ex.  Ch.  1873) ; 

lonides  j).  Pender,  supra  ; 

Stribley  v.  Imi)erial  Marine  Ins.  Co.,  1  Q.  B.  D.  507  (1876)  ; 

Rivaz  V.  Gerussi,  supra  ; 

Tate  1-.  Hyslop,  15  Q.  B.  D.  368  (C.  A.,  1885)  ; 

Herring  v.  Janson,  1  Commercial  Cas.  177  (1895).  —  Ed. 


PART  II.,  SECT.  IL]  BUFE   V.   TURNER.  169 


SECTION  II. 
Fire  Insurance. 

BUFE  V.  TUKNER  and  Others. 
Common  Pleas,   1815.     2  Marsh.  46.^ 

This  action  was  brought  by  a  merchant,  native  of,  and  resident  at, 
Heligoland,  against  tlie  defendants,  as  directors  of  the  Phoenix  fire 
office,  on  a  policy  of  insurance  effected  on  the  25th  of  July,  1814,  "on 
a  warehouse  situate  in  the  lower  town  of  Heligoland,  for  three  months, 
as  by  the  plaintiff's  letter  of  the  Uth  of  July,  1814."  The  defendants 
pleaded  that,  at  the  time  when  the  letter  ordering  the  insurance  was 
written,  tlie  premises  were  in  imminent  danger  of  being  burned,  which 
the  plaintiff  knew,  but  concealed;  in  consequence  of  which  fraudulent 
concealment,  the  policy  became  void.  Issue  was  joined  on  that  plea, 
and  on  the  trial  of  the  cause,  at  the  sittings  after  last  Trinity  term,  be- 
fore Lord  C.  J.  GiBBS,  the  jury  found  a  verdict  for  the  defendants. 

Mr.  Serjt.  Lens  having  now  moved  to  set  this  verdict  aside,  on  the 
ground  that  there  was  not  sufficient  evidence  to  support  it,  the  Chief 
Justice  stated  the  facts  of  the  case,  which  were  shortly  these :  The 
plaintiff  was  in  possession  of  two  warehouses  in  Heligoland  ;  that 
which  was  insured  was  separated  only  by  one  other  building  from  the 
warehouse  of  another  jjerson,  which  was  on  fire  on  the  night  of  Satur- 
day, the  nth  of  July.  The  fire  was  supposed  to  have  been  extinguished 
by  eight  o'clock  in  the  evening,  but  it  was  considered  necessary  to  watch 
the  premises  all  night ;  and  on  the  Monday  morning  following  it  broke 
out  again,  consumed  the  warehouse  in  which  it  originally  commenced, 
and  communicating,  through  the  intervening  building,  with  the  ware- 
house which  was  the  subject  of  this  insurance,  consumed  tliat  also. 
On  the  night  of  the  11th,  after  the  bag  of  letters  had  been  made  up  for 
England,  the  plaintiff  wrote  to  his  agent  here,  dryly  desiring  that  the 
warehouse  in  question  might  be  insured,  and  taking  no  notice  of  the 
other  warehouse  which  he  had  in  the  town  ;  wliich  letter  was  not  sent 
in  the  regular  way,  but  was  given  to  the  master  of  the  boat,  which 

1  s.  c.  6  Taunt.  338,  where  these  additional  facts  are  stated :  "  That  fire  .  .  .  was 
apparently  extinguished  in  half  au  hour,  and  four  persons  were  employed  by  the 
plaintiff,  who  was  a  magistrate  there,  to  watch  during  the  niglit  lest  the  fire  should 
again  break  out.  The  plaintiff  on  the  same  evening  wrote  the  letter.  .  .  .  The  mail 
for  England  was  to  sail  that  day,  and  was  then  closed  ;  but  the  plaintiff  procured  the 
master  of  the  packet-boat  to  take  the  letter  with  him,  and  put  it  into  the  post-office  at 
Cuxhaven,  so  that  the  letter  left  Heligoland  at  a  late  hour  on  the  same  night,  and  il 
reached  England  by  the  same  packet  on  the  24th,  and  the  plaintiff's  agent  on  the 
following  day  effected  the  policy." — Ed. 


170  FLETCHER   V.   COMMONWEALTH   INS.   CO.  [CHAP.  IIL 

carried  the  letter  bag.  The  jury  thought  that  a  fact  which  bore  so 
hard  upon  the  safety'  of  the  premises  insured  as  the  fire  of  the  11th, 
ought  to  have  been  .communicated  ;  and  though  the}-  acquitted  the 
plaintiff  of  anj'  fraudulent  intention  in  the  conceahnent,  tlie}^  still 
thought  that  the  defendants  were  not  on  equal  terms  with  the  in- 
sured. His  Lordship  added  that,  under  the  circumstances  of  the  case, 
he  could  not  but  think  that  the  juvy  were  warranted  in  the  verdict 
they  had  given ;  and  the  rest  of  the  court  concurring,  the  rule  was 

He/used.  ^ 


FLETCHER  v.  THE    COMMONWEALTH   INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1836.     18  Pick.  419. 


Assumpsit  on  a  policy  of  insurance  effected  by  the  plaintiff^r 
viz.  $150  on  his  one-story  framed  store,  situate  on  the  Buoknam  road 
in  Medford,  and  occupied  b}^  him,  and  $650  on  his  stock  in  trade  con- 
tained in  the  store.  The  store  and  stock  in  trade  were  consumed  by 
fire  on  the  2od  of  February,  1835. 

At  the  trial,  before  Shaw,  C*  J.,  it  appeared  that  the  plaintiff  applied 
at  the  defendants'  office  to  procure  insurance,  and  requested  them  to 
insure  the  above  sums  on  his  store  and  stock.  No  written  application 
or  representation  was  made  or  required  ;  and  no  other  pjxrticulars  in 
relation  to  the  propert}'  were  communicated  to  the  defendants  ;  nor 
were  any  further  inquiries  made. 

One  Bucknam  owned  the  land  on  which  the  store  had  been  placed, 
and  he  had  agreed  that  the  plaintiff  might  move  the  store  on  to  the 
land  and  keep  it  there,  paying  an  annual  rent,  for  five  years,  unless 
Bucknam  should  request  him  to  remove  it,  in  which  case  he  should 
have  six  months'  notice.  There  was  no  writing  between  Bucknam  and 
the  plaintiff  in  relation  to  the  store  or  the  land. 

Upon  this  evidence  it  was  contended,  that  facts  material  to  the  risk 
had  been  suppressed  or  not  disclosed,  which  it  was  the  duty  of  the 
assured  to  have  disclosed,  and  that  thereby  the  policy  was  rendered 
void.  But  the  Chief  Justice  instructed  the  jury  that  it  was  not  the 
plaintiff's  duty  to  give  a  more  particular  representation  of  the  nature 
of  his  interest,  without  inquiry  being  made  of  him  ;  that  if  the  de- 
fendants wislied  for  a  more  particular  description  in  this  respect,  it  was 
their  duty  to  inquire,  in  which  case  it  would  have  been  the  dut}'  of  the 
plaintiff  to  state  truly  the  nature  of  his  interest ;  but  that  under  the 
circumstances  above  mentioned,  there  was  no  such  misrepresentation 
as  would  avoid  the  policy. 

*  See  Curry  ik  Commouwealth  lus.  Co.,  10  Pick.  535  (1830) ;  Walileu  v.  Louisiana 
Ins.  Co.,  12  La.  1.34  (1838).  — Ed. 


PART  II.,  SECT.  II.]      FLETCHER   V.   COMMONWEALTH   INS.   CO.  171 

A  verdict  was  returned  for  the  plaintiff,  which  the  defendants  moved 
to  set  aside  on  the  ground  that  the  instruction  to  the  jury  was  er- 
roneous. 

Farley^  for  the  defendants. 
Ayhcin  and  H.  II.  Fuller,  for  the  plaintiff. 

Putnam,  J.  If  the  concealment  was  material,  it  will  avoid  the 
policy  notwithstanding  the  assured  did  not  intend  to  commit  any  fraud. 
And  it  is  true  that  the  materiality  of  the  fact  concealed  is  a  question 
for  the  jury.  Tlicse  general  principles  are  well  established.  But  the 
assured  may  well  be  silent  as  to  various  matters  connected  with  or  hav- 
ing some  relation  to  the  property  insured,  without  any  prejudice  to  his 
insurance,  provided  that  such  silence  was  not  intended  to  deceive  or  to 
defraud  the  underwriter.  AHud  est  celare,  aliud  tacere.  In  the  case 
at  bar  tlie  defendants  say,  tiiat  the  plaintiff  withheld  information  which 
was  material  to  the  risk,  and  which,  therefore,  ouglit  to  have  been 
communicated.  And  the  fact  so  withheld  is  stated  to  be,  that  the 
plaintiff  did  not  inform  the  defendants  who  owned  the  land  on  which 
ihc  building  stood.  Now  it  seems  to  us  very  clear,  that  it  was  not 
necessary  that  he  should.  He  stated  his  property  in  the  building, 
goods,  etc.,  etc.  He  stated  in  what  town  and  street  it  stood.  He 
stated  everything  truly.  And  it  seems  to  us  that  if  the  defendants 
wanted  any  further  information,  they  should  have  requested  it.  Now 
it  is  contended  the  land  belonged  to  another,  that  there  was  a  riglit 
reserved  for  the  owner  to  cause  the  plaintiff  to  remove  his  store  in  a 
certain  time,  and  as  his  tenure  was  such,  he  would  be  less  careful  of 
the  property,  and  so  the  risk  would  be  greater  than  it  would  be  if  the 
plaintiff  owned  the  land  as  well  as  the  building.  We  think  this  is 
more  ingenious  tlian  substantial.  If  in  truth  the  plaintiff  owned  the 
land  upon  which  his  building  stood,  it  might  be  that  he  wished  to  have 
a  new  framed  store  instead  of  the  old  one,  and  it  would  be  within  the 
region  of  possibility  that  he  would  not  be  so  hkely  to  take  as  good  care 
of  the  old  one  as  he  would  if  it  were  a  new  one  ;  and  he  might  honestly 
omit  to  state  his  desire  to  substitute  a  new  store  for  the  old.  But 
such  a  suggestion  of  such  an  omission,  although  quite  as  likely  to 
affect  the  risk,  could  not  be  a  foundation  sufficient  to  support  a  verdict 
avoiding  the  policy  for  concealment.  It  would,  we  think,  be  sufficient 
for  tlie  plaintiff  to  describe  the  property  to  be  insured,  as  it  then  ex- 
isted ;  and  if  the  defendants  wished  for  more  particular  information, 
toucliing  the  risk  to  be  assumed,  and  the  motives,  more  or  less  strong, 
which  would  operate  with  the  plaintiff  in  regard  to  the  care  he  would 
take  of  the  property  assured,  they  should  inquire. 

Tills  is  the  more  equitable;  because  the  law  would  require  the  plain- 
tiff to  take  reasonable  care  of  the  property  insured.  He  could  not 
recover  if  it  were  proved  that  the  fire  was  caused  by  his  own  fraud  or 
neglect. 

If  the  Chief  Justice  had  left  the  cause  to  the  jury  with  instructions 
to  find  for  the  defendants,  if  they  should  think  there  was  a  conceal- 


172  BOWERY  FIRE  INS.  CO.  V.  N.  Y.  FIRE  INS.  CO.        [CHAP.  III. 

ment  material  to  the  risk,  and  they  had  returned  a  verdict  for  the  de- 
fendants upon  that  ground,  we  all  think  the  verdict  could  not  have 
been  supported  upon  the  evidence  produced.  The  fact  is  to  be  settled 
by  the  jury,  but  it  must  be  upon  legal  and  sufficient  evidence;  and 
where  the  evidence  is  agreed,  it  is  a  question  of  law  whether  it  be  suf- 
ficient or  not  to  establish  the  fact.  Now  the  evidence  is,  that  the 
plaintiff  did  not  say  whether  he  owned  the  land  or  not ;  and  it  is  not  in 
our  power  to  see  how  that  varied  the  risk  which  the  defendants  assured 
against  fire.  It  would  have  been  just  as  material  to  have  stated  on 
which  side,  east  or  west,  of  the  street  the  house  stood ;  whether  it 
were  painted  or  not.  In  the  latter  case  it  probably  could  be  said  with 
truth,  that  if  painted  it  would  be  more  combustible  than  if  it  were  not. 
But  such  objections  would  be  vain  ;  and  it  seems  to  the  court  that 
those  which  are  now  made  to  the  instruction  of  the  Chief  Justice,  can- 
not be  maintained.  Enough  was  truly  represented  to  put  the  defend- 
ants upon  their  inquiries  for  more.  The  case  of  Curry  v.  Common- 
wealth Ins.  Co.,  10  Pick.  535,  and  cases  to  which  we  have  been  referred, 
seem  to  us  clearly  to  show  that  the  proceeding  at  the  trial  was  cor- 
rect, and  that  the  judgmejit  should  be  entered  for  the  plaintiff  accord- 
ing to  the  verdict.^ 


THE  NEW  YORK   BOWERY   FIRE   INS.  CO.  v.  THE   NEW 
YORK  FIRE   INS.  CO. 

Supreme  Court  of  New  York,   1837.     17  Wend.  359. 

Error  from  the  New  York  Common  Pleas.  This  was  an  action 
against  the  Bowery  Insurance  Company,  on  a  policy  of  re-insurance^ 
On  the  third  day  of  February,  1834,  the  New  York  Fire  Insurance  Com- 
pany of  the  city  of  New  York  entered  into  a  policy  to  insure  for  one 
year  one  Joseph  Mortimer,  against  loss  or  damage  by  fire  upon  his 
stock  of  dry  goods  and  ready-made  clothing,  in  a  store  occupied  by 
him,  to  the  amount  of  $3,000,  and  upon  his  household  furniture  to  the 
amount  of  S500.  On  the  eleventh  day  of  February,  1834,  the  assurers 
applied  to  the  Bowery  company  for  re-insurance  on  the  dry  goods  and 
clothing,  and  two  days  after  such  application  the  Bowery  company  en- 
tered into  a  policy  whereby  they  agreed  to  re-insure  the  other  company 
ao^ainst  loss  or  damage  by  fire,  to  the  amount  of  $3,000  on  the  stock  of 
dry  goods  and  ready-made  clothing,  the  property  of  Joseph  Mortimer, 
contained  in,  etc.  (describing  the  building  the  same  as  in  the  policy  exc- 

1  Ace:  Delahay  v.  Memphis  Ins.  Co.,  8  Humph.  (Tenn.)  G84  (1848)  ;  Hill  v.  La- 
favette  Ins.  Co.,  2  Mich.  476  (18.1.3);  Morrison's  A dmini.strator  u.  Tennessee  M.  &  F. 
Ins.  Co.,  18  Mo.  262  (185.3);  West  Rockingham  Mutual  F.  Ins.  Co.  v.  Sheets,  26 
Grat.  (Va)  854  (1875)  ;  Castner  v.  Farmers'  Mutual  F.  Ins.  Co.,  46  Mich.  15  (1881)  ; 
Morotock  Ins.  Co.  v.  Ilodefer,  92  Va.  747  (1896).  — Ed. 


PART  II.,  SECT.  II.]       BOWERY  FIRE  INS.  CO.  V.  N.  Y.  FIRE  INS.  CO.     173 

cuted  to  Mortimer).  The  polic}'  was  in  the  usual  form  of  instruments 
of  this  kind,  except  that  for  the  word  insure,  near  tlie  commencement 
of  it,  was  substituted  the  word  re-insure  ;  ^  .  .  .  the  policy  to  be  void  in 
case  the  assured  had  already  any  other  insurance  against  fire  on  the 
property  not  notified.  .  .  .  The  policy  executed  b}'  the  New  York  com- 
pany' contained  a  memorandum  in  the  body  thereof,  that  83,000  had 
been  insured  by  the  City  Y'wq  Insurance  Compan}-,  but  no  reference  to 
such  insurance  was  made  in  the  policy  executed  b}-  the  Bowerj'  com- 
pany, nor  was  the  fact  mentioned  previous  to  or  at  the  time  of  the  exe- 
cution of  the  polic}",  nor  did  it  appear  that  the  first  policy  was  exhibited 
to  the  officers  of  tlie  Bowery  company-  at  the  execution  of  their  polic}'. 
Tlie  goods  and  clothing  insured  were  destroj'ed  by  fire  on  the  14th 
Jul}',  1834,  and  the  loss  of  Mortimer  amounted  to  upwards  of  $6,000. 
Mortimer  forthwith  gave  notice  and  furnished  the  necessary  preliminary 
proofs  to  enable  him  to  assert  his  claim  against  the  New  York  company, 
and  at  the  expiration  of  GO  days  commenced  his  suit,  and  recovered  the 
whole  amount  insured.  The  company  paid  the  recovery  and  then  brought 
their  action  against  the  Bovver}'  compau}',  on  the  policy  of  re-insurance. 
.  .  .  The  defendants  .  .  .  proved  that  after  the  plaintiffs  had  entered  into 
the  policy  of  insurance  with  Mortimer,  and  previous  to  the  application 
for  re-insurance,  the  secretary  of  the  plaintiffs  was  informed  b}'  the  sec- 
retary of  the  Jefferson  Insurance  Compau}'  that  the  character  of  Morti- 
mer was  bad  ;  that  he  had  been  insured  and  twice  burned  out ;  that 
there  had  been  difficulties  in  respect  to  his  losses  ;  that  he  was  in  bad 
repute  with  insurance  offices,  and  that  he,  the  informant,  if  applied  to, 
would  not  insure  him  ;  and  that  the  information  as  to  the  character  of 
Mortimer,  thus  obtained,  was  not  communicated  to  the  defendants  at 
the  time  of  the  application  for  re-insurance.  The  recorder  charged  the 
jury  that  the  only  question  for  them  to  pass  upon  was,  whether  the  in- 
formation communicated  by  the  secretary  of  the  Jefferson  compan}'  to 
the  secretary  of  the  plaintiffs,  previous  to  tlie  re-insurance  by  the  de- 
fendants, was  material  to  have  been  communicated  to  the  defendants ; 
that  if  they  should  find  that  the  secretary  of  the  plaintiffs  had  inten- 
tionally withheld  information  which  it  was  material  to  communicate, 
then  the  plaintiffs  were  not  entitled  to  recover ;  but  if  they  should  find 
that  the  information  was  not  so  withlield,  then  the  plaintiffs  were  en- 
titled to  recover.  The  defendants  excepted,  the  jury  found  a  verdict 
for  the  plaintiffs,  on  which  judgment  was  rendered.  The  defendants 
sued  out  a  writ  of  error. 

D.  Selden^  for  plaintiffs  in  error. 

J.  Anthon,  for  defendants  in  error. 

Bronson,  J.  ...  No  doubt  seems  to  have  been  entertained  by  the 
judge  that  the  testimony  of  Thorne,  the  secretary  of  the  Jefferson  In- 
surance Company,  gave  rise  to  a  question  of  some  kind,  for  the  consid- 
eration of  the  jur}'.    The  facts  stated  by  him  to  Merchant,  the  secretary 

1  From  the  statement  and  the  opinion  .several  passages  not  bearing  on  concealment 
have  been  omitted.  —  Eb, 


174  BOWERY  FIRE  INS.  CO.  V.  N.  Y.  EIRE  IXS.  CO.       [CHAP.  III. 

of  the  plaintiffs,  weue  calculated  to  make  a  strong  impression  on  the 
mind  of  an  underwriter  for  Mortimer  ;  and  if  they  had  been  communi- 
cated to  the  defendants  at  the  time  of  the  application  for  the  re-assur- 
ance, it  can  hardly  be  doubted  that  they  would  either  have  demanded  a 
greater  premium,  or  declined  the  risk  altogether.  If  neither  of  these 
courses  had  been  adopted,  they  would  at  least  have  taken  time  to  make 
inquiries  concerning  the  character  of  Mortimer.  It  is  true  that  Thornc 
did  not,  with  absolute  certainty,  identify  the  Mortimer  of  whom  he 
spoke  with  the  one  insured  by  the  plaintiffs ;  but  there  remained  little 
more  than  a  mere  possibility  that  there  were  two  persons  of  that  name, 
answering  to  the  same  description.  The  witness  gave  not  only  his  sur- 
name, but  his  occupation,  which  was  not  of  a  kind  likely  to  include  a 
great  number  of  individuals.  This  was  not  all.  He  gave  the  place  of 
his  residence,  and  the  street  in  which  he  carried  on  business.  No  doubt 
seems  to  have  been  entertained  by  Merchant,  that  the  person  insured 
by  his  company  was  identical  with  the  person  of  whom  Thorne  spoke, 
and  none  could  well  have  been  entertained  by  any  one.  But  if  there 
was  any  uncertainty  about  the  person,  the  value  of  the  evidence  was  to 
be  estimated  by  the  jury,  under  proper  instructions  from  the  court. 

The  information  which  the  plaintiffs  possessed,  and  which  they  with- 
held from  the  defendants,  was,  I  think,  material  to  the  risk.  It  seems 
to  have  been  so  regarded  by  the  plaintiffs  themselves.  The  policy  to 
Mortimer  was  issued  by  Merchant  on  the  3d  of  February,  in  the  ab- 
sence of  the  president  of  his  company.  When  the  president  returned 
the  next  day,  he  disapproved  of  what  had  been  done,  and  ordered  a  re- 
insurance. But  nothing  was  done  by  Merchant,  the  secretary,  because, 
as  he  says,  he  thought  it  a  good  risk,  and  hoped  to  remove  the  president's 
objections.  He  adds,  he  thought  he  had  nearly  quieted  the  fears  of  the 
president,  and  persuaded  him  to  keep  the  risk.  That  he  was  right  in 
this  supposition  is  rendered  highly  probable,  from  the  fact,  that  although 
the  president  expressed  his  disapprobation  and  ordered  re-assurance  on 
the  4th  of  February,  nothing  was  done  until  the  11th,  and  after  the 
conversation  with  Thorne.  After  learning  the  character  of  Mortimer, 
no  time  was  lost  in  applying  for  re-assurance.  If  the  concealment  of 
this  information  had,  under  proper  instructions,  been  submitted  to  the 
jury  as  a  question  of  actual  fraud  on  the  part  of  the  plaintiffs,  it  is  im- 
possible to  say  that  their  verdict  would  not  have  been  in  favor  of  the 
defendants.  But  if  the  facts  concerning  Mortimer's  character  were  ma- 
terial to  the  risk,  it  is  enough  that  they  were  withheld  by  the  plaintiffs 
on  applying  for  re-assurance. 

The  general  doctrine  on  this  subject  is  not  denied ;  but  it  is  said 
that  the  character  of  Mortimer  was  not  a  fact  material  to  the  risk ;  that 
the  person  applying  for  insurance  is  not  bound  to  say  anything  about 
his  own  character.  The  last  branch  of  the  remark  is  undoubtedly  true. 
Had  Mortimer  applied  to  the  defendants  for  insurance,  he  was  not 
bound,  nor  could  it  be  expected,  that  he  should  speak  evil  of  himself. 
Good  manners  on  the  part  of  the  underwriter,  and  self-respect  on  the 


PART  II.,  SECT.  II.]       BOWERY  FIRE  INS.  CO.  V.  N.  Y.  FIRE  IXS.  00.     175 

part  of  the  applicant,  would  forbid  a  conversation  on  the  subject  of 
cliaracter.  If  the  underwriter  wished  information  on  that  point,  he 
would  naturally  seek  it  from  some  other  source.  But  this  case  pre- 
sents, I  think,  a  different  question.  There  was  no  law  of  social  inter- 
course forbidding  the  plaintiflfs  to  speak  of  the  character  of  a  third 
person  ;  especially  in  a  matter  of  business,  where  character  became  an 
important  inquiry.  But  it  is  said  that  Merchant  might  have  subjected 
liimself  to  an  action  of  slander,  if  he  had  repeated  the  words  of  Thorne, 
and  it  should  turn  out  that  they  were  untrue.  I  do  not  so  understand  the 
law.  "When  ^  man,  without  any  intent  to  defame,  repeats,  in  the  legiti- 
mate course  of  business  and  for  an  honest  purpose,  what  he  has  heard 
of  the  character  of  another,  T  have  yet  to  learn  that  he  is  liable  to  an 
action  if  the  information  prove  erroneous.  Merchant  had  no  legal  ex- 
cuse for  withholding  the  information  derived  from  Thorne,  and  I  think 
he  was  bound  to  speak.  The  rule  on  this  subject  is  very  broad.  "  Every 
fact  and  circumstance  which  can  possibly  influence  the  mind  of  any  pru- 
dent and  intelligent  insurer,  in  determining  whether  he  will  underwrite 
the  policy  at  all,  or  at  what  premium  lie  will  underwrite  it,  is  material." 
1  Marsh.  467.  He  must  even  give  doubtful  news  concerning  the  ship, 
in  cases  of  marine  insurance,  however  little  credit  he  may  give  to  it 
himself.     1  Marsh.  471  ;  Phillips,  93,  95. 

This  question  was  not  properly  submitted  to  the  ]my.  They  were 
instructed,  in  effect,  that  although  they  should  think  the  information 
material,  they  must  still  find  for  the  plaintiffs  unless  it  was  intentionally 
withheld.  There  was  no  ground  for  submitting  such  a  question  to  the 
jury.  It  was  not  raised  by  the  evidence.  And,  besides,  if  the  facts 
communicated  by  Thorne  were  material,  it  is  enough  that  they  were 
withheld  by  Merchant  on  applying  for  re-assurance.  "Whether  the 
omission  was  the  result  of  mistake  or  design,  was  not  an  important  in- 
quiry. The  assured  acts  at  his  peril  in  withholding  information.  Shir- 
ley V.  Wilkinson,  Doug.  306,  note  ;  Kohne  v.  Ins.  Comp.  X.  A.,  1  Marsh. 
Ins.  473,  note  ;  Carter  v.  Boehm,  3  Burr.  1909  ;  Thompson  v.  Buchanan, 
4  Bro.  Pari.  Cases,  482.     Phil,  on  Ins.  80. 

I  think  the  policy  was  void,  on  the  ground  that  no  notice  was  given 
to  the  defendants  of  the  insurance  of  Mortimer  on  the  same  goods  by 
the  City  Ins.  Company.  But  as  it  is  not  now  necessary  to  decide  this 
point,  and  my  brethren  are  not  prepared  to  pass  upon  it,  I  shall  not 
assign  the  reasons  for  my  own  opinion.  The  judgment  is  reversed, 
on  the  ground  that  the  charge  was  erroneous,  and  a  venire  de  novo  is 
ordered  in  the  court  below.  Judgment  reversed. 


176  LYON   V.   COMMERCIAL   INS.    CO.  [CHAP.  IIL 


LYON   AND   Another  v.   THE    COMMERCIAL   INS.    CO. 
Supreme  Court  of  Louisiana,  1842.     2  Rob.  266. 

Appeal  from  the  Commercial  Court  of  New  Orleans. 

The  plaintiffs  seek  to  recover  $15,000,  on  a  policy  of  insurance 
against  fire  on  their  stock  in  trade,  consisting  of  clothing,  hats,  etc.,  in 
a  store,  No.  11,  Front  L'evee  Street.  The  insurance  was  efl'ected  for 
one  year  from  the  9th  of  December,  1839,  and  the  goods  insured  were 
destroyed  by  fire  on  the  morning  of  the  27th  of  March,  1840.  The 
defence  set  up  to  this  claim  is  in  substance  that  before,  at  the  time  of, 
and  after  the  execution  of  the  policy,  the  plaintiffs  withheld  from  the 
company  important  information  material  to  the  risk.  The  facts  alleged 
to  have  been  concealed  were  the  names  and  occupations  of  the  tenants 
on  the  premises ;  and  it  is  averred  that  the  risks  of  the  defendants 
were  greatly  increased  by  such  concealment,  because  the  pursuits  and 
occupations  of  the  tenants  were  of  a  nature  to  endanger  the  safety  of 
the  premises.  This  case  was  tried  by  a  jury,  who  rendered  their  ver- 
dict in  favor  of  the  plaintiffs.  The  company  appealed,  after  an  ineffect- 
ual attempt  to  obtain  a  new  trial. 

Durant  and  Grymes^  for  the  plaintiffs. 

Lucius  C.  Duncan  and  Isaac  T.  Preston,  for  the  appellants. 

MoRPHY,  3}  .  .  .  On  the  merits,  there  is  no  dispute  as  to  the  value 
of  the  goods  destroyed,  and  no  charge  of  fraud  is  set  up  against  the 
plaintiffs.  The  only  defence  is,  that  the  assured,  who  rented  the 
second  story  of  the  building  they  occupied  to  one  Cornell,  and  knew 
that  he  kept  in  it  a  gambling  establishment,  did  not  communicate  the 
fact  to  the  defendants  ;  and  that  such  concealment  was  material,  as 
the  fact  concealed  greatly  increased  the  risk,  and  would  have  prevented 
them  from  insuring  had  it  been  made  known.  The  evidence  shows  that 
the  building  in  which  the  goods  insured  were  stored  was  four  stories 
high,  and  belonged  to  one  Kohn,  and  that  the  plaintiffs  had  a  lease  of 
it  for  a  term  of  years ;  that  they  never  occupied  the  whole  of  the 
premises  themselves,  but  sub-leased  from  time  to  time  the  second  and 
fourth  stories ;  that  the  fourth  stoiy,  which  had  been  let  to  a  militia 
company  some  time  before,  was  unoccupied  at  the  time  of  the  fire,  but 
that  the  second  story  was  then  occupied  by  one  Cornell.  The  testi- 
mony leaves  little  doubt  in  our  minds  that  this  tenant  kept  a  gambli no- 
bouse  in  the  rooms  he  rented  from  the  plaintiffs,  and,  moreover,  renders 
it  probable  that  the  plaintiffs  knew  the  fact.  Armstrong,  the  secretary 
of  the  company,  testifies  that  when  application  was  made  for  insur- 
ance, he  went  with  the  plaintiffs  to  take  a  general  view  of  the  premises  ; 
that  in  a  conversation  he  then  had  with  Lyons,  in  relation  to  the  gam- 
bling establishments  in  the  neighborhood,  he  stated  the  objection  he 

^  Passages  foreign  to  insurance  have  been  omitted.  —  Ed. 


PART  II.,  SECT.  II.]        LYOX    V.    COMMERCIAL    INS.    CO.  177 

should  have  to  taking  risks  near  these  establishments.  This  witness 
thinks  that  Lyons  replied,  that  he  did  not  know  there  were  any  such 
there,  and  that  if  there  were,  it  would  most  likely  be  in  the  corner 
store  ;  and  that  he  then  remarked  to  Lyons  that  there  was  an  interven- 
ing store,  that  he  knew  the  stores  to  be  well  built,  and  that  he  would, 
therefore,  take  the  risk  ;  that  plaintiff  at  the  time  gave  no  intimation 
that  he  had  under-leased  any  part  of  the  premises,  or  that  he  had  the 
intention  to  do  so  ;  that  had  he  (the  witness)  been  informed  at  the 
time  that  there  were  sub-tenants  on  the  premises,  he  would,  before 
taking  the  risk,  have  made  inquiry  to  ascertain  the  occupations  and 
liusiness  of  the  sub-tenants,  etc.  On  the  trial  of  the  case  the  counsel 
for  the  underwriters  requested  the  court  to  charge  the  jury  that,  if  they 
believed  that  the  plaintiffs  were  tenants  by  the  year  of  the  store  in 
which  the  property  insured  was,  they  (the  plaintiffs)  were  bound  to 
inform  the  company  if  there  were  any  sub-tenants  in  the  premises,  and 
who  they  were.  The  court  refused  so  to  charge  the  jury,  but  on  the 
contrary  instructed  them  that  the  plaintiffs  were  not  bound  to  inform 
the  defendants  if  there  were  any  sub-tenants,  nor  what  their  occupa- 
tions were,  the  more  especially  as  the  insurance  was  not  on  the  store, 
but  on  a  stock  of  goods  in  it ;  and  that  if  the  jury  believed  that,  pend- 
ing the  negotiation  for  the  policy,  the  defendants,  through  their  agents, 
had  objected  or  expressed  an  unwillingness  to  insure  property  in  the 
neighborhood  ^f  gambling  establishments,  and  that  the  plaintiffs  at 
the  time  knew  that  there  was  one  within  the  premises  in  which  was 
the  property  insured,  the  court  would  leave  it  to  them  to  say  whether 
this  was  a  fact,  the  concealment  or  misrepresentation  of  which  was  so 
material  to  the  risk  as  to  vitiate  the  policy,  and  that  it  was  of  no  con- 
sequence whether  it  was  material  in  the  opinion  of  the  defendants  or 
their  agent,  but  that  it  must  be  considered  material  to  the  risk  by  the 
jury  themselves.  The  judge  further  instructed  the  jury  that,  where  a 
house  was  insured,  the  owner  of  the  house  had  a  right  to  have  it  occu- 
pied by  any  person  he  pleased,  provided  the  occupations  of  the  persons, 
or  the  propert}-  in  it,  were  not  of  such  a  nature  as  to  vitiate  the  policy 
under  the  conditions  relative  to  what  was  considered  hazardous  or 
extra-hazardous  risks  ;  that  where  a  stock  of  goods  which  were  in  a 
part  of  a  house  or  store  were  insured,  the  manner  in  which  the  rest  of 
the  house  was  occupied  did  not  affect  the  policy,  unless  the  insured  had 
made  some  warranty  in  relation  thereto,  or  unless  there  had  been  a 
concealment  or  misrepresentation  of  facts  deemed  by  the  jury  material 
to  the  risk.  To  this  charge  of  the  judge,  and  to  his  refusal  to  instruct 
the  jury  as  prayed  for,  the  defendants  took  a  bill  of  exceptions. 

The  charge  of  the  judge  appears  to  us  substantially  correct.  Xo 
case,  it  is  believed,  can  be  referred  to,  in  which  it  has  been  held  that 
the  owner  of  a  house,  or  a  tenant  on  a  lease  for  years,  is  bound  to  dis- 
close or  communicate  to  his  underwriters  the  names  and  pursuits  of  the 
tenants,  or  sub-tenants,  living  on  the  premises.  If  the  insurers  wish  to 
guard  themselves  against  the  risk  or  dangers  supposed  to  result  from 

12 


178  BUimiTT  V.  SARATOGA  CO.  MUT.  F.  INS.  CO.         [CHAP.  HI. 

certain  pursuits  or  occupations  of  the  tenants,  or  sub-tenants,  of  houses 
on  which  they  malie  insurance,  whether  it  be  on  the  property  itself,  or 
on  goods  in  it,  they  have  it  in  their  power  to  insert  in  the  policy  a  war- 
ranty to  that  effect.  Being  considered  as  a  condition  precedent,  a 
warranty,  whether  material  or  immaterial  to  the  risk,  must  be  complied 
with  before  the  assured  can  maintain  an  action  on  the  policy  ;  but 
where  a  fact,  not  provided  for  by  the  warranty  appearing  on  the  face 
of  a  policy,  is  concealed,  it  cannot  affect  the  assured's  right  to  recover, 
unless  it  be  material  to  the  risk,  for  then  it  avoids  the  policy  on  the 
ground  of  fraud,  or  because  the  underwriters  have  been  misled.  But 
in  all  cases  of  this  kind  we  take  the  rule  to  be  well  settled  that  the 
materiality  of  the  fact  concealed  or  misrepresented  is  to  be  left  to 
the  jury.  They  are  the  proper  judges  of  the  fact  whether  the  risk 
of  fire  has  been  thereby  increased.  10  Pickering,  535  ;  2  Peters,  56; 
7  Wen.  77;  6  lb.  627;  1  Hall.  234,  and  note.  In  the  present  case 
the  jury  were  called  upon  to  decide  whether  the  plaintiffs,  at  the  time 
when  the  insurance  was  effected,  knew  that  their  tenant  kept  a  gambling 
house  In  the  premises,  and  whether  the  danger  of  fire  was  thereby 
greatly  enhanced.  After  hearing  all  the  evidence,  they  decided  these 
questions  of  fact  in  the  negative  ;  and  we  cannot  say  that  they  erred. 

Judgment  affirmed. 


BURRITT  V.  SARATOGA   COUNTY  MUTUAL   FIRE  INS.  CO. 

Supreme  Court  of  New  York,  1843.     5  Hill,  188. 

Assumpsit  on  a  policy  of  insurance,  tried  before  Monell,  C.  Judge, 
at  the  Tompkins  circuit,  in  September,  1842.  On  the  19th  of  Decem- 
ber, 1837,  the  defendants  insured  the  plaintiff,  Joseph  Burritt,  against 
loss  or  damage  by  fire  "  on  his  store  situate  in  the  village  of  Ithaca, 
$1,600,  refere°nce  being  had  to  the  application  of  said  Joseph  ]3urritt 
for  a  more  particular  description,  and  as  forming  a  part  of  this  policy, 
during  the  term  of  five  years."  Annexed  to  the  policy  were  "  Condi- 
tions of  insurance"  as  follows,  viz.  :  1.  "  All  applications  for  insurance 
must  be  made  in  writing,  according  to  the  printed  forms  prepared  by 
the  company.  Such  application  shall  contain  the  place  where  the 
property  is  situated  [and,  among  other  things],  its  relative  situation 
as  to  other  buildings  ;  distance  from  each,  if  less  than  ten  rods  ;  for 
i?hat  purpose  occupied,"  etc.  ;  2.  "  Such  application  may  be  made 
either  by  the  applicant  or  by  a  surveyor,  and  in  all  cases  the  insured 
will  be  bound  by  the  application,  for  the  purpose  of  taking  which,  such 
surveyor  will  be  deemed  the  agent  of  the  applicant;"  6.  "If  any 
person  insuring  any  property  in  this  company  shall  make  any  mis- 
representation or  concealment  in  the  application,  etc.,  such  insurance 


PART  II.,  SECT.  II.]       BUKRITT  V.  SARATOG.l  CO.  MUT.  F.  INS.  CO.         179 

shall  be  void  and  of  no  effect."  Tlie  printed  forms  of  applications  pre- 
pared by  the  company  contained  a  marginal  note  as  follows:  ''Kela- 
tive  situation  as  toother  buildings  —  distance  from  each,  if  less  than 
ten  rods  ;  "  at  the  right  hand  of  which  note  was  a  blank  to  be  filled  up 
by  the  applicant.  This  blank  the  plaintiff  filled  in  his  application  with 
the  description  of  five  buildings  as  standing  within  teij  rods  from  the 
building  insured.  Several  other  buildings,  and  among  the  number  a 
cabinet-maker's  shop,  all  standing  witiiin  the  ten  rods,  were  not  men- 
tioned in  the  application.  The  plaintift"s  store  was  an  ordinary'  hazard, 
and  the  rate  of  premium  was  lo  per  cent.  The  rate  for  a  cal)inet- 
maker's  shop  was  from  25  to  30  per  cent.  On  the  28th  of  Mav,  1840, 
a  fire  commenced  in  the  cabinet-maker's  shoi),  which  communicated 
to  the  plaintiff's  store  and  damaged  it  to  the  amount  of  $850  ;  and  for 
that  loss  thi.s  action  was  brought.  The  judge  charged  the  jury  in  rela- 
tion to  the  survey  or  application,  that  '•  it  ditl  not  amount  to  a  toar- 
ranty :  that  there  must  be  evidence  to  the  jury  (which  is  disclaimed  in 
this  cause)  o^  frauduleyit  misrepresentation,  ov  fraudulent  conceal- 
ment of  facts.  That  an  accidental  omission  to  insert  in  the  applica- 
tion (without  fraud)  a  building  within  the  ten  rods  did  not  make 
void  the  policy  ;  and  therefore  that  the  mere  omission  to  insert  the 
cabinet  shop,  under  the  facts  of  this  case,  where  fraud  is  disclaimed, 
did  not  avoid  the  policy."  The  jur}-  found  a  verdict  for  the  plaintiff, 
and  the  defendants  now  moved  for  a  new  trial  on  a  bill  of  exceptions. 

D.  Wright  and  J.  A.  Spencer,  for  the  defendants. 

13.  Jo/ijison,  for  the  plaintiff. 

Broxson,  J.^  .  .  .  I  am  strongly  inclined  to  the  opinion  that  there 
was  a  warranty  ;  but  there  is  another  feature  in  the  case  which  renders 
it  unnecessary  to  settle  that  question. 

In  marine  insurance  the  misrepresentation  or  concealment  by  the 
assured  of  a  fact  material  to  the  risk  will  avoid  the  policy,  although  no 
fraud  was  intended.  It  is  no  answer  for  the  assured  to  say  that  the 
error  or  suppression  was  the  result  of  mistake,  accident,  forgetfulness, 
or  inadvertence.  It  is  enough  that  the  insurer  has  been  misled,  and 
has  thus  been  induced  to  enter  into  a  contract  which,  upon  correct  and 
full  information,  he  would  either  have  declined,  or  would  have  made 
upon  different  terms.  Although  no  fraud  was  intended  by  the  assured, 
it  is  nevertheless  a  fraud  upon  the  underwriter,  and  avoids  the  polic}'. 
Bridges  v.  Hunter,  1  Maule  &  Sehv.  15;  Macdowall  v.  Fraser,  Doug. 
260;  Fitzherbert  v.  Mather,  1  T.  R.  12;  Carter  v.  Boclnn,  3  Burr. 
1905  ;  Bufe  v.  Turner,  6  Taunt.  338  ;  Curry  v.  Commonwealth  Ins.  Co., 
10  Pick.  535  ;  N.  Y.  Bowery  Ins.  Co.  v.  N.  Y.  Fire  Ins.  Co.,  17  Wend. 
359  ;  1  Marsh.  Ins.  (Cond})  451-453,  465  ;  1  Phil.  Ins.  214,  303.  The 
assured  is  bound,  although  no  inquir}-  be  made,  to  disclose  every  fact 
within  his  knowledge  which  is  material  to  the  risk.  But  this  doctrine 
cannot  be  applicable,  at  least  not  in  its  full  extent,  to  policies  against 
fire.     If  a  man  is  content  to  insure  my  house  without  taking  the  trouble 

^  A  passage  on  warranty  has  been  omitted.  —  Ed. 


ISO  BURRITT  V.  SARATOGA  CO.  MUX.  F.  INS.  CO.         [CHAP.  III. 

to  inquire  of  what  materials  it  is  constructed,  how  it  is  situated  in  refer- 
ence to  other  buildings,  or  to  what  uses  it  is  applied,  he  has  no  ground 
for  complaint  that  the  hazard  proves  to  be  greater  than  he  had  antici- 
pated, unless  I  am  chargeable  with  some  misrepresentation  concerning 
the  nature  or  extent  of  the  risk.  It  is  therefore  the  practice  of  com- 
panies which  insure  against  fire  to  make  inquiries  of  the  assured  in 
some  form,  concerning  all  such  matters  as  are  deemed  material  to  the 
risk,  or  which  may  affect  the  amount  of  premium  to  be  paid.  This  is 
sometimes  done  In'  the  conditions  of  insurance  annexed  to  the  policy, 
and  sometimes  by  requiring  the  applicant  to  state  particular  facts  in  a 
written  application  for  insurance.  When  thus  called  upon  to  speak, 
he  is  bound  to  make  a  true  and  full  representation  concerning  all  the 
matters  brought  to  his  notice,  and  any  concealment  will  have  the  like 
effect  as  in  the  case  of  a  maiine  risk.  See  1  Phil.  Ins.  284,  285,  ed. 
of  1840.  It  is  not  necessary  for  the  purpose  of  avoiding  the  policy  to 
show  that  any  fraud  was  intended.  It  is  enough  that  information  ma- 
terial to  the  risk  was  required  and  withheld. 

This  doctrine  is  fatal  to  the  present  action.  The  plaintiff  was  plainly 
and  directly  called  upon  to  state  the  relative  situation  of  the  store  as  to 
all  other  buildings  witliin  the  distance  of  ten  rods ;  and  he  omitted  to 
mention  several  buildings  which  stood  within  that  distance,  and  among 
the  number  was  one  wiiich  was  far  more  hazardous  than  that  to  which 
the  polic}'  applied.  If  there  could  be  anv  doubt  that  the  facts  con- 
cealed were  material  to  the  risk,  the  question  should  have  been  left  to 
the  jury. 

But  there  is  a  further  view  of  the  case  which  is  still  more  decisive 
against  the  action  ;  and  it  is  one  in  which  the  materiality  of  the  con- 
cealment is  not  open  for  discussion.  The  plaintiff  was  required  by  the 
conditions  annexed  to  the  polic}',  and  bj-  the  printed  form  of  applica- 
tion which  he  used,  to  give  the  information  which  he  withheld.  And 
it  was  one  of  the  "  conditions  of  insurance  "  that  if  he  should  "  make 
anij  misrepresentation  or  concealment  in  the  application "  the  polic}' 
should  be  "  void,  and  of  no  effect."  Nothing  is  said  about  fraud  ;  but 
any  concealment  in  the  application  avoids  the  polic}".  And  yet  the 
jury  was  instructed  that  there  must  be  a  fraudulent  concealment  of 
facts.  That  position  cannot  be  maintained  without  making  a  new 
contract  for  the  parties. 

A  warrantv  b}*  the  assured  in  relation  to  the  existence  of  a  particular 
fact  must  be  strictly  true,  or  the  policy  will  not  take  effect ;  and  this  is 
so  whether  the  thing  warranted  be  material  to  the  risk  or  not.  It 
would,  perhaps,  be  more  proper  to  sa}',  that  the  parties  have  agreed  on 
the  materialitv  of  the  thing  warranted,  and  that  the  agreement  pre- 
cludes all  inquiry  on  the  subject.  See  the  cases  already  cited,  and 
Fowler  v.  JEina.  Ins.  Co.,  G  Cowen,  673,  and  7  Wend.  270,  S.  C.  ; 
1  Phil.  Ins.  351,  354.  Here  the  parties  have  by  their  contract  placed 
a  misrepresentation  or  concealment  in  relation  to  pai'ticular  facts  upon 
the  same  footing  as  a  warranty.     The}'  have  agreed  that  the  misrepre- 


PART  II.,  SECT.  II.J       CLARK   V.    MANUFACTURERS'   INS.    CO.  181 

sentation  or  concealment  shall  avoid  the  policy,  and  we  have  nothing 
to  do  with  the  inquiry  whether  the  fact  misrepresented  or  concealed 
was  material  to  tlie  risk.  The  jury  should  have  been  instructed  to  find 
a  verdict  for  the  defendants. 

The  Chief  Justice,  and  Cowen,  J.,  being  members  of  the  company, 
gave  no  opinion.  New  trial  granted / 


CLARK  AND  Others,  Plaintiffs  in  Error,  v.  THE  MANUFAC- 
TURERS'   INSURANCE   CO.,    Defendants  in  Error. 

SuPRKME  Court  of  the  United  States,  1850.     8  How.  235. ^ 

Error  to  the  Circuit  Court  of  the  United  States  for  the  District  of 
Massachusetts,^  in  an  action  on  a  polic}-  of  insurance  against  fire. 

Jt  appeared  at  the  trial  that  tiie  property  insured  was  a  cotton  mill, 
at  Malone,  in  the  State  of  New  York,  the  defendant's  place  of  busi- 
ness being  Boston,  in  the  State  of  Massachusetts.  In  1834,  Jona- 
than Stearns,  being  the  owner  of  the  mill,  applied  for  insurance,  and 
in  answer  to  printed  questions  proposed  to  him  by  the  defendants, 
represented,  among  other  things,  "  no  lamps  used  in  the  picking- 
room."  Upon  these  representations,  a  policy  was  issued  to  Stearns, 
and  was  from  time  to  time  renewed,  until,  in  1842,  the  plaintiffs 
having  purcliased  the  mill,  a  policy  was  issued  to  them,  in  which  it 
was  declared:  ^'This  policy  is  issued  agreeably  to  the  representation 
formerly  made  by  Jonathan  Stearns,  the  former  owner,  which  rep- 
resentation is  binding  on  the  assured."  When  this  policy  expired, 
the  same  amount  of  premium  was  sent,  with  a  request  for  a  renewal, 
and  another  policy  sent,  not,  however,  containing  the  special  clause  as 
to  Stearns's  representation,  but  a  general  clause,  that  the  policy  was 
issued  on  the  representation  of  the  assured.  Like  policies  continued 
to  be  issued  from  time  to  time  till  1846,  when  the  mill  was  destro3ed 
by  fire,  occasioned  by  a  lamp  in  tlie  picking-room. 

The  defendants  contended  that  the  jury  would  be  warranted  in  find- 
ing that  the  representation  of  Stearns  bound  the  plaintiffs,  and  its 
falsity  avoided  the  policy;  and  if  not,  that  it  was  the  duty  of  the 
insured  to  make  known  a  fact  so  material  to  the  risk,  known  to  him, 
if  unknown  to  the  assured,  and  that  therefore  the  policy  was  void.* 

1  Compare  Gates  v.  Madison  County  Mutual  Ins.  Co.,  5  N.  Y.  469  (1851) ;  Armenia 
Ins.  Co.  V.  Paul,  91  Pa  520  (1879).  — Ed. 

2  Instead  of  the  original  statement,  the  one  in  1 7  Curt.  Dec.  569  has  been  used.  —  Ed. 

3  In  that  court  the  case  is  reported  in  2  Wood.  &  M.  472  (1847).  —  Ed. 

*  In  8  How  2.33,  it  appears  that  it  was  agreed  at  the  trial  "that  such  a  use  of 
lamps  in  the  picker-room  as  appeared  in  this  case  enhanced  the  danger  of  fire,  and  was 
material  to  the  risk ;  "  and  that,  according  to  the  bill  of  exceptions,  the  jury  were  in- 


182  CLARK   V.    manufacturers'    INS.    CO.  [CHAP.  III. 

The  opinion  of  the  court  states  the  points  taken  and  ruled  upon 
these  questions. 

Gillet^  for  the  plaintiffs. 

Cwtis  and  Hall,  contra. 

Woodbury,  J.^  .  .  .  It  is  necessar}'  for  us  to  examine  with  care 
whetlier  an  instruction  like  that  presented  here  could  legally  be  given. 

First,  tlien,  what  is  the  substance  of  that  supposed  instruction? 

It  is,  that  if  no  representations  were  made  or  adopted  by  the  plain- 
tiffs, the}'  would  not  be  entitled  to  recover,  if  lamps  were  in  truth  used 
in  the  picking-room,  which  were  conceded  to  be  material  to  the  risk; 
and  tills  use  was  known  to  the  plaintiffs  and  not  to  the  defendants,  and 
this  use  was  meant  to  be  continued,  and  was  continued,  and  caused 
tiie  present  loss.  In  the  next  place,  what  must  be  considered  the  law 
in  relation  to  this  subject?  Little  doubt  exists,  that,  when  representa- 
tions are  made  or  adopted,  the  denial  in  them  of  a  material  fact,  such 
as  liere,  that  an}'  lamp  was  used  in  the  picking-room,  where  one  or 
more  was  in  truth  used,  makes  the  polic}'  void,  not  onl}-  for  misrepre- 
sentation, but  misdescription  and  concealment.  1  Marshall  on  Ins., 
481  ;  Ellis  on  Fire  and  Life  Ins.,  58  ;  Dobsen  v.  Sotheb}',  1  Moody  & 
Malk.  90  ;  6  Cowen,  G73  ;  4  Mass.  337. 

A  false  representation  avoids  the  policy,  because  it  either  misleads 
or  defrauds.     Livingston  et  al.  v.  Mar.  Ins.  Co.,  7  Cranch,  332. 

In  such  a  state  of  things,  also,  the  insured  —  knowing  that  he  is 
asked  for  representations  to  enable  the  underwriter  to  decide  properly 
whether  he  will  insure  at  all,  and  if  so,  at  wliat  premium  —  must  sup- 
press nothing  material  to  the  risk,  or  the  underwriter  will  not  stand  on 
equal  grounds  with  himself,  and  will  be  forced  to  act  in  the  dark  more 
tlian  himself,  and  probably  to  misjudge.  1  Marshall  on  Ins.,  473,  474, 
note  ;  Lynch  v.  Dunsford,  14  East,  494  ;  Maryland  Ins.  Co.  v.  Ruden's 
Ad.,  6  Cranch,  338,  and  Livingston  v.  Mar.  Ins.  Co.,  id.  279  ;  Co- 
lumbian Ins.  Co.  V.  Lawrence,  10  Peters,  516  ;  McLanahan  v.  Uni- 
versal Ins.  Co.,  1  Peters,  185;  2  Peters,  59;  2  Duer,  388,  379,  411  j 
2  Caines,  57;  1  Wasli.  C.  C.  162. 

Concealment  thus  would  operate  in  some  cases  as  a  fraud,  and  in  all 
will  make  tlie  risk  very  different  from  what  the  insurer  knew  and  agreed 
to.     3  Burr.  1905;  Ellis  on  Fire  and  Life  Ins.,  38. 

structed  "  that  if  they  found  the  policy  declared  on  did  not  refer  to  the  said  representa- 
tions of  Stearns,  and  that  no  representation  was  in  fact  made  or  adopted  by  the  plain- 
tiffs respecting  the  use  of  lamps  in  the  picker-room,  they  -would  then  take  the  law  to 
be,  that,  as  it  was  agreed  by  the  parties  that  the  use  of  lamps  in  the  picker-room  in  the 
manner  found  was  material  to  the  risk,  it  was  the  duty  of  the  plaintiffs  to  disclose  the 
fact  of  such  use  to  the  defendants,  or  their  agent,  when  the  policy  -was  applied  for,  pro- 
vided such  use  then  existed,  and  was  known  to  the  plaintiffs  and  unknown  to  tlie  de- 
fendants, and  was  then  intended  by  the  plaintiffs  to  be,  and  in  fact  was,  continued 
after  the  policy  was  issued,  and  occasioned  the  loss  in  question  ;  and  that  each  failure 
of  the  plaintiffs,  even  without  any  fraudulent  intent  on  their  part,  to  make  this  fact 
known  to  the  defendants,  would  avoid  the  policy."  —  Ed. 

1  The  omitted  passages  did  not  deal  with  concealment.  — Ed. 


PART  II.,  SECT.  II.]       CLARK   V.    MANUFACTURERS'   INS.   CO.  183 

But  the  hypothetical  position  presented  b}'  this  record  is  that  the  law 
would  be  the  same,  provided  no  representations  whatever  were  made, 
and  in  this  form  it  does  not,  in  the  state  of  facts  exhibited  in  the 
record,  meet  Avith  the  sanction  of  this  court.  The  chief  controversy 
appears  to  have  been  concerning  the  first  point ;  and  wlieu  tliis  last 
question  was  made  a  part  of  the  case  by  agreement  of  counsel,  it  was 
not  known  whether  this  court  would  consider  the  original  representa- 
tions by  Stearns  as  adopted,  and  thus  binding  on  those  subsequently 
insured.  Independent  of  those,  none  appear  to  have  been  made  or 
asked. 

Representations,  however,  in  insurances,  it  is  well  known,  almost 
invariably  exist,  either  written  or  parol.  Columl)ian  Ins.  Co.  v.  Law- 
rence, 2  Peters,  49  ;  s.  c.  10  Peters,  515.  But  they  are  not  usually 
named  or  incorporated  in  the  polic}-,  except  on  the  continent  of  Eu- 
rope.    3  Kent,  237 ;  9  Barn.  &  Cress.  693. 

It  is  fair  to  presume  tliat  they  took  place  in  all  the  reported  cases 
on  insurance,  tliongb  often  not  named,  unless  the  contrary  is  expressly 
stated,  as  they  are  in  general  "the  principal  inducements  to  contract, 
and  furnish  the  best  grounds  upon  which  the  premium  can  be  calcu- 
lated."    (1  Marsh,  on  Ins.,  450.) 

But  the  relation  of  tlie  parties  seems  entirely  changed,  if  the  insurer 
asks  no  information  and  the  insured  makes  no  representations.  That 
is  the  chief  novelty  in  this  question,  as  hypotlietically  stated  in  the  bill 
of  exceptions.  We  think  that  the  governing  test  on  it  must  be  this,  ^ 
it  must  be  presumed  that  the  insurer  has  in  person  or  by  agent  in  such 
a  case  obtained  all  the  information  desired  as  to  the  premises  insured, 
or  ventures  to  take  the  risk  without  it,  and  that  the  insured,  being 
asked  nothing,  has  a  right  to  presume  that  nothing  on  the  risk  is  de- 
sired from  him. 

This  rule  must  not  be  misapprehended  and  supposed  to  rest  on 
a  principle  different  and  somewhat  ordinar}',  that  insurers  are  alwa3S 
to  be  expected  to  possess  .some  general  knowledge  of  such  matters  as 
they  deal  with,  independent  of  inquiries  to  the  assured.     8  Peters,  582. 

Nor  on  the  position  well  settled,  that  the  insurer  must  be  presumed 
to  know  what  is  material  in  the  course  of  an}-  particular  trade,  —  its 
usages  at  home  and  abroad,  and  those  transactions  which  are  public, 
and  equally  open  to  the  knowledge  of  both  parties.  Hazard's  Ad.  v. 
New  England  Mar.  Ins.  Co.,  8  Peters,  557  ;   2  Duer  on  Ins.,  379,  478  ; 

3  Kent's  Com.  285,  286;  Green  v.  Merchants'  Ins.  Co.,  10  Pick.  402  ; 

4  Mason,  C.  C.  489  ;  Buck  et  cil.  v.  Chesapeake  Ins.  Co.,  1  Peters,  160. 
Nor  on  any  special  usage  proved,  as  in  Long  v.  Duff,  2  Bos.  &  Pul. 
210,  that  it  was,  in  a  case  like  this,  the  duty  of  "the  underwriter  to 
obtain  this  information  for  himself." 

But  when  representations  are  not  asked  or  given,  and  with  only  this 
general  knowledge  the  insurer  chooses  to  assume  the  risk,  he  must  in 
point  of  law  be  deemed  to  do  it  at  his  peril.  It  has  been  justly  re- 
marked, in  a  case    somewhat   like   this   in   principle,  —  "With   this 


184  CLARK    V.    manufacturers'    INS.    CO.  [CHAP.  m. 

knowledge,  and  without  asking  a  question,  the  defendant  underwrote  ; 
and  hy  so  doing  he  took  the  knowledge  of  the  state  of  the  place  upon 
himself,"  etc.  '  1  Marshall  on  Ins.,  481,  482  ;  Carter  v.  Boehm,  3  Burr. 
1905. 

In  cases  of  fire  insurance,  also,  the  underwriters  ma^'  be  considered 
as  more  likely  to  do  this  than  in  marine  insurance  ;  because  the  subject 
insured  is  usually  situated  on  land  and  nearer,  so  as  to  be  examined 
easier  by  them  or  their  agents ;  and  the  circumstances  connected  with 
it  are  more  uniform  and  better  known  to  all.  1  Har.  &  Gill,  295 ; 
Burritt  v.  Saratoga  M.  F.  Ins.  Co.,  5  Hill,  192. 

It  is  true  that,  from  what  is  reasonable  and  just,  some  exceptions 
must  exist  to  this  general  rule,  though  none  of  them  are  believed  to 
cover  the  present  case.  Thus  the  insurer  must  be  supposed,  if  no 
special  information  has  been  asked  or  obtained,  to  take  the  risk,  on  the 
hy[)0thcsis  that  nothing  unusual  exists  enhancing  the  risk  ;  and  hence, 
as  in  this  case,  if  lamps  are  used  in  the  picking-room,  which  do  en- 
hance it,  he  must  show  that  their  use  in  the  manner  practised  was 
unusual  or  not  customary,  and  then,  though  no  representations  had 
been  asked  or  made,  he  would  make  out  a  case,  where  it  was  the  duty 
of  the  insured  to  inform  him  of  the  fact,  and  where  siipjyressio  veri 
would  be  as  improper  and  injurious  as  snr/gestio  falsi.  Livingston  v. 
Mar.  Ins.  Co.,  6  Cranch,  281. 

So  if  any  extrinsic  peril  existed,  outside  and  near  a  building  insured, 
and  which  increased  the  risk,  the  insured  should  communicate  that, 
though  not  requested.  Bufe  v.  Turner,  6  Taunt.  338 ;  Walden  v. 
Lou.  Ins.  Co.,  12  Louis.  134.  But  as  to  the  ordinar}'  risks  con- 
nected with  the  property  insured,  if  no  representations  whatever  are 
asked  or  given,  the  insurer  must,  as  before  remarked,  be  supposed  to 
assume  them  ;  and,  if  he  acts  without  inquiry  anywhere  concerning 
them,  seems  quite  as  negligent  as  the  insured,  who  is  silent  when  not 
requested  to  speak.  The  conclusions  on  the  whole  case  then  are,  that 
the  defendants  are  entitled  to  be  discharged  on  the  first  ground  upon 
the  merits  ;  because  the  plaintiffs  were  interrogated  in  writing  on  tliis 
very  fact  and  risk,  or  others  were,  whose  answers  the}'  adopted  ;  and 
the  truth  was  not  disclosed  in  their  representations  in  reply,  when  it  is 
conceded  to  have  been  material  to  the  risk  ;  and  therefore,  b}-  the  ex- 
press stipulations  of  this  policy,  as  well  as  by  the  general  principles  of 
the  law  of  insurance,  the  plaintifl's  should  not  recover.  But  our  judg- 
ment cannot  be  rendered  on  this  conclusion,  standing  alone,  because 
the  second  point  is  connected  with  it  in  the  form  before  explained. 
Again,  the  defendants  would  be  entitled  to  be  discharged  under  the 
second  point  on  the  ground,  which  accords  with  the  truth  here,  that 
representations  were  rcall}-  made  on  this  subject;  but  not,  if  none 
whatever  were  made,  according  to  what  is  hypotheticallj'  suggested  in 
the  record.  The  judgment  below  must,  therefore,  be  reversed,  for  the 
purpose  of  correcting  what  is  defective  in  the  manner  of  stating  how 
the  verdict  was  taken  and  how  the  last  question  stood  b}'  itself  on  the 


PART  II.,  SECT.  II.]       WALES    V.    BOWERY   FIRE   INS.    CO.  185 

facts  proved  ;  and  the  case  must  be  remanded  to  the  court  below,  "with 
instructions  to  take  all  proper  steps  to  carry  into  effect  the  views  pre- 
sented in  this  opinion.^ 


WALES  V.  NEW  YORK   BOWERY  FIRE  INSURANCE  CO. 
Supreme  Court  of  Minnesota,  1887.     37  Minn.   106. 

Appeal  by  defendant  from  an  order  of  the  District  Court  for  Henne- 
pin County,  LocHREN,  J.,  presiding,  refusing  a  new  trial  after  a  verdict 
for  plaintiff. 

Torrance  &  Fletcher,  for  appellant. 

Lxisk  ^  Bunn^  for  respondent. 

1  Ace:  Gates  v.  Madison  County  Mut.  Ins.  Co.,  5  N.  Y.  469  (1851);  Boggs  v. 
America  Ins.  Co.,  30  Mo.  6.3  (I860). 

In  Hartford  Protection  Ins.  Co.  v.  Harmer,  2  Ohio  St.  4.')2,  472  (185.3),  Rannet,  J., 
for  tlie  court,  though  the  point  was  unnecessary,  said :  "  It  is  not  now  true,  whatever 
may  he  thought  of  the  older  authorities,  that  tliere  is  no  difference  in  this  respect  be- 
tween marine  and  fire  insurance  ;  nor  that  a  failure  to  disclose  every  fact  material  to 
the  risk,  upon  which  information  is  not  asked  for,  or  suppressed  with  a  fraudulent 
intent,  will  avoid  a  policy  of  the  latter  description.  The  reason  of  the  rule,  and  the 
policy  in  which  it  was  founded,  in  its  application  to  marine  risks,  entirely  failed  when 
applied  to  fire  policies.  In  the  former,  the  subject  of  insurance  is  generally  beyond 
the  reach,  and  not  open  to  the  inspection  of  the  underwriter,  often  in  distant  ports  or 
upon  the  high  seas,  and  the  peculiar  perils  to  which  it  may  be  exposed,  too  numerous 
to  be  anticipated  or  inquired  about,  known  only  to  the  owners  and  those  in  tlieir  em- 
ploy ;  while  in  the  latter,  it  is,  or  may  be,  seen  and  inspected  before  the  risk  is 
assumed,  and  its  construction,  situation,  and  ordinary  hazards,  as  well  appreciated  by 
the  underwriter  as  the  owner.  In  marine  insurance,  the  underwriter,  from  the  very 
necessities  of  his  undertaking,  is  obliged  to  rely  upon  the  assured,  and  has  therefore 
the  right  to  exact  a  full  disclosure  of  all  the  facts  known  to  him,  which  may  in  any 
way  affect  the  risk  to  be  assumed.  But  in  fire  assurance,  no  such  necessity  for  reli- 
ance exists,  and  if  the  underwriter  assumes  the  risk  without  taking  the  trouble  to 
either  examine  or  inquire,  he  cannot  very  well,  in  the  absence  of  all  fraud,  complain 
that  it  turns  out  to  be  greater  than  he  anticipated." 

In  Campbell  v.  American  F.  Ins.  Co.,  73  Wis.  100,  109  (1888),  Taylor,  J.,  for  the 
court,  said:  "The  offer  of  the  company  to  show  .  .  .  that  the  plaintiff  did  not  disclose 
the  fact  that  the  barn  contained  some  other  property  than  the  hay  insured,  was  prop- 
erly rejected  upon  two  grounds :  first,  it  is  not  alleged  in  the  answer  that  there 
was  a  fraudulent  concealment  of  the  facts  sought  to  be  proved  ;  and,  second,  the  fact 
that  these  things  were  in  the  barn  would  not  avoid  the  contract  to  insure,  as  no  inquiry 
was  made  by  the  agent  in  regard  to  them  at  the  time  of  making  the  contract,  although 
he  did  question  the  plaintiff  in  regard  to  the  situation  of  the  barn.  Not  having  ques- 
tioned the  plaintiff  as  to  what  the  barn  contained,  he  cannot  now  claim  that  it  con- 
tained other  property  which  increased  the  hazard  of  insurance,  unless  he  can  show  that 
the  plaintiff  concealed  the  facts  fraudulently." 

And  see  Satterthwaite  v.  Mutual  Beneficial  Ins.  Assn.,  14  Pa.  393  (1850) ;  Girard 
F.  &  M.  Ins.  Co.  V.  Stephenson,  37  Pa.  293  (1860) ;  Keith  v.  Globe  Ins.  Co.,  52  111.  518, 
£?,9-531  (1370)  ;  Key  v.  Guarantors'  Liability  Indemnity  Co.,  181  Pa.  220  (1897),  a  case 
of  i"sura;-.ce  rg'inst  ncridental  losses  other  than  those  caused  by  fire  or  lightning.  — Ed. 


186  WALES   V.   BOWERY   FIRE   IXS.    CO.  [cHAP.  Ill 

Mitchell,  J.  This  action  was  brought  upon  a  policy  of  insurance 
to  recover  the  value  of  wood  destro3ed  by  fire  between  the  hours  of 
10  A.  M.  and  1  p.  M.  of  May  15,  1885.  The  policy  bore  date  May  13, 
1885,  and  purported  to  insure  plaintiff's  wood  on  the  north  side  of  the 
Manitoba  railway,  at  Armstrong's  station,  for  one  year  from  noon  of 
that  date.  The  defence  was  that  the  agreement  to  insure  was  not 
entered  into  until  May  18th,  three  days  after  the  propert}'  was  de- 
stro3'ed,  of  Avhich  fact  plaintiff  had  knowledge  at  the  time,  but  with- 
held the  information  from  the  defendant,  who  made  the  contract  and 
executed  the  policy  in  ignorance  of  the  loss  of  the  property.  It  appears 
from  the  evidence  than  an  application  for  insurance  was  made  b}' 
plaintiff,  on  either  the  14th  or  15th  of  Ma}',  to  Milligan  &  Ermentraut, 
insurance  agents  in  Minneapolis,  in  the  form  of  a  written  memorandum 
left  at  their  office  with  their  clerk,  calling  for  $1,000  insurance  on  wood, 
"  on  north  and  south  sides"  of  the  Manitoba  railway  at  Armstrong's 
station.  It  is  customary  for  insurance  agents,  when  they  have  no  com- 
pany in  which  to  carry  a  risk,  to  place  it  with  some  other  agency,  in 
which  case  the  agency  which  takes  the  risk,  after  writing  up  the  polic}', 
intrusts  it  to  the  other  agency  to  deliver,  and  to  collect  the  premium, 
and  then  the  two  divide  the  commissions  between  them. 

In  the  present  instance,  Milligan  &  Ermentraut,  having  no  company 
in  which  they  could  carry  the  risk,  on  May  15th,  took  plaintifl"s  memo- 
randum to  the  office  of  Cheney,  the  agent  of  defendant,  and,  not  finding 
him  at  home,  left  it  with  his  clerk,  with  the  request  to  have  it  written 
up.  The  clerk  promised  that  the  matter  would  be  attended  to,  but  in 
fact  she  had  no  authority  to  accept  applications,  or  bind  the  defendant 
company.  The  application  was  called  to  Cheney's  attention  about 
4  o'clock  in  the  afternoon  of  the  same  day,  but,  it  being  in  the 
"blanket"  form,  he  could  not  accept  the  risk,  and  took  no  action  in 
the  matter.  He  supposed  that  Milligan  &  Ermentraut  would  call  to 
see  about  it,  but,  not  having  done  so,  Cheney  went  to  plaintiff's  oflSce 
on  May  18th,  and  "  got  authority"  from  him  to  write  up  two  policies 
for  $1,000  each,  one  on  wood  on  the  north  side,  and  the  otiier  on  wood 
on  the  south  side,  of  the  railway  Irack.  It  was  not  until  tliis  date  that 
Cheney  assumed  the  risk  for  the  defendant,  or  entered  it  in  his  register. 
The  policies  were  dated  back  to  May  13th,  the  date  of  the  expiration 
of  a  policy  in  a  Cleveland  company  which  plaintiff  had  the  year  before 
obtained  through  Milligan  &  Ermentraut,  who  had,  however,  placed 
the  risk  with  Cheney,  who  was  at  the  time  agent  of  that  company. 
The  object  of  this  was  "  to  make  the  insurance  continuous."  •  After 
they  were  written  up,  the  policies  were  delivered  to  Milligan  &  Ermen- 
traut, who  delivered  them  to  plaintiff.  Plaintiff  learned  of  the  loss  of 
the  wood  on  the  afternoon  of  May  15th,  but  not  until  after  his  applica- 
tion had  been  left  at  the  office  of  Milligan  &  Ermentraut.  Neither 
Cheney  nor  Milligan  &  Ermentraut  had  any  knowledge  of  the  loss  until 
after  the  policies  had  been  executed  and  delivered  to  plaintiff.  U[)on 
learning  the  facts  as  to  the  loss,  defendant  cancelled  the   policies, 


PART  II.,  SECT.  II.]       WALES    V.    BOWERY   FIRE    INS.    CO.  187 

May  SOtli.  The  premiuia  was  paid  b}-  plaintifT  to  Milligan  &  Ermen- 
traut  June  9lh.  They  sa3-  they  tendered  it  to  Cheney-,  but  that  he 
refused  to  accept  it,  and  they,  on  ascertaining  that  the  policies  had 
been  cancelled,  tendered  it  back  to  plaintiff,  Init  he  refused  to 
receive  it. 

Upon  this  state  of  facts  we  do  not  see  how  plaintiff  can  recover. 
As  in  the  case  of  any  other  contract,  to  constitute  a  contract  of  insur- 
ance, the  minds  of  the  parties  must  meet  and  concur  as  to  terms. 
Now.  prior  to  May  18th,  Cheney  had  never  had  any  communication 
with  anv  one  regarding  this  insurance.  He  was  ignorant  even  of  what 
had  passed  between  plaintiff  and  Milligan  &  Erm^iitraut.  He  knew 
nothing  about  the  matter  except  what  was  disclosed  by  the  memo- 
randum of  application  left  at  his  office  May  15th.  Had  he  accepted 
the  risk  on  the  terms  of  this  application,  and  written  up  the  policy 
accordingly,  a  different  question  would  have  been  presented.  But  this 
he  declined  to  do,  because  the  risk  in  the  form  stated  in  the  application 
was  not  one  which  he  could  take.  The  terms  of  tlie  contract  were 
never  agreed  on  until  Cheney  went  to  plaintiff's  office  on  the  18th,  and 
these  terms  were  entirely  different,  both  as  to  the  amount  and  nature 
of  the  risk  assumed,  from  those  contained  in  plaintiff's  original  memo- 
randum. Hence,  even  under  the  rule  invoked  by  plaintiff,  that,  when 
an  application  for  insurance  is  accepted,  the  risk  attaches  at  the  date 
of  the  application,  the  risk  could  not  in  this  case  attach,  by  relation, 
before  the  18th,  for  that  was  the  time  when  the  terms  were  agreed  on, 
and  must  therefore  be  taken  as  the  date  when  the  application  was 
made,  and  the  contract  entered  into. 

If  at  that  time  both  parties  had  been  ignorant  of  the  loss,  it  would 
have  been  competent  for  them,  by  antedating  the  polic}-,  to  have  made 
it  retroactive.  But  in  fact  the  plaintiff"  then  knew  that  the  property 
had  been  destroyed,  but  did  not  communicate  that  fact  to  defendant's 
agent,  who,  in  ignorance  of  the  loss,  accepted  the  risk,  and  issued 
the  policy.  Under  these  circumstances,  the  policy  is  void,  and  does 
not  cover  the  loss.  Order  reversed} 

1  Compare  Home  Ins.  &  Banking  Co  t-.  Myer,  93  111.  271  (1879). 

And  see  Insurance  Co.  v.  Lyman,  I.t  Wall.  664  (1872),  a  marine  insurance  case.  —  Ed. 


188  PELZER    MANUF.    CO.    V.    ST.    PaUL   INS.    CO.         [CHAP.  III. 


PELZER  MANUFACTURING   CO.   v.    ST.   PAUL  F.    &   M. 

INS.  CO. 

PELZER  MANUFACTURING   CO.    v.   SAVANNAH   F.  &  M. 

INS.   CO. 

Circuit  Court  of  the  United  States,  District  of   South  Caro- 
lina, 1890.     41  Fed.  R.  271. 

At  law. 

Smythe  &  Lee  and  Wells  &  Orr,  for  plaintiff. 

N.  I.  Hammond  and  I.  H.  Haytoood,  for  defendants. 

SiMONTON,  J.  (cliarging  jury).     Cely  &  Brc,  warehousemen,  insured 
certain  bales  of  cotton,  stored  with  them  by  plaintiff  in  their  warehouse 
in  Greenville,  near  the  track  of  the  Greenville  &  Columbia  Railroad. 
The  cotton  was  insured  in  their  own  name,  on  a  form  of  policy  in- 
tended for  warehouses,  containing  the  special  clause,  "cotton  in  bales, 
their  own,  or  held  by  them  in  trust,  or  on  commission,  or  on  joint  ac- 
count with  others,  or  sold  but  not  delivered,  contained  in"  their  ware- 
house.    The  cotton  was  burned.     Proof  of  loss  was  made.     Cely  «fe 
Bro.   assigned  their  policies  to  the   plaintiff.     Among  these   policies 
were  one  of  the  St.  Paul  Fire   &  Marine  Insurance   Company,  for 
$5,000,  and  one  of  the  Savannah  Fire  &  Marine  Insurance  Company, 
for  $2,500.     These  two  companies  having  refused  to  pay  the  loss,  these 
suits  were  brought.     They  are    separate  and   distinct  suits;    but,  as 
they  depend  upon  the  same  facts,  they  are  tried  together.     The  de- 
fence is :  (1)  That  Cely  &  Bro.  had  no  insurable  interest  in  the  cotton 
burned.     (2)  That  they  insured  the  cotton  in  their  own  name,  and  did 
not  disclose  the  fact  that  the  Pelzer  Manufacturing  Company  owned  it. 
With  respect  to  these,  I  instruct  you  that  Cely  &  Bro.,  being  ware- 
housemen, had  the  right  to  insure  cotton  in  their  warehouse  in  their 
own  name,  under  the  forms  of  policy  in  evidence,  and  when  the  loss 
occurred  they  had  the  right  to  sue   for  the  entire  loss  in  their  own 
name  ;  and,  "having  such  right,  they  could  lawfully  assign  the  policy 
to  plaintiff,  the  owner  of  the  cotton,  who  could  lawfully  sue  as  such 
assignee.     In  these  suits,  plaintiff,  being  assignee  of  Cely  &  Bro.,  is 
bound   by  everything  which  would  have  bound   Cely  &  Bro.  before 
notice  of\hc  assignment.     Treat  the  case  as  if  brought  by  Cely  &  Bro. 
(3)  The  last  ground  of  defence  is  this  :  It  seems  that  Cely  &  Bro.  had 
erected  their  warehouse  on  the  right  of  way  of  the  Greenville  &  Colum- 
bia Railroad  ;  that  they  had  leased  the  land  on  which  it  was  built,  and, 
under  the  terms  of  the  lease,  Cely  &  Bro.  had  released  the  railroad 
company  from  liability  for  any  damage  occasioned  by  a  fire  from  its 
locomotives ;  that  this  was  a  material  fact,  as  it  deprived  the  insurers 
of  the  right  of  subrogation,  and  was  not  known  or  disclosed  to  the  in- 
surance company  when  the  insurance  was  effected,  and  for  this  reason 


PART  IT.,  SECT.  II.]       PELZER    MANUF.    CO.    V.    ST.    PAUL   INS.    CO.        189 

the  policy  is  not  binding  on  the  insurance  company.  There  can  be  no 
doubt  that  when  an  insurance  company  has  paid  a  loss  like  this  it  is 
entitled  to  be  put  in  the  place  —  would  stand  in  the  shoes  — of  the 
person  insured,  and  is  entitled  to  any  claim  for  damages  which  the 
person  insured  had  against  the  person  causing  the  loss.  This  is  called 
the  '^  right  of  subrogation."  It  is  given  by  the  law,  and  need  not  be 
o-iven  by  contract.  I  have  also  no  doubt  that  in  the  present  cases  the 
covenant  in  the  lease  of  Cely  «fe  Bro,  would  prevent  them  from  pro- 
ceeding against  the  railroad  company  ;  and,  as  Cely  &  Bro.  could  not 
do  this,  the  insurance  company,  being  subrogated  only  to  their  rights, 
could  not. 

The  questions  in  the  case  are :  Is  this  covenant  in  this  lease  a  mate- 
rial fact?  Was  its  existence  concealed  by  Cely  &  Bro.  when  they 
effected  insurance,  or  did  they  omit  to  state  it?  Did  this  concealment 
or  omission  invalidate  the  policy?  Was  it  a  material  fact?  Not,  was 
it  deemed  by  the  insurance  company  a  material  fact?  But  was  it 
known,  or  should  it  have  been  known,  to  Cely  &  Bro.  to  be  a  material 
fact  entering  into  the  contract  of  insurance?  These  are  questions  for 
you.  In  coming  to  your  conclusion  upon  them,  you  should  inquire,  in 
what  way  did  the  insurance  companies  make  known  their  estimate  of 
this  as  a  material  fact?  Did  tliey  communicate  this  to  Cely  &  Bro.? 
If  not,  did  they  make  any  difference  in  rates  between  property  insured 
with  right  of  subrogation,  and  such  property  insured  without  this  right? 
Was  there  any  usage  or  custom  among  insurance  companies  in  this  ter- 
ritory making  a  discrimination  in  this  respect,  showing  their  estimate 
of  the  materiality  of  the  right  of  sul)rogation  ?  Did  tliey  refuse  risks 
in  which  subrogation  was  released  ?  In  order  to  make  this  a  material 
fact  entering  into  this  contract,  both  parties  must  have  known,  or 
should  have  known,  that  is,  must  be  presumed  to  know,  that  it  was 
so  considered.  If  it  be  a  material  fact,  and  if  Cely  &  Bro.  did  not  in- 
tentionally conceal  it.  or  if  they  omitted  to  state  it  because  they  did 
not  know,  and  had  no  reason  to  know,  and  were  not  put  on  the  inquir}' 
so  as  to  know,  that  it  was  deemed  to  be  a  material  fact  by  the  com- 
pan}'  issuing  the  policy,  then  their  silence  with  regard  to  it  does  not 
make  the  policy  invalid,  especially  if  the  jury  believe  from  the  evidence 
that  the  policy  was  issued  on  a  verbal  application. 

ox    MOTION    FOR    NEW  TRIAL. 

(March  7,  1890.) 

Before  Bond  and  Simonton,  JJ. 

Per  Curiam.  The  jury  having  found  a  verdict  for  the  plaintiff  in 
each  of  these  cases,  the  defendants  now  move  for  a  new  trial  in  each 
case,  on  exceptions  to  the  charge  of  the  presiding  judge  to  the  jury. 
Tlie  circuit  judge,  at  the  request  of  the  trial  judge,  sat  at  the  hearing, 
and  unites  in  the  decision  upon  these  motions.^  .  .  . 

^  Passages  not  dealing  with  concealment  have  been  omitted. — Ed. 


190  PELZER   MANUF.    CO.   V.    ST.    PAUL    INS.    CO.        [CHAP.  III. 

The  most  serious  exception  is  to  so  miicli  of  the  charge  as  related  to 
the  silence  of  Cely  &  Bro.  respecting  the  covenant  in  tlieir  lease  with 
the  Greenville  &  Columbia  Railroad  Company,  releasing  that  company 
from  any  liability  for  fire  caused  by  their  locomotives  on  their  right  of 
way.  Whether  the  fact  that  Cely  &  Bro.  had  released  the  railroad 
company  from  all  claim  for  damages  caused  by  its  engines  was  a  mate- 
rial fact,  or  not,  was  submitted  to  the  jury  in  the  instructions  of  the 
court  which  are  excepted  to,  and  the  method  by  which  the  jury  could 
ascertain  such  materiality  was  pointed  out  to  it.  The  jury  was  told 
that  if  the  insurance  companies  in  this  territory  made  no  difference  in 
rate,  with  right  of  subrogation  or  without  it,  or  if  they  found  from  the 
evidence  there  was  neither  usage  nor  custom  showing  the  materiality  of 
the  right  of  subrogation  among  insurance  companies  in  their  accept- 
ance or  refusal  of  risks,  then  they  might  find  that  the  non-mention  of 
such  a  fact,  where  the  insurance  was  on  verbal  application,  was  not  a 
concealment  or  omission  of  a  material  fact,  which  would  invalidate  the 
polic}'.  If  the  fact  had  been  as  stated,  tlie  jury  found  it  would  have 
made  no  difference  in  the  risk  ;  that  neither  party,  insured  or  insurers, 
had  ever  treated  in  this  section  of  the  country  such  matter  as  material. 
This  being  the  case,  it  did  not  enter  or  become  a  part  of  the  contract 
of  insurance.  The  presiding  judge  was  not  in  error.  Tate  v.  Hyslop, 
15  Q.  B.  Div.  377;  Phoenix  Ins.  Co,  v.  Erie  &  W.  Transp.  Co.,  117 
U.  S.  313,  6  Sup.  Ct.  Rep.  750,  1176.     The  motions  are  dismissed. 


PAKT  II.,  SECT.  III.]  HUGUEXIN   V.   EAYLEY.  l91 

SECTION  III. 

Life  Insurance. 

HUGUENIN  V.   EAYLEY. 

Common  Pleas,  1815.     6  Taunt.  186. 

This  -was  an  action  upon  a  policy  of  insurance  subscribed  b}'  the 
Albion  Insurance  Compau}-  upon  the  life  of  Elizabeth  Swayne.  Upon 
the  trial  of  the  cause  at  the  Sarum  spring  assizes,  1815,  before  Dampiek, 
J.,  one  defence  ^Yas,  that  there  had  been  a  fraud  in  effecting  the  policy 
by  the  suppression  of  a  fact  which  the  contract  required  the  assured  to 
disclose.  It  appeared  that  E.  Swayne,  who  had  been  many  years  resi- 
dent in  a  house  of  her  own  in  the  parish  of  Fisherton  Anger,  but  was 
in  December,  1813,  a  prisoner  for  debt  in  the  county  jail  in  Fishertown 
Anger,  then  employed  Mather  to  effect  an  insurance  on  her  life  with 
the  defendants  ;  one  condition  of  the  insurance  was,  that  a  declaration 
should  be  made  of  the  state  of  the  health  of  the  life  insured,  and 
Mather,  reciting  that  he  had  proposed  on  the  behalf  of  Elizabeth 
Swayne  of  Fisherton  Anger  an  insurance  on  her  life,  which  had  been 
accepted  on  the  declaration  then  following,  declared  that  E.  Swayne 
did  not  exceed  the  age  of  sixtj'-six  years,  and  that  she  was  then  resi- 
dent as  above ;  it  was  stipulated  that  the  polic}^  should  be  valid  only 
if  the  statement  were  free  from  all  misrepresentation  or  reservation. 
For  the  purpose  of  ascertaining  the  state  of  her  health,  Mather,  b}'  the 
direction  of  the  defendants,  called  in  a  physician,  who  found  the  subject 
in  the  jail,  which  is  in  a  situation  perfectly  health}',  confined  in  a  large, 
airy  room,  well  calculated  to  preserve  the  health  of  its  inhabitants. 
She  was  apparently  about  sixty  years  of  age,  a  fresh-looking,  health}", 
hale  woman,  making  allowances  for  her  confinement ;  for  confinement 
makes  some  diflTerence  in  the  state  of  health.  He  certified  that  she  was 
in  good  health,  and  he  would  have  noticed  on  his  certificate  the  fact  of 
her  being  in  jail,  had  he  not  been  led  by  the  circumstance  of  Mather's 
speaking  of  the  defendants  by  the  term  "our  office,"  to  suppose  he 
was  an  agent  of  the  defendants,  and  that  all  which  he  knew  would  be 
communicated,  for  the  witness  thought  it  a  fact  material  to  the  terms 
of  the  contract  to  be  communicated.  Upon  this  evidence,  Dampier,  J., 
thought,  that  Mather  had  by  contrivance  prevented  the  physician  from 
stating  a  fact  to  the  defendants,  which  he  thought  material  to  the  con- 
tract, and  he  therefore  stopped  the  plaintiff's  case,  and  without  hearing 
the  defendant's  case  directed  a  nonsuit. 

Ijest,  Serjt.,  in  this  term  obtained  a  rule  nisi  to  set  aside  the  nonsuit 
and  have  a  new  trial ;  he  urged  that  the  contract  did  not  require  any 


193  HUGUENIN    V.   RAYLEY.  [CHAP.  III. 

Statement  respecting  the  state  of  the  party's  libert\-,  or  confinement ; 
the  defendants  required  precise  and  particular  information  respecting 
certain  facts ;  and  the  least  misstatement  on  those  facts  would,  he 
admitted,  be  fatal ;  but  the  assured  was  not  bound  to  disclose  facts 
which  were  not  inquired  of,  and  it  would  be  a  dangerous  doctrine  to 
encourage  ;  it  would  render  necessary  that  an  assured  should  furnish 
the  insurers  with  a  minute  history  of  his  whole  life  ;  there  was  a  mani- 
fest distinction  between  misrepresentation  and  silence.  Some  insurance 
offices  required  by  their  contract  that  evei-ything  should  be  certified  tliat 
was  material  to  the  risk ;  but  that  was  not  the  case  here  ;  and  there- 
fore, although  imprisonment  might,  as  the  physician  stated,  in  a  slight 
degree  increase  the  risk,  that  could  not  invalidate  the  contract  between 
the  parties  ;  at  all  events,  if  the  holding  back  a  material  fact  would 
avoid  the  policy,  it  was  a  question  that  ought  to  have  been  left  to  the 
jur}-,  whether  the  imprisonment  were  a  mateilal  fact,  and  the  defend- 
ant ought  to  have  had  the  opportunity  of  bringing  evidence  before  the 
jury  to  show  that  it  was  immaterial.     The  court  granted  a  rule  ?nsi. 

Lens,  Serjt,  now  showed  cause  against  this  rule.  From  whatever 
cause  the  concealment  originated,  if  there  was  a  concealment  of  that 
which  it  was  important  should  be  known,  it  avoids  the  policy.  The 
terms  of  the  declaration  induce  a  belief,  that  the  residence  in  Fisher- 
ton  Anger  was  a  residence  at  large  there,  the  physician's  evidence  is, 
not  only  that  he  thought  it  important  in  the  construction  of  the  con- 
tract, but  that,  for  physical  reasons,  it  was  material  whether  the 
subject  was  in  prison,  and  debarred  from  air  and  exercise,  or  not ; 
insomuch,  that  he  saw  reason  for  going  beyond  the  matters  expressly 
required  by  the  proposal,  so  far  as  to  insert  the  mention  of  this  fact  in 
his  certificate,  if  he  had  not  been  misled  by  the  idea  that  Mather  was 
the  agent  of  tlie  defendants.  By  the  terms  "  without  reservation,"  the 
assured  was  bound  to  state  everything  which  from  its  nature  could 
possibly  bear  on  the  subject.  If  this  fact  had  been  disclosed,  the 
defendants  could  have  taken  medical  advice  whether  the  imprisonment 
would  increase  the  risk.  Unless,  therefore,  the  plaintiff  could  prove 
that  this  fact  could  by  no  possibility  increase  the  risk  (and  the  nature 
of  things  shows  the  contrary),  it  ought  to  have  been  communicated, 
and  the  defendants  had  a  right  to  have  it  laid  before  them  that  they 
might  form  their  own  judgment  thereon.  Acljornatur. 

On  this  day  the  court  relieved  Best  from  supporting  his  rule.  They 
observed  that  they  had  examined  the  documents,  and  there  was  noth- 
ing express  in  the  terms  of  the  policy  which  required  the  imprisonment 
to  be  stated,  nor  was  there  an  omission  of  the  statement  of  any  matter 
which  the  office  called  for ;  nevertheless,  if  the  imprisonment  were 
a  material  fact,  the  keeping  it  back  would  be  fatal ;  but  it  ought  to 
have  been  submitted  to  the  jury,  whether  tlie  omission  of  the  fact 
relied  on  was  or  was  not  a  material  omission,  therefore  there  must  be 
a  new  trial.  Ttule  absolute. 


PART  II.,  SECT.  III.]      LINDENAU   V.   DESBOROUGH. 


193 


LINDENAU   u.   DESBOROUGH. 

King's  Bench,  1828.     8  B.  &  C.  586.* 

Assumpsit  against  the  secretary  of  the  Atlas  Insurance  Company  on 
a  policy  of  insurance  on  the  life  of  the  Duke  of  Saxc  Gotha.     Plea,  the 
general  issue.     At  the  trial  before  Lord  Tenteuden,  C.  J.,  it  appeared 
that  in  1824  an  insurance  was  effected  on  the  life  of  the  duke  with  the 
Union  Assurance  Company.     That  company  had  an  agent  in  Germany, 
who,  on  behalf  of  his  principals,  submitted  certain  questions  to  the 
physicians  of  the  duke,  many  of  them  as  to  specific  diseases,  and  his 
habits  of  life;  and   the   last  was,  ''Is  there   any  other  circumstance 
within  your  knowledge  which    the  directors  ought  to   be   acquainted 
with?"  and  this  was  answered  in  the   negative.     There   was  also   a 
private  certificate  sent  l)y  the  agent  to  the  directors  in  answer  to  their 
inquiries  as  to  certain  points.     In  this  also  there  was  a  general  ques- 
tion.    "Do   you   know  any  other   circumstance  which   ought   to   be 
communicated  to   the   directors?"    which   was   answered   as  follows: 
"Agreeably  to  our  informations,  the  duke  has  led  a  dissolute  life  in 
former  days,  by  which  he  has  lost  tiie  use  of  his  speech,  and,  according 
to  some  informations,  also  that  of  his  mental  faculties,  which,  however, 
is  contradicted  by  tlie  medical  men  ;  and  as  little  as  we  believe  that  this 
has  any  influence  on  his  natural  life,  we  find  it  our  duty  to  mention  it." 
The  physicians  in  one  of  their  answers  said  the  duke  was  hindered 
in  his  speech,  but  did  not  mention  the  state  of  his  mental  faculties.     An 
application  was  made  to  the  Union  to  insure  a  further  sura  on  the 
duke's  life  ;  but  that  being  contrary  to  their  general  rules,  their  agent 
handed  over  the  proposal  to  the  Atlas,  and  at  the  same  time  gave  the 
latter  company  the  private  answers  received  from  their  agent  in  Ger- 
many.    The  plaintiff  signed  the  usual  declaration,  and  declarations  by 
the  duke's  physicians  were  made  to  the  Atlas  similar  to  those  made  to 
the  Union.    Upon  receiving  these  documents  the  Atlas  entered  into  the 
policy.     In  1825  the  duke  died,  and  it  was  then  discovered  that  there 
had  existed  in  his  head  for  many  years  a  large  tumor  pressing  on  the 
brain,  to  which  the  loss  of  speech  and  mental  faculties  might  be  at- 
tributed ;    but   all    the   medical    testimony  went  to  establish   that  the 
symptoms  during  the  duke's  life  were  not  such  as  were  likely  to  excite 
the  suspicion  that  such  a  tumor  existed,  or  that  he  was  afflicted  with 
any  particular  disorder  tending  to  shorten  life.     One  foreign  physician, 
however,  said,  that  had  he  been  consulted  he  should  have  thought  it 
right  to  state  that  he  attributed  the  loss  of  speech  to  a  paralysis  of  the 
organs  of  speech.     And  an  English  surgeon,  called  for  the  plaintiff,  on 
cross-examination  said  he  should,  in  answer  to  the  general  question, 
"  Whether  he  knew  any  other  circumstances  that  ought  to  be  communi- 

1  s.  c.  3  M.  &  Ry.  45  —Ed. 
13 


194  LINDEN AU    V.    DESBOROUGH.  [CHAP.  III. 

cated  to  the  directors?"  have  thought  it  right  to  mention  the  state  of 
the  duke's  mental  faculties.  Upon  hearing  this  evidence  Lord  Tenter- 
den  told  the  plaintiff's  counsel  he  thought  it  made  an  end  of  his  case  ; 
and  he  should  leave  it  to  the  jur}'  to  say  whether  there  were  any  facts 
material  to  be  known  which  were  not  mentioned  to  the  assurers,  and 
that  if  there  were,  the  policy  was  void.  The  plaintiff's  counsel  there- 
upon elected  to  be  nonsuited,  leave  being  given  to  him  to  move  for  a 
new  trial,  on  the  ground  of  misdirection. 

Brougham  now  moved  accordingly. 

Lord  Tenteuden,  C.  J.  At  the  trial  before  me,  amongst  other  de- 
positions that  of  a  foreign  ph^'sician  named  Stark  was  read,  wherein  he 
stated  that  he  would  have  certified  that  the  duke  was  in  bodilj'  health, 
but  that  he  would  not  have  failed  to  observe  that  he  labored  under  an 
inability  to  speak,  which  he  attributed  to  a  paralytic  state  of  the  nerves 
of  the  organs  of  speech.  In  addition  to  this,  Mr.  Green,  a  surgeon, 
stated,  that  if  consulted  he  should  have  thought  it  right  to  mention  the 
state  of  the  duke's  mental  faculties  ;  whereupon  I  expressed  an  opinion 
that  the  cause  was  at  an  end,  and  said  that  I  should  direct  the  jury  to 
find  for  the  defendant  if  they  thought  the  plaintiff"  had  failed  to  com- 
municate to  the  insurers  any  material  circumstance  within  his  knowl- 
edge.^ The  only  question  now  is,  whether  that  direction  would  have 
been  correct  or  riot?  At  the  time  of  the  trial  I  had  in  my  recollection, 
although  not  verj'  accurately,  the  case  of  Morrison  v.  Muspratt,  4 
Bing.  60.-  ...  In  the  present  case,  the  insurance  was  upon  the  life  of 
a  foreigner.  It  appeared  that  a  previous  insurance  had  been  eff'ected 
with  an  office  that  had  an  agent  abroad.  That  office  was  requested  to 
make  a  further  insurance,  and,  being  unwilling  to  do  so,  the  secretary 
handed  over  to  the  defendant  the  certificate  received  from  their  foreign 
agent.  If  that  had  distinctly  disclosed  the  fact  now  in  question,  I  am 
not  prepared  to  sa}-  that  the  defendant  would  have  had  any  ground  of 
complaint ;  but  the  state  of  the  duke's  faculties  is  not  distinctly-  stated 
in  that  certificate.  Then  it  is  said  that  the  party  is  not  bound  to  do 
more  than  answer  the  questions  proposed,  unless  he  can  be  charged 
with  some  fraudulent  concealment.^  Admitting  this  not  to  fall  within 
any  of  tlie  specific  questions,  which  is  not  by  any  means  clear,  still  the 
general  question  put  b}-  the  office  requires  information  of  ever}*  fact 
which  any  reasonable  man  would  think  material.  It  certainly  seems  to 
me  that  the  circumstances  proved  as  to  the  state  of  the  Duke  of  Saxe 

1  In  3  M.  &  Ry.  45,  50,  the  latter  part  of  this  sentence  is  in  this  form :  "  I  should 
tell  the  jnry  'that  if  any  fact  in  their  opinion  material  to  the  information  of  the  oftice 
respecting  the  health  of  the  party,  known  to  the  party  certifying,  had  not  been  com- 
municated, the  policy  was  void.'"  Such  also  is  the  form  of  the  minute  preserved  in 
3  M.  &  Ry.  47.  —  Ed. 

2  The  statement  of  that  case  has  been  omitted. — Ed. 

8  In  3  M.  &  Ry.  45,  52,  at  this  point  in  the  opinion  occurs  this  passage :  "  This  can- 
not he  considered  as  a  fraudulent  concealment,  at  least  my  direction  to  the  jury  did 
not  put  it  upon  the  ground  of  a  fraudulent  coucealmeut,  but  merely  upou  the  omission 
to  meutjon."  —  Ed. 


PART  II.,  SECT.  III.]       LINDENAU    V.    DESBOROUGH.  195 

Gotha's  mental  faculties  were  material ;  and,  upon  the  authority  of  the 
cases  of  Morrison  v.  Muspratt  and  Bufe  v.  Turner,  I  think  I  should 
not  have  done  wrong  in  leaving  the  case  to  the  jury  in  the  manner  pro- 
posed at  the  trial. 

Bayley,  J.^  I  think  that  in  all  cases  of  insurance,  whether  on 
ships,  houses,  or  lives,  the  underwriter  should  be  informed  of  every 
material  circumstance  within  the  knowledge  of  the  assured  ;  and  that 
the  proper  question  is.  Whether  any  particular  circumstance  was  in 
fact  material?  and  not  whether  the  party  believed  it  to  be  so.  Tlie 
contrary  doctrine  would  lead  to  frequent  suppression  of  information, 
and  it  would  often  be  extremely  difficult  to  show  that  the  party  neglect- 
ing to  give  the  information  thought  it  material.  But  if  it  be  held  that 
all  material  facts  must  be  disclosed,  it  will  be  the  interest  of  the  assured 
to  make  a  full  and  fair  disclosure  of  all  the  information  within  their 
reach.  Besides  the  cases  already  mentioned,  there  are  others  estab- 
lishing that  the  concealment  of  a  material  fact,  although  not  fraudulent, 
is  sufficient  to  vitiate  a  policy  on  a  ship.  On  these  grounds  and 
authorities,  I  am  of  opinion  that  the  proper  question  for  the  jury  was 
not  whether  the  paVty  believed  the  information  withheld  to  be  material, 
but  whether  it  was  in  fact  material. 

LiTTLEDALE,  J.  I  am  of  the  same  opinioh.  It  is  the  duty  of  the 
assured  in  all  cases  to  disclose  all  material  facts  within  their  knowl- 
edge. In  cases  of  life  insurance  certain  specific  questions  are  proposed 
as  to  points  affecting  in  general  all  mankind.  But  there  ma}-  be  also 
circumstances  affecting  particular  individuals  which  are  not  likely  to  be 
known  to  the  assurers,  and  which  had  they  been  known  would  no  doubt 
have  been  made  the  subject  of  specific  inquiries.  The  general  ques- 
tion appears  to  have  been  proposed  in  order  to  meet  such  cases,  and  I 
think  the  question  on  such  a  policy  is  not  whether  a  certain  individual 
thought  a  particular  fact  material,  but  whether  it  was  in  truth  material, 
and  of  that  the  jury  are  by  law  constituted  the  judges.  I  therefore 
think  the  proposed  direction  would  have  been  right,  and  that  the  non- 
suit ought  not  to  be  disturbed.  Ride  refused. 

1  In  3  M.  &  Ry.  45,  54,  this  opinion  begins  thus  :  "  Whether  the  policy  be  upon 
ship,  or  upon  life,  or  against  fire,  I  think  the  underwriter  has  a  right  to  expect  that 
everything  material,  known  to  the  party  making  the  application,  shall  be  communi- 
cated to  him ;  and  that  it  is  at  the  peril  of  the  assured,  if  that  commuuication  is  not 
made." — Ed. 


196  RAWLINS   V.    DESBOROUGH.  [CHAP.  III. 


RAWLINS  (one  of  the  Directors  of  the  Eagle  Insurance  Co.) 
V.  DESBOROUGH  (Secretary  of  the  Atlas  Assurance  Co.). 

Nisi  Prius,  Queen's  Bench,  1840.     2  Moo.  &  R.  328. 

Assumpsit  on  a  policy  of  insurance,  dated  24th  September,  1834,  on 
the  life  of  John  Cochrane,  for  the  term  of  four  3'ears.  There  were  also 
the  usual  money  counts,  and  a  count  upon  an  inshnul  coniputassent. 

The  first  and  second  pleas  to  the  first  count  alleged  that  a  certain 
declaration  made  by  one  Bumstead,  who  proposed  the  insurance,  on 
behalf  of  the  Eagle  Company,  as  to  the  health  of  Mr.  Cochrane,  and 
that  he  was  then  in  good  health,  etc.,  was  false.  The  third  and  fourth 
pleas  alleged,  in  substance,  that  the  Eagle  Insurance  Company,  in 
answer  to  the  usual  questions^  put  when  the  insurance  was  proposed, 
referred  the  Atlas  Compan}'  to  Mr.  Bennett  and  Mr.  Neale,  respecting 
the  then  present  and  general  state  of  health  of  Mr.  Cochrane ;  that 
those  referees  gave  certain  answers,  set  out  in  the  pleas,  alleging, 
amongst  other  things,  that  the  habits  of  Mr.  Cochrane  were,  as  far  as 
the  referees  knew,  temperate ;  that  those  answers  were  false,  and  that 
the  referees  knew  them  to  be  so. 

5thly,  That  the  Eagle  Company  did  not  communicate  to  the  Atlas 
Company  a  certain  fact,  within  their  knowledge,  material  to  be  commu- 
nicated, and  which  they  ought  to  have  communicated ;  viz.  a  certificate 
given  by  the  medical  officer  of  the  Economic  Insurance  Compan}',  touch- 
ing the  health  and  apparent  habits  of  Mr.  Cochrane,  on  the  occasion  of 
the  Eagle  Company  having  proposed  the  insurance  to  the  Economic  In- 
surance Compau}'. 

6thly.  That  the  Eagle  Company  did  not  communicate  to  the  Atlas 
Companj-  a  certain  fact  within  their  knowledge,  material  to  be  commu- 
nicated, and  which  ought  to  have  been  communicated  ;  viz.  that  Mr. 
Cochrane  was  addicted  to  habits  of  intemperance  in  liquor. 

Lastly,  to  the  money  counts,  and  the  count  on  the  insinml  computas- 
sent^  ]Sron,-assum})sit. 

The  replication  traversed  the  special  pleas,  and  joined  issue  on  the 
non-assumpsit.'^  .   .   . 

There  was  a  great  body  of  evidence  as  to  the  intemperate  habits  of 
Mr.  Cochrane,  and  as  to  the  probability  that  the  two  referees  knew  that 
he  was  addicted  to  the  immoderate  use  of  spirrts.  As  to  the  fifth  plea, 
it  appeared  that  the  Eagle  Company,  having  agreed  to  advance  a  large 
sum  of  money  to  Mr.  Cochrane  on  the  security  of  some  property  in 
which  he  had  a  life  interest,  in  order  to  diminish  their  own  risk  pro- 
posed to  various  offices  to  effect  insurances  on  his  life  in  various  sums. 
Amongst  other  offices,  they  proposed  an  insurance  to  the  Economic 

^  See  the  form  set  out  in  Everett  v.  Desborongh,  5  Bing.  503.  —  Rep. 
2  Passages  foreign  to  insurance  have  been  omitted.  —  Ed. 


PART  II.,  SECT.  III.]        RAWLINS   V.    DESBOEOUGH.  197 

Insurance  Compan}-.  The  secretary  of  that  compan}-  called  at  the  office 
of  the  Eagle  Company,  declining  the  insurance,  and  showing  (as  a  rea- 
son) a  communication  which  their  medical  adviser,  Mr.  Travers,  hac^ 
made  to  the  resident  director  on  the  subject  of  Cochrane's  insurance. 
It  was  in  the  form  of  a  note  to  the  resident  director  of  the  Economic 
Compan}',  stating  that  he  (Mr.  Travers)  had  just  visited  Mr.  Cochrane, 
and  describing  his  person  ;  that  his  appearance  was  that  of  a  person 
who  had  been  drinking  ;  that  his  habits  were  those  of  a  low  roue  ;  that 
he  (Mr.  Travers)  believed  his  organs  were  sound,  and  he  should  think 
that  drinking  was  at  present  an  unconfirmed  habit ;  and  concluding 
thus  :  "  The  sum  is  large,  but  the  term  is  short  (four  3ears).  He  is  in 
more  danger  from  his  moral  than  his  ph^'sical  state  at  present ;  but  I 
cannot  view  them  in  connection  without  apprehension.  The  other  of- 
fices have  not  hesitated  ;  you  must  decide."  It  was  admitted  b}'  the 
plaintiff  that  this  fact  was  not  communicated  to  the  Atlas  Company ; 
but  there  was  conflicting  testimony  as  to  whether  it  had  been  communi- 
cated to  the  Eagle  Company  themselves  before  the  present  polic}'  was 
effected ;  and  the  plaintiff  insisted  that  evfen  if  it  had  been,  it  was  not  a 
fact  which  the}'  were  called  upon  to  communicate.  Mr.  Travers's  note 
did  not  contain  the  statement  of  any  fact,  but  merely  the  hasty  expres- 
sion (confidentially  imparted)  of  the  writer's  opinion,  and  that  obviously 
formed  on  mere  hearsay.  It  was  further  contended  by  the  defendants 
that  they  were  at  all  events  entitled  to  a  verdict  on  the  sixth  plea,  the 
evidence  of  Cochrane's  habitual  intemperance  being  (as  the  defendants' 
counsel  insisted)  irresistible;  and  that  even  if  Bennett  and  Neale  could 
be  supposed  ignorant  of  such  a  fact,  Cochrane  himself  must  have  known 
it,  and  was  bound  to  communicate  it  to  the  defendants  when  he  appeared 
before  the  directors  ;  that  he  was  the  general  agent  of  the  assured,  and 
that  they  were  responsible  for  what  he  wrongfully  did,  or  wrongfully 
omitted  doing,  in  relation  to  the  insurance  ;  and  for  this  purpose  Everett 
V.  Desborough,  5  Bing.  503,  and  Ma3'nard  v.  Rhodes,  5  D.  &  R.  266, 
were  cited. 

The  Lord  Chief  Justice,^  in  summing  up  the  case  to  the  jury,  after 
stating  that  it  was  the  duty  of  a  party  eflfecting  an  insurance  to  com- 
municate to  the  insurers  every  material  fact  within  his  knowledge  tend- 
ing to  increase  the  hazard,  or  to  affect  the  question  of  the  life  being  an 
eligible  or  proper  object  of  insurance,  left  the  jury  to  say,  as  to  the  third 
and  fourth  pleas,  whether  the  habits  of  Cochrane  were  intemperate,  and 
whether  the  referees  knew  them  to  be  so,  as  alleged  in  the  pleas.  As 
to  the  fifth  plea,  his  Lordship  left  it  to  the  jury  to  say  whether  Mr. 
Travers's  letter  had  been  communicated  to  the  Eagle  Company  before 
the  present  policy  was  effected  ;  and  whether,  if  so,  it  was  a  circum- 
stance, which,  in  the  judgment  of  the  jury,  was  material  to  be  communi- 
cated, and  which  ought  to  have  been  communicated  by  them  to  the  Atlas 
Company,  with  reference  to  the  insurance.     In  regard  to  the  issue  on 

1  Lord  Denman.  —  Ed. 


198  EAWLS   v:   AMERICAN   MUTUAL   LIFE    INS.    CO.        [CHAP.  III. 

the  sixth  plea,  his  Lordship  tokl  the  jury  that,  in  his  opinion,  the  doc- 
triue  contended  for  by  the  defendants'  counsel,  that  the  party  whose  life 
was  insured  was  the  general  agent  of  the  assured,  and  that  the  latter 
was  responsible  for  all  the  acts  of  such  party  cwnected  with  the  insur- 
ance, had  been  greatly  overstrained.  He  is  to  answer  all  questions  put 
to  him  ;  and  if  he  answers  them  falsely,  that  will  vitiate  the  policy.  Or 
even  if,  without  being  distinctly  interrogated  as  to  his  habits,  the  jury 
thought  that  he  was  aware  of  them,  and,  knowing  their  impoitance, 
studiously  concealed  them  from  the  insurers  ;  in  that  case,  his  Lordship 
advised  them  to  find  the  issue  on  the  sixth  plea  for  the  defendant.  But 
the  mere  non-communication  of  his  habits  of  life  by  the  party  whose  life 
was  insured,  would  not  in  itself  vitiate  the  insurance,  even  though  those 
habits  were  in  the  opinion  of  the  jury  such  as  tended  to  shorten  life. 
The  jury  found  a  verdict  for  the  plaintiff  on  all  the  points  left  to 

them. 

Sir  J.  Campbell,  A.  G.,  Sir  K  Pollock,  and  Robinson,  for  the  plaintiff. 
Kelly,  B.  V.  Richards,  and  W.  H.  Watson,  for  the  defendants. 


RAWLS  V.  AMERICAN   MUTUAL  LIFE  INSURANCE  CO. 
Court  of  Appeals  of  New  York,  1863.     27  N.  Y.  282.^ 

Appeal  from  the  Supreme  Court.  Action  on  a  policy  of  insurance 
issued  by  the  defendant,  dated  28th  July,  1853,  for  $5,000,  on  the  life 
of  John  L.  Fish,  payable  to  the  plaintiff. 

The  answer,  among  other  defences,  alleged  that,  before  and  at  the 
time  of  the  issuing  of  the  policy,  Fish  was  a  man  of  licentious,  intem- 
perate, and  disorderly  habits  and  passions,  and  frequently  or  habitually 
indulged  in  habits  and  practices  which  had  impaired,  or  would  impair, 
his  health  and  constitution,  and  shorten  his  life  ;  all  which  the  plaintiff. 
Fish,  Shipman  (Fish's  family  physician,  who,  after  making  a  medical 
examination,  had  made  a  written  statement,  in  the  form  of  questions 
and  answers),  and  Marsh  (to  whom  Fish  had  referred,  and  by  whom  a 
statement  as  to  health  and  habits  had  been  signed)  well  knew,  or  had 
good  reason  to  believe,  at  the  time  the  representations  were  made,  and 
before  the  issuing  of  the  policy  ;  and,  although  the  defendant  was  igno- 
rant thereof,  they  gave  it  no  notice,  but  concealed  the  same,  and  the 
policy  was,  therefore,  void. 

On  the  trial,  before  Smith,  J.,  at  the  Monroe  Circuit,  the  jury  found 
a  verdict  for  the  plaintiff. 

1  The  statement  has  been  rewritten.  The  case  raised  numerous  questions.  In  the 
statement  and  the  opinions,  matters  foreign  to  concealment  have  been  omitted.  Part 
of  the  opinion  of  Wright,  J.,  has  been  printed  ante,  p.  115,  n.  1.  — Ed. 


PART  II.,  SECT.  III.]       LONDON   ASSURANCE    V.    MANSEL.  199 

The  defendant  had  taken  numerous  exceptions,  among  others  an 
exception  to  the  judge's  charge  as  to  concealment. 

On  appeal,  the  judgment  was  affirmed  at  a  general  term,  in  the  sev- 
enth district,  and  the  defendant  appealed  to  this  court. 

Be)iedict  &  Boardman,  for  the  appellant. 

Luciun  Birdseye^  for  the  respondents. 

Wright,  J.  .  .  .  The  third  and  only  remaining  branch  of  the  charge 
singled  out  for  exception  was  the  instruction,  ''  that  if  Fish  answered 
frankly  and  truly  all  the  questions  put  to  him,  then  there  was  no  con- 
cealment. The  mere  omission  to  state  matter  not  called  for  b}'  any 
specific  or  general  question  would  not  be  a  concealment,  and  would 
not  affect  the  validity  of  the  policy."  This  was  not  wrong.  It  may  be 
conceded  that  if  the  applicant,  when  a  specific  or  even  general  ques- 
tion is  put  to  him  which  would  elicit  a  fact  material  to  the  risk,  untruly 
stated  or  concealed  the  fact,  it  would  vitiate  the  policy  ;  but  I  know  of 
no  case  in  the  law  of  life  or  fire  insurance  in  which  the  insurers,  having 
framed  and  put  to  the  insured,  and  having  had  fully  answered  by  him, 
a  series  of  questions  calling  for  such  information  as  the3'  desired  touch- 
ing the  subject  insured,  have  been  discharged  from  their  contract  be- 
cause the  insured  did  not  go  farther,  and  state  what  was  not  called  for 
in  the  interrogatories.  As  was  said  by  the  learned  judge,  in  the  court 
below:  "The  presumption  is  that  the  insurers  questioned  the  part}' 
upon  all  subjects  which  the}'  deemed  material,  and  all  which  were  in 
the  contemplation  of  the  parties  at  the  time,  and  beyond  that,  clearl}'  a 
party  is  not  bound  to  disclose."  .  .  . 

Balcom,  J.  .  .  .  There  was  no  error  in  this.  If  the  defendants 
desired  more  information  respecting  the  habits  of  Fish,  the}'  should 
have  asked  him  more  specific  questions.  He  was  not  bound  to  inform 
them  whether  he  ate  or  drank  much  or  little,  or  how  often  he  did 
either,  for  the  reason  he  was  not  interrogated  as  to  such  habits,  and 
he  could  not  have  su[jposed  the  defendants  desired  information  respect- 
ing the  same,  and,  therefore,  was  not  guilty  of  a  fraudulent  conceal- 
ment in  the  omission  to  give  it.  .  .  . 

All  the  judges  concurred  except  Emott,  J.,  who  was  for  reversal,  on 
the  ground  of  want  of  insurable  interest  in  the  plaintiff,  after  the  stat- 
ute of  limitations  had  run  on  his  action  against  Fish;  and  Selden,  J,, 
who  did  not  sit  in  the  case.  Judgment  affirmed} 


LONDON   ASSURANCE  v.   MANSEL. 

Chancery  Division,  1879.     11  Ch.  D.  363. 

This  was  an  action  by  the  plaintiffs,  who  were  duly  incorporated  by 
the  name  of  "  The  London  Assurance,"  and  were  empowered  to  grant 

1  Arc. :  Mallory  y.  Travelers'  lus.  Co.,  47  N.  Y.  52  (1871).  — Ed. 


200  LONDON   ASSURANCE   V.   MANSEL.  [CHAP.  III. 

assurances  on  lives,  to  set  aside  an  agreement  to  grant  a  policy  of  life 
assurance  to  the  defendant. 

On  the  16th  of  August,  1878,  the  plaintiffs,  on  the  application  of  the 
defendant's  solicitor,  sent  him  forms  of  proposal  for  life  assurance,  and 
on  the  20th  of  August,  1878,  the  defendant  left  with  the  plaintiffs  at 
their  office  a  proposal  for  assurance  on  his  life  for  £10,000  filled  up  on 
one  of  the  plaintiffs'  forms  of  proposal,  and  signed  b}'  the  defendant. 
The  questions  and  answers  contained  in  this  proposal,  so  far  as  mate- 
rial, were  as  follows  :  — 

Questions.  Answers. 

"  Are  you  now  and  have  3-ou  always)      ^^  y      „ 
been  of  temperate  habits?  "    .         .         .) 

"State  if  there  be  any  other  material' 
circumstance  affecting  your  past  or  pres- 
ent state  of  health  or  habits  of  life  to 
which   the   foregoing   questions   do   not| 
extend?" 

"  Has  a  proposal  ever  been  made  on- 


"  Not  to  my  knowledge." 


your  life  at  any  other  office  or  offices? 
If  so,  where  ?  "        . 

"  Was  it  accepted  at  the  ordinary  pre- 
mium, or  at  an  increased  premium,  or 
declined?" 


*' Insured  now  in  two  of- 
fices for  £16,000  at  ordinary 
rates.  Policies  effected  last 
year." 


At  the  foot  of  the  proposal  the  defendant  signed  tlie  following  decla^ 
ration  :  "■  I  declare  that  the  above  written  particulars  are  true,  and  I 
agree  that  this  proposal  and  declaration  shall  be  the  basis  of  the  con- 
tract between  me  and  the  London  Assurance." 

On  the  same  day  the  defendant  had  an  interview  with  the  medical 
officer  of  the  plaintiffs,  and  in  reply  to  his  inquiries  gave  substantially 
the  same  answers  as  those  in  the  proposal  before  stated. 

The  plaintiffs  being,  as  they  alleged,  satisfied  with  and  relying  upon 
the  said  proposal,  and  with  the  report  of  their  medical  officer,  and  with 
the  answers  they  had  received  from  two  friends  of  the  defendant  to 
whom  he  had  referred  them,  sent  to  the  defendant's  solicitor  a  written 
acceptance  of  the  proposal  for  an  assurance  of  £10,000  on  the  defend- 
ant's life,  and,  on  the  23d  of  August,  1878,  received  from  him  a  check 
for  the  first  j-ear's  premium,  and  on  the  24th  of  August,  1878,  the  plain- 
tiffs sent  him  the  usual  certificate  as  to  the  assurance  being  effected. 

The  plaintiffs  alleged  that  shortly  after  the  last-mentioned  date, 
they  discovered  tliat,  though  the  defendant's  life  had  been  assured  for 
£10,000  in  the  Rock  Life  Assurance  Company,  and  also  for  £6,000  in 
the  Equity  and  Law  Life  Assurance  Society,  the  last-named  assurance 
society  had  in  November,  1877,  when  the  defendant  applied  for  a  further 
assurance  of  £3,000,  decided  not  to  increase  tlie  amount  at  risk  on  his 
life  ;  also  that  the  defendant  had  shortly  afterwards  made  proposals  to 
the  Scottish  Equitable  Society  and  to  the  Crown  Insurance  Society, 


PART  II.,  SECT.  III.]      LONDON   ASSURANCE   V.   MANSEL.  201 

who  had  respectively  declined  his  proposals,  to  the  North  British  and 
Mercantile  Insurance  Society,  which  proposal  was  withdrawn,  and  to 
tlie  Liverpool,  London,  and  Globe  Company,  by  whom  the  proposal  was 
not  accepted;  that  in  June,  1878,  the  English  and  Scottish  Law  Life 
Assurance  Association,  after  accepting  a  proposal  for  an  assurance  of 
£5,000  on  the  life  of  the  defendant,  had  refused  to  proceed  with  it  on 
learning  that  the  Equity  and  Law  Life  Society  had  declined  the  further 
assurance  of  the  defendant's  life;  also,  that  in  August,  1878,  the  de- 
fendant had  applied  for  assurances  on  his  Life  to  the  Clerical,  Medical, 
and  General  Life  Assurance  Society,  to  the  Scottish  Amicable  Assur- 
ance Societ}',  and  the  Law  Life  Assurance  Society,  but  that  each  of 
the  said  offices  had  declined  his  proposals. 

The  plaintiffs  alleged  that  they  thereupon  determined  not  to  proceed 
with  the  assurance,  and  that  their  solicitors  wrote  to  the  defendant's 
solicitor  to  that  effect,  and  sent  a  check  for  the  amount  of  the  pre- 
mium, which  was  returned  by  the  defendant. 

The  plaintiffs  then  brought  their  action,  setting  out  in  their  statement 
of  claim  the  facts  before  stated,  and  alleging  that  it  was  the  duty  of  the 
defendant  to  have  informed  them  that  his  life  had  been  refused  by  the 
said  several  offices ;  that  such  fact  was  a  very  material  fact  in  a  con- 
tract of  life  assurance,  and  that  the  plaintiffs  would  not  have  "enter- 
tained the  defendant's  proposal  for  assurance  had  he  informed  them 
that  his  life  had  been  refused  by  other  offices,  which  the  defendant  had 
concealed. 

The  plaintiffs  claimed  a  declaration  that  the  acceptance  by  the  plain- 
tiffs of  the  defendant's  proposal  for  assurance  on  his  life  for  £10,000, 
and  the  contract  by  the  plaintiffs  for  the  assurance  on  the  life  of  the 
defendant,  were  void. 

The  defendant,  by  his  statement  of  defence,  admitted  the  plaintiffs' 
allegations  as  to  the  proposal  and  as  to  the  two  policies  that  had  been 
effected  ;  also  that  the  Equity  and  Law  Life  Society  had  decided  not  to 
increase  their  risk,  the  reason  being  that  they  considered  their  risk  suffi- 
ciently large.  With  regard  to  the  other  proposals,  the  defendant  stated 
as  follows  :  — 

"The  defendant  admits  that  proposals  were  made  to  the  Clerical, 
Medical,  and  General  Life  Assurance  Society,  the  Scottish  Amicable 
Life  Assurance  Society,  and  the  Law  Life  Assurance  Society,  for  an 
assurance  on  his  life,  and  such  proposals  were  declined  without  any 
medical  examination." 

In  paragraph  15  he  stated  as  follows:  "  The  defendant  is  not  and 
never  has  been  of  intemperate  habits  of  life,  and  although  proposals 
for  assurances  on  the  defendant's  life  had  been  made  to  and  declined  by 
the  several  offices^in  the  statement  of  claim  mentioned,  the  defendant's 
life  was  never  rejected  by  an  office,  but  was  passed  as  a  first-class  life 
by  every  medical  officer  who  examined  him."  The  defendant  also 
stated  that  the  English  and  Scottish  Law  Life  Assurance  Society 
passed  his   life  as  a  first-class    life,  but  they  reserved    the  right  of 


202  LONDON   ASSURANCE   V.   MANSEL.  [cHAP.  III. 

declining  to  complete  the  transaction  at  any  time  before  tiae  receipt  of 
the  premium  ;  but  that,  having  learned  that  the  Equity  and  Law  Life 
Assurance  Society  had  decided  not  to  increase  their  risk  on  the  defend- 
ant's life,  and  would  not  take  any  part  of  the  new  risk,  exercised  iheir 
right  of  declining  to  complete  the  transaction. 

The  defendant  submitted  that  there  had  been  no  concealment  such  as 
to  vitiate  the  contract. 

The  case  was  heard  on  motion  for  judgment  on  admissions  in  ihe 
pleading. 

Benjamin,  Q.  C,  Davei/,  Q.  C,  and  Milder,  for  the  plaintiffs. 

Chitty,  Q.  C,  and  Levett,  for  the  defendant. 

Jessel,  M.  R.  The  action' in  this  case  is  to  set  aside  an  agreement 
for  assurance  for  life  on  the  ground  of  concealment  of  a  material  fact 
in  effecting  the  assurance. 

The  first  question  to  be  decided  is,  what  is  the  principle  on  which  the 
court  acts  in  setting  aside  contracts  of  assurance?  As  regards  the  gen- 
eral principle,  I  am  not  prepared  to  lay  down  the  law  as  making  any 
difference  in  substance  between  one  contract  of  assurance  and  another. 
Whether  it  is  life,  or  fire,  or  marine  assurance,  I  take  it  good  faith  is 
required  in  all  cases,  and  though  there  may  be  certain  circumstances 
from  the  peculiar  nature  of  marine  insurance  which  require  to  be  dis- 
closed, and  which  do  not  apply  to  other  contracts  of  insurance,  that  is 
rather,  in  my  opinion,  an  illustration  of  the  application  of  the  principle 
than  a  distinction  in  principle. 

But  I  think  the  law  has  been  laid  down  very  often,  and  I  am  going  to 
refer  to  two  or  three  statements  of  it,  which  at  all  events  are  binding 
on  me. 

In  the  case  of  Dalglish  v.  Jarvie,  2  Mac.  &  G.  231,  243,  a  case  which 
had  nothing  to  do  with  insurance,  but  which  referred  to  the  principles 
on  which  a  special  injunction  ought  to  be  granted  ex  parte,  Lord  Cran- 
worth,  then  the  Lord  Commissioner  Rolfe,  says  this :  "  Upon  one  point 
it  seems  to  me  proper  to  add  thus  much,  namely,  that  the  application  for 
a  special  injunction  is  very  much  governed  by  the  same  principles  which 
govern  insurances,  matters  which  are  said  to  require  the  utmost  de- 
gree of  good  faith,  '  uberrima  Jides.^  In  cases  of  insurance  a  party 
is  required  not  only  to  state  all  matters  within  his  knowledge,  which  he 
believes  to  be  material  to  the  question  of  the  insurance,  but  all  which 
in  point  of  fact  are  so.  If  he  conceals  anything  that  he  knows  to  be 
material,  it  is  a  fraud  ;  but  besides  that,  if  he  conceals  any  tiling  that 
may  influence  the  rate  of  premium  which  the  underwriter  may  require, 
although  he  does  not  know  that  it  would  have  that  eflfect,  such  conceal- 
ment entirely  vitiates  the  policy."^  .   .  . 

Now  I  come  to  the  facts  of  the  case,  which  certainly  appear  to  me  to 
be  very  plain  and  clear  indeed.     The  office  of  the  London  Assurance 

1  Here  were  quoted  passages  from  Moens  v.  Ileyworth,  ««/<>,  p.  167,  n.  2  (1842), 
per  Parke,  B.,  and  Lindenau  r.  Desborough,  ante,  p.  193  (1828) />er  Lord  Tbntekden, 
C.  J.,  Bayley,  J.,  and  Litti.edale,  J.  —  P3d. 


PART  II.,  SECT.  III.]      LONDON   ASSURANCE   V.   MANSEL.  203 

asks  these  questions  :  "  Has  a  proposal  ever  been  made  on  your  life  at 
any  other  office  or  offices  ;  if  so,  where  ?  "Was  it  accepted  at  the  ordi- 
nary premium,  or  declined?"  and  there  is  an  agreement  at  the  end, 
"  That  this  proposal  and  declaration  shall  be  the  basis  of  the  contract 
between  the  assured  and  the  company."  Here  is  the  answer:  "In- 
sured now  in  two  offices  for  £16,000  at  ordinary  rates.  Policies 
effected  last  year."  It  is  to  be  observed  that  the  man  proposing  the 
assurance,  who  knows  the  facts,  does  not  answer  the  question.  The 
question  was,  "Has  a  proposal  been  made  at  any  office  or  offices;  if 
so,  where?"  He  does  not  state,  "  I  proposed  to  half  a  dozen  offices," 
which  was  the  truth,  but  simply  says,  "  Insured  now  in  two  offices," 
which  of  course  must  have  been  intended  to  represent  an  answer,  and 
therefore  would  mislead  the  persons  receiving  it,  who  did  not  look  at 
it  with  tlie  greatest  attention,  into  the  belief  that  he  was  insured  in 
two  offices,  and  that  they  weie  the  only  proposals  that  he  had  made. 
"  Was  it  accepted  at  the  ordinary  premiums  or  an  increased  pre- 
mium?" His  answer  is,  "At  ordinary  rates."  That  is  the  answer 
to  the  second  branch  of  the  inquiry,  but  he  has  not  answered  the  ques- 
tion, "or  declined?"  The  inference,  therefore,  which  must  have  been 
intended  to  be  produced  on  the  mind  of  the  person  reading  the  answer 
was  that  it  had  not  been  declined.  And  in  my  opinion  that  is  the  fair 
meaning  of  the  answer,  and  the  assured  is  not  to  be  allowed  to  say,  "  I 
did  not  answer  the  question."  But  if  it  were  so,  it  would  make  no  dif- 
ference, because  if  a  man  purposely  avoids  answering  a  question,  and 
thereby'  does  not  state  a  fact  which  it  is  his  duty  to  communicate,  that 
is  concealment.  Concealment  properly  so  called  means  non-disclosure 
of  a  fact  which  it  is  a  man's  dut\-  to  disclose,  and  it  was  his  duty  to  dis- 
close the  fact  if  it  was  a  material  fact. 

The  question  is  whether  this  is  a  material  fact.  I  should  say,  no 
human  being  acquainted, with  the  practice  of  companies  or  of  insur- 
ance societies  or  underwriters  could  doubt  for  a  moment  tliat  it  is  a 
fact  of  great  materialitv,  —  a  fact  upon  which  the  offices  place  great 
reliance.  They  always  want  to  know  what  other  offices  have  done 
with  respect  to  the  lives.  But  in  this  case  there  could  be  no  question 
as  to  its  materialitv.  In  the  first  place,  we  have  this  in  the  answer : 
"  The  defendant  admits  that  proposals  were  made  to  tlie  Clerical,  Med- 
ical, and  General  Life  Assurance  Society,  the  Scottish  Amicable  Life 
Assurance  Societ}',  and  the  Law  Life  Assurance  Society  for  an  assur- 
ance on  his  lif#,  and  such  proposals  were  declined."  There  are  three 
proposals  as  admitted  b}'  the  answer  declined  in  the  very  words  of  the 
question  ;  and  then  he  goes  on  [His  Lordship  then  stated  paragraph 
15  of  the  answer,  and  added] :  We  have  an  admission  by  the  defend- 
ant that  no  less  than  five  insurance  offices  had  declined  to  accept  his 
life. 

Now,  to  suppose  that  any  one  who  knows  anything  about  life  insur- 
ance, that  any  decent  special  jur3-man  could  for  a  moment  hesitate  as 
to  the  proper  answer  to  be  given  to  the  inquiry,  when  you  go  to  the  in 


204  LONDON   ASSURANCE   V.   MANSEL.  [CHAP.  III. 

surance  office  and  ask  for  an  insurance  on  your  life,  ought  you  to  tell 
them  that  your  proposals  hatl  been  declined  by  five  other  assurance 
offices?  is,  I  say,  quite  out  of  the  question.  There  can  be  but  one  an- 
swer—that a  man  is  bound  to  say,  "  My  proposals  have  been  declined 
by  five  other  offices.  I  will  give  you  the  reasons,  and  show  you  that  it 
does  not  affect  my  life,"  as  he  admits  it  to  be  by  this  answer ;  but  of 
that  the  office  could  judge.  There  can  be  no  doubt,  as  a  proposition  to 
be  decided  by  a  jury,  tliat  such  a  circumstance  is  material.  But  in  fact 
I  have  elements  here  admitted  on  the  pleadings  for  deciding  that  ques- 
tion quite  irrespective  of  the  ordinary  knowledge  of  the  practice  of 
mankind  in  respect  to  these  matters  which  is  to  be  imputed  to  a  good 
special  juryman,  because  I  have  here  two  things  admitted,  first  of  all, 
that  the  proposal  wliich  forms  the  basis  of  the  contract  asks  a  ques- 
tion. Has  a  proposal  been  declined? 

Now,  where  it  is  to  form  the  basis  of  the  contract  it  is  material,  be- 
cause, as  was  held  in  a  case  in  the  House  of  Lords  of  Anderson  v. 
Fitzgerald,  4  H.  L.  C.  484,  where  it  is  part  of  the  contract,  the  other 
side  cannot  say  it  is  not  material.  So  here  we  have  the  proposal  as  the 
basis  of  the  contract.  It  is  impossible  for  the  assured  to  say  that  the 
question  asked  is  not  a  material  question  to  be  answered,  and  that  the 
fact  which  the  answer  would  bring  out  is  not  a  material  fact. 

Further,  we  have  this,  that  within  the  defendant's  own  knowledge  the 
English  and  Scottish  Law  Life  Assurance  Society  having  accepted  his 
life,  which  had  been  duly  passed  by  their  medical  officer  as  a  first-class 
life  after  examination,  and  merely  reserving  a  right  to  decline  when 
they  found  that  one  other  office,  not  five,  but  one,  had  declined  the 
life,  or  rather  the  proposal,  at  once  withdrew  from  their  acceptance  and 
declined  his  proposal.  So  that  the  defendant  had  the  strongest  reasons 
for  believing  from  actual  knowledge  that  the  fact  of  a  proposal  having 
been  declined  was  a  most  material  circumstance,  and  would  have  the 
greatest  effect  on  the  mind  of  the  proposed  assurers. 

It  seems  to  me  a  very  plain  and  clear  case,  and  that  the  plaintiffs  are 
consequently  entitled  to  judgment. 

The  order  will  be  — The  plaintiffs  being  willing  and  hereby  offering 
to  return  the  premium,  declare  that  the  acceptance  by  the  plaintiffs 
of  the  defendant's  life  was  void  and  of  no  effect,  that  they  were  not 
bound  to  deliver  the  policy,  and  that  the  contract  be  delivered  up  to 
be  cancelled.^ 

1  Commenting  upon  the  principal  case,  in  Phoenix  Life  Ins.  Co.  v.  Raddin,  120 
U.  S.  183,  192  (1887),  Gray,  J.,  for  the  court,  said  :  "So  much  of  the  remarks  of  Sir 
George  j'essel,  M.  K.,  in  delivering  judgment,  as  implies  that  an  insurance  company 
is  nofbound  to  look  with  the  greatest  attention  at  the  answers  of  an  applicant  to  the 
great  number  of  questions  framed  by  the  company  or  its  agents,  and  that  the  inten- 
tional omission  of  the  assured  to  answer  a  question  put  to  him  is  a  concealment  which 
will  avoid  a  policy  issued  without  further  inquiry,  can  hardly  be  reconciled  with  the 
uniform  current  of  American  decisions."  —  Ed. 


PART  II.,  SECT.  III.]       PENN  INS.  CO.  V.  MECHANICS'  B'K,  ETC.  CO.      205 


PENN   MUTUAL    LIFE    INS.   CO.   v.   MECHANICS'   SAVINGS 
BANK  AND   TRUST  CO. 

United  States  Circuit  Court  of  Appeals,  Sixth  Circuit,  1896. 
37  U.  S.  App.  692.1 

Erroi'  to  the  Circuit  Court  of  the  United  States  for  the  Middle 
District  of  Tennessee. 

This  action  was  on  a  poHcy  of  insurance  for  810,000  issued  on  Dec. 
2,  1892,  by  the  Penn  Mutual  Life  Insurance  Company  to  John  Schardt 
on  his  own  life.  Schardt  died  on  April  17,  1893,  during  the  currency 
of  the  policy.  Just  before  his  death  he  had  assigned  the  policy  to  the 
Mechanics'  Savings  Bank  and  Trust  Company  ...  to  secure  a  large 
debt  owed  by  him  to  the  bank.  .  .  .  The  trial  resulted  in  a  judgment 
for  the  full  amount  of  the  policy  and  interest  in  favor  of  the  plaintiff 
below,  and  the  insurance  company  brings  the  judgment  here  for  review 
on  writ  of  error. 

The  defendant  filed  nineteen  pleas  to  the  declaration,  averring  that 
both  by  misrepresentation  of  facts  warranted  to  be  true  in  the  applica- 
tion and  policy,  and  by  concealment  of  a  fact  material  to  the  risk,  the 
polic}'  was  avoided.  .   .  . 

The  questions  and  answers  in  the  application  which  are  material  to 
the  controversy  here  are  as  follows  :  — 

"  1.  A.  Give  your  name  in  full  and  post-office  address.  A.  John 
Schardt,  Nashville,  Tenn. 

"  JB.  Present  and  previous  occupations?  (State  the  kind  of  busi- 
ness.)    B.     Present,  teller  in  Mechanics'  Bank.     Previous,  same."  .  .  . 

After  these  answers  this  statement  was  signed  by  the  applicant : 

"I  hereby  warrant  and  agree,  that  I  am  temperate  in  m}-  habits, 
now  in  good  health,  and  ordinarily  enjo}-  good  health,  and  that  in  the 
statements  and  answers  in  this  application  no  circumstance  or  infor- 
mation has  been  withheld  touching  m}*  past  and  present  state  of  health 
and  habits  of  life  with  which  the  Penn  Mutual  Life  Insurance  Com- 
pany ought  to  be  made  acquainted."  .  .  . 

Schardt's  salary  as  teller  was  $1,500,  and  he  had  but  a  small  amount 
of  property.  When  he  died,  .  .  .  he  had  $80,000  of  insurance  on  his 
life,  nearly  all  of  which  had  been  written  within  six  months.  It  was 
conceded  that,  for  more  than  a  ^-ear  prior  to  his  death,  Schardt  had 
been  constantly  embezzling  the  funds  of  his  bank,  and  that  his  indebt- 
edness to  the  bank  thus  criminally  incurred  amounted,  at  the  time  of 
the  application  for  this  policy,  to  little  less  than  $100,000,  and  at  bis 
death  exceeded  that  sum.  He  did  not  disclose  the  fact  of  his  crime  to 
the  defendant  at  the  time  of  his  application  or  at  any  other  time.  His 
death  .  .   .  was  caused  by  congestion  of  the  brain  and   other  vital 

1  s.  c.  72  Fed.  II.  413 ;  19  C.  C.  A.  286 ;  and  38  L.  R.  A.  33.  A  petition  for  a  re- 
hearing was  denied,  as  reported  in  43  U.  S.  App.  75  (1896).  — Ed. 


206  PENN  INS.  CO.  V.  mechanics'  B'K,  ETC.  CO.         [CHAP.  III. 

organs,  caused  by  the  mental  strain  which  a  disclosure  of  the  crime 
brought  on.  .  .  . 

Upon  the  question  of  concealment  of  the  fact,  tlie  court  charged  the 
jury  as  follows:  "It  is  again  insisted,  .  .  .  that,  in  addition  to  the 
answers  which  it  is  alleged  are  false,  the  insured  concealed  from  the 
insurance  company  a  fact  about  which  he  was  not  asked  in  the  policy, 
and  that  by  reason  of  that  concealment  the  policy  is  avoided.  That 
fact  is  that  he  was  at  the  time  a  defaulter  to  the  bank  of  which  he  was 
an  officer.  Now,  it  is  not  insisted  that  this  is  a  false  answer  to  any- 
thing asked  here,  because  in  the  policy  and  in  the  application  there  is 
no  question  made  upon  that  point  at  all,  and  in  the  absence  of  any 
question  at  all  upon  the  point,  it  constitutes  no  part  of  the  written 
application  or  polic}'.  ...  In  respect  to  a  fact  about  which  no  question 
is  asked,  in  order  that  the  concealment  from  the  company  of  such  a  fact 
as  that  should  avoid  the  policy,  it  must  have  been  intentionally  con- 
cealed ;  and  the  omission  to  state  it  because  the  insured  did  not  think 
it  material,  or  the  entire  omission  to  speak  of  it  because  not  asked 
about  it,  or  because  it  was  at  the  time  not  recollected  or  was  for- 
gotten, or  its  omission  in  any  manner  in  good  faith,  would  not  avoid 
the  policy.  For  the  concealment  of  a  fact  such  as  that,  outside  of  any- 
thing asked  in  the  policy,  to  have  that  effect,  as  stated,  it  must  have 
been  intentional."  ^ 

To  this  action  of  the  court  the  defendant  took  the  following 
exceptions  :  — 

"  Said  counsel  next  then  and  there  excepted  to  so  much  of  said 
charge  as  instructs  the  jury  that  before  the  failure  of  John  Schardt,  the 
insured,  to  disclose  to  the  defendant  company  the  fact  of  his  defalcation 
to  the  plaintiff  bank  at  the  time  of  the  application  and  policy  in  ques- 
tion could  be  available  as  a  defence  to  his  action  the  concealment  must 
have  been  intentional  on  the  part  of  the  said  insured,  and  that  if  his 
failure  to  divulge  the  fact  arose  from  any  of  the  causes  stated  in  said 
charge  such  defence  could  not  be  established  ;  and  said  counsel,  insist- 
ing that  the  purpose,  design,  or  intention  of  the  insured  in  withholding 
the  fact  from  tlie  knowledge  of  the  company  is  not  material  in  making 
out  said  defence,  except  to  the  opinion  of  the  court  in  its  decision  to 

the  contrarv." 

Mr.  F.  C.  Maury  (Mr.  John  B.  Daniel  was  with  him  on  a  brief), 

for  plaintiff  in  error. 

Mr.  M.  T.  Bryan,  Mr.  E.  H.  East,  and  Messrs.  Vertrees  &  Vertrees 
submitted  a  brief  for  defendant  in  error. 

1  Many  passages  not  bearing  on  the  accuracy  of  this  part  of  the  charge  liave  heen 
omitted  in  reprinting  the  statement  and  the  opinion.  The  omitted  passages  dealt 
chiefly  with  warranties  as  affected  by  Pennsylvania  Laws  of  188.5,  p.  134,  No.  101,  rep- 
resentations, the  admissibility  of  evidence  tliat  the  applicant  had  made  similar  repre- 
sentations in  procuring  later  insurance,  as  showing  an  intent  to  deceive  in  the  present 
transaction  (the  point  on  which  a  new  trial  was  granted),  the  admissibility  of  expert 
testimony  as  to  materiality  of  facts  misrepresented  or  concealed,  materiality  as  a  ques- 
tion for  the  jury,  and  the  burden  of  proof.  —  Ed. 


PART  II.,  SECT.  III.]       PENN  INS.  CO.  V.  MECHANICS'  b'k,  ETC.  CO.       207 

Taft,  Circuit  Judge.  .  .  .  For  the  error  in  excluding  evidence  .  .  . 
the  judgment  herein  must  be  reversed.  The  ciise  will  doubtless  be 
tried  again,  however,  and  it  becomes  our  duty,  therefore,  to  examine 
and  decide  other  questions  made  upon  this  record  b}-  the  defendant 
which  must  of  necessity  arise  again  on  tlie  second  trial.  .  .  . 

If  Schardt  was  not  required  by  any  specific  question  to  disclose  the 
fact  of  his  embezzlements,  the  policy  would  still  be  avoided,  if  it  were 
material  to  the  risk,  and  he  intentional!}-  concealed  it  from  the  com- 
pany. This  is  not  controverted.  The  issue  of  law  between  the  parties 
is  whetlier  the  policy  would  not  be  avoided,  even  if  his  failure  to  dis- 
close it  were  due,  not  to  fraudulent  intent,  but  to  mere  inadvertence  or 
a  belief  that  it  was  not  material.  It  is  insisted  for  the  plaintiff  in  error 
that  the  motive  or  cause  of  the  non-disclosure  is  unimportant,  if  the 
fact  be  found  material  to  the  risk,  and  was  known  to  the  insured  when 
he  obtained  the  insurance.  The  trial  court  took  the  other  view  and  in- 
structed the  jury  accordinglv.  If  this  were  a  case  of  marine  insurance, 
the  contention  for  the  plaintiff  in  error  must  certainly  be  sustained.^  .  .  . 

The  very  marked  difference  between  the  situation  of  the  parties  in 
marine  insurance  and  that  of  parties  to  a  fire  or  life  policy  has  led 
many  courts  of  this  country  to  modif}-  the  rigor  of  the  doctrine  in  its 
application  to  fire  and  life  insurance,  and  to  lean  toward  the  view  that 
no  failure  to  disclose  a  fact  material  to  the  risk  not  inquired  about  will 
avoid  the  polic}',  unless  such  non-disclosure  was  with  intent  to  conceal 
from  the  insurer  a  fact  believed  to  be  material,  that  is,  unless  the  non- 
disclosure was  fraudulent.  In  marine  insurance  the  risk  was  usuallj' 
tendered  and  accepted  when  the  vessel  was  on  the  high  seas,  where  the 
insurer  had  no  opportunit}-  to  examine  her,  or  to  know  the  particular 
circumstances  of  danger  to  which  she  might  be  exposed.  The  risk 
in  such  a  case  is  highh'  speculative,  and  it  is  manifestly  the  duty  of 
the  insured  to  advise  the  insurer  of  ever}-  circumstance  within  his 
knowledge  from  which  the  probability  of  a  loss  could  be  inferred,  and 
he  cannot  be  permitted  to  escape  the  obligation  by  a  plea  of  inadver- 
tence or  negligence.  In  cases  of  fire  and  life  insurance,  however,  the 
parties  stand  much  more  nearly  on  an  equality.  The  subject  of  the  fire 
insurance  is  usuall}'  where  the  insurer  can  send  its  agents  to  give  it 
a  thorough  examination  and  determine  the  extent  to  which  it  is  ex- 
posed to  danger  of  fire  from  surrounding  buildings  or  because  of  the 
plan  or  material  of  its  own  structure.  The  subject  of  life  insurance  is 
always  present  for  physical  examination  by  medical  experts  of  the 
insurer,  who  often  acquire  by  lung  and  heart  tests  and  b}-  chemical 
analysis  of  bodily  excretions  a  more  intimate  knowledge  of  the  l)odily 
condition  of  the  applicant  than  he  has  himself.  Then,  too,  the  practice 
has  grown  of  requiring  the  applicant  for  both  fire  and  life  insurance 
to  answer  a  great  many  questions  carefully  adapted  to  elicit  facts  which 

1  The  omitted  passage  quoted  from  Carter  (•.  Boehm,  mite,  p.  125  (1766),  and  cited 
Sun  Mutual  Ins.  Co.  v.  Ocean  Ins.  Co.,  107  U.  S.  485  (1882).  —  Ed. 


208  PENN  INS.  CO.  V.  mechanics'  B'K,  ETC.  CO.         [CHAP.  III. 

the  insurer  deems  of  importance  in  estinwiting  the  risk.  In  life  insur- 
ance, not  onl}'  is  the  applicant  required  to  answer  man}-  general  ques- 
tions concerning  himself  and  his  ancestors,  but  he  is  also  subjected  to 
an  extended  examination  concerning  his  bodily  histor}'.  This  was  true 
in  the  case  at  bar.  When  the  applicant  has  fulk  and  truthfully  an- 
swered all  these  questions,  he  may  rightfull}-  assume  that  the  range  of 
the  examination  has  covered  all  matters  within  ordinary  human  experi- 
ence deemed  material  b}-  the  insurer,  and  that  he  is  not  required  to 
rack  his  memory  for  circumstances  of  possible  materiality-,  not  inquired 
about,  and  to  volunteer  them.  He  can  only  be  said  to  fail  in  his  duty 
to  the  insurer  when  he  withholds  from  him  some  fact  which,  though 
not  made  the  subject  of  inquiry,  he  nevertheless  believes  to  be  material 
to  the  risk  and  actually  is  so,  for  fear  it  would  induce  a  rejection  of  the 
risk,  or,  what  is  the  same  thing,  with  fraudulent  intent. 

A  strong  reason  wh}-  the  rule  as  to  concealment  should  not  be  so 
stringent  in  cases  of  life  insurance  as  in  marine  insurance  is  that  the 
question  of  concealment  rarely  if  ever  arises  until  after  the  death  of 
the  applicant,  and  then  the  mouth  of  him  whose  silence  and  whose 
knowledge,  it  is  claimed,  avoid  the  polic}-  is  closed.  The  application 
is  generall}-  prepared,  and  the  questions  are  generallj-  answered  under 
the  supervision  of  an  eager  life  insurance  solicitor.  Only  the  barest 
outlines  of  the  conversations  between  the  applicant  and  the  solicitor 
are  reduced  to  writing.  The  applicant  is  likely  to  trust  the  judgment 
of  the  solicitor  as  to  the  materiality  of  everything  not  made  the  subject 
of  express  inquir}-,  and,  with  the  solicitor's  strong  motive  for  securing 
the  business,  there  is  danger  that  facts  communicated  to  him  ma}-  not 
find  their  wa}-  into  the  application.  With  respect  to  a  contract  thus 
made,  it  is  clearl}'  just  to  require  that  nothing  but  a  fraudulent  non-dis- 
closure shall  avoid  the  policy.  Nor  does  this  rule  result  in  practical 
hardship  to  the  insurer,  for  in  every  case  where  the  undisclosed  fact  is 
palpably  material  to  the  risk  the  mere  non-disclosure  is  itself  strong 
evidence  of  a  fraudulent  intent.  Thus  if  a  man  about  to  fight  a  duel 
should  obtain  life  insurance  without  disclosing  his  intention,  it  would 
seem  that  no  argument  or  additional  evidence  would  be  needed  to 
show  the  fraudulent  character  of  the  non-disclosure.  On  the  other 
hand,  where  men  may  reasonably  differ  as  to  the  materialit}-  of  a  fact 
concerning  which  the  insurer  might  have  elicited  full  information  and 
did  not  do  so,  the  insurer  occupies  no  such  position  of  disadvantage 
in  judging  of  the  risk  as  to  make  it  unjust  to  require  that  before  the 
policy  is  avoided  it  shall  appear  not  only  that  the  undisclosed  fact  was 
material,  but  also  that  it  was  withheld  in  bad  faith.  To  hold  that  good 
faith  is  immaterial  in  such  a  case  is  to  apply  the  harsh  and  rigorous 
rule  of  marine  insurance  to  a  class  of  insurance  contracts  differing  so 
materially  from  marine  policies  in  the  circumstances  under  which  the 
contracting  parties  agree  that  the  reason  for  the  rule  ceases.  The 
authorities  are  not  uniform,  and  we  are  able  to  take  that  view  which  is 
more  clearh-  founded  in  reason  and  justice. 


PART  II.,  SECT.  III.]       PENN  INS.  CO.  V.  MECHANICS'  b'k,  ETC.  CO.       209 

In  England,  the  tendeuc}'  of  the  courts  has  been  to  hold  that  the 
same  rules  apply  to  fire  and  life  insurance  as  to  marine  insurance,  in 
reference  to  the  effect  of  the  concealment  of  material  facts. ^  .   .   . 

The  rule  had  its  origin  in  the  peculiar  exigencies  of  a  very  specula- 
tive business  ;  to  wit,  marine  insurance.  To  enforce  it  in  respect  to  life 
insurance  is  to  transfer  the  result  of  a  usage  prevailing  in  one  branch 
of  business  to  another  where  the  conditions  are  very  different,  and  are 
of  a  character  that  prevents  the  possibility  of  the  existence  of  a  definite 
usage  well  known  to  both  parties  in  respect  to  the  contracts  made.  It 
is  the  business  of  shipowners  and  their  brokers  frequently  to  deal  in 
insurance,  and  they  may  be  presumed  to  know  the  usages  prevailing 
with  respect  to  contracts  that  they  are  constantly  making.  In  life 
insurance  the  insured  never  makes  a  business  of  taking  such  insurances, 
and  in  most  cases  he  takes  but  one  policy.^  .  .  . 

Coming  now  to  the  American  authorities,  we  find  very  early  in 
reported  cases  a  disposition  to  depart  from  the  strict  rules  of  marine 
insurance  law  in  the  consideration  of  life  and  fire  policies.^  .  .  . 

In  Massachusetts  in  the  earlier  authorities,  the  stringent  rule  of 
marine  insurance  as  to  concealments  was  declared  applicable  with  all 
its  rigor  to  fire  policies.  In  Curry  v.  The  Commonwealth  Ins.  Co., 
10  Pick.  535,  it  was  held  that  if  the  insured  did  not  communicate  facts 
within  his  knowledge  which  increased  the  risk,  though  he   was  not 

1  The  omitted  passai^e  cited,  with  occasional  quotation  or  brief  discussion,  Bufe  v. 
Turner,  ante,  p.  169  (181.5) ;  Hugueuin  v.  Rayley,  ante,  p.  191  (181.5) ;  Morrison  v.  Mus- 
pratt,  4  Bing.  60  (1827) ;  Lindenau  v.  Desborough,  ante,  p.  193  (1828) ;  London  Assur- 
ance V.  Mansel,  ante,  p.  199  (1879);  Abbott  v.  Howard,  Hayes'  Irish  Ex.  .331  (18.32) ; 
North  British  Ins.  Co.  v.  Lloyd,  10  Ex.  523,  533  (1854) ;  and  Magee  v.  xMetropolitan 
Life  Ins.  Co.,  92  U.  S.  93  (1875).  — Ed. 

2  Here  were  discussed  Wheelton  v.  Hardisty,  8  E.  &  B.  232  (1858);  Thomson  v. 
"Weems,  post,  p.  417  (18S4) ;  Pollock  on  Contracts,  4th  ed  ,  490,  n.  I  ;  London  Assur- 
ance V.  Mansel,  ante,  p.  199  (1879) ;  Phceuix  Life  Ins.  Co.  v.  liaddin,  ante,  p.  204,  n.  1 
(1887).  — Ed. 

3  Here  were  cited,  frequently  with  comments,  Farmers'  Ins.  and  Loan  Co.  v.  Snyder, 
16  Wend.  4S1,  492  (1836);  .Jolly's  Admrs.  v.  Baltimore  Equitable  Society,  1  H.  &  G. 
295  (1827) ;  Burritt  v.  Saratoga  County  Mutual  F.  Ins.  Co.,  ante,  p.  178  (1843) ;  Clark 
V.  Manufacturers'  Ins.  Co.,  ante,  p.  181  (1850) ;  Gates  v.  Madison  County  Mutual  Ins. 
Co.,  5  N.  Y.  469,  475  (1851) ;  Browning  v.  Home  Ins.  Co.,  71  N.  Y.  508  (1877)  ;  Wood- 
ruff V.  Imperial  F.  Ins.  Co.,  83  N.  Y.  133  (1880) ;  Short  v.  Home  Ins.  Co.,  90  N.  Y.  16 
(1882) ;  Haight  v.  Continental  Ins.  Co.,  92  N.  Y.  51,  55  (1883) ;  and  Hartford  Protec- 
tion Ins.  Co.  V.  Harmer,  ante,  p.  185,  n.  1  (1853). 

From  Burritt  v.  Saratoga  Mutual  Fire  Ins.  Co.,  ante,  pp.  178,  179,  180  (1843),  was 
quoted  the  passage  closing  thus :  "  When  thus  called  upon  to  speak,  he  is  bound  to 
make  a  true  and  full  representation  concerning  all  the  matters  brought  to  his  notice, 
and  any  concealment  will  have  the  like  effect  as  in  the  case  of  a  marine  risk."  The 
comment  was  this:  "The  use  of  'concealment'  in  this  last  passage  should  be  re- 
marked. It  means  there  a  failure  fully  to  answer  a  question  put,  and  it  was  such 
a  concealment  whicli  Sir  George  Jessel  had  to  consider  in  London  Assurance  v.  Mansel, 
and  which  was  defined  by  Sir  Frederick  Pollock.  It  is  not  a  mere  silence  upon  a 
matter  not  made  the  subject  of  inquiry.  It  is  necessary  to  determine  in  which  sense 
the  word  is  used  in  deciding  cases  before  their  bearing  on  the  present  question  can  be 
clearly  understood.  Here  we  are  considering  only  the  duty  of  the  insured  in  respect 
to  something  not  inquired  about."  —  Ed. 

14 


210  PENN  INS.  CO.  V.  mechanics'  b'K,  ETC.  CO.         [CHAP.  III. 

questioned  concerning  them,  and  -though  he  supposed  the  facts  not  to 
be  material,  the  policy'  was  void.  This  can  hardly  be  reconciled  witli 
the  later  cases  in  the  same  court.  In  Washington  Mills  Emery  Mfg. 
Co.  V.  Weymouth  and  Braintree  Mutual  Fire  Ins.  Co.,  135  Mass.  503, 
505,  the  question  was  whether  a  failure  to  state  that  the  insured  did  not 
own  the  land  on  which  the  building  stood  avoided  the  policy.  No  fraud 
appeared.  Tlie  court  said  :  "  The  defendant  saw  fit  to  issue  this  policy 
without  any  specific  inquiries  of  the  plaintiff  as  to  tiie  title  to  tiie  land, 
and  without  any  representations  by  the  plaintiff  upon  this  point.  It 
was  its  own  carelessness,  and  it  cannot  avoid  the  policy  witliout  prov- 
ing intentional  misrepresentation  or  concealment  on  the  part  of  the 
plaintiff.  An  innocent  failure  to  communicate  facts  about  which  the 
plaintiff  was  not  asked  will  not  have  this  effect ;  "  citing  Common- 
wealth V.  Hide  and  Leather  Ins.  Co.,  112  Mass.  13G  ;  Fowle  v.  Spring- 
field Fire  and  Marine  Ins.  Co.,  122  Mass.  191;  Walsh  v.  Fire  Associa- 
tion of  Philadelphia,  127  Mass.  383.  Nor  does  Chief  Justice  Shaw's 
definition  of  concealment  in  a  fire  insurance  case  seem  to  be  as  broad 
as  that  prevailing  in  marine  insurance.  In  Daniels  v.  Hudson  River 
Fire  Ins.  Co.,  12  Cush.  416,  425,  he  said,  in  defining  the  terra  as  used 
in  a  fire  policy :  "  '  Concealment '  is  the  designed  and  intentional  with- 
holding of  any  fact  material  to  the  risk,  which  the  assured,  in  honesty 
and  good  faith,  ought  to  communicate  to  the  underwriter ;  mere  silence 
on  the  part  of  the  assured,  especially  as  to  some  matter  of  fact  which 
he  does  not  consider  it  important  for  the  underwriter  to  know,  is  not 
to  be  considered  as  such  concealment."  There  are  many  other  cases  of 
fire  insurance  in  which  it  is  held  that  a  non-disclosure  of  a  material  fact 
not  inquired  about  does  not  avoid  the  policy  unless  it  aj)pears  to  have 
been  withheld  with  fraudulent  intent.  Alkan  v.  The  New  Hampshire 
Ins.  Co.,  53  Wis.  136  ;  Van  Kirk  v.  The  Citizens'  Ins.  Co.  of  Pitts- 
burgh, 79  Wis.  627;  Wytheville  Ins.  Co.  v.  Stultz,  87  Va.  629,  636; 
Sanford  v.  The  Royal  Ins.  Co.,  11  Wash.  653;  Pelzer  Mfg.  Co.  v.  St. 
Paul  F.  &  M.  Ins.  Co.,  41  Fed.  Rep.  271. 

The  number  of  life  insurance  cases  in  which  the  question  has  arisen 
is  small.  In  Rawls  v.  The  American  Mutual  Life  Ins.  Co.,  27  N.  Y. 
282,  287,  the  Court  of  Appeals  held  that  where  an  applicant  for  life 
insurance  fully  and  truly  answered  all  questions  put  to  him  by  the  com- 
pany the  mere  omission  to  state  matter,  .though  material  to  the  risk, 
would  not  be  a  concealment,  and  would  not  affect  the  validity  of  the 
policy  on  the  ground  that  the  applicant  might  presume  that  the  insurer 
had  questioned  him  on  all  subjects  which  he  deemed  material.  In 
Mallory  v.  The  Travelers'  Ins.  Co.,  47  N.  Y.  52,  57,  the  same  court 
sustained  a  charge  to  the  jury,  that,  if  the  applicant  did  not  conceal 
any  fact  which,  in  his  own  mind,  was  material  in  making  the  appli- 
cation, the  policy  was  not  void.  See,  also,  Cheever  v.  The  Union 
Central  Life  Ins.  Co.,  4  Am.  L.  Rec.  155. 

In  Vose  V.  The  Eagle  Life  and  Health  Ins.  Co.,  6  Cush.  42,  48,  the 
Supreme  Judicial  Court  of  Massachusetts  announced  the  principle  as 


PART  II.,  SECT.  III.]       PENN  IXS.  CO.  V.  xMECHAXICS'  B'K,  ETC.  CO.       211 

applicable  to  life  policies,  that  the  concealment  of  a  material  fact  will 
avoid  the  policy,  though  it  is  the  result  of  accident  or  negligence,  and 
not  of  design.  The  case  did  not  call  for  the  application  of  such  a  prin- 
ciple. The  applicant  was  asked  if  he  was  afflicted  with  any  disease. 
He  answered  that  he  was  not.  At  the  time  he  had  consumption,  and 
had  experienced  several  of  the  premonitory  s3-mptoms.  His  answers 
were  made  the  basis  of  the  policy.  It  is  probable  that  the  term  "  con- 
cealment," as  used  in  this  case,  refers  to  an  incomplete  answer  to  a 
general  question,  rather  than  a  failure  to  volunteer  a  fact  not  asked  for, 
because  the  court  uses  in  the  opinion  language  which  is  incorporated 
in  the  headnote  as  follows  :  "  It  is  the  duty  of  the  insured  to  disclose 
all  material  facts  within  his  knowledge.  Although  specific  questions, 
applicable  to  all  men,  are  proposed  by  the  insurers,  yet  there  may  be 
particular  circumstances  affecting  the  individual  to  be  insured,  which 
are  not  likely  to  be  known  to  the  insurers ;  and  the  concealment  of 
a  material  fact,  when  a  general  question  is  put  by  the  insurers  at  the 
time  of  effecting  the  policy  which  would  elicit  that  fact,  will  vitiate  the 
policy."  But,  whatever  the  effect  of  this  case,  we  think  the  modern 
tendency,  even  of  Massachusetts  decisions,  is  to  require  that  a  non- 
disclosure of  a  fact  not  inquired  about  shall  be  fraudulent,  before  viti- 
ating the  policy;  and,  as  already  stated,  this  view  is  founded  on  the 
better  reason.  The  subject  is  by  no  means  as  clear  upon  the  authori- 
ties as  could  be  wished,  and  the  text  writers  find  much  difficulty  in 
reconciling  the  cases.  May  on  Insurance  (3d.  ed.),  §§  202,  203,  207. 
We  hold  that  the  charge  of  the  Circuit  Court  upon  this  question 
was  correct.  .  .  . 

For  the  error  already  referred  to  in  the  exclusion  of  evidence,  the 
judgment  of  the  Circuit  Court  is 

Heversed,  icith  instructions  to  order  a  neio  trial. 


212  PAWSON   V.   WATSON.  [CHAP.  IV. 


CHAPTER  IV. 
REPRESENTATION. 


SECTION  I. 
Marine  Itisurmice. 

PAWSON   V.    WATSON. 

King's  Bench,  1778.     2  Cowper,  785.* 

Upon  a  rule  to  show  cause  wh}'  a  new  trial  should  not  be  granted  in 
this  case,  Lord  Mansfield  reported  as  follows  :  This  was  an  action  upon 
a  polic}'  of  insurance.  At  the  trial  it  appeared  in  evidence,  that  the 
first  underwriter  had  the  following  instructions  shown  hiin  :  "  Three 
thousand  five  hundred  pounds  upon  the  ship  '  Julius  Caesar,'  for  Halifax, 
to  touch  at  Plymouth,  and  an}'  port  in  America:  she  mounts  12  guns 
and  20  men."  These  instructions  were  not  asked  for  or  communicated 
to  the  defendant ;  but  the  ship  was  only  represented  generally  to  him 
as  a  ship  of  force  ;  and  a  thousand  pounds  had  been  done,  before  the 
defendant  did  anything  upon  her.  The  instructions  were  dated  the 
28th  June,  1776,  and  the  ship  sailed  on  the  23d  July,  1776  ;  and  was 
taken  by  an  American  privateer.  That  at  the  time  of  her  being  taken, 
she  had  on  board  6  four  pounders,  4  three  pounders,  3  one  pounders, 
6  half  pounders,  which  are  called  swivels,  and  27  men  and  boys  in  all, 
for  her  crew ;  but  of  them  1 6  only  were  men  (not  20,  as  the  instruc- 
tions mentioned),  and  the  rest  boys.  But  the  witness  said  he  con- 
sidered her  as  being  stronger  with  this  force  than  if  she  had  12  carriage 
guns  and  20  men.  He  also  said  (which  is  a  material  circumstance) 
that  there  were  neither  men  nor  guns  on  board  at  the  time  of  insur- 
ance. That  he  himself  insured  at  the  same  premium,  without  regard  or 
inquiry  into  the  force  of  tlie  ship.  Other  undorwi-iters  also  insured  at 
the  same  premium,  without  any  other  representation  than  that  she  was 
a  ship  of  force.  That  to  ever}-  four  pounder  there  should  be  five  men 
and  a  boy.  That  in  merchant  ships  bo3-s  always  go  under  the  denomi- 
nation of  men.  This  was  met  by  evidence  on  the  part  of  the  de- 
fendant, saying,  that  guns  mean  carriage  guns,  not  swivels,  and  men 
mean  able  men  exclusive  of  boys.      There  were  three  causes  of  the 

1  s.  c.  1  Doug   1 1 ,  n.  3.  —  Ed. 


SECT.  I.]  '  PAWSON    V.    WATSOX.  213 

same  nature,^  depending  upon  the  same  evidence :  The  defence  in  each 
was,  that  these  instructions  were  to  be  considered  as  a  warrant}',  the 
same  as  if  the}'  had  been  inserted  in  the  policy  ;  though  they  were  not 
proved  to  have  been  shown  to  any  but  the  first  underwriter.  In  all 
the  three  cases  the  question  reserved  for  the  opinion  of  the  court  is, 
"  Whether  the  written  instructions  which  were  shown  to  the  first 
underwriter  are  to  be  considered  as  a  warranty  inserted  in  the  policy, 
or  as  a  representatfon,  which  would  only  avoid  the  policy,  if  fraudu- 
lent?" If  the  court  should  be  of  opinion  that  the  instructions  amounted 
to  a  warranty,  then  a  new  trial  is  to  be  granted  in  each,  without  costs  ; 
otherwise,  the  verdicts  are  to  stand. 

At  the  trial  I  was  of  opinion  that  it  would  be  of  very  dangerous 
consequence  to  add  a  conversation  that  passed  at  the  time,  as  part  of 
the  written  agreement.  It  is  a  collateral  representation.  And  if  the 
parties  had  considered  it  as  a  warranty,  they  would  have  had  it  inserted 
in  the  policy.  But,  secondly,  if  these  instructions  were  to  be  con- 
sidered in  the  light  of  a  fraudulent  misrepresentation,  they  must  be 
both  material  and  fraudulent :  and  in  that  light,  I  held,  that  a  misrep- 
resentation made  to  the  first  underwriter  ought  to  be  considered  as  a 
misrepresentation  made  to  every  one  of  them,  and  so  would  infect  the 
whole  policy.  Otherwise,  it  would  be  a  contrivance  to  deceive  many  : 
for  where  a  good  man  stands  first,  the  rest  underwrite  without  asking 
a  question  ;  and  if  he  is  imposed  upon,  the  rest  of  the  underwriters 
are  taken  in  by  the  same  fraud.  The  case  was  left  to  the  jury  under 
that  direction. 

Mr.  Wallace,  who  showed  cause,  insisted  that  the  instructions  in 
question  were  no  warranty,  but  a  representation.  That  the  policy  is 
the  formal  instrument  containing  the  final  agreement  of  the  parties ; 
and  therefore  no  instructions,  parol  or  written,  can  be  admitted  to  con- 
tradict it.  2.  "With  respect  to  its  being  a  fraudulent  misrepresentation, 
the  evidence  proved,  and  the  jury  by  their  verdict  found  tliere  was  no 
fraud.  On  the  contrary,  the  terms  of  the  representation  were  more 
than  complied  with  ;  for  by  the  evidence  it  clearly  appears  that  the 
force  actually  on  board  exceeded  the  force  specified  in  the  instructions. 
Tlierefore,  he  prayed  the  rule  might  be  discharged. 

Mr.  MansfiehlUr.  Macdonald,  and  Mr.  Daveiqiort,  contra. 

Lord  Mansfield  asked.  Whether  there  was  any  case  that  made  a 
difference  between  a  written  and  a  parol  representation?  Upon  re- 
ceiving no  answer,  his  Lordship  proceeded  to  give  his  opinion  as  fol- 
lows :  There  is  no  distinction  better  known  to  those  who  are  at  all 
conversant  in  the  law  of  insurance  than  that  which  exists  between  a 
warranty  or  condition  which  makes  part  of  a  written  policy  and  a  rep- 
resentat'iou  of  tlie  state  of  the  case.  Where  it  is  a  part  of  the  written 
policy,  it  must  be  performed ;  as  if  there  be  a  warranty  of  convoy, 
there"^  it  must  be  a  convoy  ;  nothing  tantamount  will  do  or  answer  the 

1  The  names  of  the  other  two  causes  were  Pawson  v.  Snell  and  Pawson  v.  Ewer.  — 

B£f. 


214  PAWSON   V.   WATSON.  [CIIAP.  IV. 

purpose ;  it  must  be  strictly  performed,  as  being  part  of  the  agreement ; 
for  there  it  might  be  said  the  party  would  not  have  insured  without 
convo3\     But  as,  by  the  law  of  merchants,  all  dealings  must  be  fair 
and    honest,    fraud    infects    and   vitiates   every   mercantile   contract. 
Therefore,  if  there  is  fraud  in  a  representation,  it  will  avoid  the  policy, 
as  a  fraud,  but  not  as  a  part  of  the  agreement.     If,  in  a  life  policy,  a 
man  warrants  another  to  be  in  good  health,  when  he  knows  at  the  same 
time  he  is  ill  of  a  fever,  that  will  not  avoid  the  policy,  because  by  the 
warranty  he  takes  the  risk  upon  himself.     But  if  there  is  no  warranty, 
and  he  says,  "the  man  is  in  good  health,"  when  in  fact  he  knows  him 
to  be  ill,  it  is  false.     So  it  is,  if  he  does  not  know  whether  he  is  well  or 
ill ;   for  it  is  equally  false  to  undertake  to  say  that  which  he  knows 
nothing  at  all  of;    as  to  say  that  is  true  which  he  knows  is  not  true. 
But  if  he  only  says,  "  he  believes  the  man  to  be  in  good  health," 
knowing  nothing  about  it,  nor  having  any  reason  to  believe  the  con- 
trary, there,  though  the  person  is  not  in  good  health,  it  will  not  avoid 
the  policy,  because*  the  underwriter  then  takes  the  risk  upon  himself. 
So  that  there  cannot   be  a  clearer  distinction  than  that  which  exists 
between  a  warranty  which  makes  part  of  the  written  policy  and  a  col- 
lateral representation,  which,  if  false  in  a  point  of  materiality,  makes 
the  policy  void  ;   but  if  not  material,  it  can  hardly  ever  be  fraudulent. 
So  far  from  the  usage  being  to  consider  instructions  as  a  part  of  the 
policy,  parol  instructions  were  never  entered  in  a  book,  nor  written 
instructions  kept,   till  many  years  ago,  upon  the  occasion  of  several 
actions  brought  by  the  insured  upon  policies,  where  the  brokers  had 
represented  many  things  they  ought  not  to  have  represented,  in  con- 
sequence of  which  the  plaintiffs  were  cast ;   I  advised  the  insured  to 
bring  an  action  against  the  brokers,  which  they  did,  and  recovered  in 
several  instances;   and  I  have  repeatedly,  at  Guild-hall,  cautioned  and 
recommended  it  to  the  brokers,  to  enter  all  representations  made  by 
them  in  a  book.     That  advice  has  been  followed  in  London  ;    but  it 
appeared  lately,  at  the  trial  of  a  cause,  that  at  Bristol,  to  this  hour,  they 
make  no  entry  in  their  bof)ks,  nor  keep  any  instructions. 

The  question  then  is,  "  Whether  in  this  policy  the  party  insuring  has 
warranted  that  the  ship  should  positively  and  literally  have  twelve  car- 
riage guns  and  twenty  men?"  That  is,  "whether  the  instructions 
given  in  evidence  are  a  part  of  the  policy?"  Now,  I  will  take  it  by 
degrees.  The  two  first  underwriters  before  the  court  are  Watson  and 
Snell.  Says  Watson,  "It  is  part  of  my  agreement  that  the  ship  shall 
sail  with  twelve  guns  and  twent}-  men  ;  and  it  is  so  stipulated  that 
nothing  under  that  number  will  do.  Ten  guns  with  swivels  will  not 
do."  The  answer  to  this  is,  "  Read  your  agreement ;  read  your  policy." 
There  is  no  such  thing  to  be  found  there.  It  is  replied,  yes,  but  in  fact 
there  is,  for  the  instructions  u[)on  which  the  policy  was  made  contain 
that  express  stipulation.  The  answer  to  that  is,  there  never  were  any 
instructions  shown  to  Watson,  nor  were  any  asked  for  bv  him.  AVhat 
color  then  has  he  to  say  that  those  instructions  are  any  part  of  his 


SECT.  I.]  PAWSON   V.   WATSON.  215 

noreement?     It  is  said  he  insured  upon  the  credit  of  the  first  under- 
writer.    A  representation  to  the   first  underwriter  has  nothing  to  do 
with  that  which  is  the  agreement  or  the  terms  of  the  policy.     No  man 
who  underwrites  a   policy  subscribes,  by  the  act  of  underwriting,  to 
terms  which  he  knows  nothing  of.     But  he  reads  the  agreement,  and  is 
governed  by  that.     Matters  of  intelligence,  such  as  that  a  ship  is  or  is 
not  missing,  are  things  in  which  a  raau  is  guided  by  the  name  of  a  first 
underwriter,  who  is  a  good  man,  and  which  another  will  therefore  give 
faith  and  credit  to;    but  not  to  a  collateral  agreement,  which  he  can 
know  nothing  of.     The  absurdity  is  too  glaring,  it  cannot  be.     By  ex- 
tension of  an  equitable  relief  in  cases  of  fraud,  if  a  man  is  a  knave  with 
respect  to  the  first  underwriter,  and  makes  a  false  representation  to  him 
in  a  point  that  is  material,  as  where  having  notice  of  a  ship  being  lost, 
he  says  she  was  safe,  that  shall  afl^ect  the  policy  with  regard  to  all  the 
subsequent  underwriters,  who  are  presumed  to  fcjllow  the  first.     How 
then  do  Watson  and  SncU  underwrite  the  sliii)  in  question?     Without 
knowing  whether  she  had  any  force  at  all.     That  proves  the  risk  was 
equal  to  a  ship  of  no  force  at  all ;  and  the  premium  was  a  vast  one  — 
eight  guineas.     So  much  therefore  for  those  two  cases.     The  third  case 
is  that  of  Ewer,  who  saw  the  instructions,  with  the  representation  which 
they  contained.     Did  the  number  of  guns  induce  him  to  underwrite  the 
policy?     If  it  did,  he  would  have  said,  "Put  them  into  the  policy; 
warrant  that  the  ship  shall  depart  with  twelve*  guns  and  twenty  men." 
Whereas,  he  does  no  such  thing,  but  takes  the  same  premium  which 
Watson  and   Snell  did,  who  had   no  notice  of  her  having  any  force. 
What  does  that  prove?     That  he  is  paid  and  receives  a  premium,  as  if 
it  were  a  ship  of  no  force  at  all.     The  representation  amounts  to  no 
more  than  this,  "  I  tell  you  what  the  force  will  be,  because  it  is  so  much 
the  better  for  you."     There  is  no  fraud  in  it,  because  it  is  a  representa- 
tion only  of  wiiat,  in  the  then  state  of  the  ship,  they  thought  would  be 
the  trutii.     And  in  real  truth,  the  ship  sailed  with  a  larger  force ;  for 
she  had  nine  carriage  guns,  besides  six  swivels.      The  underwriters, 
therefore,  had  the  advantage  by  the  difference.     There  was  no  stipula- 
tion about  what  the  weight  of  metal  should  be.     All  the  witnesses  say, 
".she  had  more  force  than  if  she  had  had  twelve  carriage  guns,  both  in 
point  of  strength,  of  convenience,  and  for  the  purpose  of  resistance." 
The  supercargo  in  particular  says,  "he  insured  the  same  ship  and  the 
same  voyage,  for  the  same  premium,  without  saying  a  syllable  about 
the  force.""   Why,  then,  it  was  a  matter  proper  for  the  jury  to  say 
WHiether  the  representation  was  false?  or  whether  it  was  in  a  fact  an 
insurance,  as  of  a  ship  without  force?     They  have  determined,   and  I 
think  very  rightly,  that  it  was  an  insurance  without  force.     Ewer  makes 
an  objection  that  the  representation  ought  to  be  considered  as  inserted 
in  the  policy  ;  but  the  answer  to  that  is,  he  has  determined  whether  it 
should  be  inserted  in  the  policy  qf  not,  by  not  inserting  it  himself. 
There  is  a  great  difference,  whether  it  shall  be  considered  as  a  fraud. 
But  it  would  be  very  dangerous  to  permit  all  collateral  represen^i^"on« 


216  BIZE   V.   FLETCHER.  [CHAP.  IV. 

to  be  put  into  the  polic}-.  I  am  extremel}'  glad  to  hear  that  a  great 
many  of  the  underwriters  have  paid.  Mr.  Tiiornton  has  paid,  who  was 
the  first  person  that  saw  the  instructions.  Shall  the  rest  refuse,  then.'' 
As  to  Watson  and  Snell,  the}'  have  no  pretence  to  refuse,  for  there  is 
not  a  color  for  the  objection  made  by  them.  As  to  P^wer,  we  are  all  satis- 
fied with  the  determination  of  the  jur}-  against  him.  Therefore,  the  rule 
for  a  new  trial  must  be  discharged.^  N.  B.  On  the  Monday  following, 
Mr.  Davenport  said  he  was  desii-ed  b}-  the  underwriters  to  ask  whether  it 
was  the  opinion  of  the  court  that  to  make  written  instructions  valid  and 
binding  as  a  warranty,  they  must  be  inserted  in  the  policy?  Lord 
Mansfield  answered  that  most  undoubtedly  that  was  the  opinion  of  the 
court.  If  a  man  warrants  that  a  ship  shall  depart  with  twelve  guns, 
and  it  departs  with  ten  only,  it  is  contrary  to  the  condition  of  the 
policy. 


BIZE   V.   FLETCHER. 
Nisi  Prius,  King's  Bench,  1779.     1  Park  Ins.  8th  ed.  439.2 

This  was  an  action  on  a  polic}'  of  insurance  on  the  ship  "  Carnatic," 
East  Indiaman,  "  at  and  from  Port  L'Orient  to  the  isles  of  France  and 
Bourbon,  and  to  all  or  anj'  ports  or  places,  where  and  whatsoever,  in 
the  East  Indies,  China,  Persia,  or  elsewhere,  beyond  the  Cape  of  Good 
Hope,  from  place  to  place  ;  and  during  the  ship's  stay  and  trade  back- 
wards and  forwards,  at  all  ports  and  places,  and  until  her  safe  arrival 
back  at  her  last  port  of  discharge  in  France."  But  at  the  same  time 
that  this  polic}'  was  subscribed,  there  was  a  slip  of  paper  wafered  to 
it,  and  shown  to  the  underwriters,  on  which  was  written  the  following 
representation  :  The  ship  has  had  a  complete  repair,  and  is  now  a  fine 
and  good  vessel,  three  decks.  Intends  to  sail  in  September  or  October 
next  (1776).  Is  to  go  to  Madeira,  the  isles  of  France,  Pondicherr}-, 
China,  the  isles  of  France,  and  L'Orient. 

The  ship  did  not  sail  till  the  6th  of  December,  1776,  and  did  not 
reach  Pondiolierry  till  the  23d  of  July,  1777.  She  continued  there  till 
the  23d  of  August  following,  when,  instead  of  proceeding  to  China,  she 
sailed  for  Bengal,  where  having  passed  the  winter  and  undei'gone  con- 
siderable repairs,  she  sailed  from  thence  earl}-  in  the  year  1778  (being 
the   second   ship  that  left  the  Ganges),  returned  to  Pondicherry,  and 

^  On  the  effect  of  a  representation  made  to  a  prior  underwriter  of  the  same  poh'cy, 
see  Stackpole  v.  Simon,  post,  p.  285  (1779),  wliich  was  a  life  insurance  case;  Barber 
V.  Fletcher,  1  Doug.  305  (1779);  Marsdeu  l\  Keid,  3  East,  572,  573  (1803);  Bell  i-. 
Carstairs,  2  Camp.  543  (1810);  Brine  v.  Featherstone,  4  Taunt.  8G9,  871  (1813); 
Sibhald  v.  Hill,  post,  p.  227  (1814);  Kobertson  v.  Marjoril)anks,  2  Stark.  573,  575 
(1819).     And  see  Elting  v.  Scott,  2  Johns.  137   (1807).  — Ed. 

-  s.  c.  1  Doug.  284.  —  Ed. 


SECT.  I.]  BIZE    V.   FLETCHER.  217 

after  taking  in  a  bomewavd-bound  cargo  at  that  place,  proceeded  in  her 
vo3age  back  to  L'Orient,  but  was  taken  in  October  in  that  year  by  the 
"Mentor"  privateer.  The  usual  time  in  which  the  direct  voyage  be- 
tween Pondicherry  and  Bengal  is  performed  is  six  or  seven  days  ;  but 
the  "Carnatic"  was  about  six  weeks  in  going  to  Bengal,  and  two 
months  on  the  wa}'  back  from  thence  to  Pondicherr}'.  Both  going  and 
returning,  she  either  touched  at,  or  lay  off  Madras,  Masulipatam,  Visiga- 
patam,  and  Yanon,  and  took  in  goods  at  all  those  places. 

It  was  contended  in  this  cause,  at  the  trial,  that  the  representation 
accompanying  the  policy  restrained  the  A'oyage  to  the  limits  therein 
specified.  They  produced  some  letters  from  the  owners  to  their  corre- 
spondents, one  of  which  was  to  the  following  effect:  "We  doubt  not 
but  on  account  of  the  storm  the  ship  will  be  forced  to  go  to  Bengal  to 
be  laid  down,  which  cannot  be  done  at  Pondicherrj- ;  in  which  case  our 
captain  will  have  entered  a  protest,  which  we  will  forward  in  time  to 
you."  In  a  subsequent  letter  the}'  say  nothing  of  the  storm  or  leak, 
but  mention  a  different  cause  for  the  ship's  going  to  Bengal.  These 
letters,  it  was  said,  raised  a  presumption  that  the  necessity  of  going  to 
Bengal  was  mereh'  a  pretence  devised  after  the  capture,  and  wlien  the 
insured  began  to  apprehend  that  the  words  of  the  policy  would  not 
cover  a  voyage  to  that  place. 

Lord  Mansfield  told  the  jury  "that  the  first  question  was,  whether 
the  polic}'  was  void  on  account  of  misrepresentation?  Now  there  is 
an  essential  difference  between  a  warrant}-  and  a  representation.  The 
warranty  is  a  part  of  the  contract ;  a  risk  described  in  the  policy  is 
part  of  the  contract.  There  can'  be  no  warranty  by  any  collateral 
representation.  The  ground  on  which  a  representation  affects  a  policy 
is  fraud,  the  representation  must  be  fraudulent;  that  is,  it  must  be 
false  and  material  in  respect  to  the  risk  to  be  run.  All  risks  are  gov- 
erned by  the  nature  of  them  ;  and  the  premium  is  governed  by  the  risk. 
Where  a  representation  accompanies  an  instrument,  it  says,  '  I  will 
have  this  understood  as  my  present  intention  ;  but  I  will  have  it  in  my 
power  to  vary  it.'  The  great  question  in  this  cause  is,  whether  the 
representation  was  false,  and  that  in  a  material  instance?  Fraud  is 
found  out  by  the  materiality  of  the  point  it  is  charged  in.  It  is  to  be 
considered,  then,  whether  they  had  really  a  view  of  going  to  China.  A 
witness  has  proved  that  the  diflference  of  insurance  is  one  per  cent  on 
going  to  Bengal,  and  not  to  China.  If  you  think  that  this  was  a  mis- 
representation to  avoid  paying  the  one  per  cent,  you  will  find  for  the 
defendant.  But  if  you  are  satisfied  that  the  real  intention,  at  the  time 
of  the  representation,  was  to  go  to  China,  the  plaintiff  will  be  entitled 
to  your  verdict ;  for  the  insured  may  change  his  intention,  go  to  Bengal, 
and  yet  be  protected  by  the  policy,  which  clearly  admits  of  that  voyage, 
and  must  be  understood  by  both  parties  in  a  greater  latitude  than  the 
representation,  being  expressed  in  diflTerent  and  much  more  compre- 
hensive terras.  If,  upon  the  whole  evidence,  you  shall  be  of  opinion 
that  no  fraud  was  intended,  and  that  the  variance  between  the  intended 


218  MACDOWALL  V.    FRASER.  [CHAP.  IV. 

voyage,  as  described  in  the  slip  of  paper,  and  the  actual  voyage  as  per- 
formed, did  not  tend  to  increase  the  risk  to  tlie  underwriters,  this  slip 
of  paper  being  only  a  representation,  you  must  find  for  the  plaintiff." 

The  jury  found  a  verdict  accordingly. 


MACDOWALL  v.   FRASER. 

King's  Bench,  1779.     1  Doug.  260. 

This  was  an  action  upon  a  policy  of  insurance  on  the  ship  the 
"  '  Mary  and  Hannah,'  from  New  Yorlc  to  Pliiladelphia."  At  the  time 
when  the  insurance  was  made,  which  was  in  London,  on  the  oOth  of 
January,  the  broker  represented  the  situation  of  the  ship  to  the  under- 
writer as  follows:  "The  'Mary  and  Hannah,'  a  tight  vessel,  sailed 
with  several  armed  ships,  and  was  seen  safe  in  the  Delaware  on  tlie 
11th  of  December,  by  a  ship  which  arrived  at  New  York."  In  fact,^ 
the  vessel  was  lost  on  the  9th  of  December,  by  running  against  a  cheval 
defrise,  placed  across  the  river.  Tlie  cause  came  on  to  be  tried  before 
Lord  Mansfield,  at  the  last  sittings  at  Guildhall.  Tlie  defence  was 
founded  on  the  misrepresentation  as  to  the  time  when  the  ship  was 
seen  ;  and  the  representation  and  the  day  of  the  loss  being  proved, 
the  jury  found  for  the  defendant.  On  Monday,  the  8th  of  November, 
Dunning  obtained  a  rule  to  show  cause  why  there  should  not  be  a  new 
trial,  which  came  on  to  be  argued  this  day. 

The  Solicitor-  General  and  Dunning.,  for  tlie  plaintiff. 
Lee  and  Davenport,  for  the  defendant. 

On  the  part  of  the  plaintiff,  the  difference  between  a  warranty  and 
a  representation  was  much  enlarged  upon.  It  was  admitted  that  the 
representation  in  this  case  was  false  in  point  of  fact,  though  the  insured, 
at  the  time,  believed  it  to  be  true.  It  was  also  admitted  that  a  repre- 
sentation, if  false  in  a  material  point,  annuls  the  contract.  But  it  was 
contended  that  the  particular  day,  when  the  ship  had  been  seen  in  the 
Delaware,  was  not  material.  That  the  meaning  of  the  representation 
was  to  inform  the  underwriter  that  the  ship  had  got  safe  through  two- 
thirds  of  her  voyage  from  New  York,  and  beyond  the  reach  of  capture. 
What  wa^  stated  as  to  that  material  part  was  perfectly  true,  and  that 
was  all  that  was  necessary,  as  was  decided  in  the  cases  on  the  insurance 
of  the  "  Julius  Cresar."  ^  If  the  representation  had  been,  that  she  had 
been  seen  on  the  8th  or  9th  in  the  Delaware,  it  would  have  made  no 
difference  in  the  premium.  There  might  have  been  circumstances 
which  would  have  rendered  the  day  material,  as  a  bad  storm  on  the  9th 
or  10th  ;  but  there  was  nothing  of  that  sort  in  this  case.  An  intentional 
misrepresentation  was  not  imputed  to  the  insured.     The  manner  in 

1  Tawson  v.  Watson,  ante,  p.  212  (1778).— Ed. 


SECT.  I.]  MACDOWALL   V.    FRASER.  219 

which  the  mistake  arose  was  this :  The  captain  who  had  met  the  ship 
said  that  lie  had  seen  her  on  the  fifth  da}'  after  her  departure  from  New 
Yorlc.  It  seems  a  ship  is  said  to  sail  from  New  York  indifferently, 
either  when  she  sails  from  the  qua}'  at  New  York,  or  from  Sandy  Hook. 
When  the  captain  mentioned  her  departure  from  New  York,  he  was 
understood  to  mean  from  Sandy  Hook,  and  it  was  known  that  she  had 
sailed  from  thence  on  the  6th  ;  but  it  turned  out  that  he  meant  to  speak 
of  her  departure  from  the  qua}',  which  was  some  da3"s  before. 

For  the  defendant,  it  was  urged  that  the  materiality  of  the  fact  misrep- 
resented was  before  the  jur}',  and  that  they  had  exercised  their  judgment 
upon  it,  and  determined  b}'  their  verdict  that  it  was  material. 

Lord  Mansfield.  The  distinction  between  a  warrants'  and  a  repre- 
sentation is  perfectly'  well  settled.  A  representation  must  be  fair  and 
true.  It  should  be  true  as  to  all  that  the  insured  knows  ;  and,  if  he 
represent  facts  to  the  underwriter  without  knowing  the  truth,  he  takes  the 
risk  upon  himself  But  the  difference  between  the  fact  as  it  turns  out,  and 
as  represented,  must  be  material.  The  case  of  the  "Julius  Caesar"  was 
very  different  from  this.  The  ship,  there,  was  only  fitting  out  when  the 
insurance  was  made.  No  guns  nor  men  were  put  on  board.  It  was  onl}' 
said  what  was  meant  to  be  done  ;  and  what  was  done,  though  different, 
was  as  advantageous,  or  more  so,  than  what  had  been  represented. 
There  was  no  evidence  of  actual  fraud  in  the  present  case,  and  no 
question  of  that  sort  seemed  to  be  made.  But  there  was  a  positive 
averment  that  the  ship  was  seen  in  the  Delaware  on  the  11th  of  De- 
cember. The  underwriter  was  deceived  as  to  that  fact,  and  entered 
into  the  contract  under  that  deception.  There  was  no  evidence  at  the 
trial  when  she  was  seen  in  the  Delaware,  or  in  what  condition  ;  but 
suppose  the  fact  had  been  explained  in  the  manner  now  suggested,  why 
did  the  insured  take  upon  him  to  compute  the  day  of  the  month  on 
which  she  had  been  seen  ?  AYliy  did  he  not  mention  exactly  what  his 
information  was,  and  leave  the  underwriter  to  make  the  computation? 
In  insurances  on  ships  at  a  great  distance,  their  being  safe  up  to  a 
certain  day  is  always  considered  as  a  very  important  circumstance.  I 
am  of  opinion  that  the  representation  concerning  the  day  was  material. 

WiLLES,  Justice.  This  is  certainly  only  a  representation  ;  but,  in  an 
insurance  on  so  short  a  voyage,  it  might  have  made  a  material  differ- 
ence whether  the  ship  was  known  to  be  safe  two  days  sooner  or  later. 
It  ought  to  have  been  shown,  on  the  part  of  the  plaintiff,  that  it  was 
not  materia],  but  there  was  no  evidence  that  the  ship  was  met  on  the 
9th,  or  any  other  day.  The  materiality  was  proper  for  the  consideration 
of  the  juiy. 

AsHHCRST,  Justice.  The  distinction  which  the  court  has  made  in  the 
cases  on  the  "Julius  Caesar,"  and  some  others,  between  a  representa- 
tion and  a  warranty,  is  extremely  just.  There  is  no  imputation  of 
fraud  in  this  case;  but  the  insured  should  have  been  more  cautious. 
In  tlie  former  cases  the  representation  was  of  what  was  intended  ;  here 
it  was  of  a  fiict,  stated  as  having  happened  within  the  knowledge  of  the 


220  FILLIS    V.   BRUTTON.  [CHAP.  IV. 

insured.     He  should  have  made  the  representation  in  the  same  words 
in  which  the  intelligence  is  said  to  have  been  communicated  to  him. 

BuLLER,  Justice.  We  cannot  say  the  difference  of  the  day  was  not 
material.  The  safety  of  the  ship  is  the  most  material  fact  of  any,  in 
cases  of  insurance.  The  plaintiff  admits  that  the  place  where  she  was 
met  in  safety  was  material.  Why  was  not  the  time  equally  so?  There 
was  no  intentional  deceit,  and  it  is  perhaps  unfortunate  that  the  insured 
made  the  mistake  ;  but  I  think  the  verdict  right. 

I'he  rule  discharged} 


FILLIS   V.  BRUTTON. 
Nisi  Prius,  King's  Bench,  1782.     1  Park  Ins.  8th  ed.  414. 

The  policy  was  on  the  brig  "  Richaixl,"  at  and  from  Plymouth  to  Bris- 
tol. Several  letters  passed  between  the  plaintiff  and  the  broker,  who 
effected  the  policy,  as  to  the  premium  at  which  the  insurance  could  be 
made;  at  last,  it  was  underwritten  four  guineas  per  cent.  The 
broker's  instructions  stated  the  ship  ready  to  sail  on  the  24th  of 
December.  The  broker  represented  to  the  underwriter  that  the  ship 
was  in  port,  when,  in  fact,  she  had  sailed  the  23d  of  December. 

Lord  Mansfield  said  "  that  this  was  a  material  concealment  and  mis- 
representation." The  jury,  however,  hesitated  ;  his  Lordship  then  laid 
down  the  following  as  general  principles:  "In  all  Insurances  it  is 
essential  to  the  contract  that  the  assured  should  represent  the  true 
state  of  the  ship  to  the  best  of  his  knowledge.  On  that  information  the 
underwriters  engage.  If  he  states  that  as  a  fact  which  he  does  not 
know  to  be  true,  but  only  believes  it,  it  is  the  same  as  a  warrant}'. 
He  is  bound  to  tell  the  underwriters  truth.  In  the  present  Insurance, 
the  only  material  point  is  this.  Had  the  ship  sailed,  or  was  she  in 
port?"  Ujyoji  this  the  jury  found  for  the  defendant. 

1  In  Sawyer  v.  Coasters'  Mutual  Ins.  Co.,  post,  p.  320  (1856),  Metcalf,  J.,  for  the 
court,  said:  "In  the  present  case  it  is  not  suggested  that  the  misrepresentation  was 
made  designedly.  And  we  need  not  express  an  opinion  upon  a  point  about  which 
writers  differ,  namely,  whether  in  such  a  case  the  policy  is  avoided  on  the  ground  of 
constructive  or  legal  fraud,  or  on  the  ground  that  a  positive  representation  as  to  a 
material'  fact  is  as  essentially  a  part  of  the  contract  as  a  warranty  is,  and  that  its 
substantial  truth  is  as  much  a  condition  precedent  to  the  insurer's  liability  as  is  the 
literal  truth  of  a  warranty.  It  is  sufficient  for  this  case  that  the  policy  is  avoided  by 
misrepresentation." 

And  see  the  dissenting  opinion  of  Lord  Abinger,  C  B.,  in  Cornfoot  v.  Fowke,  6 
M.  &  W.  358,  379  (1840). -.-E©. 


SECT.  I.]  FITZHERBERT    V.   MATHER,  221 

FITZHERBERT   v.   MATHER. 
King's  Bekcu,  1785.     1  T.  E.  12. 

This  was  an  action  on  a  policy  of  insurance  for  £110  underwritten 
by  the  defendant  on  the  21st  of  September,  1782,  at  six  guineas  per 
cent,  on  a  cargo  of  oats  on  board  the  ship  "  Joseph,"  lost  or  not  lost,  at 
and  from  Hartland  to  Portsmouth,  beginning  the  adventure  from  the 
loading  thereof  on  board  the  said  ship  at  Hartland.  The  defendant 
pleaded  the  general  issue,  and  paid  the  premium  into  court.  The  jury 
found  a  verdict  for  the  plaintiff  at  the  sittings  at  Guildhall,  before 
BuLLER,  J.,  after  last  Trinit}'  Term,  subject  to  the  opinion  of  the 
court  on  the  following  case  : 

''  That  on  the  27th  of  Jul}',  1782,  William  Buudock,  of  Pool,  agent 
for  the  plaintiff,  contracted  with  Richard  Thomas,  of  Hartland,  a  corn- 
factor,  for  the  purchase  of  500  quarters  of  oats,  to  be  consigned  to 
William  Fuller,  at  Portsmouth,  on  the  plaintiff's  account,  and  directed 
Thomas  to  send  him  (Bundock)  a  bill  of  loading  and  invoice,  and  also 
a  like  bill  of  loading  and  invoice  to  the  plaintiff  at  Cuthbert  Fisher's, 
Esq.,  London.  That,  in  pursuance  thereof,  Thomas  shipped  the  oats 
on  board  the  ship  insured,  which  sailed  from  Hartland  on  the  16th  of 
September,  1782,  and  was  lost  the  same  day  off  the  pier  of  Hartland. 
That  on  the  16th  of  September,  1782,  Thomas  wrote  the  two  following 
letters  to  William  Bundock  and  Cuthbert  Fisher : 

"Hartlaxd,  Sept.  16,  1782. 
"  To  Mr.  William  Bcndock. 

'•Sir,  —  This  morning  I  loaded  the  'Joseph'  with  175  quarters  of 
oats  to  the  address  of  William  Fuller,  Portsmouth,  and  the  sloop  sailed 
immediately  ;  but  I  am  afraid  the  wind  is  coming  to  the  westward,  and 
will  force  her  back.  I  have  engaged  Harvej',  which  hope  will  carry  the 
rest ;  and  if  the  weather  does  not  come  foul,  hope  to  despatch  him  this 
week.  I  have  sent  a  bill  of  loading  and  a  letter  by  the  master  to  Mr. 
Fuller ;  also  I  have  sent  a  bill  of  loading  and  advice  to  Mr.  Fisher,  that 
he  may  insure  if  he  likes,  as  the  equinox  is  near,  &c. 

"  R.  Thomas. 

"  Hartland,  Sept.  16,  1782. 
"  To  Cuthbert  Fisher,  Esq. 

t^  Sir, —  By  an  order  from  Mr.  William  Bundock,  of  Pool,  I  shipped 
this  day  on  "board  the  'Joseph,'  who  immediately  sailed  for  Ports- 
mouth, a  cargo  of  oats  as  under ;  and  by  the  same  order,  as  well  as  the 
orders  of  Thomas  Fitzherbert,  Esq.,  I  took  the  liberty  of  drawing  on 
you  at  three  days'  sight,  in  favor  of  Messrs.  Scott  and  Willes,  or  order, 
£106  105.  to  be  placed  to  the  account  of  Thomas  Fitzherbert,  Esq.  I 
wish  the  whole  safe  to  hand,  and  expect  another  vessel  to  be  loaded 
this  week,  weather  permitting.     This  evening  appears  stormy. 

"  I  remain,  «S;c., 

"  R.  TnoMAS. 


222  riTZHERBERT    V.    MATHER.  [CHAP.  IV. 

£  s.    d. 
"  Shipped  175  quarters  of  sweet  drj'  oats  at  12s.  2d.  per 

quarter  on  board  the  '  Joseph/ of  Pool       ....        106  9     2 

"  Bills  of  ladmg 10 


£106  10     0 


"  That  about  six  or  seven  o'clock  of  the  evening  of  the  IGth  Septem- 
ber, Richard  Thomas  heard  a  report  that  the  ship  was  on  shore  ;  and  at 
six  o'clock  in  the  morning  of  the  17th  he  knew  the  ship  was  lost.  That 
the  mode  of  sending  letters  from  Hartland  to  London  is  as  follows  :  the 
letters  are  collected  by  a  private  hand,  who  goes  with  them  from  Hart- 
land  to  Bideford  about  one  or  two  o'clock  on  the  day  the  post  sets  out 
from  Bideford,  and  which  leaves  Bideford  about  nine  o'clock  in  the. 
evening.  That  the  16th  of  September  was  not  a  post  da}-,  and  the 
above  letters  did  not  leave  Hartland  till  one  o'clock  in  the  afternoon  on 
the  17th,  which  was  the  post  day  from  Bideford  to  London;  and  the 
letters  which  went  from  Bideford  by  the  post  of  that  evening  were  re- 
ceived in  London  on  the  20th  of  September.  Tliat  on  the  19th  the 
plaintiff  wrote  the  following  letter  to  Cuthbert  Fisher,  Esq.  :  — 

"  Stubs  Lodge,  near  Portsmouth, 
"Sept.  19,  1782. 

"Dear  Fisher, — My  correspondent,  Mr.  William  Bundock,  of 
Pool,  having  informed  me  he  has  sent  two  sloops  to  Hartland,  in 
Devonshire,  to  load  oats  on  my  account  and  risk,  I  beg  the  fav^or  of 
you  to  insure  my  amount  of  the  cargoes  to  Portsmouth,  as  soon  as  the 
bills  are  sent  you.  T.  Fitzherbert. 

"That  the  last-mentioned  letter,  together  with  the  aforesaid  letter, 
from  R.  Thomas  to  Mr.  Fisher,  dated  the  16th  of  September,  were  both 
received  by  Fisher  in  London  on  the  20th  of  September,  and  he  there- 
upon directed  the  insurance  in  question  to  be  effected.  That,  on  the 
21st  of  September,  the  defendant  underwrote  the  policy  stated  in  the 
declaration.  If  the  court  should  be  of  opinion  that  the  plaintiff  may 
recover,  then  the  verdict  to  stand  ;  if  not,  then  a  verdict  for  the 
defendant." 

Boiver,  for  the  plaintiff,  made  two  questions : 

1st.  Supposing  Thomas  to  be  the  agent  of  the  plaintiff,  whetlier  his 
negligence  in  not  sending  an  account  of  the  loss  of  the  ship  shall  vacate 
the  policy? 

The  whole  that  is  required  in  making  this  kind  of  contracts  is,  that 
the}'  be  made  bond  fide  between  the  insured  and  the  insurer.  If  there 
be  a  real  disclosure  as  between  them,  the  act  of  a  third  person  is  not 
material. 

2dly.  Whether  Thomas  be  the  plaintiff's  agent?  All  the  orders 
which  Bundock  had  given  to  Thomas  wore  to  send  such  a  quantity  of 
oats  on  board  a  slap,  and  to  send  a  bill  of  lading ;  the  moment  he  had 
done  that,  his  agencv  ceased. 


SECT.  I.]  FITZHERBEET    V.   MATHER.  22a 

Cowper,  for  the  defendant,  contended  that  Thomas  was  the  plaintiff's 
agent.  Thomas  suffered  a  letter  to  go  to  Fisher,  informing  him  that 
the  ship  sailed  several  hours  after  he  knew  she  was  lost ;  he  himself 
knowing  an  insurance  might  be  made,  as  appears  b}'  his  letter  dated 
the  same  day  to  Bundock.  The  letter  having  been  written  before  the 
loss  was  known  makes  no  difference,  because  it  did  not  go  before 
Thomas  actually  knew  of  the  loss.  If  there  had  been  no  reference  to 
Thomas's  letter,  there  could  have  been  no  insurance  :  this  connects  him 
■with  the  principal.  The  case  of  Stewart  r.  Dunlop,  in  the  House  of 
Lords  in  1785,  on  an  appeal  from  the  sessions  of  Scotland,  is  very 
strong.  That  was  where  a  clerk  of  the  assured,  knowing  of  the  loss  of 
the  ship,  suffered  the  merchant  to  cause  a  policy  to  be  made,  without 
disclosing  what  he  knew ;  on  which  ground  the  polic}-  was  vacated. 

Lord  Maxsfielu,  Ch.  J.  This  policy  was  eff'ectcd  by  misrepresen- 
tation ;  and  tliat  misrepresentation  arose  from  the  proper  agent  of  the 
plaintiff,  who  gave  the  intelligence.  Now,  whether  this  happened  by 
fraud  or  negligence,  it  makes  no  difference  ;  for  in  either  case  the  policy 
is  void. 

It  was  b}'  misrepresentation  ;  because  the  underwriter  was  warranted, 
on  the  information  of  tlie  agent,  to  take  for  granted  that  on  the  17th 
September  at  12  or  1  o'clock  the  ship  was  safe  ;  for  the  agent  gave  an 
account  of  the  ship  being  loaded,  and  said  nothing  of  what  had  hap- 
pened to  her.  Then  there  was  strong  ground  to  believe  on  this  letter, 
that  she  was  safe  when  the  post  came  away.  * 

How  did  this  misrepresentation  happen?  The  agent  wrote  the  letter. 
And,  supposing  he  was  not  an  agent,  he  gave  information  to  Fisher, 
as  well  as  to  the  plaintiff,  to  make  the  insurance.  He  acted  honestly 
when  he  wrote  the  letter;  but  on  the  16th,  at  night,  he  heard  the  ship 
was  on  shore,  and  the  next  morning  he  knew  that  she  was  lost.  The 
post  did  not  go  out  till  the  afternoon  of  that  day  ;  therefore  he  had  full 
opportunity  to  send  an  account  of  the  loss. 

If  Thomas  were  not  guilty  of  fraud,  at  least  he  was  guilty  of  great 
negligence  ;  and  this  polic}',  being  effected  b}*  misrepresentation,  is 
void. 

WiLLES,  J.  Thomas  must  be  considered  as  the  agent  of  the  plain- 
tiff. He  shows  by  his  first  letter  that  he  acted  by  the  orders  of  Bun- 
dock,  as  well  as  of  the  plaintiff;  and  being  his  agent,  the  plaintiff 
must  be  liable  for  any  misrepresentation  of  Thomas  ;  and  this  is  a 
gross  misrepresentation. 

AsHHURST,  J.  On  general  principles  of  policy,  the  act  of  the  agent 
ought  to  bind  the  principal;  because  it  must  be  taken  for  granted  that 
the  principal  knows  whatever  the  agent  knows.  And  there  is  no  hard- 
ship on  the  plaintiff ;  for  if  the  fact  had  been  known,  the  policy  could 
not  have  been  effected. 

Duller,  .J.  In  order  to  show  that  Thomas  was  not  the  agent  for  the 
plaintiff,  INIr.  Bower  assumed  one  fact  which  is  contrary  to  the  case  ; 
for  he  said  the  insurance  was  not  made  in  consequence  of  Thomas's 


224  EDWARDS    V.   FOOTNER.  [CHAP.  IV. 

letter ;  but  the  fact  is  not  so.  According  to  the  plaintiff's  letter,  the 
insurance  was  not  to  be  made  till  Thomas's  letter  arrived  ;  and  the 
plaintiff  expressly  refers  to  the  letter  of  Thomas,  "when  it  shall 
arrive ; "   it  was  therefore  the  foundation  of  the  insurance. 

Tliough  the  plaintiff  be  innocent,  3et  if  he  build  his  information  on 
that  of  his  agent,  and  his  agent  be  guilty  of  a  misrepresentation,  the 
principal  must  suffer.  It  is  the  common  question  every  da}'  at  Guild- 
hall, when  one  of  two  innocent  persons  must  suffer  by  the  fraud  or 
negligence  of  a  third,  which  of  the  two  gave  credit?  Here  it  appears 
that  the  plaintiff  trusted  Thomas ;  and  he  must  tlierefore  take  the 
consequences.  Judcjme^it  for  the  defendant. 


EDWARDS   V.    FOOTNER. 
Nisi  Prius,  King's  Bench,  1808.     1  Camp.  530. 

This  was  an  action  on  a  policy  of  insurance  on  goods  in  the 
"  Fanny,"  from  London  to  Hayti. 

The  ship  was  captured  by  a  French  privateer  with  the  goods  on 
board ;  and  the  question  was,  whether  the  underwriters  were  dis- 
charged b}'  a  representation  concerning  her  equipment. 

It  appeared  that  about  a  week  before  the  policy  was  signed,  the 
names  of  the  underwriters  were  put  down  upon  a  slip,  when  the  broker 
stated  to  the  defendant,  "  that  the  '  Fann\' '  was  to  sail  with  the  'Hope- 
well' and  'Young  Roscius,' botli  armed  ships,  and  that  she  was  herself 
to  cany  ten  guns  and  twenty-five  men."  There  was  no  evidence  of 
anj'  conversation  upon  the  subject  having  passed  between  the  parties 
either  when  the  policy  was  signed,  or  in  the  intervening  period.  In 
fact,  the  "  Fanny  "  sailed  by  herself,  and  carried  only  eight  guns  and 
seventeen  men. 

Topping^  for  the  plaintiff,  contended,  that  the  ship  was  sufficiently 
equipt  to  be  seaworthy,  and  that  what  was  said  when  the  defendant's 
name  was  put  upon  the  slip  could  not  be  considered  as  a  representa- 
tion which  the  assured  were  bound  to  compl}'  with,  as  the  slip  was  no 
evidence  of  the  contract,  and  the  court  could  only  look  to  what  took 
phvce  when  the  policy  was  subscribed.  This  very  point  had  been  latel}' 
decided  in  Dawson  n.  Atty,  7  East,  367,  where  it  was  held,  that 
although  the  broker,  when  the  slip  was  subscribed,  had  said  that  the 
ship  was  an  American,  yet,  as  he  had  not  represented  her  to  be  of  any 
particular  country  at  the  time  when  the  policy  was  subscribed  she  did 
did  not  require  to  be  documented  as  an  American,  and,  although  she 
was  captured  for  want  of  a  certificate  required  by  a  treaty  between  the 
government  of  the  captors  and  the  United  States  of  America,  the 
owner  of  the  goods  recovered  against  the  underwriters. 


SECT.  I.]  BOWDEN   V.   VAUGHAN.  225 

Lord  Ellenborough.  If  a  representation  is  once  made,  it  is  to  be 
considered  as  binding,  unless  tliere  is  evidence  of  its  being  afterwards 
altered  or  withdrawn.  In  the  case  cited,  the  vessel  was  stated  to  be  an 
American  when  the  slip  was  made  out;  but  when  the  policj-  came  to 
be  signed,  the  broker  said  generally,  "  that  it  was  an  insurance  on 
goods  in  the  '  Herraon,'  "  without  describing  lier  as  of  an}-  particular 
country.  There,  the  first  conversation  was  qualified  and  controlled  liy 
what  followed.  But  here  there  is  no  evidence  of  any  conversation 
upon  this  subject  between  the  parties  sul)seqnently  to  the  statement 
that  the  ship  was  to  carr}'  ten  guns  and  twenty-five  men  ;  and  this 
having  taken  place  when  the  insurance  was  talked  of,  and  the  terms  of 
it  were  agreed  upon,  it  must  be  referred  to  the  policy,  and  treated  as  a 
representation  which  required  to  be  substantially  complied  with  on  the 
part  of  the  assured.  Verdict  for  the  deftndant.^  .   .  . 

Topping  and  2\iddy,  for  the  plaintiff. 

The  Attorney- General  and  Park^  for  the  defendant. 


BOWDEN   V.   VAUGHAN. 

King's  Bench,  1809.     10  East,  415. 

This  was  an  action  upon  a  policy'  of  insurance  on  goods  at  and  from 
Lisbon  to  London.  Previous  to  the  effecting  of  the  insurance  a  letter 
had  been  received  by  the  plaintiff  from  his  correspondent,  dated  Lis- 
bon, 27th  of  October,  1807,  in  which  the  writer  advises  him  that  he 
had  consigned  to  him  1,828  hides  by  the  "  Almirante  Nelson,"  which 
were  to  be  insured  ;  stating  that  she  was  a  Portuguese  ship,  and  would 
sail  in  a  few  days.  This  letter  was  not  shown  to  the  underwriters  at 
the  time  of  subscribing  the  policy  ;  but  the  broker  represented  that  the 
ship  was  to  sail  in  a  few  days  ;  and  he  said  upon  his  examination  at  the 
trial  at  Guildhall,  that  if  it  had  been  represented  that  the  ship  was  not 
to  sail  in  less  than  a  month,  the  insurance  could  not  have  been  effected  ; 
the  French  army  marching  to  the  attack  of  Portugal  being  then  daily 
expected  at  Lisbon.  There  was  no  doubt,  therefore,  of  the  materiality 
of  the  representation  :  and  in  fact  the  vessel  did  not  sail  till  the  29th 
of  November,  and  was  stopped  b}'  the  enemy  on  the  30th  before  she 
left  the  Tagus.  Lord  Ellenborough,  C.  J.,  left  the  case  to  the  jury  ; 
advising  them  to  consider  that  the  person  b^-  whom  the  representation 
was  made  was  the  owner  of  goods,  who  could  only  speak  of  the  sailing 
of  the  vessel  from  probable  expectation  ;  and  that  if  such  representa- 
tion were  made  bond  fide,  it  should  not  conclude  him.  And  the  jurv. 
being  of  opinion  that  the  representation  had  been  made  bond  fide  on 
probable  expectation,  found  a  verdict  for  the  plaintiff. 

1  A  point  foreign  to  representation  has  been  omitted.  — Ed. 
15 


226  HUBBARD   V.    GLOVER.  [CHAP.  IV. 

Fark  now  moved  for  a  new  trial,  on  the  ground  that  no  such  dis- 
tinction appeared  in  any  of  the  cases,  between  a  representation  as  to 
the  time  of  sailing  made  by  the  owner  of  the  goods,  and  one  made  by 
the  shipowner;  and  that  tlie  effect  of  it  with  respect  to  the  under- 
writer was  the  same,  whether  it  proceeded  from  the  one  or  the  other. 
But 

The  court  were  of  the  same  opinion  with  the  Lord  Chief  Justice  at 
the  trial,  that  a  representation  as  to  the  time  of  the  ship's  sailing,  made 
by  the  owner  of  goods  on  board,  must  from  the  nature  of  the  thing  be 
considered  only  as  a  probable  expectation,  he  having  no  control  over 
the  event.  ^"^^  refused. 


HUBBARD   V.    GLOVER. 
Nisi  Prius,  Iving's  Bench,  1812.     3  Camp.  313. 

This  was  an  action  on  a  policy  of  insurance  on  the  ship  "  Alex- 
ander," at  and  from  Petersburgh  or  Cronstadt  to  London,  at  a  premium 
of  20  guineas  per  cent  to  return  10  for  arrival. 

The  policy  was  subscribed  by  the  defendant  on  the  13th  of  June, 
1811.  Before  subscribing  it,  he  wished  a  warranty  to  be  introduced, 
that  the  ship  should  sail  before  the  first  of  August ;  upon  which  the 
broker  observed,  "  There  is  no  occasion  for  that;  the  ship  has  sailed 
some  time,  and  must  now  be  at  Gottenburgh.  There  is  a  cargo  ready 
for  her ;  and  she  is  sure  to  be  an  early  ship." 

In  point  of  fact  she  had  reached  Gottenburgh  some  days  before  this 
conversation,  and  she  performed  her  voyage  to  Cronstadt  without  any 
accident  or  delay.  The  captain  from  his  arrival  there  was  ready  to 
take  the  cargo  on  board  ;  but  the  first  part  of  it  was  not  sent  alongside 
till  the  8th  of  September.  On  the  30th  of  the  same  month  the  ship 
sailed  on  the  homeward  voyage,  and  after  lying  some  time  for  convoy 
at  Matwick,  was  wrecked  on  the  11th  of  November  off  the  coast  of 
Denmark.  Before  she  sailed  from  Cronstadt  the  winter  risk  had  be- 
gun, and  the  current  premium  had  risen  to  30  guineas  to  return  10. 

Scarlett,  for  the  defendant,  contended,  that  under  these  circum- 
stances the  underwriters  were  not  liable.  The  broker  had  represented 
that  there  was  a  cargo  ready  for  the  ship.  This  he  did  not  state 
as  matter  of  expectation  or  belief;  but  he  directl}'  and  positively 
asserted  it  as  a  fact  within  his  own  knowledge  or  that  of  his  employer. 
Therefore,  the  only  thing  to  be  considered  is,  the  materialit}-  of  the 
representation  ;  and  there  can  be  no  doubt  that  it  was  most  material. 
If  the  cargo  liad  been  ready  for  the  ship  upon  her  arrival  at  Cronstadt, 
in  all  probability  she  would  have  returned  in  safety.  Upon  the  repre- 
sentation made,  the  underwriters  contem[)lated  a  summer  risk,  and  were 
contented  to  receive  the  summer  premium  ;  but  by  the  representation 


SECT.  I.]  SIBBALD  V.    HILL.  227 

being  falsified,  a  winter  risk  was  attempted  to  be  thrown  upon  tliem, 
and  tlie  loss  had  arisen  which  the  assured  now  sought  to  recover. 

Lord  Ellenbofough.  Had  the  desired  warranty  been  introduced 
into  the  polic}',  that  would  have  been  falsified,  and  the  underwriters 
would  have  been  discharged.  But  I  find  no  representation  here  upon 
the  falsit}'  of  whicli  they  can  defend  themselves.  The  broker  said,  the 
ship  had  sailed  some  time,  and  must  then  have  reached  Gottenburgh  ; 
that  a  cargo  was  provided  for  her;  and  that  she  must  be  an  early  ship. 
Of  tliese  circinnstances,  onh'  the  first  could  be  considered  as  within 
his  own  knowledge ;  and  that  was  true.  The  next  was  likewise  true, 
although  onl}-  matter  of  probable  conjecture  ;  for  the  ship  had  reached 
Gottenburgh  some  days  before.  He  said  in  unqualified  terms  that  a 
cargo  was  ready  ;  but  this  from  its  very  nature  was  only  the  subject 
of  expectation  and  belief.  Neither  he  nor  his  principal  could  be  sup- 
posed to  have  been  at  Cronstadt  or  Petersburgh  to  see  the  cargo  in  a 
warehouse  or  on  the  wharf  there  ;  and  I  believe  it  is  by  no  means  an 
usual  thing  to  have  a  cargo  of  Russia  produce  prepared  for  any  par- 
ticular ship  before  she  sails  on  the  outward  voyage.  All  the  broker 
could  be  understood  to  mean  was,  that  a  cargo  had  been  ordered  for 
the  ship  in  question,  and  that  there  was  every  reason  to  suppose  it 
would  be  ready  for  her  by  the  time  of  her  arrival,  so  that  she  might  be 
expected  to  be  an  early  ship.  We  have  no  evidence  that  this  repre- 
sentation does  not  perfectly  accord  with  the  truth.  The  defendant, 
instead  of  insisting  upon  the  warrant}',  chose  to  speculate  upon  proba- 
bilities. He  erred  in  his  calculation  ;  but  that  is  no  reason  wh}-  he 
shoukl  not  pay  tlie  loss.^  Verdict  for  the  j^laintiff. 

Garroiv^  S.  G.,  and  UlcJiardson,  for  the  plaintiff. 

Scarlett  and  Campbell^  for  the  defendant. 


SIBBALD   AND  Others,    Appellants,   v.  HILL  and   Others, 
Respondents. 

House  of  Lords,  1814.     2  Dow,  263. 

Appeal  from  the  Court  of  Session  of  Scotland. 

Hill,  a  London  merchant  (April  8,  1802),  wrote  to  his  brother  to  get 
some  insurance  done  at  Leith  on  two  South  Sea  whalers,  "Redbridge" 
and  "Britannia,"  at  and  from  the  Southern  Fishery  to  London.  The 
letter  had  these  words  :  "I  have  two  ships  in  the  Southern  Fisher\',  on 
which  I  have  done  as  much  as  my  underwriters  here  are  inclined  to  take, 
and  I  wish  to  do  something  at  an  outport,  &c.  I  have  no  objection  to 
give  eight  guineas  per  cent  on  these  ships,  which  is  the  highest  premium 
I  have  given."     The  brother  wrote  accordingly  to  Robb,  a  Leith  mer- 

1  Ace:  Brine  v.  Featherstone,  4  Taunt  869  (1813).  And  see  Barber  v.  Fletcher, 
1  Doug.  305  (1779).  — Ed. 


228  SIBBALD    V.    HILL.  [CHAP.  IV. 

chant,  one  of  the  appellants,  stating,  inter  alia,  as  follows  :  "  Mr.  Hill 
has  clone  as  much  insurance  upon  the  two  ships  as  the  underwriters  here 
are  inclined  to  take  at  eight  guineas  per  cent."  Some  difficulty  occurred 
in  getting  the  insurance  etfected,  owing  to  the  ignorance  of  tlie  Leith 
underwriters  as  to  the  nature  of  the  risk.  But  the  appellants,  trusting  to 
the  skill  and  information  of  tlie  Lloyd's  underwriters,  underwrote  the 
policy  of  the  "  Redbridge"  to  the  amount  of  £1,750,  at  eight  guineas  per 
cent.  The  vessel,  on  December  30,  1801,  was  captured  on  the  coast  of 
Chili;  but  the  underwriters,  having  discovered  that  the  premiums  at 
Lloyd's  on  this  ship  had  been  15,  18,  and  25  guineas,  refused  to  pa\-, 
and  an  action  was  brought  by  Hill  in  the  Scotch  Admiralty  Court.  The 
Judge-Admiral  decided  for  the  underwriters,  on  the  ground  of  tlie 
misrepresentation  ;  but  his  decree  was  reduced  by  the  Lord  Ordinary 
and  Court  of  Session,  from  whose  judgment  the  cause  was  appealed. 

The  interlocutor  of  the  Lord  Ordinary,  adopted  in  substance  by  the 
court,  found,  "  that  the  statement  given  by  the  pursuer,  as  to  the 
amount  of  the  premium  he  had  given  on  former  policies,  was  not  a  mis- 
representation as  to  anj-  of  the  circumstances  attending  the  situation  or 
condition  of  the  ship,  or  nature  of  the  voyage,  which  could  affect  the 
nature  of  the  risk,  but  partakes  rather  of  the  nature  of  these  verba 
jactantia,  not  very  moial,  perhaps,  but  very  common,  and  not  illegal, 
which  are  used  at  the  cheapening  of  goods  and  other  bargains,  the  seller 
alleging  that  such  goods  cannot  be  bought  so  cheap  elsewhere,  &c.,  and 
which  representations  or  misrepresentations  will  not  avail  to  set  aside 
a  sale,  as  concealments  or  misrepresentations  may  do  as  to  the  defects 
or  qualities  of  the  goods,  &c." 

There  was  anotlier  point  as  to  the  concealment  of  a  material  fact, 
but  it  seems  unnecessary  to  state  it,  as  the  judgment  of  the  Lords 
turned  on  the  question  of  misrepresentation. 

ParJc  and  Nolan,  for  appellants. 

Adam  and  Romilly,  for  respondents. 

Lord  Ei.Dox  (Chancellor).  It  appeared  to  him  that  the  judgment  of 
the  Lord  Ordinary  and  -Court  of  Session  ought  to  be  reversed,  and 
that  of  the  Judge-Admiral  affirmed.  But  whatever  might  be  their 
Lordships'  opinion,  it  would  be  necessary  to  attend  to  these  interlocu- 
tors, and  alter  the  terms,  so  that  the  ground  of  their  judgment  might 
not  be  misunderstood.  Tlie  Judge-Admiral's  interlocutor  found,  "that 
in  this  case  the  rate  of  premium  was  fixed  and  accepted  in  consequence 
of  false  information,  &c.,  holding  out  the  same  premium  of  eight  guineas 
per  cent  as  the  highest  premium  exacted  bv  the  underwriters  in 
London ;  whereas  it  appeared,  and  was  now  acknowledged  by  the 
pursuer,  that  the  very  lowest  premium  paid  by  liim  on  the  same  vessel 
at  London  amounted  to  15  guineas  per  cent."  He  had  not  been  able 
to  find  that  any  such  acknowledgment  was  made  by  the  respondents, 
or  that  the  circumstance  was  apparent ;  and  therefore  if  it  should  be 
their  Lordships'  opinion  that  the  Lord  Ordinary  was  wrong,  still  the 
principle  of  their  judgment  might  be  misunderstood,  if  that  judgment 
should  state  a  fact  which  did  not  appear  in  the  cause. 


SECT.  I.]  SIBBALD   V.   HILL.  229 

As  to  the  judgment  of  the  Lord  Ordinaiy  and  that  of  the  court,  which 
was  in  substance  the  same,  they  (the  judges)  did  not  say  that  this  was 
not  such  a  misrepresentation  as  would  affect  the  premium,  but  that 
it  was  not  such  a  misrepresentation  as  could  affect  the  nature  of  the 
visk^ —  "  that  it  partook  rather  of  the  nature  of  these  verba  Jactantia, 
not  very  moral,  perhaps,  but  very  common,  and  not  illegal,  which  were 
used  at  the  cheapening  of  goods,"  &c.  —  he  should  suppose  that  at  least 
the  word  perhaps  ought  to  be  left  out,  for  there  could  be  no  doubt  but 
that  such  misrepresentations  were  grossly  immoral  —  "and  which 
representations  or  misrepresentations  would  not  avail  to  set  aside  a 
sale,"  &c.  Taking  that  as  a  general  proposition,  he  could  not  admit 
the  truth  of  it ;  for  even  in  chaffering  about  goods,  there  might  be  such 
misrepresentations  as  would  set  aside  the  contract.  When  the  mis- 
representations were  made  under  such  circumstances  and  in  such  a 
way  that  they  took  the  confidence  of  the  purchaser,  and  induced  him 
to  act  when  otherwise  he  would  not,  this  was  a  fraud  which  would 
affect  the  sale. 

It  appeared  to  him  settled  here,  that  if  a  person,  meaning  to  effect 
an  insurance,  exhibited  a  policy  underwritten  b}'  a  person  of  skill  and 
judgment,  knowing  that  this  would  weigh  with  the  other  party  and  dis- 
arm the  ordinary  prudence  exercised  in  the  common  transactions  of 
life,  and  it  turned  out  that  this  person  had  not  in  fact  underwritten  the. 
policy,  or  had  done  so  upon  such  terms  as  that  he  came  under  no  ob- 
ligation to  paj',  —  it  appeared  to  him  to  be  settled  here,  that  this  would 
vitiate  the  policy.  The  courts  in  this  country  would  say  that  this 
was  a  fraud,  not  on  the  ground  that  the  misrepresentation  affected  the 
nature  of  the  risk,  but  because  it  induced  a  confidence,  without  which 
the  party  would  not  have  acted.  If  one,  then,  sent  down  a  policy  to 
Leith  with  the  names  of  two  or  three  underwriters  at  Lloyd's,  were  the 
Leith  underwriters  to  send  to  Lloyd's  to  ascertain  whether  these  were 
fair  and  bona  fide  subscriptions?  —  No.  And  where  was  the  difference 
between  sending  policies  and  letters  ?  But  then  another  question  had 
been  raised,  —  Whether  the  real  meaning  of  the  letters  was,  that  insur- 
ance had  been  effected  on  the  same  voyage  at  Lloyd's  at  eight  guineas 
per  cent?  He  took  the  letters,  in  fair  and  obvious  construction,  as 
representing  that  insurance  had  been  effected  at  Lloyd's  on  the  very 
same  vo3-age  at  eight  guineas  per  cent,  and  an  attempt  by  nice  criti- 
cisms to  show  that  they  were  susceptible  of  a  different  meaning  would 
not  do.  Such  being  his  opinion  on  the  first  point,  he  thought  it  need- 
less, unless  their  Lordships  disagreed  with  him,  to  address  himself  to 
the  rest. 

Redesdale  assentiente. 

Interlocutors  of  Lord  Ordinary  and  Court  reversed,  and  Judge- 
AdmiraVs  decree  affirmed,^  with,  an  alteration  as  above. 

1  See  "Whittingham  v.  Thornbnrgh,  post,  p.  284  (1690-91),  a  life  insurance  case; 
and  Wilson  v.  Ducket,  3  Burr.  1361  (1762).— Ed. 


230  DENNISTOUN,    BUCHANAN,    AND    CO.    V.   LILLIE.       [CHAP.  IV. 


DENNISTOUN,   BUCHANAN,  &  CO.,  Appellants,  v.  LILLIE 
AXD  Others,  Respondents. 

House  of  Lords,  1821.     3  Bligh,  202.^ 

Appeal  from  the  Court  of  Session  of  Scotland. 

Upon  the  17th  of  June,  1814,  the  appellants,  Messrs.  Dennistoun, 
Buchanan,  and  Company,  merchants  in  Glasgow,  received  a  letter  of 
advice  from  Messrs.  William  Duff  and  Company,  their  correspondents 
at  New  Providence,  dated  2d  April,  1814,  containing  copies  of  their 
letters  to  the  appellants  of  the  19Lh  and  24th  of  March  preceding. 

The  following  are  extracts  of  such  parts  of  the  letters  as  relate  to  the 
subject  of  insurance.  By  the  letter  of  the  19th  March  the  appellants 
are  informed  thus:  "  At  a  prize  sale  of  a  South  Sea  whaler  and  her 
cargo  of  oil,  that  took  place  here  yesterday,  we  purchased  on  your 
account  about  40,000  gallons  of  spermaceti  oil,  at  3s.  %\d.  sterling  per 
gallon,  14,000  gallons  of  which  we  intend  to  ship  upon  that  remarkable 
fast-sailing  schooner  'Brilliant,'  of  157  tons  burthen,  mounting  six  nine- 
pounders,  to  sail,  icith  or  without  convoy^  about  the  first  of  May ;  and 
on  the  value  of  wliich  shipment  you  will  please  to  make  insurance. 
Messrs.  Seton  and  Elliot  will  ship  on  board  the  '  Jessie'  60,000  lbs.  St. 
Domingo  coffee,  which  they  wish  you  to  have  insurance  done  for  at 
50s.  per  100  lbs.,  and  17,000  lbs.  Cuba  coffee,  at  60s.  per  100  lbs. 
They  also  wish  3-ou  to  have  insurance  effected  on  the  '  Brilliant'  from 
hence  to  Greenock,  valuing  her  at  £1,400  sterling;  to  all  of  which  we 
beg  your  attention."  The  letter  of  the  24th  says,  that  the  "Brilliant" 
would  be  cleared  out  as  bound  to  Greenock  and  a  port  on  the  Conti- 
nent. And  in  the  letter  of  2d  April  Messrs.  Duff  and  Company  state, 
towards  the  conclusion  of  the  letter,  which  relates  to  a  variety  of  other 
matters,  "  Tiie  'Brilliant'  will  sail  on  the  1st  of  3fay,  a  running  vessel, 
in  which  the  writer  of  this  will  take  his  passage." 

Upon  these  advices  an  insurance  was  effected,  on  ship  and  goods, 
on  the  18th  of  June,  being  the  day  after  receiving  the  letters  above 
quoted,  although  the  contract  or  policy  bears  date  on  the  21st  of  June, 
three  days  later.  At  the  time  of  entering  into  the  contract,  the  letters 
of  advice  were  shown  to  the  respondents,  who  were  some  of  the  under- 
writers at  Glasgow,  with  whom  the  insurance  was  effected. 

The  terras  of  the  policy  were,  "  From  Nassau  to  Clyde,  with  leave  to 
call  at  all  ports  and  jjlaces  whatsoever,  for  conroy,  or  for  any  other  pur- 
pone  xohatever,  without  being  deemed  a  deviation  ;  and  with  or  without 
letters  of  marque,  leave  to  chase,  capture,  man  and  convoy,  or  send 
into  port  or  ports,  any  vessel  or  vessels." 

The  insurance  was  done  at  the  rate  of  six  guineas  per  cent^  to  return 
three  pounds  per  cent  "  for  convoy  for  the  voyage,  or  two  pounds  />e;' 
cent  for  partial  convoy  and  arrival.''^ 

^  8.  c.  1  Shaw's  Scotch  App.  Cas.  22. —  Ed. 


SECT.  I.]         DEXXISTOUN,    BUCHAXAX,    AND    CO.    V.    LILLIE.  231 

About  the  20th  of  April  his  Majesty's  ship  "Martin"  came  into  tlie 
harbor  of  Xassan,  and  being  bound  for  Halifax,  the  commander  offered 
to  take  the  "Brilliant"  under  his  protection.  This  being  considered  a 
great  advantage,  as  the  risk  of  capture  between  Nassau  and  Halifax 
was  imminent,  extraordinary  exertions  were  used  to  complete  the 
loading  of  the  '-Brilliant."  and  she  sailed  under  convoy  of  the  "  Martin  " 
on  the  23d  of  April,  being  about  eight  days  earlier  than  the  date  of 
sailing  proposed  in  the  foregoing  letters. 

Upon  the  11th  of  May  the  "  Brilliant"  was  captured  In*  an  American 
privateer,  and  carried  into  Boston. 

When  the  intelligence  of  the  capture  arrived,  the  appellants  applied 
to  the  underwriters,  and  many  of  them  settled  the  loss.  But  tlie 
respondents  resisted  payment;  whereupon  the  appellants  brought  an 
action  before  the  Court  of  Admiralty,  concluding  for  payment  of  the 
sums  respectively  underwritten  for  them  ;  and,  after  the  usual  pleading,^ 
the  Judge-Admiral  pronounced  the  following  interlocutor  :  "  The  Judge- 
Admiral,  having  advised  the  libel,  defences,  answers,  replies,  and 
writings  produced,  finds,  that  by  a  letter,  dated  the  19th  of  March, 
1814,  from  William  Duff  and  Compau}',  the  correspondents  of  the 
pursuers,  of  New  Providence,  to  them,  they  mentioned  the  ship  '  Bril- 
liant,' a  remarkable  fast-sailing  schooner,  was  to  sail,  with  or  without 
convoy,  about  the  1st  of  May ;  and  that  by  an  after  letter,  dated  the  2d 
of  April  last,  1814,  the  incorrectness  of  the  word  '  about,'  as  applicable 
to  the  1st  of  Ma}',  was  explained  by  the  same  correspondents  inform- 
ing the  pursuers  that  the  'Brilliant'  w-as  to  sail  for  ^evf  Providence  on 
the  1st  of  May,  a  running  vessel,  'and  in  which  the  writer  of  this 
(William  Duffj  will  take  his  passage':  Finds  it  admitted,  that  these 
letters  were  communicated  to  the  defenders,  whereb}-  tlic}'  saw  that  the 
vessel  was  positively  intended  to  remain  in  New  Providence,  and  not 
to  sail  therefrom  till  the  1st  of  May  last,  and  under  this  impression 
suiiscribed  the  policy  in  question  :  Finds,  that  the  '  Brilliant'  sailed  on 
the  23d  of  April  from  New  Providence,  and,  for  anything  known,  may 
have  been  captured  before  the  1st  da}*  of  Ma}',  when  she  was  held 
forth  to  the  defenders  as  remaining  in  the  harbor:  Finds,  therefore, 
that  althougii  the  representation  made  by  the  pursuers  was  absolutely 
innocent  on  their  part,  the  fact  stated  by  them  to  the  defenders  was 

^  The  report  in  1  Shaw's  Scotch  App.  Cas.  22,  23,  says :  "  In  defence  it  was  pleaded, 
that  the  nature  and  extent  of  the  risk  had  been  misrepresented  ;  that  it  appeared  from 
the  letter  of  the  2d  of  April  that  the  '  Brilliant '  was  to  sail  on  the  1st  of  May,  whereas 
she  had  sailed  on  the  23d  of  April,  which  fact  wa,s  material,  because  the  vessel  had 
thus  been  56  days  at  sea  instead  of  49,  as  was  supposed  when  the  contract  was  entered 
into,  and  so  would  have  been  considered  a  missing  ship  ;  and  that  in  this  question  it  was 
unimportant  that  the  misrepresentation  was  unintentional.  'J'o  this  it  was  answered, 
that  there  was  no  warranty  as  to  the  period  when  the  vessel  was  to  sail ;  that  the  letters 
had  been  exhibited,  so  that  the  insurers  were  put  in  possession  of  all  the  information 
which  Dennistoun,  Buchanan,  and  Company  had  obtained  ;  and  that  these  letters  repre- 
sented nothing  more  than  that  it  was  the  intention  of  Duff  and  Company  to  despatch 
the  vessel  on  the  1st  of  May,  without,  however,  fixing  them.selves  down  to  that  day,  or 
preventing  themselves  from  taking  advantage  of  a  convoy  in  the  mean  while."  —  Ed. 


232  DENNISTOUN,   BUCHANAN,   AND   CO.   V.   LILLIE.       [CHAP.  IV. 

not  verified,  and  a  material  change  was  thereb}'  made  in  the  risk  under- 
taken by  the  latter ;  and  therefore  assoilzies  the  defenders,  and  finds 
them  entitled  to  expenses." 

The  appellants  brought  the  foregoing  interlocutor  under  review  of 
the  Judge- Admiral,  bj-  petition,  and  tlie  interlocutor  thereon  was: 
"  The  Judge- Admiral  liaving  advised  this  petition,  and  another  dated 
23d  February  last,  with  the  writings  produced,  remains  of  the  same 
opinion,  that  the  risk  which  the  underwriters  undertook,  being  con- 
fessedly that  on  a  vessel  to  sail  on  the  1st  of  May,  was  perfectly  dif- 
ferent from  one  on  a  vessel  which  sailed  on  the  23d  April,  inasmuch 
as  the  defenders  undertook  a  risk  on  a  vessel  understood  to  be  in  the 
harbor,  and  safe  on  the  1st  of  May,  when  in  fact  she  had  been  eight 
days  at  sea,  refuses  this  petition,  and  adheres  to  the  interlocutor 
complained  of." 

"  iVb^e.  —  The  petitioners  do  not  seem  to  dispute,  that  if  the  vessel 
had  been  taken  before  the  1st  of  May,  they  woukl  have  had  no  argu- 
ment. They,  however,  state  that  the  vessel  was  not  captured  till  11th 
May.  This,  in  real  reasoning,  makes  no  difference,  since  it  is  a  thou- 
sand chances  to  one  that  if  she  had  not  sailed  till  1st  May  she  would 
not  have  fallen  in  with  the  vessel  which  took  her.  The  case  of  a  vessel 
sailing  the  day  before  she  is  represented  to  sail  is  quite  different  from 
that  of  a  ship  being  detained  by  unavoidable  accidents  beyond  that  da}'. 
In  fact,  it  is  an  insurance  on  a  vessel  in  jeopardy,  when  she  is  repre- 
sented to  be  comparatively  safe."  And  on  the  19th  of  April,  1815, 
the  Judge-Admiral  modified  the  defenders'  account  of  expenses  to 
£10  Is.  Ahd.,  and  decerned  against  the  appellants  for  payment  of  the 
same,  and  for  the  fees  of  extracting  the  decree. 

The  appellants  pursued  an  action  of  reduction  before  the  Lords  of 
Council  and  Session  of  the  foregoing  interlocutors  pronounced  by  the 
Judge-Admiral.  This  action  was  discussed  before  Lord  Pitmill}', 
Ordinary,  who  pronounced  an  interlocutor,  repelling  the  reasons  of 
reduction,   &c. 

The  appellants  submitted  the  question  to  review  in  a  representation, 
to  which  answers  were  given  in  ;  but  the  Lord  Ordinary  adhered  to 
the  interlocutor. 

The  appellants  then  brought  these  interlocutors  under  review  of  the 
Second  Division  of  the  Court  of  Session  b}'  a  petition.  The  Lords 
adhered  to  the  interlocutors  complained  of,   &c. 

The  appeal  was  against  the  foregoing  interlocutors. 

On  the  part  of  the  appellants  distinctions  were  taken  between  a  war- 
ranty and  a  representation,^  and  it  was  contended  that  the  letters 
exhibited  did  not  amount  to  a  warrant}',  or  anything  more  than  a  repre- 
sentation, which  was  not  material ;  and  that  the  statement  of  a  future 
event,  as  an  intended  day  of  sailing,  can  be  no  more  than  an  expecta- 
tion.    Bowden  v.  Vaughan,  10  East,  415  ;  Hubbard  v.  Glover,  3  Camp. 

1  Pawson  V.  Watson,  Cowper,  790;  Park  on  Ins.  c.  10,  pp.  203,  205,  c.  18,  pp.  321, 
322;  Marshall  on  Ins.  c.  9,  s.  2,  p.  342.  —  Rep. 


SECT.  I.]        DENXISTOUN,    BUCHANAN,    AND    CO.    V.   LILLIE.  233 

313  ;  Barber  r.  Fletcher,  1  Doug.  305  ;^  Bize  v.  Fletcher,  1  Doug.  284; 
s.  c.  Park  on  Ins.  202.  It  was  further  argued,  that  the  representation 
not  being  made  mala  fide,  the  policy  was  not  vitiated  by  such  a 
misrepresentation. 

For  tlie  respondents  it  was  contended,  1.  That  the  da}-  of  sailing  was 
a  fact  material  to  the  risk,  and  being  within  the  control  of  the  appel- 
lants, a  statement  of  intention  was  equivalent  to  a  statement  of  fact. 
2.  That  the  vessel,  having  sailed  on  the  23d  of  April,  was,  at  the  time 
when  the  insurance  was  effected,  what  is  termed  "  a  missing  ship." 
Ratcliffe  v.  Slioolbred,  Park  on  Ins.  180  ;  s.  c.  Marshall  on  Ins.  4G8  ; 
Fillis  v.  Brutton,  Park  on  Ins.  182  ;  s.  c.  Marshall  on  Ins.  467. 

For  the  appellants,  The  Attorney-General^^  Mr.  Ahercrombie. 

For  the  respondents,  Mr.  JVetherell,  Mr.  Denman. 

[In  the  course,  and  at  the  conclusion  of  the  argument,  the  Lord 
Chaxcellor  ^  made  the  following  observations.] 

The  second  letter,  in  which  it  is  expressed  that  the  vessel  will  sail 
on  the  1st  of  May,  was  shown  to  tlie  underwriters,  and  is  it  not  the 
same  thing  whether  the  party  means  to  misrepresent,  or  whether  the 
thing  actually  communicated  is  a  misrepresentation?  The  authorities 
turn  upon  the  difference  between  expectation  and  representation.  In 
the  ease  of  Barber  v.  Fletcher  the  representation  is,  that  the  ship  is 
expected  to  sail.  If  the  accurac}'  of  a  representation  as  to  time  is  to  be 
given  up,  that  doctrine  must  apply  equally  to  the  question  of  place. 
The  letter  of  the  2d  of  April  speaks  in  terms  of  uncertainty  as  to  the 
sailing  of  the  "Dart"  and  the  "  Jessie,"  but  as  to  the  "  Brilliant"  the 
statement  is  positive.  Do  the  appellants  carry  their  arguments  so  far 
as  to  assert,  that  in  cases  which  go  beyond  expectation,  where  there  is  a 
misrepresentation  of  a  material  fact,  without  a  warrant}'  or  mala  fides, 
the  policy,  according  to  the  authorities,  is  not  vacated?  In  the  case  of 
such  a  misrepresentation,  7}\ala  fides  is  not  necessary  to  render  the 
contract  inoperative.  The  principle  of  the  judgment  is  the  same  in  all 
the  cases,  although  we  cannot  agree  in  all  the  decisions.  The  principle, 
and  the  application  of  the  principle,  are  different  things.  To  maintain 
the  argument  for  the  appellant,  it  is  necessary  to  contend,  that  if  the 
vessel  had  been  captured  on  the  24th  of  April  the  underwriters  would 
have  been  liable. 

19^A  March,  1821.  The  Lord  Chancellor:  This  case  resolves 
itself  into  two  questions  :  —  first,  whether  the  representation  was  made, 
of  which  there  is  no  doubt ;  and  secondly,  whether  it  is  a  representation 
of  an  expectation,  or  a  statement  as  of  a  past  fact,  which  is  material 
to  the  risk. 

I  have  formed  an  opinion  upon  the  subject,  but  wish  to  give  it  further 
consideration  ;  and  this  is  the  more  necessary,  as  this  branch  of  law 
is  not  well  understood  in  Scotland.  The  case  is  to  be  determined  upon 
a  consideration  of  the  facts,  as  a  jury  would  decide  under  the  direction  of 

1  In  this  case  the  word  "  expected  "  was  used.  —  Rep. 

2  Sir  Robert  Gifford.  —  Ed.  ^  Lord  Eldox.  —  Ed. 


234  BAXTER   V.    NEW   ENGLAND   INS.    CO.  [CHAP.  IV. 

a  judge  as  to  the  law  applicable  to  those  facts.  The  question  for  a  juiy 
would  be,  Was  there  in  this  case  a  misrepresentation  of  a  material  fact 
affecting  the  risk  covered  b}-  the  polic}-  ?  ^ 

The  Lord  Chancellor  :  In  the  absence  of  the  noble  Lord,*  who  was 
present  at  the  hearing  of  tiiis  appeal,  and  by  his  desire,  I  suggest,  that 
upon  inspection  of  the  policy  of  insurance  (which  is  not  sufficiently 
stated  in  the  printed  cases),  it  appears  to  be  a  policy  upon  the  ship  as 
well  as  goods.  It  is  not,  therefore,  like  the  case  of  Bowden  v.  Vaughan, 
which  was  cited  on  the  argument.  In  that  case  the  policy  was  effected 
by  the  owner  of  goods,  and  on  goods  only.  If  there  should  be  any 
desire  to  make  further  observations  on  the  matter  of  the  policy,  the\' 
may  be  suggested  at  the  meeting  of  the  House  on  Wednesday. 

5(h  April,  1821.  The  Lord  Chancellor  [after  stating  the  question 
on  the  appeal]: — There  is  a  difference  between  the  representation 
of  an  expectation  and  the  representation  of  a  fact.  The  former  is  im- 
material, but  the  latter  avoids  the  policy  if  the  fact  misrepresented  be 
material  to  the  risk.  After  the  most  attentive  consideration  of  the  case, 
it  appears  to  me  that  the  judgment  of  the  court  below  is  right. 

Judgment  affirmed. 


BAXTER  V.   THE   NEW  ENGLAND   INSURANCE   CO. 

Circuit  Court  of  the  United  States,  District  of  Massachusetts, 
1822.     3  Mason,  9G. 

Assumpsit  on  a  policy  of  insurance,  dated  on  the  28th  of  September, 
1821,  whereby  Aaron  Baldwin,  "  for  whom  it  may  concern,  and  pa}-- 
able  to  him  in  case  of  loss,"  procured  insurance  of  "$4,000,  on  prop- 
erty on  board  the  brig  '  Robert,'  «t  and  from  Kingston,  Jamaica,  to 
St.  Andrews  (N.  B.),  four  per  cent  on  specie,  and  two  per  cent  on 
merchandise."  Loss  averred  to  be  on  the  24th  of  August,  1821,  by 
pirates,  of  certain  gold  on  board.     Plea,  the  general  issue. 

At  the  trial  the  loss  and  interest  in  the  plaintiff  was  proved  or 
admitted  ;  and  the  principal  question  was,  whether  there  was  not  a 
misrepresentation  avoiding  the  polic\".  On  the  6th  of  August,  1821, 
the  plaintiff  (who  was  master  of  the  "Robert")  wrote  to  C.  Curry  (the 
agent  in  procuring  the  insurance  through  Baldwin),  "  I  shall  leave  this 
on  the  12th  inst."  On  the  20th  of  September  Curry  wrote  to  Baldwin 
for  the  insurance,  and  added  in  a  postscript,  "  Mr.  Patterson's  brig 
'  James '  has  arrived  with  specie  and  produce,  in  thirty-two  days." 
On  the  next  day  Curry  wrote  to  Baldwin,  "I  am  informed  to-day  by 

1  Before  the  motion  for  judgment  was  finally  made,  the  Lord  Chancei-lor  inti- 
mated that  the  House  would  (if  desired)  hear  a  further  argument  on  the  terms  of  the 
policy  ;  hut  the  proposal  was  declined  by  the  agents.  —  Kep. 

2  Redesdale.  —  Kep. 


SECT.  I.]  EICE   V.    NEW   ENGLAND   MARINE   INS.    CO.  235 

the  master  of  the  'James,' that  she  [the  brig  "Robert"]  would  not 
sail  until  four  dajs  after  the  'James.'"  Upon  the  communication  of 
these  letters  the  insurance  was  procured.  In  fact,  the  "James"  sailed 
from  Kingston  on  the  20th  of  August ;  the  brig  "  Robert"  sailed  three 
or  four  days  before  that  time;  and  the  brig  "John  and  Robert"  was 
to  sail  three  or  four  da3-s  after  the  "James." 

It  was  proved  that  the  difference  of  time,  whether  the  brig  "Robert" 
sailed  before  or  after  the  "James,"  whether  on  the  12th  or  24th  of 
August,  was  verj'  material  to  the  risk,  as  the  very  delay  in  her  passage 
would  give  rise  to  suspicion  of  her  being  captured  bv  pirates. 

Story,  J.  I  think  upon  this  evidence  the  plaintiff  is  not  entitled  to 
recover.  There  has  been  a  material  misrepresentation,  and  whether 
it  be  innocent  or  otherwise  does  not  vary  the  legal  result.  It  was 
represented  in  the  first  letter  that  the  brig  "  Robert "  would  sail  on  the 
12th  of  August;  in  the  second,  tiiat  she  would  not  sail  until  the  24th 
of  August.  In  point  of  fact,  she  had  sailed  about  the  16th  of  August. 
And  this  difference  of  time  is  proved  to  be  material  to  the  risk. 

Plaintiff  nonsuit. 
Shaw,  for  plaintiff. 

Hubbard,  for  defendant. 


RICE   ET  AL.,   Administrators,   v.  NEW  ENGLAND 
MARINE   INSURANCE  CO. 

Supreme  Judicial  Court  of  Massachusetts,  1827.     4  Pick.  439. 

Assumpsit  upon  a  policy  of  insurance  '  made  by  the  defendants  on  the 
28th  of  September,  1821,  on  property  belonging  to  Baxter,  the  plaintiffs' 
intestate,  on  board  the  brig  "  Robert,"  of  which  Baxter  was  master,  at 
and  from  Kingston,  Jamaica,  to  St.  Andrews,  New  Brunswick.  Tlie 
loss  was  admitted,  the  vessel  having  been  piratically  assailed  on  the 
voyage  described  in  the  policy,  and  plundered  of  the  property. 

The  defence  was  that  there  was  a  misrepresentation  as  to  the  time 
of  tlie  vessel's  sailing  from  Kingston  ;  and  it  was  satisfactorily*  proved 
that  tlie  fact  supposed  to  have  been  misrepresented  was  material  to  the 
risk  undertaken  by  the  defendants. 

On  this  point  it  was  proved  by  Aaron  Baldwin,  who  procured  the 
polic3',  that  on  the  morning  of  the  da}-  on  which  it  was  obtained,  he 
received  from  one  Currie,  of  Campo  Bello,  the  agent  of  Baxter,  two 
letters,  one  dated  the  20th  of  September,  in  which  he  desires  Baldwin 
to  procure  insurance,  and  states  that  Baxter  expected  to  sail  on  the 
12th  of  August,  the  other  dated  the  21st  of  September,  in  which  he 
mentions  the  arrival  of  the   "James"  after  a  passage  of  thirty-two 

^  Baxter  v.  New  England  lus.  Co.,  ante,  p.  234  (1822),  was  an  action  upon  the  same 
policy.  —  Ed. 


236  RICE    V.    NEW   ENGLAND    MARINE    INS.    CO.  [CHAP.  IV. 

days  from  Kingston,  and  that  he  was  informed  bj-  Hewett,  the  master 
of  the  "James,"  that  the  "Robert"  would  not  sail  until  four  days 
after  the  "James."  Baldwin  testified  that  both  of  these  letters  were 
handed  by  him  to  Hall,  the  president  of  the  company,  who  read  them, 
and  with  the  witness  calculated,  from  the  facts  therein  stated,  the  prob- 
able time  of  the  "Robert's"  sailing  from  Kingston  to  be  about  the  24th 
of  August,  which  would  leave  her  out  twenty-nine  days,  which  was 
within  the  ordinary  passage  from  Kingston  to  St.  Andrews  ;  whereupon 
the  words,  "  Expected  to  sail  about  the  24th  ult.,"  were  inserted  in  the 
margin  of  the  policy.  Currie,  before  writing  this  letter  of  the  20th  of 
September,  had  received  a  letter  from  Baxter,  dated  the  Gth  of  August, 
saying,  "I  shall  leave  Kingston  on  the  12th;"  and  the  vessel  did,  in 
fact,  sail  on  the  12th,  so  that  when  the  policy  was  effected  she  would 
have  been  out  forty  days,  which  was  out  of  time.  She  did  in  fact  arrive 
at  St.  Andrews  on  the  22d  of  September,  but  her  arrival  was  not 
known. 

The  cause  was  submitted  to  the  jury  on  the  question  whether  the 
facts  stated  in  Currie's  letter  of  September  21st,  of  the  "Robert's" 
having  been  left  at  Kingston  when  the  "  James"  sailed  from  that  i^ort, 
and  that  she  was  to  sail  four  or  five  days  after  the  "James,"  were  in 
truth  communicated  to  Currie  by  Hewett  by  mistake,  or  whether  Currie 
misapprehended  Hewett  and  stated  the  facts  in  his  letter  by  mistake. 
The  defendants  contended  that  as  the  information  was  in  fact  not  true, 
the  policy  which  was  obtained  upon  it  was  void,  although  Currie  truly 
stated  the  information  he  had  received;  but  in  this  they  were  over- 
ruled, and  the  Chief  Justice  instructed  the  jury,  that  if  they  were  satis- 
fied from  the  evidence  that  Hewett  did  state  to  Currie  the  facts  as 
related  in  Currie's  letter,  the  contract  was  valid,  notwithstanding  the 
facts  proved  not  to  be  true.^  .   .   . 

A  verdict  was  found  for  the  plaintiff's  ;  but  if  the  instruction  to  the 
jur}'  was  incorrect,  ...  a  new  trial  was  to  be  granted. 

Prescott  and  Hubbard,  for  the  defendants. 

Sharo  and  Bartlett^  contra. 

Parker,  C.  J.  .  .  .  We  are  to  take  it  as  proved,  then,  that  the 
information  obtained  from  Hewett  was  truly  and  correctl}'  represented 
to  the  president  of  the  office ;  and  if  this  be  so,  although  the  fact  thus 
communicated  was  not  true,  there  was  no  misrepresentation,  for  the 
insured  or  his  agent  is  l)ound  only  to  communicate  all  the  information 
he  has  ;  and  if  the  insurer  is  not  satisfied  with  that,  he  may  require  a 
warrantv. 

Nor  do  we  think  the  case  proves  a  misrepresentation  in  the  other 
point  which  has  been  urged  in  argument.  Baxter  wrote  to  Currie,  his 
agent,  from  Kingston,  and,  in  a  postscript,  stated  that  he  should  sail  on 
the  12th  of  the  month.  Currie,  in  his  letter  of  the  20th  of  September 
to  Baldwin,  whom  he  desires  to  procure  insurance,  says  that  he  (Baxter) 

^  In  reprinting  the  statement  and  the  opinion,  a  point  as  to  evidence  has  been 
omitted.  —  Ed. 


SECT.  I.]  FLINN   V.    HEADLAM.  237 

expected  to  sail  on  the  12tb.  "We  think  that  the  statement  of  the  day 
on  which  a  vessel  will  sail,  is  snbstantiallv  nothiiis;  uiore  than  statin^ 
an  expectation  that  she  will  sail  on  that  day.  The  most  positive  inten- 
tions to  sail  on  any  future  day  amount  only  to  a  strong  expectation,  for 
it  must  depend  upon  the  elements  and  other  causes  affecting  the  sail- 
ing of  vessels  whether  such  intention  shall  be  executed  or  not.  And 
if  the  time  of  sailing  be  material  to  the  risk,  the  insurer  would  be  as 
likely  to  requii-e  a  warranty  that  the  vessel  would  sail  or  had  sailed 
on  the  day  proposed,  if  it  were  stated  positively,  as  if  stated  only  as 
an  expectation.^  .   .  . 

We  do  not  think  that  a  representation  that  a  vessel  will  sail  on  a  future 
day  is,  under  the  circumstances  of  this  case,  a  fact,  but  an  expectation. 

But  even  if  we  had  not  come  to  this  opinion,  the  case  would  stand 
well  for  the  plaintiffs,  for  the  insurance  was  not  at  all  influenced  by  the 
supposed  misrepresentation  of  Baxter's  information  in  the  letter  to 
Currie.  It  was  on  the  letter  of  Currie  of  the  21st  of  September,  in 
which  he  gives  the  information  obtained  from  Captain  Hewett,  that 
the  president  and  Baldwin  made  their  calculations,  in  consequence  of 
which  the  memorandum  was  made  in  the  margin  of  the  policy,  "Ex- 
pected to  sail  about  the  2-lth  of  August."  This  necessarily  superseded 
the  prior  information,  because,  if  true,  it  established  the  fact  that  the 
vessel  had  not  sailed  until  several  days  after  the  12th,  and  created  a 
probability  that  she  would  sail  about  the  24th  ;  and  it  was  upon  the 
expectation  founded  on  this  probability  that  the  policy  was  effected. 

We  are  satisfied  that,  though  this  is  an  unfortunate  case  for  the 
office,  there  is  no  principle  of  the  law  of  insurance  upon  which  they  can 
be  exonerated  from  the  loss.  Judgment  according  to  verdict 


FLIXN   V.    HEADLAM. 

King's  Bexch,  1829.     9  B.  &  C.  693. 

Assumpsit  on  a  policy  of  insurance  on  ship  from  Liverpool  to  Trous- 
berg,  loss  by  perils  of  the  sea.  Plea,  the  general  issue.  At  the  trial 
before  Lord  Texterden,  C.  J.,  at  the  London  sittings  after  Trinit}' 
Term,  1828,  it  appeared  that  the  policy  was  effected  in  1821  b}'  Corrie, 
the  agent  of  the  owner,  through  Headlam  and  Conway,  brokers,  at 
Liverpool ;  that  the  vessel  sailed  on  the  voyage  insured,  and  was  lost 
b}'  perils  of  the  sea.  For  the  defendant,  evidence  was  given  that  when 
Corrie  took  the  order  for  insurance  to  Headlam  and  Conw.ay,  they  ob- 
served that  the  ship  was  old,  and  inquired  what  cargo  was  on  board. 
Corrie  answered  that  she  was  old,  but  had  been  repaired,  that  the  cargo 
had  been  insured  b}-  the  charterers  in  the  office  of  B.  and  E.,  where  he, 

1  Here  Deunistoun  v.  Lillie,  ante,  p.  230  (1821),  was  discussed.  —  Ed. 


238-  FLINN   V.    HEADLAM.  [cHAP.  IV. 

Conwa}',  might  obtain  furtlier  information.  Conway  tlien  said  that  if 
Conie  wonkl  get  a  certificate  of  her  repair  and  seaworthiness,  the  in- 
surance sliould  be  effected.  A  certificate  was  obtained,  stating  tlie  ship 
to  be  strong,  stiff,  and  stanch,  perfectly  seaworth}-,  fit  to  prosecute 
her  then  intended  voyage,  and  carry  a  cargo  of  rock-salt.  A  clerk  to 
Headlam  and  Conway  swore  that  he  first  oflTered  the  risk  to  Hebson,  an 
underwriter  of  great  experience  in  Liverpool.  That  Hebson,  on  seeing 
the  cliaracter  of  the  ship  in  Lloyd's  book,  and  hearing  she  was  to  carry 
rock-salt,  said  he  would  have  nothing  to  do  with  her.  Tlie  witness 
communicated  this  to  Corrie,  who  answei-ed  that  she  would  only  carry 
as  much  rock-saltji8j5X)uJd  pub  her  in  ballast  trim,  and  that,  upon  this 
beingT-epoi'ted  to  Hebson,  he  subscribed  the  policy.  On  cross-exami- 
nation, this  witness  admitted  that  before  the  policy  was  subscribed,  the 
certificate  of  seaworthiness  had  been  left  at  the  oflSce  of  Headlam  and 
Conwa}'.  The  ship  sailed  deeply  laden  with  rock-salt,  but  it  did  not 
appear  whether  it  was  shipped  before  or  after  the  representation  made 
b}-  Corrie.  On  this  state  of  facts  it  was  contended  for  the  defendant 
that  the  policy  was  void  on  account  of  the  misrepresentation  of  Corrie 
as  to  the  quantity  of  rock-salt  on  board  the  vessel.  For  the  plaintiff  it 
was  said  that  if  the  underwriters  meant  to  insist  upon  it  as  part  of  the 
contract,  that  only  a  certain  quantity  of  rock-salt  should  be  carried  in 
the  vessel,  they  should  have  had  it  inserted  in  the  policy' ;  and  that,  at 
all  events,  such  a  representation  would  not  affect  an}-  underwriter  but 
Hebson,  to  whom  it  was  made.  Lord  Tenterden  observed  to  the  jury 
that  it  did  not  appear  distinctly  whether  the  representation  b}-  Corrie 
was  made  as  to  the  rock-salt  then  actually  on  board,  or  as  to  that  which 
was  expected  to  be  sliipped,  and  he  advised  them  to  find  for  the  de- 
fendant if  the}'  thought  that  a  material  misrepresentation  was  made  bv 
Corrie  as  to  the  quantity  then  on  board  ;  but  to  find  for  the  plaintiff  if 
they  thought  that  the  representation  was  respecting  the  cargo  expected 
to  be  shipped,  and  he  desired  them  to  say  on  what  ground  their  verdict 
proceeded,  in  order  that  anv  question  of  law  arising  upon  it  might  be 
argued.  He  observed, _also,  that_perhaj3s_the  underwriters  might  be 
guided  by  the  certificate  of  seaworthiness^|_and^not  by  the  rcpresenta- 
timLof  CorrTe^  The  jury  found  a  verdict  for  the  plaintiff,  and  said 
they  tliought  the  representation  was  not  material.  In  Michaelmas 
Term  a  rule  m'si  for  a  new  trial  was  obtained,  on  the  ground  that  the 
misrepresentation  by  Corrie  was  such  as  rendered  the  policy  void,  and 
that  the  jur}'  ought  not  to  have  found  that  it  was  not  material. 

Tiie  Attorney-  General  and  Alderson  showed  cause. 

Broufjham  and  Patteso7i,  contra. 

Lord  Tenterden,  C.  J.  It  is  certainly  very  desirable  that  parties 
subscribing  a  polic}'  should  take  care  to  have  inserted  in  it  those  repre- 
sentations which  they  consider  the  basis  of  their  contract.  The  neglect 
to  do  so  leads  to  much  confusion  and  litigation.  In  the  present  case, 
no  complaint  has  been  made  against  the  mode  in  which  the  question 
was  presented  to  the  jury,  and  if  they  thought  that  the  defendant  took 


SECT.  I.]  BEYANT  V.    OCEAN  INS.  CO.  239 

the  risk,  not  on  the  representation  that  only  a  small  quantity  of  rock- 
salt  had  been,  or  would  be,  put  on  board,  but  on  account  of  the  certifi- 
cate  of  seaworthiness  that  had  been  left  witirihe  hrokers>_tIIey  said 
rightlyj;hat  the_J:epresentation  by  Corrie  was  not  material.  I  am, 
therefore,  of  opinion  that  no  sufficient  ground  for  disturbing  their 
verdict  has  been  pointed  out.  Mule  discharged} 


GUSHING  BRYANT  et  al.  v.  THE  OCEAN  INSURANCE  CO. 
Supreme  Judicial  Court  of  Massachusetts,  1839.     22  Pick.  200. 

This  was  an  action  on  a  policj*  of  insurance  dated  on  the  10th  of 
January,  1837,  whereb}-  the  defendants  caused  the  plaintiffs  to  be  in- 
sured the  sum  of  §9,000  on  the  brig  "  Hope,"  for  one  year,  to  all  ports 
and  places. 

The  trial  was  before  Shaw,  C.  J. 

It  appeared  that  the  brig,  which  was  a  new  vessel,  sailed,  after  the 
policy  attached,  from  Damariscotta  for  New  Orleans,  and  was  totally 
lost  and  abandoned  at  sea  in  March,  1837. 

The  defence  relied  on  was,  tliat  prior  to  and  at  the  time  of  effecting 
the  insurance,  Cushing  Bryant,  who  acted  as  agent  of  the  plaintiffs  for 
this  purpose,  made  a  representation  in  a  letter  to  the  defendants,  that 
he  was  taking  in  paving  stones  for  ballast  and  should  fill  up  with  hay, 
and  send  the  vessel  to  New  Orleans,  from  which  place  she  would  go 
into  the  usual  freighting  business  ;  ])ut  that  instead  of  ballasting  the 
vessel  with  paving  stones  and  filling  her  up  with  a  cargo  of  hay,  the 
owners  had  put  in  a  cargo  of  paving  stones  without  ha}-,  which  was  a 
much  heavier  and  more  perilous  cargo,  especially  for  a  new  vessel,  and 
increased  the  risk. 

1  Flinn  v.  Tobin,  Moo.  &  M.  367  (1829),  which  was  tried  soon  after  the  decision  of 
the  principal  case,  was  apparently  an  action  against  another  underwriter  of  the  same 
policy.  The  facts  were  substantially  like  those  in  the  principal  case.  The  arguments 
of  counsel  turned  chiefly  on  the  distinction  between  a  misrepresentation  of  facts  that 
have  already  occurred  and  a  statement  as  to  facts  that  are  to  happen  hereafter.  Lord 
Texterdkn,  C.  J.,  in  summing  up,  said  :  "  I  think  the  defendant  in  this  case  will  not 
be  entitled  to  a  verdict,  unless  he  satisfy  the  jury  that  there  was  a  fraudulent  misrep- 
resentation of  the  cargo  which  the  '  Andromache  '  was  to  carry.  If  he  does  so,  tiie 
plaintiff  cannot  recover ;  but  the  mere  fact  of  a  misrepresentation,  without  fraud,  will 
not  be  enough  to  prevent  the  plaintiff's  recovering ;  for  the  contract  between  the 
parties  is  the  policy,  whicli  is  in  writing,  and  cannot  be  varied  by  parol.  Xo  defence, 
therefore,  which  turns  on  showing  that  the  contract  was  different  from  that  contained 
m  the  policy  can  be  admitted;  and  tliis  is  the  effect  of  any  defence  turning  on  the 
mere  fact  of  misrepresentation,  witliout  fraud.  If,  however,  fraiul  was  practised  to 
induce  the  defendant,  or  tlie  first  underwriter,  to  sign  the  policv,  no  signatures  so 
obtained  can  be  binding.  The  question  therefore  is,  whetlier  you  tliink  there  was  any 
■wilful  and  fraudulent  mis'-epresentation  made,  for  the  purpose  of  getting  the  policy 
signed."     The  verdict  was  for  the  plaintiff.  —  Ed. 


240  BRYANT   V.    OCEAN   INS.    CO.  [CHAP.  IV. 

.The  plaintiffs  objected  to  the  admission  of  tlie  evidence  of  these  facts, 
on  the  following  grounds  : 

1.  That  it  was  an  attempt  to  control  and  alter  tlie  terms  of  the  policy, 
by  evidence  of  proposals  and  negotiations  wliich  preceded  it,  and  which 
were  all  embraced  in  the  terms  of  the  contract  itself ;  and  that  there 
being  a  stipulation  in  the  policy  to  cover  the  vessel  to  all  ports  and 
places  with  any  lawful  cargo,  it  could  not  be  restrained,  by  a  previous 
proposal,  to  a  particular  employment.  2.  Tliat  as  a  representation,  it 
did  not  relate  to  any  existing  fact,  but  as  to  what  was  intended  to  be 
done,  and  could  not  be  deemed  false  and  fraudulent,  unless  made  with 
a  fraudulent  intent  to  mislead  the  defendants. 

It  was  admitted  by  the  defendants  that  they  did  not  expect  to  prove, 
that  at  the  time  when  the  representation  was  made,  the  plaintiffs  had 
actually  laden  a  cargo  of  paving  stones  on  board  the  brig,  or  that  there 
was  a  fraudulent  intent  on  the  part  of  the  plaintiffs  to  deceive  them ; 
but  they  insisted  that  they  relied  upon  the  representation,  and  had  a 
right  so  to  do,  so  that  without  it  they  would  not  have  taken  the  risk, 
or  not  at  the  same  premium,  and  that  tliey  were  not  bound  by  their 
contract  unless  the  plaintiffs  made  such  representation  good. 

"Whereui>on  it  was  ruled  that  the  evidence  offered  was  not  admissible 
for  any  other  pur[)Ose  than  to  prove  a  fraudulent  intent  on  the  part  of 
the  insured  to  mislead  the  defendants  and  to  induce  them  to  take  the 
risk,  or  to  take  it  at  a  lower  premium  than  they  otherwise  would  have 
done  ;  that  as  a  representation,  not  of  a  fact,  but  of  an  intention,  it  did 
not  avoid  the  policy,  unless  made  with  a  fraudulent  intent ;  that  as  it 
related  solely  to  the  employment  of  the  vessel  within  the  time  for  which 
she  was  insured,  it  was  not  of  an  independent  or  collateral  fact  affecting 
the  risk,  but  was  embraced  in  the  terms  of  the  contract,  and  must  be 
considered  as  absorbed  in  the  contract  afterwards  formally  executed, 
or  as  by  mutual  consent  withdrawn  and  waived  by  the  execution  of  the 
policy. 

\Yherenpon  the  defendants  consented  to  be  defaulted,  the  default  to 
be  subject  to  the  opinion  of  the  whole  court. 

If  the  court  should  be  of  opinion  that  the  evidence  ought  to  have 
been  admitted  for  the  purpose  for  which  it  was  offered,  the  default  was 
to  be  taken  off  and  a  new  trial  granted ;  otherwise  the  default  was  to 
stand. 

Feabodi/,  for  the  defendants. 

C.  G.  Loring  and  F.  C.  Loring,  for  the  plaintiffs. 

"Wilde,  J.  The  sole  question  in  this  case  is,  whether  there  was  any 
such  misrepresentation  made  to  the  defendants  by  one  of  the  plaintiffs, 
in  his  application  for  insurance,  as  will  by  law  avoid  the  policy. ^  .  .  . 

It  has  been  argued  that  a  misrepresentation  will  avoid  a  polic}', 
whether  made  with  a  fraudulent  design,  or  by  mistake  or  negligence, 
as  the  insurer  is  thereby  led  into  an  error,  and  computes  the  risk  upon 
false  grounds.     This  is  undoubtedly  true  as  to  all  facts  represented ; 

'  Here  the  case  was  stated.  —  Ed. 


SECT.  I.]  BRYANT  V.    OCEAN  INS.  CO.  241 

and  so  if  facts  material  to  the  risk,  and  which  the  assured  were  bound 
to  disclose,  are,  by  mistake  or  negligence,  not  disclosed,  the  omission 
thouo-h  not  fraudulent  would  avoid  the  policy.  And  on  this  ground 
there  is  no  doubt,  that  if  the  defendants  could  have  proved  that,  at  the 
time  the  representation  was  made,  the  plaintiffs  had  no  intention  to  take 
in  a  cargo  of  hay,  such  a  false  representation  would  avoid  the  policy. 
Indeed,  if  they  had  no  such  intention  it  would  have  been  a  fraudulent 
misrepresentation.  That  was  a  question  of  fact  for  the  jury  to  decide, 
if  the  defendants  had  inclined  to  submit  it  to  their  decision.  But  no 
representation  of  a  party's  expectation  or  belief,  unless  fraudulently 
made,^  will  avoid  ji_j>olic^.  Nor  is  there  any  distinction  between  a 
party's  expectation,  and  intention,  as  to  any  matter  relating  to  the 
voyage.^  .  .  . 

The  defendants'  counsel  have  endeavored  to  distinguish  the  case 
under  consideration  from  that  of  Bize  v.  Fletcher  and  some  of  the 
other  cases  cited.  In  those  cases,  it  is  said,  the  events  expected  were 
prevented  by  necessit}',  or  were  not  within  the  control  of  the  assured ; 
whereas,  in  the  present  case,  the  plaintiffs  might  have  well  carried  their 
declared  intention  into  effect,  for  aught  that  appears  to  the  contrary,  if 
they  had  seen  fit  so  to  do.  But  we  do  not  consider  this  as  a  sound  dis- 
tinction. No  doubt  circumstances  may  be  supposed  that  might  justify 
a  jury  in  finding  that  the  plaintiffs'  declared  intention  was  a  mere  pre- 
tence, and  that  they  in  fact  had  no  such  intention.  But  if  tlie  intention 
was  real,  and  they  had  a  right  to  change  their  intention,  there  is  no 
evidence  to  prove  that  they  did  not  act  with  good  faith. 

If  the  evidence  offered  was  intended  to  prove  an  agreement  or  promise 
not  embraced  in  the  policy,  it  was  clearly  inadmissible. 

It  is  a  familiar  principle  of  the  law  of  insurance  that  a  representation 
is  no  part  of  the  policy.  It  is  a  collateral  statement  of  facts  or  circum- 
stances relative  to  the  proposed  adventure,  which  may  be  an  induce- 
ment to  the  contract,  but  is  not  inserted  in  the  policy.  It  is  said  truly, 
that  if  information  be  stated  as  mere  opinion,  expectation,  or  intention, 
it  does  not  amount  to  a  representation.  The  information  of  the  plain- 
tiffs' intention  as  to  the  nature  of  the  cargo  was  contained  in  a  letter  to 
tlie  defendants,  in  which  other  facts  were  stated  amounting  strictly  to  a 
representation.  The  whole  was  intended  as  such,  and  must  have  been 
so  understood  by  the  defendants.  But  this  is  not  material ;  for  if  the 
information  of  the  plaintiffs'  expectation  and  intention  is  strictly  no  part 
of  the  representation,  it  is  clearly  no  part  of  the  policy,  and  cannot  avail 
the  defendants  in  any  manner. 

It  is  admitted  that  by  the  principles  of  the  common  law  this  evidence 
could  not  be  admitted,  but  in  respect  to  contracts  of  insurance  it  is 
contended  that  a  more  liberal  rule  of  evidence  should  be  applied.  We 
tliink  there  is  no  ground  for  this  distinction.  The  reason  of  the  rule 
applies  to  contracts  of  insurance,  as  well  as  to  other  contracts.  The 
written  contract  is  the  best  evidence  of  the  understanding  and  intention 

1  Here  was  stated  Bize  v.  Fletcher,  1  Dong.  287  (1779)  ;  s.  c.  aiUe,  p.  216.  — Ed. 

16 


242  LEWIS    V.   EAGLE    INS.    CO.  [CHAP.  IV. 

of  the  parties.  A  representation  or  other  parol  evidence  is  admissible 
to  explain  a  latent^Huibiguity,  or  to  prove  a  usage  whicli  maj'  affect  the 
policy ;  but  the  like  evidence  is  admissible  in  explanation  of  other 
written  contracts.  A  case  is  cited,  1  Marshall  (3d  edit),  352,  where 
on  insurance  from  Archangel  to  the  Downs,  and  thence  to  Leghorn, 
with  a  parol  agreement  that  tlie  policy  should  not  attach  till  a  certain 
period,  it  was  held,  that  the  plaintiff  could  not  recover  in  contravention 
of  the  parol  agreement.  In  Weston  v.  Emes,  1  Taunt.  115,  the  court 
held,  that  this  case  could  not  be  law,  and  expressed  their  opinion  that 
it  could  not  have  been  so  decided. 

But  if  the  parol  evidence  were  admissible,  it  could  not  sustain  the 
defence.  It  would  only  prove  the  declaration  of  an  intention  of  the 
plaintiffs  previous  to  the  policy,  and  as  it  was  not  afterwards  inserted 
in  the  policy  the  defendants  must  be  presumed  to  have  talien  upon 
themselves  the  risli  of  any  change  of  intention  ;  otherwise  they  would 
have  required  a  warranty. 

In  Whitney  v.  Haven,  13  Mass.  R.  172,  it  was  proved  by  the  broker 
that  the  plaintiff  declared,  at  the  time  of  effecting  the  policy,  that  the 
vessel  was  to  sail  within  five  days,  and  that  the  defendant  said  that  his 
name  should  be  taken  off  the  polic}',  or  tiiat  he  would  not  be  bound, 
if  she  did  not  then  sail.  She  did  not  sail  within  the  five  days ;  and 
the  delay  was  relied  upon  as  a  sufficient  defence.  But  the  court  de- 
cided that  the  defendant  could  not  avail  himself  of  it,  not  because  the 
delay  was  justified  by  tlie  apprehended  danger  of  capture,  but  because 
the  stipulation  was  no  part  of  the  written  contract ;  and  that  parol 
evidence  was  not  sufficient  to  give  it  effect.  This  was  evidently  con- 
sidered by  the  court  as  quite  clear  ;  and  we  are  all  of  the  same  opinion. 

We  are  therefore  of  opinion  that  the  evidence  offered  in  defence  was 
not  admissible,  and  that  the  ruling  of  the  court  at  the  trial  was,  in  all 
respects,  correct.  Motion  for  a  new  trial  overruled. 


LEWIS   AND  Another   v.   THE    EAGLE   INSURANCE   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1858.     10  Gra}-,  508. 

Action  of  contract  upon  a  policy  of  insurance  on  the  schooner 
"Emeline,"  valued  therein  at  $G,000.  .   .   . 

A  second  trial  ^  was  iiad  before  Thomas,  J.,  who,  after  a  verdict  for 
the  plaintiffs,  made  a  report  to  the  full  court,  so  much  of  which  as  is 
material  to  the  understanding  of  their  decision  was  as  follows  : 

The  defendants  in  their  answer  alleged  that  "•  the  said  vessel  was 
valued  by  the  plaintiffs  to  them  at  the  time  when  said  policv  was  made, 
and  represented  b}'  the  plaintiffs  to  the  defendants  to  be  of  the  value 

^  Only  so  inucli  of  the  case  has  been  rcj)riiited  as  relates  to  the  second  trial.  —  Ed. 


SECT.  I.]  LEWIS    V.    EAGLE    INS.    CO.  243 

of  six  thousand  dollars,  and  upon  the  faith  of  such  valuing  and  repre- 
sentations the  defendants  executed  the  said  polic3-*wherein  said  vessel 
is  valued  at  six  thousand  dollars  ;  and  the  defendants  sa}"  that  the 
same  was  a  gross  and  fraudulent  overvaluation  of  said  vessel  by  the 
said  plaintiffs  ; "'  and  furtlier  alleged  tliat  "  they  were  induced  to  make 
the  policy  declared  upon  by  the  fraudulent  representations  of  the  plain- 
tiff W.  G.  Lewis,  who  represented  to  the  defendants,  in  order  to  obtain 
said  insurance  of  six  thousand  dollars,  that  he  had  paid  five  thousand 
dollars  for  the  said  vessel,  or  she  cost  five  thousand  dollars,  and  that 
he  had  laid  out  one  thousand  dollars  on  her,  whereas  the  said  vessel 
was  bought  bv  him  for  two  thousand  one  hundred  and  fifty  dollars." 

The  defendants  offered  evidence  tending  to  prove  the  allegations  in 
the  answer.     And  the  presiding  judge  instructed  the  jurj-  as  follows  : 

"If,  upon  the  evidence,  the  jury  find  an  overvaluation,  fraudulently 
made  on  the  part  of  the  assured  or  his  agent,  with  the  intent  of  de- 
stroying the  property,  and  of  recovering  from  the  insurers  the  amount 
for  which  it  is  so  valued,  such  a  fraudulent  purpose  would  render  the 
contract  void. 

"  The  law  requires  of  the  parties  to  a  policy  of  insurance  the  exer- 
cise of  good  faith.  A  misrepresentation  is  a  false  representation  of 
a  material  fact  b}-  one  of  the  parties,  tending  directly  to  induce  the 
other  to  enter  into  the  contract.  This  principle,  applicable  to  all  con- 
tracts, is  peculiarly  applicable  to  a  policy  of  insurance,  which  is  ordi- 
narih'  made  upon  the  statements  and  representations  of  the  assured. 
A  representation  of  what  a  vessel  cost,  or  what  was  paid  for  it,  is  a 
representation  as  to  a  material  fact ;  and  if  the  plaintiffs,  in  effecting 
this  policy,  fraudulently,  and  in  order  to  obtain  the  insurance,  repre- 
sented that  the  vessel  cost  S5,000  and  $1,000  for  coppering,  when,  in 
point  of  fact,  the  entire  cost  was  S3, 150,  it  was  a  misrepresentation 
upon  a  material  point,  which,  if  false,  would  avoid  the  policy. 

"  But  this  question  is  to  be  tried  upon  the  exact  answer  filed  by  the 
defendants  ;  and  that  answer,  as  made,  requires  proof  that  the  repre- 
sentation was  fraudulent,  as  well  as  false,  and,  in  point  of  fact,  induced 
the  defendants  to  make  the  contract ;  that  the  defendants  had  taken 
this  burden  on  themselves  ;  and  that  the  burden  in  this  matter  was  on 
the  defendants." 

Sohier  <&  C.   W.  JLoring,  for  the  defendants. 

Choate  &  JRichanhon,  for  the  plaintiffs. 

Merrick,  J.  The  representation  made  by  the  plaintiffs,  upon  ob- 
taining insurance  upon  their  vessel,  that  it  cost  them  five  thousand 
dollars  and  one  thousand  more  for  coppering,  was  of  and  concerning 
facts  material  to  be  known  by  the  underwriters  ;  and,  if  false,  avoided 
the  policy  which  they  had  issued,  and  relieved  them  from  all  liability 
thereon.  Upon  this  point  the  instructions  given  to  the  jury  were  cor- 
rect. But  the  instructions  went  further  than  this ;  and  it  was  ruled 
that,  upon  the  exact  answer  filed  by  the  defendants,  they  must  prove, 
in  order  to  avoid  the  policy,  not  only  that  the  representation  made  by 


244  HARMONY   F.    AND    M.    INS.    CO.    V.    HAZLEHUKST.       [ciIAP.  IV. 

the  plaintiffs  was  false,  but  that  it  was  also  fraudulent.  This,  we  think, 
would  necessarily  have  been  understood  by  the  jury  as  importing  that 
the  alleged  fraud  was  a  distinct  subject  of  inquiry,  not  to  be  deduced 
from  the  mere  proof  of  the  false  representation  relative  to  the  cost  of 
the  vessel ;  and  that  unless  this  fraud  was  established  by  other  evidence, 
thev  would  not  be  warranted  in  finding  a  verdict  for  the  defendants. 
There  is  nothing  in  their  answer,  which  imposes  upon  the  defendants 
the  burden  of  proving  this  fact,  in  addition  to  the  fact  of  a  false  rep- 
resentation, in  order  to  maintain  their  defence.  It  is  true  that  they 
alleo-e  in  general  terms  that  the  representation  of  which  they  complain 
was  falsely  and  fraudulently  made.  But  whether  this  representation 
was  designedly  and  intentionally  erroneous,  and  made  with  the  corrupt 
purpose  of  gaining  an  undue  advantage  or  not,  is  immaterial  in  relation 
to  the  question  at  issue  between  the  parties ;  for  if  it  was  false,  it 
clearly  exonerated  the  defendants  from  the  performance  of  the  contract 
on  their  part,  and  wholly  avoided  the  policy.  It  is  unnecessary  to 
multiply  citations  in  support  of  this  position,  because,  as  is  remarked 
by  Mr.  Phillips  in  his  treatise  on  insurance,  the  doctrine  is  constantly'' 
assumed,  and  runs  through  the  whole  jurisprudence  on  the  subject,  that 
material  representations  having  reference  to  past  or  existing  circum- 
stances discharge  the  underwriters  from  all  liability  in  respect  of  the 
risks  to  which  they  relate.  1  Phil.  Ins.  §§  537,  677  ;  Elton  v.  Larkins, 
5  Car,  &  P.  385.  The  ruling  of  the  court,  therefore,  which  required  the 
defendants  to  produce  proof  of  the  fraudulent  character,  as  well  as  of 
the  falsity,  of  the  plaintiffs'  representations  concerning  the  cost  of  their 
vessel,  in  order  to  sustain  their  defence,  must  be  held  to  have  been 
erroneous  ;  and  for  this  cause  only,  as  the  instructions  which  were 
given  to  the  jury  appear  in  all  other  particulars  to  have  been  unexcep- 
tionable, the  verdict  for  the  plaintiffs  must  be  set  aside,  and  a 

^ew  trial  granted. 


THE   HARMONY   FIRE  AND  MARINE  INSURANCE 
COMPANY  V.   HAZLEHURST. 

Court  of  Appeals  of  Maryland,  18G9.     30  Md.  380. 

Appeal  from  the  Superior  Court  of  Baltimore  City. 

The  appellant  in  this  case  was  sued  by  the  appellee  on  a  policy  of 
insurance  effected  upon  the  steamer  ' '  Richmond."  The  facts  are  suf- 
ficiently stated  in  the  opinion  of  the  court. 

L.  L.  Conrad  and  S.  Teackle  Wallis,  for  the  appellant. 

Geo.  H.  Williams  and  John  H.  B.  Latrohe,  for  the  appellee. 

Bartol,  C.  J.  At  the  trial  of  this  cause,  the  Superior  Court  rejected 
the  prayers  on  both  sides,  and  gave  instructions  to  the  jury  upon  the 
law  of  the  case.     Two  prayers  having  been  asked  by  the  appellant,  the 


SECT.  I.]       HAKMONY    F.    AND    M.    INS.    CO.    V.   HAZLEHURST.  245 

defendant  below,  of  which  the  second  was  granted  substantial!}'  and 
embodied  in  the  court's  instructions,  the  only  questions  presented  on 
this  appeal  arise  upon  the  first  prayer  of  the  defendant,  and  the  instruc- 
tions given  to  tlie  jury. 

The  suit  was  instituted  upon  a  policy  of  insurance  on  the  steamer 
"■  Richmond,"  underwritten  by  the  appellant.  The  only  matter  in  con- 
troversy grew  out  of  alleged  misrepresentations  affecting  the  risk,  as  to 
the  age  and  rate  of  the  steamer,  which  had  been  made  by  Cole,  the  in- 
surance broker,  in  his  application  to  the  Phoenix  Insurance  Company, 
for  insurance  on  the  same  steamer  in  behalf  of  another  party,  and 
which  it  is  alleged  the  appellant  acted  on,  in  executing  the  policy  now 
in  question. 

The  evidence  was  conflicting  as  to  the  truth  of  the  alleged  represen- 
tations ;  no  fraud  or  bad  faith  was  charged  against  any  of  the  parties 
concerned  in  procuring  the  policy. 

But  the  defence  rested  on  the  ground  that  the  appellee  was  bound  by 
the  representations  made  by  Cole,  and  if  they  were  relied  on  by  the 
appellant  in  executing  the  policy,  and  were  found  by  the  jury  to  be 
untrue  in  any  particular  which  they  might  find  to  be  material  to  the 
risk,  the  appellee  would  not  be  entitled  to  recover,  although  they  were 
made  in  good  faith.  This  defence  is  presented  by  the  appellant's  first 
prayer. 

The  general  proposition  as  to  the  effect  of  a  material  misrepresenta- 
tion in  avoiding  the  policy  was  not  denied  ;  but  the  particular  point 
presented  by  that  prayer,  upon  which  the  dispute  arose,  was  whether 
upon  the  evidence  of  the  witnesses  Bedell  and  Cole,  the  appellee  was 
bound  in  law  by  the  representations  alleged  to  be  untrue.  The  evi- 
dence shows  that  Cole,  an  insurance  broker  in  Baltimore,  made  an  appli- 
cation to  the  Phoenix  Insurance  Company  of  New  York  for  an  insurance 
on  the  steamer ''Richmond,"  for  and  on  behalf  of  Jacob  Brandt,  Jr. 
On  that  application  was  indorsed  a  description  of  the  steamer  stating 
her  age,  and  her  rate  as  "  A,  No.  1."  Those  representations  as  to  her 
age  and  rate,  though  made  in  good  faith,  were  alleged  to  be  untrue,  and 
evidence  was  offered  tending  to  prove  that  she  was  much  older,  and 
her  true  rate  was  lower,  and  the  single  question  ai  Ising  upon  the  prayer 
was  whether  the  appellee  was  bound  by  the  representations  so  made. 

There  was  no  evidence  that  Carey,  the  appellee's  agent,  made  any 
representations  whatever  to  Cole  concerning  the  age  or  rate  of  the 
steamer  when  he  applied  to  him  to  procure  insurance,  or  that  he  autho- 
rized Cole  to  make  any  representations  to  the  appellant,  or  that  he,  Carey, 
had  any  knowledge  that  any  representations  on  that  subject  had  been 
made  by  Cole  to  the  Phoenix  Insurance  Company.  All  the  evidence  shows 
that  in  the  application  for  insurance  made  by  Cole  on  the  appellee's 
behalf,  and  in  the  procuring  of  the  policy  in  question,  no  representations 
-whatever  were  made.  The  fact  that  the  appellant  in  taking  the  risk 
acted  upon  representations  which  had  previously  been  made  by  Cole  to 
a  different  company,  and  in  behalf  of  another  party  with  whom  the 


246  HARMONY   F,   AND    M.    INS.    CO,    V.    HAZLEHURST.       [CHAP.  IV. 

appellee  was  not  in  piivit}',  could  not  in  any  manner  affect  the  rights  of 
the  appellee  —  there  being  no  evidence  that  the  appellee's  agent  ever 
adopted  such  representations,  or  had  any  knowledge  of  them. 

The  single  fact  upon  which  the  appellant  relies  to  hold  the  appellee 
bound  by  the  representations  made  by  Cole,  is  that  Avhen  his  agent 
Carey  called  on  Cole  for  the  purpose  of  obtaining  insurance  he  was 
informed  b^'  Cole  that  he  had  a  negotiation  pending  in  Xew  York  for 
insurance  on  the  steamer  for  other  parties,  and  would  communicate 
with  him  when  he  heard  froui  New  Yoi'k  about  it.  But  Cole  did  not 
state  that  he  had  made  any  representations  on  behalf  of  such  other 
parties,  nor  was  Care}-  bound  to  inquire  as  to  that  matter,  being  a 
stranger  to  the  transaction.  His  was  a  distinct  and  independent  appli- 
cation on  behalf  of  the  appellee,  unaccompanied  b^-  an}'  representations 
whatever  ;  and  if  the  appellant,  in  acting  upon  that  application  and 
assuming  the  risk,  chose  to  rely  upon  representations  which  had  been 
made  on  behalf  of  other  parties,  in  their  a[)plication  to  a  different  com- 
pan}'  for  insurance,  and  without  the  knowledge  of  the  appellee  or  his 
agent,  the  rights  of  the  appellee  under  the  contract  would  not  be 
affected  thereby  ;  and  for  these  reasons  we  think  the  first  pra3er  of 
the  appellant  was  properly  rejected. 

The  only  error  alleged  by  the  appellant  in  the  court's  instruction  con- 
sists in  its  having  submitted  to  the  jurj'  to  find,  as  necessary  to  the 
defence,  that  the  appellee  adopted  the  acts  of  Cole  in  making  the  repre- 
sentations before  spoken  of.  The  objection  to  that  part  of  the  instruc- 
tion taken  at  the  trial,  and  relied  on  as  cause  for  reversal,  is  that  the 
court  thereby  submitted  to  the  jur}-  a  question  of  law. 

If  that  were  sa,  it  would  present  no  ground  for  a  reversal  in  tlie  pres- 
ent case,  as  the  appellant  could  not  have  been  injured  thereby.  Hanson 
V.  Campbell,  20  Md.  223,  233. 

Unless  the  acts  of  Cole  had  been  adopted  b}'  the  appellee,  he  was 
not  bound  b}'  them.  So  far  as  such  adoption  was  sought  to  be  estab- 
lished as  a  legal  inference  to  be  deduced  from  the  evidence,  it  was  a 
question  of  law,  and  was  correctly  decided  by  the  court  below  in  pass- 
ing upon  the  appelhmt's  first  praj-er. 

And  there  being  no  evidence  of  any  such  adoption  in  fact,  no  injur}' 
could  result  to  the  appellant  by  reason  of  the  court's  submitting  that 
question  to  the  jury.  Judgment  affirmed} 

1  On  the  topic  of  this  section,  see  also  :  — 

Driscol  V.  Passmore,  1  B.  &  P.  200  (1798) ; 

Su'ckley  v.  Delafiehl,  2  Caiues,  222  (1806) ; 

Clason  V.  Smith,  3  Wash.  C.  C.  156  (1812); 

Eeid  V.  Ilarvey,  4  Dow,  97  (1816)  ; 

Mackintosh  v.  Marshall,  11  M.  &  W.  116  (184.3) ; 

Anderson  v.  Pacific  Y.  and  M.  Ins.  Co.,  L.  K.  7  C.  P.  65  (1872)  ; 

Dnrkeer.  India  Mutual  Ins.  Co.,  159  Mass.  514  (1893) ; 

Nova  Scotia  Marine  Ins.  Co.  r\  Stevenson,  23  Can.  S.  C.  137  (1894).  — Ed. 


SECT.  II.]  COLUMBIA   INS.    CO.    V.   LAWRENCE.  247 

SECTION    II. 

Fire  Insurance. 

COLUMBIA   IXSURA^'CE    CO.,    Plaintiffs   ix   Error,  r.  LAW- 
RENCE,   WHO    SURVIVED    PoiNDEXTER. 

Supreme  Court  of  the  United  States,  1836.     10  Pet.  507.^ 

The  case  is  stated  iu  the  opinion  of  the  court. 

Jones,  for  tiie  plaintiffs  in  error. 

Sicann  and  Berru^  for  the  defendant. 

Story,  J.,  delivered  the  opinion  of  the  court. 

This  is  a  writ  of  error  to  the  Circuit  Court  of  the  District  of  Colum- 
bia, for  the  count}'  of  Alexandria. 

The  original  action  was  assumpsit^  brought  by  the  defendant  in 
error  against  the  insurance  compan}-,  upon  a  policy  of  insurance, 
against  fire  underwritten  l\v  the  corapan}-,  on  the  9th  of  April,  1823, 
whereby  the  company'  insured  for  the  defendant  in  error,  and  his*pr.rt- 
ner,  Poindexter  (since  deceased),  $7,000  on  their  stone  mill,  called 
the  Elba  Mill,  four  stories  high,  situated  on  an  island  about  a  mile 
from-  Fredericksburg,  in  Virginia.  The  declaration  averred  a  total 
loss  by  fire,  on  the  14th  of  February,   1824. 

There  was  a  former  suit  brought  on  the  same  policy,  against  the 
company,  in  which  the  plaintiff  obtained  a  verdict  and  judgment.  That 
judgment  was  brought  before  this  court  on  a  writ  of  error,  in  January 
term,  1829  ;  and  the  judgment  was  reversed.  The  cause  will  be  found 
fully  reported,  with  the  grounds  of  the  reversal,  in  the  second  volume 
of  Mr.  Peters's  Reports,  2  Pet.  26,  et  seq.  One  of  the  grounds  of  that 
reversal  was  the  omission,  before  the  suit  was  commenced,  to  procure 
a  certificate  from  a  magistrate,  in  compliance  with  the  ninth  funda- 
mental article  of  the  rules  of  the  company,  upon  which  the  policy  was 
made  ;  and  to  which  those  rules  were  annexed,  as  a  part  of  the  condi- 
tions of  the  contract.  On  the  14th  of  February,  1829  (after  the  re- 
versal and  the  reason  thereof  were  made  known),  being  five  3-ears 
after  the  loss,  a  new  certificate  was  obtained  from  Mr.  Hooe.  a  magis- 
trate of  the  county  in  which  the  mill  was  situated.  The  original  suit 
was  afterwards  discontinued  in  the  Circuit  Court,  on  the  5th  of  Novem- 
ber. 1830.  The  present  suit  was  afterwards  commenced  in  September, 
1831. 

In  the  court  below,  various  pleas  were  interposed  b}'  the  company, 
upon  some  of  which  there  were  issues  to  the  country  ;  and  others, 
which  were  special,  eventuated  in  demurrers.  L'pon  the  former,  a 
verdict  was  at  the  trial  found  for  the  plaintiff;  and  upon  the  latter  (as 

1  The  case  has  been  reprinted  from  12  Curtis's  Decisions,  216.  —  Ed. 


248  COLUMBIA   INS.    CO.    V.   LAWKENCE.  [CHAP.  IV, 

well  as  upon  the  verdict),  judgment  was  ultimately  pronounced  in  favor 
of  the  plaintiff.  Bills  of  exceptions  were  also  taken  at  the  trial  upon 
various  points  of  law  raised  in  argument ;  and  the  correctness  of  the 
ruling  of  these  points,  raised  both  upon  the  special  pleadings  and  upon 
the  trial  of  the  issues  of  fact,  are  upon  the  present  writ  of  error  brought 
before  us  for  revision.  All  the  leading  facts  of  the  case,  except  the 
new  certificate  of  Hooe  before  mentioned,  and  the  testimonj-  of  Joseph 
Howard  (which  will  hereafter  be  a  subject  of  comment,  upon  the 
inquiry  as  to  his  competency),  are  precisely  the  same  as  were  before 
us  upon  the  writ  of  error  in  1829.  And  as  the  testimony  of  Howard, 
if  admissible,  does  not  in  our  opinion  at  all  vary  the  operation  and 
pressure  of  the  point  of  law  in  tlie  case,  we  deem  it  unnecessary  to  do 
more  than  to  refer  to  the  case,  as  reported  in  Peters's  Reports,  for  all 
the  material  facts.^     It  may  be  proper,  however,  to  state,  that  it  was 

1  In  Columbian  Ins.  Co.  v.  Lawrence,  2  Pet.  2.5,  44-48  (1829),  the  facts  as  to  the 
misrepresentation  of  title  were  thus  stated  in  the  opinion  of  the  court  by  Marshall, 
C.J.:  — 

"The  mill  insured  was  built  on  an  island  in  the  Rappahannoc,  which  was  demised 
bv  Charles  Mortimer  to  Stephen  Winchester,  for  three  lives,  renewable  forever,  at 
the  yearly  rent  of  £80  (-$266.60) ;  witli  a  condition  of  re-entry  for  rent  iu  arrear,  etc. 

"  1801,  Dec.  19.  S.  W.  conveyed  one  undivided  third  part  to  Richard  Winchester, 
and  another  undivided  third  part  to  Joshua  Howard. 

"1806,  May  9.  R.  aud  S.Winchester  conveyed  to  Joshua  Howard,  by  deed  of 
mortgage  in  fee,  their  two-thirds  of  the  said  island,  with  other  property  to  a  consider- 
able amount,  in  order  to  secure  the  said  Howard  to  the  amount  of  $40,000. 

"  1813,  Jan.  27.  Joshua  Howard  conveyed  the  whole  island  to  William  and  George 
Winchester. 

"1813,  Sept.  23.  William  and  George  Winchester  conveyed  the  island  to  Joseph 
Howard  and  Joseph  W.  Lawrence. 

"  1818,  -July  22.  Joseph  Howard  entered  into  an  agreement  with  Joseph  W.  Law- 
rence, by  which  the  said  Lawrence  was  to  take  the  island,  etc.  at  the  price  of  $30,000 ; 
for  which  amount  in  debts,  due  from  Howard  &  Lawrence,  he  was  to  procure  a  re- 
lease;  on  his  doing  which,  Howard  was  to  execute  a  deed  for  the  property;  on  the 
failure  or  inability  of  Lawrence  to  procure  this  release,  the  contract  was  to  be  void. 

"1822,  Nov.  28.  Joseph  W.  Lawrence  enters  into  an  agreement  witli  Thomas 
Poindexter,  Jun.,  for  the  sale  of  one-half  of  the  island,  mills,  etc. ;  for  wliich  the  said 
Poindexter  agrees  to  assume  and  take  upon  himself  one-half  tlie  debts  due  from  How- 
ard &  Lawrence  to  the  banks  iu  Fredericksburg ;  which  were  secured  by  a  deed  of 
trust. 

"  Nov.  29.  An  agreement  between  Howard  and  Lawrence  to  work  the  mills  iu 
partnership. 

"By  the  deeds  of  January  27,  and  Sept.  23,  1813,  all  tlie  title  of  Joshua  Howard  to 
the  island  on  which  the  mills  insured  were  erected,  passed  to  Joseph  Howard  and 
Jo.seph  W.  Lawrence.     What  was  that  title  ? 

"He  held  one-third  part  in  his  own  riglit,  and  the  remaining  two-tliirds  as  mort- 
gagee. 

"  The  agreement  of  July  22,  1818,  between  Howard  and  Lawrence,  does  not  appear 
to  have  lean  performed  on  the  part  of  Lawrence ;  nor  is  there  any  evidence  of  his 
ability  to  perform  it:  but  it  does  not  apj)ear  that  Howard  has  taken  any  step  to  avoid 
it,  or  has  asserted  any  title  in  himself. 

"The  agreement  of  Nov.  28, 1822,  between  Lawrence  and  I'oindexter,  admits  Poin- 
dexter to  an  undivided  moiety  of  any  interest  L.awrence  might  have  in  the  property. 

"  Lawrence  &  Poindexter  then,  wiien  the  insurance  was  made,  Avere  entitled  to  one- 
third  of  tlie  property  under  the  deed  made  by  Cliarles  Mortimer,  aud  to  the  remaining 


SECT.  II.]  COLUMBIA   INS.    CO.    V.   LAWKENCE.  249 

then  decided  that  there  was  no  waiver  by  the  compan}'  of  their  rio-ht  to 
the  preUminary  proofs,  required  by  the  ninth  article  of  their  rules  ;  and 
that  the  assured  had  an  insurable  interest.^  .    .   . 

The  next  question  whicli  arises  is,  whether  there  has  been,  in  the  pro- 
posal for  the  insurance,  a  misrepresentation  of  the  interests  of  the 
assured  in  the  property  insured  ;  and  if  there  has  been,  whether  if  that 
misrepresentation  is  material  to  the  risk,  and  would  have  enhanced  the 
premium,  it  avoided  the  policy.  The  proi^osal  for  insurance  describes 
the  property  and  interest  thus  :  "  What  premium  will  you  ask  to  insure 
the  following  property,  belonging  to  Lawrence  and  Poindexter,  for  one 
year,  against  loss  or  damage  by  fire,  on  their  stone  mill,  four  stories 
high,  covered  with  wood,  situate,  etc."  It  was  decided  by  the  court, 
in  the  former  case,  in  2  Pet.  47,  etc.,  that  the  real  interest  existing  in 
Lawrence  and  Poindexter,  at  the  time  of  the  proposal,  was  not  such  as 
is  described  therein.  It  was  further  decided  by  the  court,  in  the  same 
case,  that  a  misrepresentation  of  the  interest  of  the  assured,  which  is 
material  to  the  risk,  would  avoid  the  policy.  The  language  of  the 
court  on  that  occasion  was:  "The  contract  for  insurance  is  one  in 
which  the   underwriters  generally  act  on   the  representation   of  the 

two-thirds  as  mortgagees;  but  oue  moiety  of  the  whole,  which  moiety  was  derived 
from  Joseph  Howard  under  the  agreemeut  of  July  22,  1818,  was  held  under  an  agree- 
ment which  had  not  been  comjilied  with,  and  whicli  purported  on  its  face  to  be  void  if 
not  complied  with ;  but  the  other  contracting  party  had  not  declared  it  void,  nor 
called  for  a  compliance  with  it. 

"  It  cannot  be  doubted,  we  think,  tliat  the  assured  had  an  interest  in  the  property 
insured.  Lawrence  had  an  unquestionable  title  to  a  moiety  of  one-third,  subject  to 
the  rent  reserved  in  the  original  lease,  and  to  a  moiety  of  the  remaining  two-thirds  as 
mortgagee.  He  had  sucli  title  to  the  other  moiety  as  could  be  acquired  by  an  agree- 
ment for  a  purchase,  the  terms  of  which  had  not  been  complied  with. 

"  The  title  is  thus  stated,  because  those  words  wiiicii  declare  the  contract  to  be  void 
if  Lawrence  should  fail  to  comply  witli  it,  do  not,  we  think,  render  it  absolutely  void, 
but  only  voidable."  No  time  for  performance  is  fixed;  and  if  Howard  is  content  with 
wliat  has  been  done  by  Lawrence,  and  does  not  choose  to  annul  the  contract,  tlie  under- 
writers of  this  policy  cannot  treat  it  as  a  nullity.  Lawrence,  having  this  title  under 
an  executory  contract,  sells  to  Poindexter  one  undivided  moiety  of  the  property. 
These  two  persons,  being  botli  in  possession,  partly  under  legal  conveyances  and  partly 
under  executory  contracts,  require  an  insurance  on  it  against  loss  by  fire.  .  .  . 

"The  original  offer  for  insurance  was  in  these  words,  'What  premium  will  you 
ask  to  insure  the  following  property  belonging  to  Lawrence  &  Poindexter,  for  one 
year  against  loss  or  damage  by  fire  ?  On  their  stone  mill  four  stories  high,  covered 
witli  wood,  on  an  island  about  oue  mile  from  Fredericksburg  in  the  county  of  Staf- 
ford ;  the  mill  called  Elba  mill.  Seven  thousand  dollars  are  wanted.  Not  within 
thirty  yards  of  anv  other  building,  except  a  corn  house,  which  is  about  twenty  yards 
off.' 

"  The  policy  states  that  the  underwriters  insure  Lawrence  &  Poindexter  against 
loss  or  damage  by  fire,  to  the  amount  of  $7,000  on  their  stone  mill,  etc. 

"The  declaration  charges  that  the  defendants  insured  the  plaintiffs  §7,000"against 
loss  or  damage  by  fire  on  their  stone  mill,  etc. ;  and  avers  that  they  were  interested  in, 
and  the  equitable  owners  of  the  premises  insured  as  aforesaid,  at  the  time  the  insur- 
ance was  made  as  aforesaid,  &c."  —  Ed. 

1  In  reprinting  the  opinion,  passages  not  bearing  on  misrepresentation  of  title  have 
been  omitted. — Ed. 


250  COLUxMBIA   INS.   CO.   V.   LAWEENCE.  [CHAP.  IV. 

assured ;  and  that  representation  ought,  consequently,  to  be  fair, 
and  to  omit  nothing  which  it  is  material  for  the  underwriters  to  know. 
It  may  not  be  necessary  that  the  person  requiring  insurance  should 
state  every  encumbrance  on  his  property,  whicii  it  might  be  required  of 
him  to  state  if  it  was  offered  for  sale.  But  fair  dealing  requires  that 
he  should  state  everything  which  might  influence,  and  probably  would 
influence,  the  mind  of  the  underwriter  in  forming  or  declining  the  con- 
tract, etc.  Generally  speaking,  insurances  against  fire  are  made  in 
the  confidence  that  the  assured  will  use  all  the  precautions  to  avoid 
the  calamity  insured  against,  which  would  be  suggested  by  his  interest. 
The  extent  of  this  interest  must  ahvaj's  influence  the  underwriter  in 
taking  or  rejecting  the  risk,  or  in  estimating  the  premium.  So  far  as 
it  may  influence  him  in  these  respects,  it  ought  to  be  communicated  to 
him.  Underwriters  do  not  rely  so  much  upon  the  principles  as  on  the 
interest  of  the  assured  ;  and  it  would  seem,  therefore,  to  be  always 
material,  that  they  should  know  how  far  this  interest  is  engaged  in 
guarding  the  propert}'  from  loss." 

We  think  this  reasoning  entirely  satisfactor}',  and  founded  in  the 
true  exposition  of  the  contract  of  insurance.  Whenever  the  nature  of 
this  interest  would  have,  or  might  have  a  real  influence  upon  the  under- 
writer, either  not  to  underwrite  at  all,  or  not  to  underwrite  except  at  a 
higher  premium,  it  must  be  deemed  material  to  the  risk  ;  and  if  so, 
the  misrepresentation  or  concealment  of  it  will  avoid  the  polic}-.  One 
of  the  testSy  and  certainly  a  decisive  test,  whether  a  misrcijresentatioji 
or  concealmeiit  is  material  to  Jjie  risk,  is  to  ascertain  whether,  if  the 
truestate  of  the  property  or  title  had  bi^ji_kuown,  it  woulcj  have  en- 
hanced  the  premium.  If  it  would,  tlien  the  misrepresentation  or  con- 
cealment is  fatal  to  the  polic}'.  Now,  at  the  trial  of  the  present  case, 
the  counsel  for  the  insurance  compau}',  in  their  second  bill  of  excep- 
tions, prayed  the  court  to  instruct  the  jurj",  that  if  they  "  find  from  the 
evidence  that  a  full  disclosure  of  the  actual  title  of  the  insured  in  the 
premises,  as  it  existed  at  the  time,  was  material  to,  and  would  have 
considerably  increased  the  estimate  and  value  of  the  risk  and  premium  ; 
and  that  no  other  disclosure  of  the  same  was  made  than  as  aforesaid 
[i.  e.  in  the  offer  of  insurance],  then  there  was  a  material  concealment, 
which  avoids  the  policy."  The  court,  being  divided  in  opinion,  did  not 
give  this  instruction  to  the  jur}',  and  it  was  consequently  refused.  In 
our  opinion,  upon  the  principles  already  stated,  it  ought  to  have  been 
given ;  and  the  refusal  was  an  error  for  which  the  judgment  must  be 
reversed.  But  the  court  rightly  rejected  the  instructions  upon  the 
sailie  subject  asked  in  the  first  bill  of  exceptions,  which  proceeded 
upon  the  ground  that  if  there  was  any  misrepresentation  of  the  interest 
of  the  assured,  that  alone,  whether  material  or  not  to  the  risk,  would 
avoid  the  policy.  The  instruction  asked  upon  the  same  subject,  in  the 
second  bill  of  exceptions,  is  still  more  objectionable,  as  it  called  upon 
the  court  to  declare  to  the  jury,  as  matter  of  law,  that  tlic  non-disclos- 
ure of  the  true  nature  and  extent  of  the  title  and  interest  of  the  assured 


SECT.  II.]  CARPENTER    V.   AMERICAN    INS.    CO.  251 

in  the  premises,  was  a  concealment  of  circumstances  raateriall}'  affect- 
ing the  risk,  which  avoided  the  polic}',  thus  taking  from  the  jury  the 
proper  examination  of  the  fact,  whether  it  was  material  to  the  risk 
or  not.  .   .   . 

.  The  judgment  of  the  Circuit  Court  must  be  reversed  for  the  error 
already  stated ;  and  the  case  remanded,  with  directions  to  the  court  to 
award  a  venire  facias  de  novo. 


CARPENTER  v.   THE    AMERICAN   INSURANCE   COMPANY. 

Circuit  Court  of  the  United  States,   District  of  Rhode  Island, 

1839.     1  Story,  57. 

This  was  an  action  of  assumpsit  on  a  policy  of  insurance  upon  the 
Glenco  Factory  and  machinery,  underwritten  by  the  American  Insur- 
ance Company  at  Providence,  on  the  faith  of  certain  representations 
contained  in  letters  written  by  Samuel  G.  Wheeler  to  the  Insurance 
Company.  At  the  time  that  the  policy  was  underwritten,  he  and  his 
brother  Henry  M.  Wheeler  were  proprietors  of  the  factory  and  machin- 
ery under  the  copartnership  name  of  Henry  M.  AVheeler  &,  Co.  The 
policy  bore  date  on  the  12th  of  December,  1836,  and  was  as  follows  : 

"  The  American  Insurance  Company,  &c.,  do  insure  Henry  M.  AVheeler 
&  Co.  against  loss  of  damage  by  fire  to  the  amount  of  six  thousand 
dollars,  to  wit:  fifteen  hundred  dollars  on  the  Glenco  Cotton  Factory, 
water-wheel  and  fixed  machinery,  thirty-five  hundred  dollars  on  mov- 
able machinery,  and  one  thousand  dollars  on  stock  contained  therein. 
Said  factory  is  situated  in  Livingston,  New  York.  This  insurance  is 
made  with  reference  to  letters  of  S.  G.  Wheeler,  dated  the  Uth  Novem- 
ber and  6th  December,  1836,  with  knowledge  of  additional  insurance 
on  the  same  property  by  the  Providence  Wasliington  Insurance  Com- 
pany to  the  amount  of  fifteen  thousand  dollars,  and  with  the  agree- 
ment thattlie  assured  may  assign  this  policy  to  Epenetus  Reed,"  &c. 

The  whole  interest  of  Samuel  G.  Wheeler  and  Henry  M.  Wheeler 
■was  by  a  subsequent  assignment  transferred  to  Jeremiah  Carpenter, 
the  present  plaintiff,  and  indorsements  thereof  were  made  on  the  policy 
as  follows:  "  1837,  Dec.  14th.  Samuel  G.  Wheeler  by  letter  dated 
this  13th  Dec.  1837,  certifies,  that  he  has  transferred  his  interest  in  the 
Glenco  Factory  and  machinery  to  Jeremiah  Carpenter,  and  tliereupon 
it  is  agreed  that  the  within  policy  shall  be  for  his  benefit  and  not  that  of 
said  AVheeler.  See  letter  to  Jeremiah  Carpenter,  Dec.  14th,  1837." 
And  subsequently,  "1838,  iMay  4th,  Assignment  by  Henry  M.  Wheeler 
and  Samuel  G.  Vheeler  of  their  interest  in  this  policy  to  Jeremiah 
Carpenter.     See  letter  to  Samuel  G.  Wheeler,  May  4th,  1838." 

The  policy  was  subsequently  renewed  by  Wheeler  &  Co.  on  the  18th 
December,  1837;  by  which  renewal  it  was  to  continue  in  force  for  one 
year  from  the  12th  of  December,  1837  ;  and  again  by  Jeremiah  Carpen- 


252  CARPENTER   V.    AMERICAN    INS.    CO.  [CHAP.  IV. 

ter  on  December  11th,  1838,  by  which  it  was  to  continue  in  force  from 
December  12th,  1838,  to  December  12th,  1839.^  .  .   . 

The  factory  and  machinery  were  afterwards  destroyed  by  fire  on  the 
night  of  April  9th,  1839,  and  this  action  was  brought  to  recover  the 
insurance. 

Rivers  and  Whipple,  for  the  plaintiff. 

Pratt  and  AtioeJl,  for  the  defendants. 

Story,  J.,  delivered  the  opinion  of  the  court  as  follows.  We  arc 
clearly  of  opinion  that  the  policy  in  this  case,  having  been  obtained 
upon  a  misrepresentation  of  the  material  facts,  is  utterly  void.  The 
original  proposal  for  the  insurance  by  the  letter  of  the  14th  of  Novem- 
ber, 1836,  referred  the  defendants  to  the  description  of  the  property  at 
Providence  Washington  Insurance  Comi)any's  office,  at  which  it  was 
insured  for  $15,000,  the  property  being  therein  valued  at  $19,000. 
The  defendants  after  examining  that  policy  and  description  declined, 
by  the  letter  of  the  17th  of  November,  to  take  the  additional  sum  pro- 
posed, upon  the  very  ground  that  the  sum  already  insured  thereon  was 
as  much  as  was  proper  to  be  taken  on  such  a  valuation.  In  order  to 
induce  the  defendants  to  take  the  risk  the  letter  of  the  6th  of  Decem- 
ber, 1836,  represented,  that  since  the  original  insurance  was  made, 
additions  had  been  made  to  the  factory,  &c.,  fully  equal  to  $10,000. 
Upon  the  faith  of  this  statement  the  present  policy  was  underwritten. 
It  now  turns  out  that  this  representation  is  utterly  untrue  (whether  by 
design  or  by  mistake  is  not  material),  and  no  such  additions  have  been 
made  since  the  former  policy.  No  one  can  doubt  the  materiality  of 
this  representation  ;  for  it  was  the  very  point  (the  increased  value) 
upon  which  the  policy  was  underwritten.  It  seems  to  us,  therefore, 
that  this  makes  an  end  of  the  case  ;  for  a  false  representation  of  a  ma- 
terial fact  is,  according  to  well-settled  principles,  sufficient  to  avoid  a 
policy  of  insurance  underwritten  on  the  faith  thereof,  whether  the  false 
representation  be  by  mistake  or  by  design. 

It  is  suggested  that  the  misrepresentation  was  in  fact  unintentional  and 
without  any  fraudulent  design,  and  thatEpenetus  Reed  (the  mortgagee) 
for  whose  benefit  the  insurance  was  made,  was  entirely  ignorant  of  the 
misrepresentation  ;  and  that,  under  such  circumstances,  his  riglits  un- 
der the  policy  ought  not  to  be  prejudiced  thereby.  But  this  suggestion 
cannot  avail  for  the  plaintiff,  or  for  Reed.  The  misrepresentation 
made  by  an  agent  in  procuring  a  policy  is  equally  fatal,  whether  made 
with  the  knowledge  or  consent  of  the  principal  or  not.  The  ground  in 
each  case  is  the  same.  The  underwriters  are  deceived.  They  execute 
the  policy  upon  the  faith  of  statements  material  to  the  risk,  which  turn 
out  to  be  untrue.  The  mistake  is,  therefore,  fatal  to  the  policy,  as  it 
goes  to  the  very  essence  of  the  contract.'^ 

The  2)lai?Hiff  discontiniied  his  suit,  and  costs  were  awarded 
to  the  defendants. 

5  The  letters  summarized  in  the  opinion  have  been  omitted.  —  Ed. 
2  Ace. :  Continental  Ins.  Co.  v.  Kasey,  25  Gratt.  268  (1874).     See  Ring  v.  Phoenix 
Ass.  Co.,  145  Mass.  426  (1888). —  Ed. 


SECT.  II.]         DENNISON    V.   THOMASTON   MUTUAL   INS.   CO.  253 


DENNISON  V.   THOMASTON   MUTUAL  INSURANCE 
COMPANY. 

Sdpreme  Judicial  Court  of  Maine,  1841.     20  Me.  125. 

Tins  was  an  action  upon  a  polic}'  of  insurance  against  fire  upon  the 
plaintiff's  dwelling-liouse  and  store,  &c.,  in  Washington  Blocli.  in  tlie 
city  of  Bangor,  bearing  date  Jan.  5,  1837. 

On  the  trial  of  the  cause,  before  Shepley,  J.,  the  plaintiff  introduced 
the  polic}-  of  insurance,  which  was  in  the  usual  form.  Among  the  con- 
ditions of  insurance  referred  to,  and  made  a  part  of  the  policy,  was 
this  :  "  No  insurance  will  entitle  the  insured  to  any  indemnity  for  loss 
or  damage,  if  the  description  by  the  applicant  of  the  building  or  prop- 
erty insured  be  materially  false  or  fraudulent ;  or  if  any  circumstance 
material  to  the  risk  be  suppressed,"  &c. 

In  the  application  for  insurance,  in  reply  to  the  inquiry,  "  what  dis- 
tance from  other  buildings  ? "  the  answer  given  (so  far  as  material  to 
this  case)  was,  "east  side  of  the  block,  small  one-story  sheds,  and 
would  not  endanger  the  building,  if  they  should  burn."  To  the  inquiry, 
"what  are  the  buildings  occupied  for,  that  stand  within  four  rods? 
how  many  buildings  are  there,  to  the  fires  of  which  this  may  in  any 
case  be  exposed?"  no  answer  was  given. 

"Warren  Preston,  Esq.,  called  by  the  plaintiff,  testified  that  he  was  the 
agent  of  the  insurance  company  when  the  policy  was  taken  out ;  that 
the  plaintiff"  called  upon  him  to  obtain  insurance,  and  was  informed 
that  the  company  were  not  inclined  to  take  property  in  the  city ;  that 
he  wrote  to  the  company,  stating  generally  the  situation  of  the  build- 
ings, and  received  an  answer,  saying,  that  "Mr.  Dennison  had  better 
forward  an  application  to  enable  the  president  to  decide  understand- 
ingly  ;  "  that  he  handed  the  plaintiff  a  blank  application  to  be  filled  up  ; 
that  the  plaintiff  requested  him,  the  witness,  to  fill  it  up,  saying,  he  did 
not  understand  it ;  that  he  went  with  him  into  the  building  and  the 
back  pait,  so  that  he  could  see  all  the  buildings  in  the  rear,  and  having 
seen  them,  he  made  out  the  answers  to  the  questions  ;  that  both  of 
them  came  to  the  conclusions  therein  stated  ;  that  he  sent  on  the  appli- 
cation and  representation  so  made  out  and  signed  by  the  plaintiff,  and 
received  in  return  the  policj',  which  he  handed  the  plaintiff;  that  on 
Monday  after  the  fire,  the  plaintiff  came  and  notified  him  of  the  loss, 
and  he,  by  his  request,  and  witliin  ninety  days,  wrote  the  company, 
stating  the  facts  in  relation  to  the  loss. 

It  appeared  from  the  testimony  introduced  by  the  plaintiff,  that 
fronting  on  Wall  Street,  and  east  of  the  building  insured,  stood  a  two- 
story  wooden  building,  about  thirty  by  sixty  feet,  occupied  for  stores, 
belonging  to  one  Prince  ;  and  that  from  the  back  wall  of  the  building 
insured  to  the  rear  of  the  wooden  building  designated  as  Prince's,  the 


254  DENNISON    V.    THOMASTON    MUTUAL    INS.    CO.       [CHAP.  IV. 

distance  was  fifty-nine  feet ;  that  north  of  Prince's,  and  separated  by 
a  passage  of  four  feet,  stood  a  wooden  building  belonging  to  one 
Call,  which  fronted  on  Wall  Street ;  that  the  building  insured  fronted 
Main  Street,  was  of  brick,  three  stories  on  Main  and  four  stories  high 
in  the  rear  towards  Wall  Street ;  that  in  the  rear  of  the  building,  and 
between  it  and  Prince's,  stood  a  one-story  wood-shed  ;  that  northerly 
and  adjoining  stood  another  brick  building,  similar  to  the  one  insured, 
called  Richards'  building,  and  in  the  rear  of  that  also  a  wooden  shed  ; 
that  the  fire  commenced  in  the  second  story  of  Call's  building,  and  ex- 
tended to  Prince's,  and  thence  to  the  wooden  shed  in  its  rear  ;  that  the 
fire  took  on  the  coving  of  Richards'  building,  from  Call's  building,  and 
extended  from  thence  to  the  plaintiff's  ;  that  the  wood-shed  in  rear 
of  Richards'  building  was  on  fire  when  the  fire  took  first  in  Richards' 
building ;  that  all  these  buildings  were  burnt,  except  a  wood-shed  torn 
down  ;  that  there  was  but  little  air,  except  that  caused  b}'  the  fire  ;  that 
it  was  ebb-tide,  and  that  the  wells  were  not  to  be  depended  upon. 

There  was  evidence,  likewise,  that  all  the  wooden  buildings  were  on 
fire  when  the  coving  caught.  There  was  likewise  testimon}'  as  to  the 
condition  of  the  fire  department,  and  its  exertions  in  relation  to  the 
extinguishing  of  the  fire. 

There  was  much  evidence  in  relation  to  the  fire  and  the  situation  of 
the  buildings  ;  but  as  the  facts  sufflcientl}'  appear  from  the  opinion  of 
the  court  and  the  preceding  statement,  it  is  not  full^'  reported. 

A  verdict  was  found  for  the  plaintiff,  subject  to  the  opinion  of  the 
court,  whether  the  plaintiff,  on  this  testimon}',  or  so  much  of  it  as  may 
be  legally  admissible,  is  entitled  to  recover ;  the  defendants'  counsel 
objecting  to  all  that  part  of  it  relating  to  the  condition  of  the  fire  de- 
partment and  its  exertions,  and  the  statements  of  its  members  and 
others  relating  to  those  matters.  If  the  plaintiff  is  entitled  to  recover, 
judgment  is  to  be  entered  on  the  verdict ;  and  if  entitled  to  recover 
interest  from  an  earlier  date  than  sixty  days  after  affidavit  furnished 
and  notice  annexed,  the  verdict  is  to  be  amended  accordingly. 

JPreble,  for  the  defendants. 

Itogers  and  Cutting^  for  the  plaintiff. 

Whitman,  C.  J.  A  verdict  was  taken  for  the  plaintiff  subject  to  the 
opinion  of  the  court,  upon  a  report  of  the  judge,  before  whom  the  trial 
was  had,  of  the  evidence  and  rulings  b}'  him  made  in  the  progress  of 
the  trial.  And  it  is  agreed  that  such  judgment  shall  be  entered,  either 
upon  the  verdict  or  upon  nonsuit,  as  the  court  ma}"  deem  reasonable. 

The  action  is  upon  a  policy  of  insurance  against  fire,  underwritten 
by  the  defendants,  on  the  dwelling-house  of  the  plaintiff,  situated  in 
Bangor,  which  was  consumed  by  fire.  Tlie  defendants,  for  their  defence, 
rely  upon  what  thej'  consider  to  have  been  a  misrepresentation  made 
at  the  time  the  polic}"  was  effected.  The  misrepresentation  alleged  is 
contained  in  the  answer  to  a  written  interrogatory,  propounded  to  the 
pl.'xintiff,  as  to  the  distance  of  other  buildings  from  the  premises  insured. 
The  answer  was  in  these  words  :  "East  side  of  the  block  are  small  one- 


SECT.  II.]  DEXXISON   V.   THOMASTON   MUTUAL   IXS.    CO.  255 

Story  wood-sheds,  and  would  not  endanger  the  buildings  if  they  should 
burn." 

In  evidence,  it  appeared  that  small  sheds  projected  out  from  near 
the  back  part  of  the  brick  block  of  buildings  (one  of  which  was  the 
house  in  question)  twenty-four  feet,  being  twelve  feet  in  width,  and 
eight  feet  stud  ;  and  leaving  a  passage-way  in  the  rear  of  them  of  four- 
teen feet  wide,  adjoining  some  two-story  wooden  buildings,  standing  on 
another  street,  forty-nine  feet  from  the  plaintiff's  house,  and  in  which 
the  fire  which  consumed  the  plaintiff's  house  originated. 

The  first  question  which  arises  is,  was  this  a  misrepresentation,  or 
was  there  a  suppression  of  the  truth  tantamount  thereto,  and  material 
to  the  risk.  It  does  not  seem  to  be  necessary,  in  order  to  avail  the 
defendants  in  their  defence,  that  the  misrepresentation  or  suppression 
of  the  truth  should  have  been  wilful.  If  it  were  but  an  inadvertent 
omission,  yet  if  it  were  material  to  the  risk,  and  such  as  the  plaintiff 
should  have  known  to  be  so,  it  would  render  the  policy  void. 

In  the  case  at  bar,  it  has  now  been  rendered  undeniable  that  the 
burning  of  the  two-story  buildings  on  another  street  endangered  the 
plaintiff's  house  ;  and  to  the  interrogatory  propounded  it  now  would 
seem  that  the  existence  of  those  buildings  might,  with  propriety,  have 
been  stated.  But  this  does  not  prove  that,  before  the  occurrence  of  the 
fire,  it  would  have  been  deemed  material  to  name  them,  as  being  near 
enough  to  put  the  plaintiff's  house  in  jeopard}'.  It  is  not  an  unfrequent 
occurrence,  after  a  disaster  has  happened,  that  we  can  clearly  discern 
that  the  cause  which  may  have  produced  it  would  be  likely  to  have  such 
an  effect,  while,  if  no  such  disaster  had  occurred,  we  might  have  been 
very  far  from  expecting  it.  In  this  case,  it  is  essential  to  determine 
whether  the  plaintiff  was  bound  to  have  known  that  a  fire  originating 
in  the  two-story  wooden  buildings  would  have  endangered  the  burning 
of  his  house.  If,  as  a  man  of  ordinarj'  capacity,  he  ought  to  have  had 
such  an  apprehension,  then  he  ought  to  have  named  those  buildings  in 
reply  to  the  interrogatory  propounded  ;  for  what  a  man  ought  to  have 
known,  he  must  be  presumed  to  have  known.  This  knowledge,  in  a 
case  like  the  present,  must  have  been  something  more  than  that,  by 
possibility,  a  fire  so  originating  might  have  endangered  his  house. 
This  kind  of  knowledge  might  exist  in  regard  to  a  fire  originating  in 
almost  any  part  of  a  city  like  Bangor;  for  a  fire  originating  in  an  ex- 
treme part  of  it,  if  the  wind  were  high  and  favorable  for  the  purpose, 
might  endanger  all  the  buildings,  however  remote,  standing  nearly  con- 
tiguous one  to  another  to  the  leeward  of  it.  Any  danger  like  this  could 
not  have  been  in  contemplation  when  the  interrogatory  was  propounded. 
Such  buiklings  only  as  were  so  nearly  contiguous  as  to  have  been,  in 
case  a  fire  should  originate  therein,  productive  of  imminent  hazard  to 
the  safety  of  the  plaintiff's  dwelling,  could  have  been  in  view  by  the 
defendants.  And  the  question  is,  were  the  two-story  wooden  buildings 
of  that  description  ? 

In  reference  to  this  question,  it  may  not  be  unimportant  to  consider 


256  DENNISON   V.   THOMASTON   MUTUAL   INS.    CO.       [CHAP.  IV. 

that  the  defendants,  at  the  time  when  this  policy  was  effected,  had  an 
agent  residing  in  Bangor,  whose  business  it  was  to  attend,  in  their  behalf, 
to  the  applications  for  insurance  from  that  quarter.  It  may  be  believed 
that  the  selection  of  this  individual  was  the  result  of  knowledge  with 
regard  to  his  intelligence  and  capacity  for  such  purp(^e.  It  was  not, 
however,  his  business,  perhaps,  to  prepare  representations  to  be  made 
b}'  applicants  for  insurance.  But  it  did  so  happen  that  he  assisted 
the  plaintiff  in  preparing  the  answers  to  the  standing  interrogatories, 
one  of  which  is  the  interrogator^'  before  named,  intended  to  produce 
a  representation  upon  which  to  found  the  estimates  of  the  propriety' 
of  assuming  the  risk  proposed.  He,  it  seems,  examined  the  premises, 
looked  at  the  wood-sheds  and  the  two-story  wooden  buildings  beyond 
them.  To  him  it  did  not  seem  to  have  occurred,  that  the  vicinity  of 
those  buildings  was  such  as  to  render  it  necessary  that  the  two-story 
wooden  buildings  should  be  named  in  answer  to  the  interrogator}' ;  for 
he,  at  the  request  of  the  plaintiff,  penned  the  reply  thereto  as  he  thought 
proper. 

It  does  not  appear  that  any  witness  has  testified  that,  anterior  to  the 
disaster,  he  should  have  anticipated  such  an  event  as  within  the  range 
of  probabilit}'.  What  other  individuals  of  intelligence  did  not  foresee 
to  be  likely  to  occur,  could  not  reasonably  be  expected  of  the  plaintiff. 
And  what  he  could  not  be  expected  to  know,  he  cannot  be  considered 
as  culpable  for  not  knowing.  And  what  he  could  not  be  expected 
to  apprehend,  he  could  not  be  bound  to  communicate  ;  and,  in  not 
communicating  an}'  such  fact,  he  could  not  be  considered  as  guilt}^  of 
concealing  it,  even  inadvertently',  and  much  less  wilfully. 

As  to  the  vv'ooden  sheds,  they  were  named  ;  and  the  description  given 
of  them  is  precisely  in  conformity  to  the  truth.  The}'  were  named, 
however,  in  connection  with  an  opinion,  that  if  they  took  fire,  they 
would  not  endanger  the  house.  There  is,  then,  no  misrepresentation 
with  regard  to  their  existence.  The  misrepresentation  complained  of. 
in  reference  to  them,  is  merelv  in  matter  of  opinion.  But  opinions,  if 
honestly  entertained  and  honestl}'  communicated,  are  not  misrepresen- 
tations, however  erroneous  the}'  may  prove  to  be.  That  this  opinion 
was  uttered  Ijona  Jide,  and  in  perfect  singleness  of  heart  and  purpose, 
may  well  be  believed,  and  may  fairly  be  deducible  from  the  fact  that 
it  was  expressed  in  concurrence  with  the  unquestionable  belief,  at  the 
time,  of  its  correctness,  by  the  confidential  friend  of  the  defendants. 
An  opinion  so  uttered,  if  not  in  good  faith,  might  well  be  complained 
of,  as  it  might  tend  to  throw  the  defendants  off  their  guard.  In  such 
case,  it  might  tend  to  show  a  fraudulent  design,  and,  in  connection 
with  evidence  of  misrepresentation  of  facts,  even  short  of  what  other- 
wise might  be  necessary  to  vacate  a  contract,  would  be  likely  to  have 
that  effect. 

But  it  is  by  no  means  clear,  if  the  fire  had  not  originated  elsewhere 
than  in  the  sheds,  that  it  would  have  been  attended  with  essential 
danger  to  the  main  building.     The  neighbors  and  firemen  of  the  city 


SECT.  11.]  ALSTON   V.   MECHANICS'   MUTUAL   INS.   CO.  257 

might  be  expected  to  be  able  to  extinguish  a  fire  so  originating.  Such 
buildings  are  easily  pulled  to  pieces ;  and  an  engine  brought  to  bear 
upon  them  would  do  great  execution.  It  may  therefore,  even  now, 
be  very  questionable  whether  the  opinion  complained  of  may  not  be 
adopted  as  well  founded  to  a  very  considerable  extent  at  least. 

As  to  the  testimony  of  the  witnesses  touching  the  condition  of  the 
fire  department  and  its  exertions,  and  whatever  relates  thereto,  we  see 
no  ground  from  thence  arising  to  question  the  correctness  of  the  finding 
of  the  jury.  The  most  that  can  be  said  of  that  part  of  the  evidence  is, 
that  it  is  irrelevant,  and  not  of  a  tendency  to  influence  a  jury  one  wa}' 
or  the  other. 

We  are  of  opinion,  therefore,  that  judgment  must  be  entered  upon 
the  verdict,  with  interest  as  agreed.^ 


ALSTON  V.   THE  MECHANICS'   MUTUAL  INSURANCE 
COMPANY. 

Court  of  Errors  of  New  York,  1842.     4  Hill,  329. 

Error  to  the  Supreme  Court.  The  action  in  the  court  below  was 
upon  a  fire  policy  on  a  building  and  some  personal  property  belonging 
to  the  plaintiff,  "which  bore  date  August  27,  1838.  The  term  of  insur- 
ance was  five  years,  commencing  at  the  date  of  the  policy.  In  the  pol- 
icy, the  building  was  described  as  a  brick  dwelling-house  and  shop  ;  and, 
after  setting  forth  the  size  of  the  building  and  its  height  above  the  base- 
ment, the  policy  added  —  "which  basement  is  privileged  as  a  cabinet- 
maker's shop."  The  personal  property  covered  by  the  policy  consisted 
of  '•  stock  in  trade  in  the  cabinet  business,"  household  furniture,  weariro: 
apparel,  and  family  stores.  Among  other  conditions  contained  in  the 
policy  was  this:  '-If  the  said  David  Alston  [the  plaintiff]  shall  make 
any  misrepresentation  or  concealment,  or  if  such  building  or  premises 
sholl  lie  occupied  in  any  way  so  as  to  render  the  risk  more  hazardous 
than  at  the  time  of  insuring,  this  policy  shall  be  void  and  of  no  effect." 
After  issue  joined  in  the  court  below  the  cause  was  referred. 

On  the  hearing,  the  plaintiff  gave  in  evidence  the  policy,  the  prelimi- 
nary proofs  of  loss,  &c.,  and  then  called  one  Pratt,  who  testified  as 
follows,  viz. :  Witness  knows  the  building  described  in  the  policy  ;  it 
was  burned  down  the  last  of  August,  1838  ;  plaintiff  occupied  the  house, 
and  had  for  some  time  occupied  it  as  his  own.  It  was  totally  destroyed 
except  the  brick.  Witness  made  out  an  estimate  of  the  cost  of  the 
house,  and  it  amounted  to  81 ,781,  &c.  Plaintiff"  is  a  cabinet-maker  and 
had  tools,  stock  in  trade,  &c.     His  shop  was  in  the  basement  of  the 

1  Ace:  Standard  Oil  Co.  v.  Amazon  Ins.  Co.,  14  Hnn,  619  (1878). 
See  Greet  >:  Citizens'  Ins.  Co.,  5  Ontario  App.  596  (1880) ;  and  Campbell  v.  Victoria 
Mutual  Fire  Ins.  Co.,  45  Upper  Canada  Q  B.  412  (1880).  — Ed. 

17 


258  ALSTON  V.  mechanics'  mutual  ins.  CO.       [chap.  IV. 

building.  The  witness  further  testified,  on  cross-examination,  that  he 
lived  near  the  house  and  saw  the  fire.  The  first  he  saw  of  it,  it  ap- 
peared to  be  in  the  basement,  —  i.  e.  in  the  shop.  This  was  between 
nine  and  ten  o'clock  in  the  evening.  A  fire  was  kept  in  the  shop,  some- 
times in  the  fireplace  and  sometimes  in  the  furnace,  —  a  portable  furnace, 
for  cooking  and  heating  glue. 

The  defendants  then  called  Lyman  Garfield,  their  secretar}-,  who  tes- 
tified to  the  following  facts  :  On  the  27th  of  August,  1838,  tlie  plaintiff 
called  on  the  witness  for  the  policy  of  insurance,  the  application  for  it 
having  been  sent  in  sometime  previously.  Witness  told  the  plaintiff  the 
company  had  concluded  not  to  accept  the  proposals  ;  adding,  that  he 
[the  witness]  understood  the  plaintiff  was  using  a  fire  in  the  fireplace 
of  the  cabinet-maker's  shop  [the  basement  story  of  the  building]  and 
that  the  house  had  before  taken  fire  from  that  cause.  The  plaintiff 
inquired  where  the  president  of  the  company  [Mr.  Starbuck]  resided. 
"Witness  informed  him  ;  whereupon  the  plaintiff  left,  and  in  about  half 
an  hour  returned  with  the  president.  Some  conversation  then  ensued, 
and  the  plaintiff  finally  said  :  "  I  will  abandon  tlie  use  of  the  fireplace  ; 
I  have  got  a  stove  and  will  use  that."  Witness  understood  him  he  had 
a  stove  in  the  basement.  Upon  this  statement,  we  agreed  to  give  him 
the  policy,  and  did  give  it  to  him. 

Mr.  Starbuck,  the  president,  was  then  called  by  the  defendants  and 
gave  a  more  full  statement  of  the  conversation  at  the  time  alhided  to 
by  Garfield.  He  testified,  among  other  things,  that  after  the  plaintiflT 
was  informed  of  the  company's  unwillingness  to  accept  the  risk,  the 
plaintiff  said:  "  Suppose  I  should  abandon  the  fireplace  in  the  base- 
ment, would  you  then  take  it?"  Witness  thereupon  consulted  with  the 
secretary,  and  then  spoke  to  the  plaintiff,  who  said  he  would  abandon 
the  fireplace  in  the  basement  altogether ;  that  he  would  not  use  it  him- 
self nor  suffer  an}'  other  person  to  use  it,  but  would  use  a  stove  which 
he  had.  Witness  and  Mr.  Garfield  then  told  the  plaintiff  if  he  would 
do  that,  the}'  would  t.ake  the  risk,  and  it  was  taken  accordingly.  The 
building  burned  up  two  or  three  days  afterwards.  The  using  of  a. fire- 
place in  the  basement,  instead  of  a  stove,  was  material  to  the  risk. 

The  above  testimony  of  Garfield  and  Starbuck  was  objected  to  by 
tlie  counsel  for  the  plaintiff  in  due  season  ;  but  the  referees  were  of 
opinion  Xhat  it  was  admissible,  and  therefore  overruled  the  objection. 

It  appeared  from  other  evidence  given,  that  the  plaintiff  used  the 
fireplace  in  the  basement,  for  the  purpose  of  cooking,  the  next  day 
after  the  policy  was  delivered.  His  aflSdavit  forming  a  part  of  the  pre- 
liminary proofs  of  loss  contained  this  clause  :  "  I  occupied  at  the  time 
[of  the  fire]  the  basement  or  lower  rooms  [of  the  building]  as  a  cabi- 
net-maker's shop,  for  the  manufacturing  of  furniture,  and  believe,  accord- 
ing to  the  best  of  my  knowledge,  that  the  fire  originated  in  the  last- 
mentioned  basement  rooms,  where  I  was  at  work  late  at  night  varnish- 
ing furniture,  a  fire  being  on  the  hearth  at  the  time  for  that  pur- 
pose," etc. 


SECT.  II.]  ALSTON   V.    MECHAXICS'    MUTUAL    IXS.    CO.  259 

The  referees  reported  in  favor  of  the  defendants,  and  the  plaintiff 
afterwards  moved  the  court  below  to  set  aside  the  report,  but  the 
motion  was  denied.  A  report  of  the  case  in  that  court,  together 
with  the  opinion  there  delivered  on  denying  the  motion,  will  be  found 
in  1  Hill,  o\0  et  seq.  After  judgment,  the  plaintiff  sued  out  a  writ  of 
error. 

U.  C.  Littlejield  and  A.  Taher^  for  the  plaintiff  in  error. 

S.  Stevens,  contra. 

"Walworth,  Chancellor.  The  loss  in  this  case  was  clearly  covered 
by  the  terms  of  the  polic}-.  Those  terms  unquestionably  embraced  a 
loss  by  fire  arising  from  the  use  of  the  basement  of  the  premises  as  a 
cabinet-maker's  shop,  which  included  the  ordinary'  use  of  fire  for  var- 
nishing and  the  melting  of  glue.  The  polic}'  also,  b}-  implication  at 
least,  gives  the  assured  the  right  to  occupy  and  use  the  basement  as  it 
w^as  used  at  the  time  when  the  insurance  was  made  ;  for  it  contains  an 
express  provision  that  if  the  premises  shall  be  occupied  in  an}-  waj*  so 
as  to  render  the  risk  more  hazardous  than  at  the  time  of  insuring,  the 
j)olicy  shall  be  void.  And  the  attempt  now  is  to  prove,  b}-  parol,  that 
the  assured,  at  the  time  this  contract  of  insurance  was  made,  agreed 
that  he  would  thereafter  occup}-  this  basement  room  in  such  a  manner 
as  to  render  the  risk  less  hazardous  than  it  was  at  the  date  of  the 
polic}'.  The  question  then  arises  whether  this  supposed  agreement, 
■which,  if  actuall}-  made  and  if  there  has  been  no  misunderstanding  be- 
tween the  parties  as  to  its  nature  and  extent,  was  of  itself  a  part  of 
the  contract  of  insurance  and  should  have  been  inserted  in  the  written 
policy,  as  a  condition  or  warrant}',  can  be  converted  into  what  the 
defendant's  counsel  calls  a  proniissor}-  representation  ;  and  thus  avoid 
the  policy  on  the  ground  that  the  assured  has  not  performed  his  part  of 
the  agreement,  when  no  such  agreement  is  either  expressed  or  implied 
in  the  written  policy  which  was  executed  by  the  agents  of  the  insurance 
compan}-. 

Marshall,  who  I  admit  is  a  writer  of  very  considerable  authority  on 
the  law  of  insurance,  does  indeed  speak  of  two  different  kinds  of  repre- 
sentation, one  of  which  he  calls  an  affirmative  and  the  other  a  promis- 
sorv  representation.  But  I  have  not  been  able  to  find  any  case  in 
•which  a  court  has  adopted  this  distinction.  And  the  onl}-  other  writer 
on  the  law  of  insurance,  who  appears  to  have  considered  a  representa- 
tion as  a  contract  between  the  parties,  is  Ellis.  He  says  "  a  represen- 
tation in  insurance  is  in  the  nature  of  a  collateral  contract."  (Ellis's 
Law  of  Fire  and  Life  Ins.  29.)  I  have  examined  Millar,  "Wcskett, 
Annesley,  Hughes,  Evans,  Park,  Beaumont,  Phillips,  Emerigon, 
Blaney,  Quenault,  Grun  &  Joliat,  Vincens,  Lafond,  Persil,  Merlin, 
Pardessus,  Boula}-  Paty,  and  the  works  of  some  other  English  and 
foreign  writers  on  the  subject  of  marine,  fire,  and  life  insurances  ;  and 
so  far  as  the}-  say  anything  on  the  subject,  I  find  them  to  concur  in 
saying  that  misrepresentation,  in  reference  to  insurance  contracts,  is 
a  false  aflBrmatiou  as  to  some  fact,  material  to  the  risk  ;  which  affirma- 


260  ALSTON    V.   mechanics'   MUTUAL   INS.    CO.  [cHAP.  IT. 

tion  is  made  b}'  the  assured,  or  his  agent,  either  from  a  mistake  as  to 
tlie  fact  represented,  or  with  a  design  to  deceive  the  insurer. 

Annesle}'  says,  if  there  be  a  misrepresentation,  it  will  avoid  the 
policy,  as  a  fraud ;  but  not  as  a  part  of  the  agreement,  as  in  the  case 
of  a  warranty.  And  if  the  representation  is  false  in  any  material 
point,  even  through  mistake,  it  will  avoid  the  policy ;  because  the 
underwriter  has  computed  the  risk  upon  circumstances  which  did  not 
exist.  (Ann.  on  Ins.  124.)  Blaney  says,  it  is  necessary  that  the  con- 
tracting parties  should  have  equal  knowledge,  or  ignorance,  of  every 
material  fact  or  circumstance  which  may  or  can  affect  the  insurance. 
And  if  on  either  side  there  is  any  misrepresentation,  allegatio  falsi,  or 
suppressio  veri,  which  would  in  any  degree  affect  the  amount  of  the 
premium  or  the  terms  of  the  engagement,  the  contract  will  be  deemed 
fraudulent  and  absolutely  void.  (Blan.  on  Life  Assurance,  59.)  Evans 
states  the  difference  between  a  representation  and  a  warranty  to  be, 
that  the  one  induces  an  error  in  regard  to  the  subject  of  the  contract, 
and  the  other  is  a  stipulation  of  the  contract  itself.  And  he  divides 
representations  into  but  two  classes,  —  those  which  are  intentionall}' 
false,  and  misrepresentations  through  mistake.  (Evans'  Law  of  Ins. 
58,  64.)  Hughes  speaks  of  a  representation  as  the  assertion  of  a 
material  fact  which  the  insured  knows  to  be  false,  or  which  he  makes 
in  an  unqualified  manner  without  knowing  whether  it  is  true  or  not. 
(Hughes'  Law  of  Ins.  345.)  Phillips,  an  American  writer,  whose 
treatise  on  the  law  of  insurance  stands  deservcdl}'  high,  says,  a  re[)re- 
sentation  is  a  material  fact  stated  before  completing  the  contract;  and 
a  misrepresentation  is  the  statement  of  such  a  fact  which  turns  out  not 
to  be  true.  (1  Phil,  on  Ins.  90.)  And  Mr.  Justice  Park,  lately  one  of 
the  English  judges,  a  recent  edition  of  whose  valuable  work  on  marine 
insurances  and  insurances  on  lives,  and  against  fire,  has  been  published 
by  Barrister  Hildyard,  places  misrepresentations  under  the  head  of 
frauds  in  policies.  He  divides  them  into  two  classes,  —  representa- 
tions intentionalh'  false,  and  the  misstatement  of  a  material  fact  by 
mistake.  And  he  defines  a  representation  to  be  a  state  of  the  ease ;. 
not  a  part  of  the  written  instrument,  but  collateral  to  it  and  entirely 
independent  of  it.  He  also  says,  if  there  be  a  misrepresentation,  it 
will  avoid  the  polic}-  as  a  fraud,  but  not  as  a  part  of  the  agreement. 
(1  Park  on  Ins.,  8th  London  ed.  404,  438  ;  see  also  Quenault  des 
Assur.  Terrestres,  289,  No.  374,  375;  Persil  Traite  des  Assur.  Terr. 
297,  No.  210,  211;  Grun  &  Joliat  des  Assur.  Terr.  260,  No.  208; 
nnd  2  Boulay  Paty  Cours  de  Droit  Commercial  Maritime,  87,  tit. 
ID,  §  14.)  Chancellor  Kent  also,  in  his  brief  notice  of  contracts  of 
insurance,  speaks  of  two  kinds  of  misrepresentations  only  :  tliose  which 
r.re  intentional  and  avoid  the  contract  for  actual  fraud  on  the  part  of 
the  assured  or  his  agents  ;  and  those  which  arise  from  mistake  or  over- 
sight,' which  do  not  affect  the  policy  unless  they  are  untrue  in  sub- 
stance and  are  material  to  the  risk.  (3  Kent's  Com.  283.)  It  is 
hardly  possible  to  suppose  that  if  there  was  such  a  term  known  to  the 


SECT.  II.]  ALSTON    V.   MECHANICS'    MUTUAL   INS.    CO.  261 

law  of  insurance  as  a  promissory  representation,  rendering  the  contract 
void  for  the  non-performance  of  a  stipulation  in  the  nature  of  a  col- 
lateral execuiory  agreement,  which  the  parties  did  not  think  [)roper  to 
make  a  part  of  the  written  contract,  it  would  have  been  passed  over  in 
silence  by  all  the  writers  I  have  referred  to. 

Nor  do  I  find  any  such  thing  as  a  promissory  representation  men- 
tioned in  the  decisions  of  the  courts.^  .  .  . 

These  cases  therefore  show  that  a  statement  as  to  a  future  fact  or 
event  which  is  in  its  ver}'  nature  contingent,  and  which  the  insurer 
knows  the  partj'  could  not  have  intended  to  state  as  a  known  fact,  but 
as  an  intention  or  expectation  merely,  if  honestly  made  and  not  with 
an  intent  to  deceive,  is  not  a  collateral  contract  or  a  prouiissor}'  repre- 
sentation wliieh  the  assured  is  bound  to  see  performed  to  render  his 
polic}'  valid.  But  if  the  underwriter  considers  the  statement  material 
to  the  risk,  and  is  unwilling  to  insure  at  the  contemplated  premium 
without  binding  the  assured  to  the  performance  of  it  as  a  condition 
precedent  to  his  liability,  he  should  make  it  a  part  of  the  contract 
stated  in  the  policy. 

AVhore  the  assured  acts  in  good  faith  without  any  intent  to  deceive, 
and  without  concealing  or  misstating  an}'  fact  within  hi.s  knowledge 
which  it  is  essential  to  the  underwriters  to  know,  to  enable  them  to 
judge  of  the  propriety-  of  assuming  the  risk  and  the  amount  of  premium 
and  other  conditions  of  the  policy,  common  justice  requires  that  the 
party  who  pays  the  premium  should  be  informed,  by  the  terms  of 
the  written  agreement,  what  is  the  real  contract  between  him  and  the 
underwriters,  and  it  should  not  be  left  to  the  uncertain  recollection  of 
any  one  to  prove  a  different  agreement  from  that  which  is  contained  in 
the  written  policy.  For  it  frequently  happens  that  where  negotiations 
are  carried  on  between  parties,  and  they  suppose  the}'  understand  one 
another  as  to  the  terms  of  the  bargain,  they  find,  when  the}-  come  to 
reduce  their  agreement  to  writing,  that  they  do  not  understand  it  alike. 
It  is  for  tins  reason  that  parol  proof  is  not  admissible  to  vary  or  alter 
the  terms  or  the  legal  meaning  of  a  written  contract,  by  showing  what 
either  party  said  wliile  the  negotiation  was  going  on.  Fraud,  misrep- 
sentation,  and  deceit  are  necessary  exceptions  to  this  general  rule  ;  but 
there  is  no  good  reason  why  anything  which  is  in  fact  a  part  of  the 
contract  between  the  parties,  should  form  an  exception  to  the  rule  in 
an  insurance  case. 

The  case  now  under  consideration,  I  am  inclined  to  think,  shows  the 
importance  of  adhering  rigidly  to  this  rule  in  insurance  cases  as  well 
as  others.  For  although  I  have  no  reason  to  suppose  the  president 
and  secretary  of  the  company  have  not  stated  the  supposed  agreement 

1  Here  were  discussed  Bize  v.  Fletcher,  ante.  p.  216  (1779);  Macdowell  v.  Eraser, 
ante,  p.  218  (1779)  ;  Curell  v.  Mississippi  M.  &  F.  Ins.  Co.,  9  La.  16.3  (1836)  ;  Dennis, 
toun  V.  Lillie,  ante.  p.  230  ( 1821) :  Baxter  v.  New  England  Ins.  Co.,  ante,  p.  2.34  (1822) ; 
Rice  V.  New  England  Marine  Ins.  Co.,  ante,  p.  235  (1827) ;  Bryant  v.  Ocean  Ins.  Co., 
ante,  p.  239  (1839),  and  Allegre  v.  Maryland  Ins.  Co.,  2  Gill  &  J.  136  (1830).  —  Ed. 


262  ALSTON  V.  mechanics'  mutual  ins.  CO.       [chap.  IV. 

in  relation  to  tlie  use  of  tlie  fireplace,  exactl}'  as  they  understood  it, 
I  have  great  doubts  whether  the  plaintiff  understood  that  he  was  to  be 
precluded  by  that  agreement  from  using  the  fireplace  to  heat  his  glue- 
pot  and  warm  his  varnish  ;  or  that  he  was  to  remove  his  cooking  ap- 
paratus from  the  basement  room  the  instant  the  policy  was  signed, 
without  giving  him  a  reasonable  time  to  put  up  his  stove  for  cooking 
in  another  part  of  the  house.  It  must  be  recollected  that  the  conversa- 
tion took  place  in  dog-days,  when  a  stove  was  not  wanted  to  warm  his 
shop ;  but  when  his  family  were  using  the  fireplace  in  that  room  for 
family  purposes.  He  therefore  most  probably  spoke  in  reference  to 
that  use  of  the  fireplace,  when  he  said  he  would  abandon  the  fireplace 
and  use  his  stove.  And  as  the  president  and  secretary  do  not  them- 
selves agree  in  respect  to  the  words  he  used,  it  is  possible  that  both 
have  misapprehended  what  he  did  in  fact  mean  to  say  on  the  subject ; 
or  he  may  have  inadvertently  used  language  which  did  not  properly  ex- 
press what  he  intended  to  agree  to  on  the  subject.  That  he  understood 
he  was  to  abandon  the  use  of  the  fireplace  for  cooking,  is  very  prob- 
able. For  it  appears  the  family  only  cooked  there  until  the  next  day, 
when  he  had  probably  gotten  his  stove  up  in  another  part  of  the  house, 
or  had  made  some  other  provision  for  the  necessary  fire  for  family  pur- 
poses. And  if  he  thus  discontinued  cooking  in  the  fireplace  in  good 
faith,  immediately  after  he  had  obtained  his  insurance,  it  is  hardly 
probable  that  he  would  have  used  the  fireplace  for  the  temporary  pur- 
pose of  varnishing,  if  he  had  understood  that  his  agreement  with  the 
oflScers  of  the  insurance  company  extended  so  far  as  to  embrace  such 
a  use.  By  the  terms  of  his  policy,  the  basement  was  privileged  as  a 
cabinet-maker's  shop,  which  of  course  included  the  necessary  use  of 
fire  for  gluing  and  varnishing. 

In  Wliitney  v.  Mayer  (13  Mass.  Rep.  172),  the  Supreme  Court  of 
Massachusetts  decided  that  the  underwriter  could  not  set  up  a  parol 
agreement  between  the  parties,  which  was  not  inserted  in  the  policy,  to 
defeat  the  insurance  ;  but  that  if  the  underwriter  intended  to  avail 
himself  of  it,  he  should  have  made  it  a  part  of  the  written  contract. 
A  similar  decision  was  made  by  Lord  Tenterden  in  Flinn  v.  Tobin  (1 
Mood.  &  Malk.  Rep.  369).  And  in  tliis  case,  no  one  who  reads  the 
testimony  can  for  a  moment  doubt  that  a  promise  to  abandon  the  fire- 
place and  use  a  stove,  was  an  agreement,  and  not  a  representation  of  a 
fact.  I  think  the  referees  erred,  therefore,  in  receiving  parol  evidence 
of  such  an  agreement  to  defeat  the  policy ;  and  that  their  report  should 
have  been  set  aside  and  a  venire  de  novo  awarded. 

The  judgment  of  the  court  below  is  therefore  erroneous,  and  should 
be  reversed. 

BoCKEE,  Senator.  There  is  no  rule  better  settled  than  that  "parol 
evidence  shall  not  be  admitted  to  contradict,  add  to,  or  vary  the  terms 
of  a  written  instrument."  Whether  the  admission  of  tlie  testimony  of 
Garfield  and  Starbuck  was  a  violation  of  this  rule  is  the  only  point  to 
be  inquired  into.     If  the  evidence  was  properly  admissible,  or  if  the 


SECT.  II  ]  ALSTON   V.    MECHANICS'   MUTUAL    INS.    CO.  263 

stipulation  or  agreement  given  in  evidence  had  been  contained  in  the 
policy,  the  case  would  present  such  a  violation  of  contract  on  the  part 
of  the  plaintiff  in  error  as  would  probably  bar  him  from  a  recovery.     It 
is  not  denied  that  a  fraudulent  representation,  material  to  the  risk, 
might  be  proved  by  parol,  and  would  avoid  tlie  policy.     Fraud  is  an 
element  tluit  vitiates  all  contracts.     A  representation  is  of  some  matter 
extrinsic  the  contract,    and  generally,   if  not  always,    relates  to  the 
present  state  and  condition  of  the  subject  insured.     The  proof  shows 
that  the  plaintiff  said  "he  would  abandon  his  fireplace  in  the  base- 
ment altogether;  he  would  not  use  it  himself  or  suffer  any  other  person 
to  use  it  for  any  purpose  whatever,  but  would  use  a  stove  which  he  had." 
It  is  contended  by  the  defendant's  counsel  that  this  is  a  promissory 
representation,  fraudulently  made,  material  to  the  risk,  and  that  the 
non-fulfilment  of  it  precludes  the  plaintiff  from  recovering  on  the  policy. 
How  such  a  promissor}-  representation,  relating  to  a  thing  which  the 
party  is  to  do  in  futuro,   is  to  be  distinguished  from  a  contract  or 
agreement,  I  am  unable  to  comprehend.     It  is  a  representation  in  no 
other  sense  than  every  contract,  promise,  or  agreement  is  a  rei)resenta- 
tion  that  the  party  will  do   or  refrain  from  doing  a  particular  thing. 
Bv  whatever  name  it  is  called,  it  is  neither  more  nor  less  than  an  en- 
<yagement  that  fire  should  not  be  used  in  the  basement  fireplace.     If 
this  had  been  contained  in  the  policy,  it  would  have  been  a  warranty, 
binding  upon  the  plaintiff.     Being  out  of  the  policy,  it  is  no  more  than 
conversation  between  the  parties,  inadmissible  as  evidence  of  their 
rights  under  this  written  contract.     If  it  was  material  to  tlie  risk,  it 
was  material  that  it  should  be  inserted  in  the  policy,  or  at  least  that 
the  evidence  of  it  should  be  in  writing.     It  was  essentially  a  part  of 
the  contract,  — a  stipulation  by  the  plaintiff  adding  to  and  varying  the 
terms  of  the  policy.     It  can  hardly  be  said  that  a  contract  is  both 
written  and  verbal.     To  admit  parol  evidence  in  this  case  would  be 
breaking  down  a  salutary  and  established  rule  ;  and  there  would  be 
no  longer  any  security  in  written  contracts.     In  the  case  of  Bize  ?.'. 
Fletcher  (Douglas,  284),  cited  by  the  court  below,  the  question  was 
not  on  the  admissibility  of  parol  evidence  of  a  promissory  representa- 
tion, but  whether  a  writing  annexed  to  the  policy  was  to  be  considered 
a  part  of  the  contract,   and  therefore  a  warranty  to  be  strictly  per- 
formed ;  or  whether  it  was  to  be  taken  as  a  representation,  collateral 
to  and  out  of  the  poUcy.     So  in  the  case  of  Edwards  v.  Footner  (1 
Camp.  530),  where  a  ship  was  to  sail  with  a  certain  number  of  guns 
and  men,  the  question  was  whether  a  written  memorandum  not  at- 
tached to  the  policy  was  to  be  considered  a  warranty  or  a  representa- 
tion.    The  precise  question  before  this  court  is  not  whether  a  prom- 
issory representation  may  exist,  but  whether  parol  evidence  of  such 
representation  can  be  given,  where,  if  the  representation  was  included 
in  the  policy,  it  would  be  a  warranty,  and  where  the  effect  of  the  evi' 
dence  will  be  to  add  to  and  vary  the  written  contract  between  the 
parties.     On  this  question,  perhaps  no  decision  can  be  found  in  the 


264  DAVENPOKT  V.  NEW  ENGLAND  MUT.  FIRE  INS.  CO.       [CIIAP.  IV. 

books  exactly  in  point,  for  the  reason  that  the  rule  applicable  to 
the  case  is  one  of  the  most  ancient  landmarks  of  the  law  of  evidence 
and  hac  never  been  questioned  or  disturbed.  The  policy  of  insurance 
was  the  highest  evidence  of  the  contract  between  these  parties,  and 
parol  evidence  to  show  the  contract  variant  from  what  appears  by  its 
terms  in  writing,  would  be  productive  of  dangerous  consequences  and 
■was  improperly  received.  The  decision  of  the  court  below  ought  to  be 
reversed. 

The  President  and  Senators  Dickinson  and  Hopkins  delivered  oral 
opinions  in  favor  of  reversing  the  judgment  of  the  court  below. 

All  the  members  of  the  court,  nineteen  being  present,  concurring  in 
this  result,  the  judgment  was  unanimouslj'  reversed.^ 


DAVENPORT  v.   NEW  ENGLAND  MUTUAL  FIRE  INSUR- 
ANCE COMPANY. 

Supreme  Judicial  Court  of  Massachusetts,  1856.     6  Cush.  340. 

In  this  case,  which  was  argued  b}^  T.  D.  Eliot,  for  the  plaintiff,  and 
T.  G.  Coffin  and  C.  B.  Farnsioorth,  for  the  defendants,  the  material 
facts  appear  in  the  opinion  of  the  court. 

Fletcher,  J.  This  is  an  action  of  assumpsit  on  a  policy  of  insur- 
ance, dated  March  3d,  1846,  by  which  the  defendants,  a  company 
established  by  tlie  laws  of  New  Hampshire,  insured  a  building  of  the 
plaintiff's  in  New  Bedford  for  $2,500  for  the  term  of  three  years.  The 
building  was  destroyed  b}'  fire  on  the  15th  of  Ma}',  1848. 

The  case  was  opened  to  the  jur}-,  and  a  verdict  taken  for  the  de- 
fendants, subject  to  the  opinion  of  the  whole  court,  upon  the  facts  to 
be  reported  ;  the  court  to  draw  such  inferences  therefrom  as  a  jmy 
might  draw.  There  were  several  grounds  of  defence  relied  upon,  of 
which  it  is  necessary  to  refer  only  to  one,  which  is  quite  decisive  of  the 
case.  At  the  time  the  insurance  was  made  the  estate  was  encumbered 
b}'  two  mortgages,  upon  which  large  sums  of  money  were  due.  In  the 
printed  application,  signed  by  the  plaintiff,  there  is  this  question  dis- 
tinctly put  to  him,  to  wit:  "is  the  property  encumbered ; "  to  which 
tlie  plaintiff  gave  a  written  answer,  in  the  negative.  The  defendants 
now  insist  that  the  polic}'  is  void,  on  account  of  this  misrepresentation. 

The  plaintiff  contends  that  tliis  misrepresentation  is  immaterial,  be- 
cause the  defendants  are  a  corporation  created  b}'  the  laws  of  New 
Hampshire  and  established  in  that  State,  and  therefore  would  have  no 
lioi:  on  tlie  property  by  the  statute  of  this  Commonwealth ;  and  that  a 
law  of  New  Hampshire  would  not  operate,  in  this  Commonwealth,  to 

1  Ace:  Kimball  v.  -(Etna  Ins.  Co.,  9  Allen,  540  (18G5).  — Ed. 


SECT.  II.]       COLLINS   V.   CHARLESTOWN   MUTUAL   FIRE   INS.    CO.         265 

give  the  defendants  a  lien,  if  there  were  any  such  law  in  that  State, 
which  was  denied.  As  the  defendants,  therefore,  would  have  no  lien 
on  the  property,  the  plaintiff  maintains  that  the  misrepresentation  as 
to  tlie  encumbrances  is  immaterial. 

But,  irrespective  of  the  lien,  whether  the  defendants  would  or  would 
not  have  one,  the  misrepresentation  was  clearly  a  material  misrepresen- 
tation. It  was  material  for  the  insurers  to  know  of  the  encumbrances, 
in  reference  to  the  responsibility  of  the  insured,  and  his  ability  to 
meet  his  engagements  to  the  company ;  it  was  material  to  know  who 
was  interested  in  or  had  any  title  to  the  estate  ;  but  more  particularly 
and  especially  was  it  material  for  the  defendants  to  know  what  interest 
the  plaintiff  himself  had  in  the  premises,  and  whether  his  estate  was 
encumbered  or  unencumbered. 

It  is  manifest  that  the  defendants  deemed  this  information  material ; 
and  they  put  tlie  direct  question,  and  it  was  a  proper  and  a  practical 
question  ;  and  it  was  material  that  the  plaintiff  should  answer  it  truly. 
The  plaintiff  having  given  an  untrue  answer,  whether  by  accident,  mis- 
take, or  design,  it  matters  not,  to  a  direct,  plain,  and  practical  ques 
tion,  cannot  now  be  heard  to  say  it  was  immaterial. 

Judgment  on  the  verdict? 


COLLINS  V.  CHARLESTOWN  MUTUAL  FIRE  INSURANCE 

COMPANY. 

Supreme  Judicial  Court  of  Massachusetts,  1857.     10  Gray,  155. 

Thomas,  J.  This  is  an  action  of  contract  upon  a  policy  of  insur- 
ance on  a  lead  mill.  The  parties  insured  were  Benjamin  Collins  and 
George  L.  Stearns,  partners  under  the  firm  of  Collins  &  Stearns. 
ColHns,  the  plaintiff,  is  a  mortgagee  of  the  premises,  to  whom  the 
policy  was  payable  in  case  of  loss.  The  making  of  the  policy  and  the 
loss  by  fire  witliin  the  term  being  admitted,  the  defendants  rely  upon 
two  grounds  of  defence.  First,  that  there  was  a  misrepresentation  in 
the  application  of  the  assured  as  to  the  title  of  the  estate.  Secondly, 
a  representation  and  warranty  as  to  the  use  to  which  the  building  was 
then  and  should  be  thereafter  applied,  and  a  breach  of  that  warranty 
and  representation. 

1.  The  estate  was  conveyed  by  deed  to  George  L.  Stearns,  one  of 
the  partners.  The  legal  title  was  in  him.  In  the  application  signed 
by  Collins  and  Stearns,  in  answer  to  the  question,  "Do  you  own  the 
land  upon  which  the  buildings  stand?"  the  answer  is  "Yes."  The 
polic}'  secures  a  lien  upon  the  land  and  buildings.     One  of  the  pro- 

1  Ace:  Tivan  v.  Rprinfirfield  F.  &  M.  Ins.  Co.,  46  Wis.  671  (1879).  See  Byers  v. 
Farmers'  Ins.  Co.,  35  Ohio  St.  606  (1880).  Compare  Strong  v.  Manufacturers'  Ins. 
Co.,  10  Pick.  40  (1830).  —Ed. 


266       COLLINS   V.    CHARLESTOWN   MUTUAL   FIRE    INS.    CO.       [CHAP.  IV. 

visions  of  the  by-laws  is,  that  "  the  polic}-  shall  become  void  and  of  no 
effect,  if  the  application  shall  not  contain  a  full,  fair,  and  substantially 
a  true  representation  of  all  the  facts  and  circumstances  respecting  the 
property,  so  far  as  they  are  within  the  knowledge  of  the  assured  and 
are  material  to  the  risk." 

So  far  as  respects  the  lien,  the  insurance  company  is  not  affected. 
The  property  is  owned  by  one  of  the  parties  to  the  note.  Each  part- 
ner is  liable  i/i  solido.  The  lien  is  therefore  perfect.  Nor  is  it  easy 
to  see  how  it  was  material  to  the  risk,  whether  the  title  to  the  estate 
was  in  one  or  both  the  partners. 

But  though  the  legal  title  to  the  land  was  in  one  of  the  partners,  the 
equitable  title  was  in  the  firm.  Stearns  held  the  estate  in  trust  for  the 
partnership.  By  the  written  articles  of  copartnership,  Collins  was  to 
be  charo-ed  on  the  books  of  the  partnership  with  one-half  of  the  cost  of 
the  mill.  Upon  the  books  of  the  partnership,  Stearns  was  credited  with 
the  ao-reed  value  of  the  mill.  The  estate  became  part  of  the  capital  of 
the  firm.  It  was  the  property  of  the  firm,  though  the  legal  title  was  in 
one  of  the  partners  only.  Such  was  the  state  of  the  title  when  the 
application  was  made.  In  the  statement  that  Stearns  &  Collins  owned 
the  estate  we  see  no  misrepresentation  material  to  the  risk. 

The  case  of  Smith  v.  Bowditch  Mutual  Fire  Ins.  Co.,  6  Cush.  448,  is 
quite  distinct  from  that  at  bar.  By  the  17th  article  of  the  by-laws  of 
that  company  it  was  provided  that  any  policy  issued  by  the  company 
should  be  void  unless  the  true  title  of  the  insured  should  be  expressed 
in  the  application  for  insurance  ;  and  the  plaintiff  had  no  legal  title  to 
the  estate  of  which  he  represented  himself  the  owner.  He  had  only  a 
bond  for  a  deed.  No  lien  therefore  was  secured.  Nor  was  the  true 
title  of  the  insured  expressed  in  the  application. 

In  the  case  of  Davenport  v.  New  England  Mutual  Ins.  Co.,  6  Cush. 
340,  in  answer  to  the  question  whether  the  estate  was  encumbered,  the 
answer  was  in  the  negative,  the  estate  being  at  the  time  subject  to 
heavy  mortgages.  The  case  of  Bowditch  Mutual  Fire  Ins.  Co.  v.  Wins- 
low,  3  Gray,  431,  is  to  the  same  point.     It  goes  no  further. 

In  Allen  v.  Charlestown  Mutual  Fire  Ins.  Co.,  5  Gray,  384,  the  dis- 
tinction is  made  between  the  preceding  cases  and  one  in  which  the 
statement  as  to  title  was  substantially  correct,  and  where  the  differ- 
ence, if  any  existed,  did  not  impair  the  lien  of  the  company  or  other- 
wise affect  the  risk. 

But,  as  if  to  free  the  case  before  us  from  difficulty,  in  January,  1854, 
the  partnership  was  dissolved.  Collins  transferred  his  interest  in  all 
the  assets  of  the  partnership  to  Stearns.  The  dissolution  and  convey- 
ance were  made  known  to  the  insurance  company,  and  on  the  24th  of 
March,  1852,  with  full  knowledge  of  the  facts,  they  indorsed  on  the 
policy  this  agreement:  "Agreed  that  this  policy  shall  from  this  date 
stand  good  to  George  L.  Stearns."  And  we  think  it  does  stand  good, 
unless  there  is  force  in  the  second  ground  of  defence,  which  is  misrepre- 
sentation of  the  purpose  for  which  the  building  was  to  be  used. 


SECT.  II.]        DICKSON   V.    EQUITABLE   FIRE   ASSURANCE   CO.  '267 

2.  To  the  question,  "  For  what  purpose  occupied,  and  by  whom?  "* 
the  answer  is,  "By  the  applicants,  for  the  manufacture  of  lead  pipe 
only." 

The  defendants  offered  evidence  to  show  that  the  attic  of  the  build- 
ing was  used  for  the  manufacture  of  reels  upon  which  the  lead  pipe  is 
coiled.  But  the  answer,  and  we  think  satisfactory  answer,  made  by 
the  plaintiff  was,  that  the  making  of  the  reels  upon  the  premises  was 
a  necessary  and  essential  part  of  the  manufacture  of  lead  pipe.  The 
evidence  was  submitted  to  the  jury  under  these  instructions:  "that 
the  term  '  manufacture  of  lead  pipe '  would  include  all  that  was  reason- 
ably necessary  and  essential  for  carrying  on  the  business  of  manufac- 
turing lead  pipe  in  the  building  insured ;  that  if,  for  the  proper  and 
reasonable  carrying  on  of  the  business,  it  was  essential  to  manufacture 
reels  upon  the  premises,  by  the  machinery  and  in  the  manner  proved, 
the  representation  that  the  building  was  used  for  the  manufacture  of 
lead  pipe  only  was  sufficient ;  that  the  mere  fact  that  it  was  more  eco- 
nomical or  convenient  to  make  reels  upon  the  premises  was  not  suffi- 
cient to  authorize  the  insured  to  make  such  use  of  the  premises." 
These  instructions  seem  to  us  entirely  correct. 

In  this  view  of  the  case,  the  question  whether  the  word  "  only  "  was 
contained  in  the  application  becomes  immaterial.  It  does  not  change 
the  force  of  the  words  "  manufacture  of  lead  pipe,"  or  exclude  anything 
essential  to  it.  Judgment  on  the  verdict  for  the  plaintiff .^ 

E.  D.  Sohier  and  H.  G.  Hutchins^  for  the  defendants. 

W.  G.  Hussell,  for  the  plaintiff. 


DICKSON  V.   THE  EQUITABLE  FIRE  ASSURANCE  CO. 
Queen's  Bench  of  Upper  Canada,  1859.     18  U.  C.  Q.  B.  246. 

Action,  on  a  policy  of  insurance,  for  $1,100,  against  fire,  upon  a 
wooden  building,  comprising  a  tavern  and  two  tenements  under  the 
same  roof,  occupied  as  dwelling-houses.  The  risk  taken  was  from  the 
16th  of  March,  1858,  for  a  year. 

There  was  another  sum  of  $900,  insured  in  the  Western  Assurance 
Compan}'  upon  the  same  property  for  the  same  period,  with  the  knowl- 
edge and  assent  of  the  defendants. 

The  plaintiff  averred  that  the  premises  were  totally  destroyed  b}-  fire 
within  the  year. 

Pleas.  —  1.  Non  est  factum.  2.  That  the  policy  was  obtained  by 
fraud,  the  plaintiff  having  in  his  application  to  the  defendants  falsely 
represented  the  present  cash  value  to  be  £750,  whereas  the  building  was 
of  much  less  value. 

1  On  the  first  point,  see  the  cases  cited  post,  p.  276,  n.  1.  On  the  second  point,  see 
Sims  V.  State  Ins.  Co.,  47  Mo.  54,  63  (1870).  — Ed. 


268  DICKSON   V.    EQUITABLE   FIKE   ASSURANCE   CO.       [CIIAP.  IV. 

At  the  trial,  at  Toronto,  before  Robinson,  C.  J.,  it  appeared  that 
there  was  a  driving-shed  attaclied  to  the  buildings  insured,  whicli  was 
insured,  as  well  as  the  other  buildings,  in  the  Western  Assurance  office. 
This  was  stated  in  the  evidence  to  have  been  worth  about  £100  ;  and 
when  the  plaintiff  applied  for  insurance  to  the  Western  Assurance  Com- 
pany, he  stated  all  the  buildings  to  be  worth  from  £300  to  £350.  In 
Lis  application  to  these  defendants,  made  ten  days  afterwards,  he 
declared  the  other  buildings  alone,  without  the  driving-shed,  to  be  of 
the  value  of  £750.  The  whole  formed  a  range  of  wooden  buildings 
under  one  roof,  about  116  feet  long  by  30  feet  wide.  . 

On  the  part  of  the  plaintiff,  the  only  evidence  of  value  was  given  by 
a  carpenter,  who  valued  the  buildings  insured  by  the  defendants  at 
$2,500,  but  he  made  up  his  estimate  after  they  had  been  totally  con- 
sumed. He  stated  that  he  had  been  in  the  building  while  it  was  stand- 
ing, but  had  never  gone  through  it.  Part  of  this  range  of  wooden 
biiildings  had  a  stone  foundation  under  it,  and  that  afforded  a  guide  in 
regard  to  the  dimensions  of  that  part.  He  did  not  know  the  interior 
arrangements  of  the  buildings,  and  took  all  his  information  from  the 
account  given  to  him  by  the  plaintiff,  no  one  being  present  on  the  part 
of  the  defendants.  He  could  not  recollect  the  size  of  the  building,  and 
could  not  state  what  portion  of  the  $2,500  he  had  allowed  on  account 
of  the  main  building,  the  tavern. 

On  the  other  side,  the  defendants  put  in  the  plaintiff's  affidavit  of  the 
loss  by  fire,  in  which  he  swore  that  the  tavern  and  two  other  tenements 
were  worth  $2,089.  They  called  a  witness,  who  swore  that  he  was  a 
carpenter  ;  that  he  had  worked  in  the  building  insured  ;  that  he  had 
made  an  estimate  of  the  value  of  all  the  buildings  since  the  fire  ;  that 
be  considered  the  tavern  and  two  dwellings  to  be  worth  $1,200,  and  no 
more,  and  the  driving-house  about  $400  ;  and  he  had  made  an  offer  to 
rebuild  the  whole  for  $1,600. 

The  learned  Chief  Justice  told  the  jury  that  it  was  for  them  to  deter- 
mine from  the  evidence,  whether,  w^hen  the  plaintiff  made  his  applica- 
tion to  the  defendants  for  insurance,  he  could  have  believed  that  he 
gave  a  true  account  of  the  value,  when  he  declared  that  the  tavern  and 
small  tenements  were  worth  $3,000  ;  that  however  it  might  have  hap- 
pened that  the  plaintiff  gave  so  exaggerated  an  account  of  the  value  in 
his  application  to  the  defendants,  whether  it  was  from  any  mistake  of 
his  or  not,  it  was  fair  towards  the  defendants  to  consider  that  if  they 
were  misled  by  it,  and  in  consequence  took  a  risk  which  they  might 
otherwise  have  thought  it  imprudent  to  take,  they  ought  not  to  be  held 
liable,  even  although  there  might  be  no  direct  evidence  of  a  fraudulent 
design  in  the* plaintiff,  because  the  defendants  would  equally  be  imposed 
ui)on.  The  jury  were  out  a  long  time,  and  came  in  with  a  verdict  for  the 
plaintiff  for  the  full  amount  insured. 

Gait,  Q.  C,  obtained  a  rule  7iisi  for  a  new  trial,  on  the  ground  that 
the  verdict  was  against  law  and  evidence,  and  the  judge's  charge. 
M.  C.  Cameron  showed  cause. 


SECT.  11.]       DICKSOX   V.   EQUITABLE   FIRE    ASSURAXCE    CO.  269 

EoBiNSON,  C.  J.,  delivered  the  judgment  of  the  court. 

This  is  certainly  a  singular  case  in  its  facts.  The  buildings  -were  all 
totally-  consumed,  and  ^et  the  plaintiff  onlj-  estimated  his  loss  at  $2,089, 
and  even  that  is  between  8300  and  $400  more  than  a  witness  swore  he 
had  offered  to  restore  -them  for.  Moreover,  what  the  defendants  had 
been  asked  to  insure  did  not  include  one  of  the  buildings  burnt, — ' 
namel}',  the  driving-house.  On  what  pretence  the  plaintiff,  after  hav- 
ing declared  the  value  of  the  whole  range  of  buildings  to  be  from  £300 
to  £350,  when  he  obtained  his  first  insurance  for  $900,  could  go  only 
ten  days  afterwards  to  the  office  of  these  defendants,  and  declare  the 
value  of  a  portion  only  of  the  building  (that  is,  leaving  out  the  driving- 
shed)  to  be  $3,000,  or  £750,  it  is  certainly  hard  to  understand.  One 
can  easil}'  understand  a  probable  motive  to  this  over-valuation  in  the 
plaintiffs  application,  for  having  told  these  defendants  (which  he  did) 
that  he  was  already  insured  to  the  extent  of  $900  on  buildings  worth 
onlv  $1,400,  he  could  not  have  expected  to  be  able  to  effect  Mnth  them 
a  further  insurance  of  $1,100  on  the  same  buildings.  How  the  plaintiff 
came  to  make  such  a  statement  of  the  value  was  not  explained.  It  was 
sworn  that  the  statement  was  filled  up  from  his  dictation.  It  seemed 
to  me  at  the  trial  that  so  remarkable  a  misrepresentation  on  a  point 
very  material  to  be  considered  in  deliberating  upon  the  risk,  must  be 
looked  upon  in  law  as  a  fraudulent  misrepresentation  that  will  avoid  the 
policy,  although  it  might  possibly  have  happened  from  some  unex- 
plained mistake  of  the  plaintiff.  It  had  all  the  effect  that  actual  and 
intended  fraud  would  haA-e  in  misleading  the  defendants,  and  it  seems 
to  us  that  it  ought  to  be  attended  with  the  same  consequences,  as  re- 
spects the  [ilaintiff's  right  to  recover.  It  would  have  been  folly  in  the 
defendants  to  have  taken  an  insurance  to  an  amount  which,  added  to 
the  former  insurance,  would  exceed  the  value  of  the  building  insured  b}' 
about  £150,  and  this  a  wooden  building  in  part  occupied  as  a  tavern. 

Though  this  case  certainly'  seems  to  be  ver}*  strong  against  the  plain- 
tiff's right  to  recover  under  such  circumstances,  we  have  had  some 
doubt  about  setting  aside  the  verdict,  for  there  is  a  manifest  difference 
between  marine  risks  and  risks  upon  buildings.  Ships  when  insured 
are  generally  not  in  a  situation  to  be  inspected  and  examined  by  the 
insurer,  who  is  therefore  obliged  to  depend  on  the  account  of  the  ship 
given  by  the  owner,  but  it  is  not  so  with  buildings  on  shore.  The  com- 
pany or  their  agent  has  generally  convenient  means  of  inspecting  them, 
seeing  their  real  condition,  and  judging  of  their  value  ;  and  it  seems  in 
this  case  to  have  been  careless  and  imprudent,  in  the  defendaftts'  agent, 
to  take  no  troulile  of  the  kind,  though  he  admits  that  he  had  gone  past 
the  building.  It  would  be  hard  on  the  insured  if  he  should  lose  the 
benefit  of  his  policy  in  such  a  case,  because  after  the  loss  there  might 
be  a  difference  of  opinion  about  the  real  value  of  the  buildings;  but,  on 
the  other  hand,  when  the  circumstances  are  so  striking  as  they  are  here, 
and  the  over-valuation  so  manifest,  it  should  hardly  lie  in  the  plaintiff's 
mouth  to  sav  to  the  defendants,  "You  should  not  have  put  confidence 


270  FRANKLIN   FIRE   INS.    CO.    V.   VAUGHAN.  [CHAP.  IV. 

in  my  representation,  and  since  j'ou  did  not  choose  to  examine  for  yonv- 
selves,  30U  have  no  right  to  complain  of  being  deceived." 

Whether  upon  the  facts  proved  here  there  was  so  plain  and  so  mate- 
rial a  misrepresentation  made  b}-  the  plaintiff  as  ought  to  avoid  the 
policy,  though  not  upon  a  point  respecting  which'  there  is  any  warranty 
or  condition  in  the  policy,  is  a  question  that  must  be  left  to  the  jury, 
because  they  alone  can  draw  inferences  of  fraud  ;  but  it  is  of  conse- 
quence that  their  verdict  should  in  such  cases  conform  to  the  evidence. 

AYe  think  that  what  the  law  regards  as  a  fraudulent  overvaluing  [is] 
required  to  be  proved  in  order  to  support  the  plea,  and  that  the  evi- 
dence was  so  strong  to  lead  to  the  conclusion  in  this  case  that  there 
ought  to  be  a  new  trial,  with  costs  to  abide  the  event. 

Mule  absolute.'^ 


FRANKLIN  FIRE  INSURANCE   CO.   v.  VAUGHAN. 

Supreme   Court  of  the   United  States.  October  Term,  1875. 

92U.  S.  516. 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Eastern 
District  of  Arkansas. 

Mr.  U.  31.  Rose.,  for  the  plaintiff  in  error. 
Mr.  Albert  Pike.,  contra. 

Mr.  Justice  Hunt  delivered  the  opinion  of  the  court- 
In  seeking  to  recover  the  amount  insured  upon  his  goods  destroyed 
by  fire  the  insured  was  bound  to  prove  only  his  policy,  his  loss,  and  the 
service  of  preliminary  proofs.     This  proof  he  made. 

The  insurance  was  for  $2,500.  The  jury  found  the  value  of  the 
goods  destroyed  by  fire  to  be  $7,204. 

Defence  is  made  on  the  ground  of  a  violation  of  that  condition  of 
the  pohcy  which  provides,  that  "if  the  interest  of  the  assured  in  the 
propert}-  is  not  absolute  it  must  be  so  expressed  in  the  polic}*,  other- 
wise the  insurance  shall  be  void,"  and  of  a  misstatement  in  answering 
that  there  was  no  encumbrance  on  the  propert}'  insured. 

The  insured  had  bought  the  goods  of  one  Flowers.  They  were  in 
the  store  of  Harris  &  Co.,  auctioneers,  at  the  time  of  the  purchase,  and 
were  left  there  for  sale  by  and  under  the  direction  of  Vaughan,  the  pur- 
chaser. It  was  agreed  by  him  that  the  first  proceeds  of  the  sale  should 
be  paid  to  the  vendor  to  the  amount  of  $3,150  ;  and  if  the  auctioneers 
advanced  mone}'  upon  the  stock  they  were  authorized  to  retain  the 
possession  and  control  of  the  goods  as  their  security.  There  is  no 
evidence  or  claim  that  an}'  such  advance  was  made. 

*  This  case  has  since  been  again  tried,  and  a  second  verdict  having  been  rendered 
for  the  plaintiff,  on  evidence  not  differing  materially  from  that  given  at  the  first  trial, 
the  court  refused  to  disturb  it.  —  Rep. 


SECT.  II.]  FRANKLIN   FIRE    INS.    CO.    V.   VAUGHAN.  271 

"We  see  nothing  in  the  writing  produced  to  justify  the  claim  that  the 
property  insured  was  encumbered,  or  that  any  person  other  than  the 
vendee  had  any  interest  in  it,  or  that  the  title  of  the  insured  was  not 
absolute.  The  property  was  sold  to  tlie  insured  in  April,  1873  ;  and 
the  evidence  showed  that  when  so  sold  it  was  in  the  auction  store  of 
Harris  &  Co.  for  sale.  The  goods  remaining  there,  the  purchaser  took 
possession  and  proceeded  to  make  sale  of  them  as  was  also  proved  on 
the  trial.  The  writing  produced  contains  no  limitation  of  Vaughan's 
title,  and  expresses  no  right  of  possession  or  control  in  any  person 
other  than  himself,  except  in  the  event  that  Harris  &  Co.  should  make 
advances.  The  paper  stipulated  that  Harris  &  Co.  might  hold  the 
possession  and  control  of  the  goods  as  security  for  their  advances. 
There  was  no  such  stipulation  in  favor  of  the  vendor.  He  did  not  pro- 
fess to  retain  any  right  in  the  goods  or  any  control  over  their  posses- 
sion. So  far  as  he  was  concerned,  Vaughan  had  the  full  power  of 
disposition.  His-  claim  was  upon  the  money  realized  from  the  sales. 
To  bring  his  claim  into  enjoyment  it  was  necessary  that  sales  should 
first  be  made,  and  Yaughan,  and  Harris  &  Co. ,  as  the  agents  of  Vaughan, 
were  intrusted  with  this  duty.  The  goods  were,  and  the  proceeds  of 
the  goods  when  sold  would  be,  the  property  of  Yaughan.  His  agree- 
ment as  to  the  proceeds  did  not  affect  his  title  or  estate.  While  it  is 
possible  that  in  the  event  of  a  fraudulent  combination  to  defraud  him, 
Flowers  might  have  invoked  the  aid  of  a  couit  of  equity  in  securing 
the  proceeds  of  the  sales,  there  is  nothing  to  affect  the  present  title  of 
his  vendee.  It  may  be  likened  to  the  familiar  case  of  an  insurance 
upon  a  house  in  the  name  of  the  mortgagor,  which  he  promises  to  hold 
for  the  benefit  of  the  mortgagee.  Wliile  under  certain  circumstances 
equity  would  interfere  in  behalf  of  the  mortgagee,  it  can  scarcely  be 
doubted  that  until  the  occurrence  of  such  circumstances  the  mortgagor 
is  the  owner  of  the  policy  and  its  fruits. 

A  defence  was  also  sought  to  be  made  on  the  ground  of  the  over- 
valuation of  the  goods  by  Yaughan  when  he  obtained  the  insurance. 
The  policy  was  preceded  by  an  application  in  this  form  :  — 

"  Application  of  James  L.  Yaughan  for  insurance,  &c.,  in  the  sum 
of  S6,000,  on  the  property  specified;  the  value  of  the  property  being 
estimated  by  the  applicant. 

Valuation.  Sum  to  be  insured.  Rate. 

On  stock,  &c.,  $12,000  86,000  3-10  of  2  per  cent." 

TYhich  statement  was  signed  In'  Yaughan  and  agreed  to  be  true  so 
far  as  it  was  known  to  him,  and  so  far  as  it  was  material  to  the  risk. 
This  was  on  the  23d  of  March,  1873.  The  fire  occurred  on  the  fifth  day 
of  May,  1873. 

The  sale  of  goods  after  the  purchase  and  before  the  fire  amounted 
to  the  sum  of  6653.  The  jury  found  the  goods  which  were  actually 
destroyed  to  have  been  worth  $7,204.  These  two  sums  show  the  valu*? 
of  the  goods  ;  to  wit,  §7,857. 


272  FRANKLIN    FIRE    INS.    CO.    V.    VAUGHAN.  [CHAP.  IV. 

The  value  of  the  goods  was  to  be  estimated  by  the  applicant.  He 
gave  this  estimate  at^$12,000;  and  there  is  not  the  slightest  evidence 
tliat  such  was  not  his  honest  estimate  of  their  value.  Insurance 
agents  as  well  as  other  persons  know  with  what  partiality  most  men 
estimate  their  property,  and  how  much  more  valuable  they  esteem  it 
when  their  own  than  when  it  is  their  neighbor's.  They  do  not  object 
to  this  principle  when  the  premiums  are  received  for  issuing  policies. 
It  is  only  when  losses  occur  that  they  seek  to  apply  the  more  rigid  test 
of  actual  value. 

The  value  of  a  stock  of  goods  is  not  always,  nor  usually,  indicated 
by  its  purchase  price.  Such  goods  are  often  bought  in  the  country 
to  sell  at  retail  and  at  a  profit.  What  may  be  expected  to  be  ob- 
tained for  them  under  such  circumstr.nces  may  reasonably  be  consid- 
ered their  value  ;  and  that  the  owner  and  purchaser  should  estimate 
them  at  much  more  than  he  gave  for  them,  and  should  hope  and  expect 
to  make  large  gains  and  profits  upon  their  sale,  was,  no  doubt,  under- 
stood by  the  agent  making  tlie  insurance. 

The  counsel  for  the  plaintiff  in  error,  in  his  brief,  concedes  that  it  is 
not  every  over-valuation  which  will  avoid  a  policy  ;  but  he  objects  to 
the  cliarge  of  the  judge,  that,  to  produce  this  result,  the  over-valuation 
must  be  "grossly  enormously"  in  excess  of  the  truth.  It  is  hardly 
just  to  the  judge  holding  the  circuit,  or  to  the  claimant,  that  the  charge 
should  rest  upon  this  statement.  The  judge  undoubtedly  said,  "If 
the  valuation  was  grossly  enormously  in  excess  of  the  value  of  the 
goods,  then  the  burden  is  cast  on  the  plaintiff  of  showing  that  he  acted 
honestly  and  in  good  faith  in  making  the  valuation,  and  that  it  was 
not  made  for  any  fraudulent  purpose  or  with  any  fraudulent  intention, 
but  was  an  honest  and  unintentional  error."  He  did  not,  however,  say 
that  nothing  less  than  this  would  have  that  effect.  He  said  also,  "  The 
law  exacts  the  utmost  good  faith  in  contracts  of  insurance,  both  on  the 
part  of  tlie  insured  and  the  insurer ;  and  a  knowing  and  wilful  over- 
valuation of  property  by  the  insured,  with  a  view  and  purpose  of  obtain- 
ing insurance  thereon  for  a  greater  sum  than  could  otherwise  be  obtained, 
is  a  fraud  upon  the  insurance  company  that  avoids  the  policy.  ...  It 
is  a  question  of  good  faith  and  honest  intention  on  the  part  of  the 
insured;  and  though  he  may  have  put  a  value  on  his  property  greatl}' 
in  excess  of  its  casli  value  in  the  market,  yet  if  he  did  so  in  the  honest 
belief  that  the  property  was  worth  the  valuation  put  upon  it,  and  the 
excessive  valuation  was  made  in  good  faith,  and  not  intended  to  mis- 
lead or  defraud  the  insurance  company,  then  such  over-valuation  is  not 
a  fraudulent  over-valuation  that  will  defeat  a  recovery." 

Looking  at  the  whole  charge,  as  we  must  do,  we  think  the  jury  were 
correctly  instructed,  and  that  there  was  nothing  said  wliich  the  com- 
pany can  properly  except.  Judgment  affirmed.^ 

1  Arc:  Behrens  v.  Germania  F.  Ins.  Co.,  64  Iowa,  19  (1884)  ;  and  Baker  v.  State 
ins.  Co.,  31  Oregon,  41  (1897). 

Contra:  Bobbitt  v.  L.,  L.  &  G.  Ins.  Co.,  66  N.  Car.  70,  79-81  (1872). 


SECT.  II.]  FRANKLIN    FIRE    INS.    CO.    V.   YAUGHAN. 


273 


Compare  Catron  i-.  Tennessee  Ins.  Co.,  6  Humph.  176  (1845)  ;  and  Lycoming  Fire 
Ins.  Co.  V.  Rubin,  79  111.  402  (1875). 

Id  Insurance  Co.  of  North  America  v.  McDowell,  50  111.  120,  126-128  (1869), 
Walker,  J.,  fur  the  court,  said :  — 

"  It  is  urged  that  the  mill  was  overvalued  at  the  time  the  application  was  made. 
.  We  are  at  a  loss  to  perceive  how  such  a  statement  in  the  application  can  be  materirl, 
provided  tlie  risk  taken  is  less  than  its  value,  or  where  the  value  at  the  time  of  1<  ss 
exceeds  the  amount  covered  by  tlie  insurance.  To  hold  that  an  over-valuation  vitiates 
a  policy,  without  reference  to  its  value  at  the  time  of  the  loss,  would  be  to  hold  that  a 
mere  diversity  of  opinion  in  reference  to  value  might  render  a  policy  obtained  in  tl.c 
most  perfect  good  faith  void,  simply  because  the  assured  had  placed  a  Jiigher  estimate 
on  his  property  than  tiiat  fixed  by  his  neighbors. 

"  As  a  matter  of  prudence  and  precaution  against  loss,  these  companies  may,  and 
perhaps  do,  endeavor  to  avoid  insuring  property  at  more  than  its  value,  so  as  to 
tliereby  avoid  all  temptatiou  to  carelessness  and  destruction  of  the  property.  But  at 
the  same  time  tiiere  is  no  law  prohibiting  such  bodies  from  insuring  property  at  its 
full,  or  even  an  .over-value.  Nor  have  tliese  companies  inserted  any  condition  that  rn 
over-value  shall  avoid  the  policy. 

"  Nor  can  it  be  said  that  where  the  owner  is  mistaken  in  tlie  value  of  his  property, 
and  places  it  too  high  in  his  application,  he  intended  to  defraud  the  company.  A  sur- 
vey is  generally  made  by  the  agent  of  the  company,  and  if  regarded  too  high,  and  as 
a  matter  of  importance,  the  agent  should  then  object.  After  examination  he  can, 
of  course,  determine  whether  he  regards  the  value  fixed  in  the  application  as  too  high. 
In  this  ca.*e  the  local  agent  who  issued  the  policies  swears  that  he  went  through  and 
carefully  examined  the  mill,  and  we  must  presume  that  he  had  some  knowledge  of  the 
value  of  tlie  property,  and  if  it  was  regarded  important  by  the  company  to  know  its 
value  the  agent  could  have  learned  it  upon  inquiry.  The  agent  accepted  tlie  applica- 
tion without  objection  and  received  the  premiums  and  paid  them  to  the  companies.  It 
would  be  unprecedented  to  permit  the  companies  to  receive  an  application,  issue  a 
policy,  receive  the  i>remium,  and  then  say  we  knew  that  your  policy  was  void  when  we 
received  vour  money,  and  that  whilst  you  in  good  faith  relied  upon  the  validity  of  your 
policy  we  knew  that  we  liad  incurred"  no  risk.  And  where  the  agent  knows  or  can 
judge  of  the  value  of  the  property,  and  accepts  an  application  without  objection,^  even 
if  tlie  valuation  is  higher  than  it  should  be,  we  cannot  say  that  it  is  so  far  material  as 
to  vitiate  the  policv." 

In  Bedford  v.  M'utual  F.  Ins.  Co.,  38  U.  C.  Q.  B.  538,  541-542  (1876),  Harbison, 
C.  J.,  for  the  court,  said  :  — 

"  It  is  not  however,  every  answer  to  every  question  in  an  application  for  insurance 
which  is  to  be  deemed  and  taken  as  an  assertion  or  representation  of  a  fact.  See  Ben- 
ham  i:  The  United  Guarantie  and  Life  Ass.  Co.,  7  Ex.  744 :  Andersou  et  al.  v.  The 
Pacific  Fire  and  Marine  Ins.  Co.,  L.  R.  7  C.  P.  6.5. 

•'  The  question  may  be  so  put  as  to  ask  for  a  mere  statement  of  opinion,  and  the 
question,  looking  at  its  subject-matter,  may  be  of  that  character  that  an  opinion  only 
shall  be  deemed  to  be  given,  and  thus  not  held  to  be  the  assertion  or  representation  of 
a  fact,  so  as  in  the  event  of  innocent  exaggeration  to  avoid  a  policy. 

"  No  man  can  generally  do  more  than  state  his  opinion  as  to  the  value  of  property. 
There  is  nothing  about  which  there  may  be  greater  difference  of  opinion  among,  men 
than  the  value  of  real  estate.  The  owner  of  real  estate  generally  sets  a  higher  value 
upon  it  than  another,  and  this  simplv  because  it  is  his  own,  and  he  flatters  himself  to 
be  better  off  in  the  world  than  he  really  is,  —  a  mistake  very  commonly  made  by  men 
in  all  conditions  of  life. 

"  A  man  may  be  able  to  state  with  something  like  absolute  accuracy  the  distance 
of  his  house  from  any  other  building,  the  material  of  which  his  house  is  built,  the 
number  of  stoves  therein  contained,  and  otlier  matters  of  description,  the  accuracy  of 
which  before  the  making  of  the  representation  may  be  absolutely  tested. 

"  But  when  a  man  is  called  upon  to  speak  of  the  value  of  that  which  he  has  no 
desire  to  sell,  —  a  value  which  fluctuates  from  year  to  year,  if  not  from  day  to  day,  — 

18 


27^  farmers'   mutual   fire   ins.    CO.   V.   FOGELMAN.       [CHAP.  IV. 


FARMERS'   MUTUAL   FIRE   INSURANCE   COMPANY  v. 
FOGELMAN. 

Supreme  Court  of  Michigan,  1877.     35  Mich.  481. 

Error  to  St.  Joseph  Circuit. 
M.  H.  Riley ^  for  plaintiff  in  error. 
John  B.  Shipman.,  for  defendant  in  error. 

Graves,  J.  Defendant  in  error  took  a  policy  from  the  company 
August  11th,  1869,  on  a  barn  and  other  property  situated  on  a  farm  in 

he  can  only  speak  in  language  of  approximation  ;  he  can  do  no  better  than  state  his 
belief  or  opinion. 

"  It  would  be  well  for  insurance  companies  not  to  rely  too  much  upon  representations 
as  to  value,  but  rather  to  inspect  for  tliemselves  before  accepting  risks.  .  .  . 

"  Unless  the  evidence  show  the  over-valuation  to  have  been  intentional  and  fraudu- 
lent the  over-valuation  does  not  usually  affect  the  policy,  and  for  this  reason,  that 
the  statement  as  to  value  is  not  so  much  the  assertion  of  a  fact  as  the  expression  of 
an  opinion.  See  Dickson  v.  The  Equitable  Fire  Assurance  Co.,  18  U.  C.  Q.  B.  246; 
Tark  v.  The  Phoenix  Ins.  Co.,  19  U.  C  Q.  B.  110." 

In  Harrington  v.  Fitchburg  Mutual  F.  Ins.  Co.,  124  Mass.  120,  130-131  (1878), 
Loud,  J.,  for  the  court,  said  :  — 

"  Tiie  exact  question  then  is,  If  a  person  honestly  and  in  good  faith  applies  for 
insurance  upon  jtroperty,  the  locality  of  which  and  all  the  circumstances  affecting  the 
risk  he  fully  discloses,  and  discloses  also  the  exact  amount  of  insurance  existing,  and 
honestly  and  in  good  faith  puts  a  value  upon  the  property,  and  the  existing  insurance 
with  what  he  obtains  is  less  than  tiiree-fourths  of  the  value  as  he  believes  and  repre- 
sents it  to  be,  and  the  insurer,  with  full  knowledge  of  the  amount  of  the  existing 
insurance  and  with  a  full  knowledge  of  his  valuation,  issues  a  policy  ;n  whicli  it  con- 
sents to  other  insurance  to  the  amount  of  three-fourths  of  the  value,  and  •;;  subse- 
quently appears  that,  in  point  of  fact,  the  real  value  at  that  time  was  less  than  the 
applicant  believed  it  to  be,  would  this  avoid  the  policy  thus  issued  ?  The  mere  state- 
ment of  the  proposition  suggests  its  solution.  The  applicant  tells  where  the  property 
is,  he  tells  what  it  is,  he  tells  by  what  it  is  surrounded,  and  the  purposes  for  which  it 
is  used  ;  all  these  are  facts  which  he  is  bound  to  kuow,  and  in  reference  to  wliich  he  is 
bound  to  tell  the  truth.  Valuation  is  necessarily  a  matter  of  judgment  or  opinion, 
and  it  is  matter  of  common  belief  that  the  owner  of  property  is  liable  to  put  upon  it  a 
higher  valuation  than  others.  In  the  absence  of  fraud  there  can  be  no  injustice  in 
holding  the  parties  to  such  a  contract  as  this  to  the  valuation  which  was  acted  upon, 
if  not  by  both  parties,  at  least  by  the  applicant  with  the  knowledge  of  the  other  party 
that  he  was  thus  acting.  And  this  is  especially  true  in  this  case  in  which  the  extent 
of  the  insurance  was  fully  disclosed,  and  in  which  the  parties  are  fully  protected 
against  any  liability  other  than  their  proportion  of  three-fourths  of  the  value  of  the 
property.  We  are,  tiierefore,  of  opinion  that,  when  all  the  facts  and  circumstances 
are  honestly  and  in  good  faith  disclosed,  a  mere  error  of  opinion  in  an  honest  valua- 
tion of  property  fully  described  does  not  avoid  the  contract.  There  is  less  reason  for 
strictness  in  this  respect  where  the  limit  of  insurance  is  three-fourtlis  the  value,  be- 
cause the  insured  assumes  a  portion  of  the  risk  himself.  And,  in  analogy  to  other 
cases  of  insurance,  where  property  may  be  insured  to  its  full  amount,  the  valuation 
agreed  upon,  and  for  which  insurance  is  issued,  though  it  exceeds  the  real  value  of 
the  property,  if  made  in  good  faith  and  without  fraud,  is  conclusive  between  tlie 
p  irties." 

See  also  Planters' Ins.  Co.  v.  Myers,  ."5.5  Miss.  479,  507-508  (1877);  Schmidt  v. 
Mutual  City  and  Village  F.  Ins.  Co.,  55  Mich.  432  (1885) ;  and  Morotock  Ins.  Co.  v. 
Foftoria  Novelty  Co.,  94  Va.  361,  368-369  (1897).  —  Ed. 


SECT.  II.]       farmers'   mutual    FIRE    IX.S.    CO.    V.   FOGELMAN.  275 

St.  Joseph  County,  and  on  the  24th  of  July,  1874,  the  barn  was  de- 
stroyed by  fire.  An  action  was  brought  for  the  loss,  and  defendant  in 
error  recovered.  The  company  asks  for  a  reversal.  They  object,  that 
in  the  application  defendant  in  error  represented  that  he  was  owner  of 
the  farm  and  barn,  but  in  fact  was  not. 

There  is  no  dispute  concerning  the  form  of  his  vepi-esentation.  He 
was  asked :  ''  Are  you  the  owner  of  the  buildings  to  be  insured,  and  of 
the  farm  upon  which  they  are  situated?"  To  which  he  replied,  "  Yes." 
The, question  arises  upon  the  correctness  of  his  answer.  It  was  ruled 
below,  and  his  counsel  here  contends,  that  the  facts  showed  that  he 
was  the  equitable  owner,  and  if  so,  that  was  sufficient.  Counsel  for 
the  company  claims  that  the  facts  were  not  sufficient  to  make  out  an 
equitable  title. 

It  appears  that  when  the  application  was  made,  and  until  May  22il, 
1871,  the  legal  title  stood  in  the  name  of  Mrs.  Fogelraan,  wife  of  de- 
fendant in  error,  and  that  she  deeded  to  him  at  this  last-named  date  ; 
that  some  time  prior  to  her  marriage  with  him,  which  occurred  March 
26,  1868,  her  father  bought  this  farm,  paying  two  thousand  dollars  in 
cash,  and  caused  it  to  be  conveyed  to  her  as  her  property  upon  her 
giving  back  to  him  a  mortgage  upon  it  to  secure  the  balance  of  the 
purchase  price,  being  four  thousand  dollars  ;  that  the  place  was  worth 
some  six  thousand  dollars  ;  that  shortly  before  her  marriage  a  verbal 
agreement  was  entered  into  between  herself,  her  intended  husband, 
Mr.  Fogelman,  and  her  father,  that  if  Mr.  Fogelman  would  move  upon 
the  place,  cultivate  and  improve  it,  care  for  and  support  the  family, 
and  pay  off  the  encumbrances,  Mrs.  Fogelman,  when  required  by  her 
husband,  the  defendant  in  error,  would  convey  to  him  the  legal  title  ; 
that  in  pursuance  of  this  arrangement,  defendant  in  error  in  good  faith 
actually  moved  upon  the  premises,  and  carried  out  and  performed  the 
terms  thus  vei  bally  expressed  ;  that  he  lived  on  the  premises  with  his 
family,  worked  tlie  lands,  paid  the  taxes,  kept  up  the  fences,  made  im- 
provements, and  conducted  the  cultivation  as  owner ;  that  he  used  the 
proceeds  as  his  own,  applying  what  was  necessary  for  the  support  of 
his  family  ;  that  he  took  with  him  a  span  of  horses,  four  head  of  cattle, 
and  other  personal  propert}',  and  all  of  which  was  now  on  the  farm  ; 
that  i)iior  to  the  application  for  insurance  he  had  actually  paid  enough 
on  the  four-thousand-dollar  mortgage  to  reduce  it  to  two  thousand  two 
hundred  dollars  ;  that  the  mone}-  so  paid  was  raised  in  part  and  mostly 
from  crops  taken  off  of  the  farm,  but  that  the  rest  was  obtained  from 
crops  raised  by  him  on  other  lands  ;  that  no  account  was  kept  of  these 
matters  between  himself  and  wife  ;  that  after  the  policj*  was  obtained, 
and  prior  to  the  loss,  he  had  paid  some  fifteen  hundred  dollars  or 
eighteen  hundred  dollars  more  on  the  mortgage  from  the  proceeds  of 
crops  produced  on  the  farm  ;  that  the  conveyance  from  his  wife  to  him 
was  delayed  because  money  was  scarce,  and  because  the  parties  at  one 
time  supposed  she  could  not  convey  directly  to  him. 

It  is  urged  for  plaintiff  in  error  that  there  was  here  no  contract  on  the 


276  FAKMERS'   MUTUAL    FIRE   INS.    CO.    V.   FOGELMAN.       [CHAP.  IV. 

part  of  defemlant  in  error ;  that  he  was  left  to  do  just  as  he  pleased, 
either  to  go  on  or  abstain.  The  arrangement  should  be  judged  of  in 
tlie  light  of  all  the  circumstances.  There  was,  of  course,  nothing  pre- 
cise or  formal  in  it. 

The  father  had  just  bought  for  his  daughter's  benefit  a  farm  worth 
six  thousand  dollars,  and  was  giving  her  two  thousand  dollars  of  the 
purchase  price,  but  wished  the  balance  of  four  thousand  dollars  to  be 
cleared  up  without  his  aid.  He  was  acting  in  contemplation  of  the  im- 
mediate marriage  of  his  daughter  with  defendant  in  error,  and  the  two 
last  were  acting  upon  his  wishes,  and  on  their  own  ideas  of  prudence. 

The  three  were  looking  at  the  farm  in  question  as  the  future  home  of 
the  two.  The  arrangement  was  a  domestic  arrangement,  an  affair  in 
the  family-.  The  daughter  and  son-in-law  were  to  be  settled,  and  the 
father  was  aiding.  Through  the  father  the  daughter  held  the  legal  title 
to  a  farm  worth  six  thousand  dollars,  but  subject  to  a  mortgage  of  four 
thousand  dollars.  It  was  thought  best  that  the  son-in-law  should  carr}' 
on  the  place  and  pay  up  this  mortgage  and  have  the  legal  title.  We 
are  not  confined  to  mere  words.  We  must  look  at  the  acts  of  the  par- 
ties. They  are  expressive.  The  defendant  in  error  at  once  repaired 
with  his  wife  to  the  farm.  He  carried  his  personal  property  there.  He 
there  labored.  He  went  to  paying  up  the  mortgage.  He  paid  the 
taxes.  He  made  improvements  and  repairs,  and  acted  precisely  as 
though  he  was  purchaser.  Unless  he  was  carrying  out  the  arrangement 
as  one  accepted  by  and  obligatory  upon  him  his  course  is  not  explained. 
His  wife  considered  that  he  had  fully  acceded  to  the  verbal  understand- 
ing, and  was  performing  his  share.  The  whole  circumstances,  in  fine, 
prove  that  he  undertook  to  pay  up  the  mortgage,  and  on  his  part  carry 
out  the  verbal  understanding. 

When  he  applied  for  insurance  he  had  made  large  expenditure,  and 
could  not  retire  without  great  loss,  and  at  the  same  time  what  remained 
to  be  done  was  small  in  comparison  with  the  value  of  the  farm. 

That  he  was  tlien  owner  by  equitable  title  seems  hardly  open  to  dis- 
cussion. Twiss  V.  George,  33  Mich.  253.  And  it  is  not  claimed  tliat 
he  must  have  been  vested  with  the  legal  title  also,  in  order  to  support 
his  statement  in  the  application  that  he  was  owner. 

He  was  owner  of  the  barn  by  equitable  title,  and  the  risk  of  its  de- 
struction was  his  risk.  Nobody  was  under  obligation  to  rebuild  for 
him,  and  he  could  protect  himself  only  by  insurance. 

Judgment  affirmed,  with  costs.^ 

The  other  Justices  concurred. 

1  See  Strong  u.  Manufacturers'  Ins.  Co.,  10  Pick.  40  (1830);  Curry  r.  Common- 
wealth Ins.  Co.,  10  Pick.  5.35  (1830);  Catron  v.  Tennessee  Ins.  Co.,  6  Humph.  176 
( 1 845) ;  Franklin  F.  Iu.s.  Co.  v.  Martin,  40  N.  J.  L.  (1 1  Vroom)  568  (1878) ;  Susquehanna 
Mutual  F.  Ins.  Co.  v.  Staats,  102  Pa.  529  (1883)  ;  Buck  v.  Phoenix  Ins.  Co.,  76  Me.  586 
(1885)  ;  Oilman  v.  Dwelling-IIouse  Ins.  Co.,  81  Mo.  488  (1889) ;  Waiuer  v.  Milford 
Mutual  F.  In.s.  Co.,  153  Mass.  335  (1891);  Capital  City  Ins.  Co.  v.  Caldwell  Bros., 
95  Ala.  77  (1891).  — Ed, 


SECT.  II.]  ARMOUR   V.    TRANSATLANTIC   FIRE    INS.    CO.  277 


ARMOUR  ET  AL.,  Appellants,  v.  THE  TRANSATLANTIC  FIRE 
INSURANCE  COMPANY,  Respondents. 

Court  of  Appeals  of  New  York,  1882.     90  N.  Y.  450. 

Appeal  from  judgment  of  the  General  Term  of  the  Superior  Court 
of  the  Cit\'  of  New  York,  entered  upon  an  order  made  on  the  first 
Monday  of  March,  1881,  which  affirmed  a  judgment  in  favor  of  de- 
fendant, entered  upon  an  order  dismissing  plaintiffs'  complaint  on 
trial.     (Reported  below,  1.5  J.  &  S.  352.) 

This  action  was  upon  a  policT  of  fire  insurance,  the  material  portions 
of  wiiich,  as  well  as  the  facts  pertinent  to  the  questions  discussed,  are 
stated  in  the  opinion. 

J).  M.  Porter,  for  appellants. 

Lexcis  Sanders,  for  respondent. 

Rapallo,  J.  The  court  at  the  trial  dismissed  the  complaint  in  this 
action,  on  the  defendant's  evidence,  and  refused  the  plaintiffs'  request 
to  submit  the  questions  of  fact  in  the  case  to  the  jury.  The  only  ques- 
tions for  our  consideration  are  whether  the  facts  alleged  on  the  part  of 
the  defendant  were,  or  either  of  them  was,  sufficient  to  defeat  the 
plaintiffs'  claim  to  recover,  and  so  clearly  proved  by  conclusive  or  un- 
controverted  evidence  as  to  justif}-  the  court  in  withdrawing  the  case 
from  the  consideration  of  the  jur}-.  The  action  was  upon  a  policy  of 
insurance  issued  by  the  defendant  U[jon  a  wareliouse  of  the  plaintiffs 
in  the  City  of  Chicago,  whieli  was  partially  destroyed  by  fire  upon  the 
25th  of  January,  1879.  The  warehouse  consisted  of  three  sections, 
and  the  amount  of  insurance  on  one  of  the  sections  covered  by  the 
plaintiffs'  policy  was  S3, 000.  The  loss  on  that  section  was  about 
$14,000,  and  the  total  insurance  tliereon  about  $17,000.  The  amount 
insured  on  all  three  sections  was  838,000,  exclusive  of  defendant's 
policv,  at  the  time  of  the  loss.  Tiie  ^r/-o  rata  share  of  loss  claimed 
from  the  defendant  was  $2,440. 

The  defendant  set  up  three  defences.  1st.  That  the  policy  was  issued 
upon  a  misrepresentation  of  the  plaintiflfs,  through  their  agent,  that  the 
rate  of  insurance  in  Chicago  on  the  premises  insured  was,  at  the  date  of 
their  application  for  said  insurance,  seventy-five  cents  for  every  $100  in- 
sured for  the  term  of  one  year;  whereas,  in  fact,  the  rate  of  insurance 
upon  the  propert}-  in  Chicago  at  the  time  of  plaintiffs'  application  was 
SI. 25  for  every  $100  insured.  2d.  That  at  tlie  time  of  the  application 
for  said  insurance,  the  plaintiffs,  bj-  their  agent,  represented  that  the 
property  sought  to  be  insured  was  alread}-  insured  in  the  amount  of 
$200,000  in  various  other  companies,  of  which  a  list  was  furnished  ; 
that  the  defendant  relied  upon  the  trutii  of  said  representation  in  making 
the  polic}'  and  accepting  the  risk,  but  that  in  fact  none  of  the  property 
mentioned  in  said  policy  was  insured  in  the  amount  of  $200,000,  or  to 


278  ARMOUK    V.    TRANSATLANTIC   FIRE    INS.    CO.        [CHAP.  IV. 

exceed  Ihe  sum  of  $50,000.  3cl.  That,  according  to  the  terms  of  the 
policy,  the  defendant  was  entitled  to  terminate  it  on  giving  notice  to 
the  plaintiffs,  and  that  it  did  so  elect  to  terminate  it  before  the  alleged 
loss  b}'  fire. 

The  plaintiffs,  after  making  the  prima  facie  proof  necessary  to  main- 
tain the  action  on  their  part,  rested  their  case,  and  the  defendant  in- 
troduced evidence  in  support  of  the  defences  set  up  by  it.  We  have 
carefully  examined  the  evidence,  and  think  there  may  be  some  question 
as  to  whether  the  allegation  of  misrepresentation  as  to  the  rate  of  in- 
surance should  not  have  been  submitted  to  the  jury ;  but  the  defence 
of  misrepresentation  as  to  the  amount  of  insurance  on  the  property  was, 
we  think,  so  fully  established  that  a  verdict  in  favor  of  the  plaintiffs 
could  not  have  been  sustained. 

The  insurance  was  effected  by  the  plaintiffs  through  Mr.  Cameron  of 
Chicago,  who,  with  the  knowledge  of  the  plaintiffs,  employed  a  broker 
in  New  York,  named  Dickinson,  to  obtain  the  insurance  in  that  city. 
The  whole  warehouse  was  divided  into  three  separate  sections,  —  A,  B, 
and  C.  Mr.  Cameron  was  authorized  by  the  plaintiffs  to  procure 
$80,000  upon  the  entire  building,  viz. :  $20,000  on  section  A,  and 
$30,000  each  on  sections  B  and  C.  The  plaintiffs  at  that  time  had  over 
$200,000  of  insurance  upon  the  stock  of  merchandise  in  the  warehouse, 
but  had  no  insurance  upon  the  building.  Mr.  Cameron,  by  letter,  in- 
structed Mr.  Dickinson  in  New  York  as  to  the  situation  of  the  build- 
ing, and  informed  him  that  he  probably  should  request  hirii  by  telegraph 
to  effect  the  insurance  in  question,  in  New  York,  on  the  building  ;  that 
$200,000  had  already  been  placed  on  the  three  sections  at  three-quarters 
per  cent.  Mr.  Cameron,  in  his  testimony  taken  on  commission,  says 
that  in  employing  that  language  he  referred  to  the  insurance  on  the 
stock  in  the  warehouse,  and  did  not  intend  to  refer  to  the  insurance  on  the 
building.  But,  nevertheless,  the  letter  which  conveyed  Mr.  Cameron's 
instructions  states  distinctly  that  $200,000  had  already  been  placed,  in 
Chicago,  on  the  three  sections  of  the  warehouse,  and  Mr.  Dickinson 
states  that  he  understood  that  the  $200,000  of  insurance  was  upon  the 
warehouse. 

Mr.  Hoenig,  the  general  manager  of  the  defendant,  testifies  that 
when  Dickinson  applied  to  the  defendant  for  the  policy  in  question,  he 
stated  to  him  that  he  already  had  $200,000  of  insurance  on  the  build- 
ing in  Chicago,  and  that  in  issuing  the  policy  he  acted  upon  the  state- 
ment of  Mr.  Dickinson  that  the  board  rate  of  insurance  in  Chicago  was 
seventj'-five  cents  on  $100,  and  that  there  had  already  been  procured 
insurance  on  the  building  to  the  amount  of  $200,000.  Mr.  Dickinson 
does  not  contradict  this  statement,  but  testifies  that  he  exhibited  to 
Mr.  Hoenig  the  list  of  companies  which  he  had  received  from  Chicago, 
stating  that  they  were  on  the  risk,  and  that  he  understood  that  that 
risk  was  on  the  building,  and  he  was  not  informed  that  it  was  on  the 
stock,  until  after  the  fire.  There  is  consequently  no  conflict  of  evidence 
on  that  point  between  these  two  witnesses. 


SECT.  II.J  ARMOUR   V.    TRANSATLANTIC   FIRE   INS.   CO.  279 

By  the  terras  of  the  policy  of  the  defendant  other  insurance  was  per- 
mitted without  notice,  and  it  was  provided  that  losses  should  be  ai> 
portioned  on  the  whole  sum  insured,  and  it  was  further  provided  that 
any  omission  to  make  known  ever}'  fact  material  to  the  risk,  or  any 
over-valuation,  or  any  misrepresentation  whatever,  either  in  a  written 
application  or  otherwise,  should  avoid  the  policy.  The  representation 
in  this  case  was  not  fraudulent,  and  arose  from  a  mistake  or  misappre- 
hension of  the  plaintiffs'  agent,  but,  nevertheless,  it  was  a  very  material 
representation,  and  was  unti-ue,  the  insurance  on  the  entire  building 
being,  as  appears  by  the  testimony  of  one  of  the  plaintiffs,  only 
$30,000  at  the  time  of  the  application  to  the  defendant,  and  the  insur- 
ance on  the  section  which  was  injured  only  617,000.  Had  the  insur- 
ance been  $200,000,  the  proportion  of  loss  chargeable  to  the  defendant 
would  have  been  comparatively  trifling.  The  risk  was  greatly  enlianced 
by  the  comparatively  small  amount  of  insurance  actually  existing. 

On  the  other  branches  of  the  defence,  the  testimony  indicates  that 
the  defendant  issued  the  policy  to  Mr.  Dickinson  with  the  express 
understanding  that  if  the  board  rate  in  Chicago  was  more  than  three- 
quarters  per  cent,  the  policy  should  not  take  effect,  and  should  be  re- 
turned, and  that  long  before  the  fire,  having  ascertained  that  the  rate 
was  $1.25,  they  recalled  the  policy  and  demanded  its  surrender.  There 
is,  however,  some  slight  conflict  of  evidence  in  relation  to  these  points, 
but  it  is  unnecessary  to  consider  them,  as  we  find  that  the  misrepresen- 
tation as  to  the  amount  of  other  insurance  is  so  clearly  established  that 
a  recovery  by  the  plaintiffs  could  not  have  been  sustained.  It  is  not 
necessary,  in  all  cases,  in  order  to  sustain  a  defence  of  misrepresenta- 
tion in  applying  for  the  polic}-,  to  show  that  the  misrepresentation  was 
intentionally  fraudulent.  A  misrepresentation  is  defined  by  Phillips  to 
be  where  a  party  to  the  contract  of  insurance,  either  purposely  or 
through  negligence,  mistake,  or  inadvertence,  or  oversight,  misrepre- 
sents a  fact  which  he  is  bound  to  represent  truly  (Phil.  Ins.,  §  537), 
and  he  lays  down  the  doctrine  that  it  is  an  implied  condition  of  the 
contract  of  insurance  that  it  is  free  from  misrepresentation  or  conceal- 
ment, whether  fraudulent  or  through  mistake.  If  the  misrepresen- 
tation induces  the  insurer  to  enter  into  a  contract  which  he  would 
otherwise  have  declined,  or  to  take  a  less  premium  than  he  would  have 
demanded  had  he  known  the  representation  to  be  untrue,  the  effect  as 
to  him  is  the  same  if  it  was  made  through  mistake  or  inadvertence,  as 
if  it  had  been  made  with  a  fraudulent  intent,  and  it  avoids  the  contract. 
An  immaterial  misrepresentation,  unless  in  reply  to  a  specific  inquiry, 
or  made  with  a  fraudulent  intent,  and  influencing  the  other  party,  will 
not  impair  the  contract.  But  if  the  risk  is  greater  than  it  would  have 
been  if  the  representation  had  been  true,  the  preponderance  of  authority 
is  to  the  effect  that  it  avoids  the  policy,  even  though  the  misrepresen- 
tation was  honestly  made.  (Pliillips  on  Ins.,  §§  537-542;  AYall  v. 
Howard  Ins.  Co.,  14  Barb.  383.) 

A  material  misrepresentation  by  the  agent  for  effecting  the  insurance 


280  ARMOUK   V.    TRANSATLANTIC    FIRE    INS.    CO,        [CHAP.  IV. 

will  defeat  It,  though  not  known  to  the  assured,  and  though  made  with- 
out any  fraudulent  intent  on  the  part  of  the  agent,  to  the  same  extent 
as  though  made  by  the  assured  himself.  (Carpenter  v.  Am.  Ins.  Co., 
1  Story's  C.  C.  57.)  In  this  ease  (which  was  a  case  of  fire  insurance) 
Stor}',  J.,  says  :  "  A  false  representation  of  a  material  fact  is,  accord- 
ing to  well-settled  principles,  sufficient  to  avoid  a  policy  of  insurance 
underwritten  on  the  faith  thereof,  whether  the  false  representation  be 
by  mistake  or  design." 

The  rules  as  to  misrepresentations  and  concealments,  or  omissions  to 
state  facts  material  to  the  risk,  are  more  strict  in  cases  of  marine  than 
of  fire  insurance.  But  the  distinctions  are  founded  on  the  differences 
in  the  character  of  the  property,  and  the  greater  facility'  the  insurers 
possess,  of  obtaining  information  as  to  its  condition  and  surrounding 
circumstances  in  cases  of  insurance  on  buildings,  etc.,  than  on  vessels, 
which  are  often  insured  when  absent  or  afloat,  and  the  distinctions  are 
applied,  ordinarily,  in  cases  where  the  insurer  sets  up  the  omission  of 
the  insured  to  state  material  facts.  In  those  cases  there  is  a  ditTerence 
between  the  rules  applicable  to  marine  insurances  and  those  applicable 
to  fire  insurance.  But  where  the  defence  is  a  material  affirmative  rep- 
resentation as  to  a  matter  which  is  presumably  within  the  knowledge  of 
the  part}'  applying  for  the  insurance,  and  as  to  which  the  insurer  has 
not  the  same  means  of  knowledge,  there  is  no  ground  for  any  distinc- 
tion between  cases  of  fire  and  marine  insurance.  (See  Phillips  on  Ins., 
§  635,  etc.) 

"Where  any  doubt  exists  as  to  the  materiality  of  the  misrepresenta- 
tion, it  is  a  question  of  fact  for  the  jury.  But  in  this  case  it  so  clearly 
appears  that  the  amount  of  risk  incurred  by  the  defendant  was  so  much 
greater  than  it  would  have  been  had  the  representation  as  to  -other  in- 
surance been  true,  that  a  verdict  that  tlie  representation  was  immaterial 
could  not  have  been  sustained.  Aside  from  these  considerations,  how- 
ever, in  the  present  case  the  parties  stipulated  in  the  policy  that  any 
misrepresentation  whatever,  either  in  a  written  application  or  otherwise, 
should  avoid  the  policy,  and  the  parties  by  this  agreement  put  every 
material  representation  on  the  same  footing  as  a  warranty.  (Burritt 
V.  Saratoga  Co.  M.  Fire  Ins.  Co.,  5  Hill,  188.)  That  that  is  the  efl'ect 
of  such  an  agreement  was  reaffirmed  in  this  court  in  Gates  v.  The 
Madison  Co.  Mut.  Ins.  Co.,  2  N.  Y.  49-53. 

The  judgment  should  be  affirmed. 

All  concur.  Judgment  affirmed. 


SECT.  II.]  citizens'   INS.    CO.    V.   HOFFMAN.  281 


CITIZENS'  INSURANCE  COMPANY  v.  HOFFMAN. 
Supreme  Court  of  Indiana,  1891.     128  Ind.  370. 

From  the  Vanderburgh  Circuit  Court. 

S.  J.  Peelle,  W.  L.  Taylor,  A.  Gilchrist,  and  C.  A.  De  Bruler,  for 
appellant. 

T.  E.  Garvin,  Jr.,  and  G.  Cunningham,  for  appellee. 

Miller,  J.  The  appellee  sued  the  appellant  to  recover  on  a  policy 
of  insurance,  b\-  which  the  appellant,  in  consideration  of  fifteen  dollars, 
agreed  to  indemnif}-  him  to  the  extent  of  $1,.500  against  loss  hy  fire  of 
the  property  therein  described. 

The  complaint  was  in  two  paragraphs.  The  first  averred  a  total  loss 
of  $90,000,  and  asked  for  judgment  for  61,500,  the  full  amount  of  the 
l^olic}'. 

The  second  averred  a  loss  of  651,000,  a  total  insurance  of  $60,000, 
and  that  the  defendan.  was  liable  for  such  proportion  of  the  loss  as  the 
amount  of  its  policy  bore  to  the  whole  amount  of  insurance  carried. 

The  defendant  answered  in  two  paragraphs.^  .   .   . 

In  the  second  paragraph  it  is  alleged  that  the  application  for  the 
policy  was  in  a  letter  addressed  b}*  the  plaintiff  to  the  managers  of  the 
defendant ;  that  in  such  application  the  plaintiff  represented  that  the 
amount  of  insurance  upon  the  property'  descrilied  in  the  policy  filed 
•with  the  complaint,  which  was  at  all  times  carried  by  the  plaintiff,  was 
$90,000,  including  the  amount  applied  for ;  that  in  such  letter  the  plain- 
tiff represented  and  guaranteed  that  there  was,  and  should  thereafter 
be,  during  the  time  the  defendant  might  insure  the  property,  an  insur- 
ance in  the  sum  of  $90,000;  that  the  letter  had  been  lost  and  the 
defendant  was  therefore  unable  to  file  a  cop}'  of  the  same  with  the 
answer  ;  that  the  polic}'  was  issued  solely  in  consideration  of  the  rep- 
resentation and  guarantee  contained  in  the  letter  ;  that  b}'  the  terms  of 
tiie  policy  the  defendant  onh-  agreed  to  pay  the  one-sixtieth  of  the 
loss  which  the  plaintiff  might  sustain  by  fire  on  each  of  the  items  of 
property  described  in  the  polic}'. 

It  is  averred  that  the  plaintiff,  in  violation  of  said  representation  and 
guarantee,  did  not  keep  and  maintain  $90,000  insurance  upon  the  prop- 
erty, but  only  had  $60,000  insurance  at  the  time  of  the  fire  ;  that  the 
total  loss  sustained  w-as  $51,000,  of  which  the  defendant  was  liable  for 
$850  and  interest,  and  no  more. 

Demurrers  were  sustained  to  each  of  these  paragraphs  of  answer, 
and  the  defendant  declining  to  plead  further,  judgment  was  rendered 
for  $1,275  and  interest. 

Appellant  assigns  as  error  the  ruling  of  the  court  in  sustaining  the 
demurrers  to  these  paragraphs  of  answer.  .  .  . 

1  In  reprinting  the  opinion,  passages  not  dealing  Avith  the  second  paragraph  of 
the  answer  have  been  omitted.  —  Ed. 


282  citizens'  ins.  co.  v.  hofFxMan.  [chap.  iv. 

In  the  second  paragraph  of  answer  the  letter  written  by  the  assured 
to  the  company  is  relied  upon  either  as  a  warranty  or  a  representation. 

In  Commonwealth  Ins.  Co.  v.  Monninger,  18  Ind.  352,  this  court,  in 
distinguishing  between  a  representation  and  a  warranty,  cites,  with 
a[)proval,  the  following  definition  of  a  representation  as  "a  verbal  or 
written  statement,  made  by  the  assured  to  the  underwriter,  before  the 
subscription  of  the  policy,  as  to  the  existence  of  some  fact,  or  state  of 
facts,  tending  to  induce  the  underwriter  more  leadily  to  assume  the 
risk,  by  diminishing  the  estimate  he  would  otherwise  form  of  it.  It  is 
a  part  of  the  preliminary  proceedings  which  propose  the  contract ;  and 
a  warranty  is  a  part  of  the  contract,  as  it  has  been  completed."  May 
Ins.  (3d  ed.),  section  159  ;  Wood  Fire  Ins.  ("id  ed.),  section  150. 

It  will  be  observed  that  there  is  no  allegation  in  the  answer  that 
there  was  $90,000  insurance  on  the  property  at  the  time  the  policy  was 
issued.  Neither  is  it  claimed  in  the  answer  that  at,  or  prior  to,  the  time 
the  policy  was  issued  the  assured  made  an}-  statement  of  fact  that  was 
not,  at  the  time,  true. 

It  is  contended,  that,  if  the  application  did  not  contain  a  misstate- 
ment of  fact,  it  constituted  a  warranty  or  guarantee  that  the  assured 
would  maintain  $90,000  insurance  on  the  property. 

It  nowhere  appears  from  the  policy  that  the  application  was  incor- 
porated in,  or  made  a  part  of,  the  same.  We  find  in  the  policy  this 
clause:  "If  an  application,  surve}',  plan,  or  description,  is  referred  to 
in  this  policy,  such  application,  survey,  plan,  or  description  is  hereby 
made  a  part  of  this  contract,  and  a  warranty  b}'  the  assured." 

This  language  is  significant  when  taken  in  connection  with  the  fact 
that  no  reference  was  made  in  the  policy  to  any  application  having  been 
made  for  insurance. 

The  necessity  for  making  the  application  a  part  of  the  policy  in  order 
to  make  an}'  statements  therein  contained  warranties,  is  tersely  stated 
by  Elliott,  J.,  in  Presbyterian,  etc.,  Fund  v.  Allen,  106  Ind.  593,  as 
follows :  — 

"  Statements  made  b}-  the  insured  in  his  application  for  insurance  are 
not  deemed  warranties  unless  the}'  are  incorporated  in  the  polic}',  or,  in 
some  appropriate  method,  referred  to  in  that  instrument." 

It  does  not  come  within  the  rule  of  construing  and  reading  together 
papers  contemporaneously  executed,  as  parts  of  the  same  contract 
(Burns  v.  Singer  Mfg.  Co.,  87  Ind.  541,  and  Singer  Mfg.  Co.  v.  Forsyth, 
108  Ind.  334),  for  the  policy  is  a  complete  instrument  and  contract 
within  and  of  itself,  containing  no  reference  or  allusion  to  any  other 
instrument. 

It  is  evident,  from  the  averments  of  the  answer,  taken  in  connection 
with  the  polic}',  that  the  company,  instead  of  accepting  tlie  terms  of  the 
letter,  \>y  inserting  a  clause  in  the  policy  to  that  eflfect,  as  is  usual,  when 
a  given  amount  of  insurance  is  to  be  maintained,  issued  the  policy,  giv- 
ing the  assured  the  privilege  of  making  other  insurance,  without  limit 
or  notice,  until  required. 


SECT.  II.]  citizens'    INS.    CO.    V.    HOFFMAN.  283 

The  general  and  well-settled  rule  is,  that  the  application  forms  no 
part  of  the  policy,  unless  it  is  referred  to  and  adopted.  Wood  Fire 
Ins..  section  138;  Ma}"  Ins.,  section  159;  Owens  v.  Holland  Purchase 
Ins.  Co.,  56  N.  Y.  5G5  ;  Commonwealth  Ins.  Co.  v.  Monuinger,  supra. 

Holding,  as  we  do,  that  the  corapan}-  did  not  adopt,  or  treat  the 
application  as  a  part  of  the  policy,  no  inference  arises  that  the  polic}' 
was  issued  upon  the  terras  or  conditions  mentioned  in  the  letter,  or  ap- 
plication, for  it  might  well  be  inferred  that  the  terms  of  the  application 
were  not  satisfactory  to  the  insurers,  and  that  the}'  therefore  chose  to 
make  the  contract  upon  their  own  terms,  and  independent  of  the 
application. 

We  are  of  the  opinion  that  the  court  did  not  err  in  sustaining  the 
demurrer  to  the  second  paragraph  of  the  answer. 

Judgment  affirmed.^ 

1  On  the  topic  of  this  section,  see  also:  — 

Clark  V.  Union  Mutual  F.  Ins.  Co.,  40  N.  H.  333  (1860) ; 

Bellatty  v.  Thomaston  AI.  F.  Ins.  Co.,  61  Me.  414  (1872); 

Wood  V.  Firemen's  F.  Ins.  Co.,  126  Mass.  316  (1879) ; 

Jackson  i-.  St.  Paul  F.  &  M.  Ins.  Co.,  99  U.  S.  124  (1885) ; 

Lamb  v.  Council  Bluffs  Ins.  Co.,  70  Iowa,  238,  242  (1886) ; 

Mutual  Mill  Ins.  Co.  v.  Gordon,  121  111.  366  (1887)  ; 

Insurance  Co.  v.  Leslie,  47  Ohio  St.  409  (1890) ; 

Germania  F.  Ins.  Co.  v.  Deckard,  3  Ind.  App.  361,  365-367  (1891) ; 

Davis  V.  ^Etua  Mutual  F.  Ins.  Co.,  39  Atl.  Rep.  902  (N.  H.,  1893).  — Ed. 


284  WHITTINGHAM   V.   THORNBUP.GH.  [CHAP.  IV. 


SECTION  III. 

Life   Insurance. 

WHITTINGHAM  v.  THORNBURGH  et  al. 
Chancery,  1690-91.         2  Vera.  206.i 

Defendant  Thoraburgh  in  March,  1689,  caused  a  policy  of  insurance 
to  be  drawn  for  tlie  insuring  tlie  life  of  one  Edward  Harwell  for  a  year, 
and  left  it  at  one  Samuel  Luplon's  office,  to  get  subscriptions  at  /re 
pounds  x>er  cent  j^^^emium  ;  and  to  draw  in  the  plaintiffs  and  others  to 
underwrite  the  policy,  procured  one  Marwood,  a  near  neighbor  of 
Harwell's,  to  underwrite  07ie  hundred  j^ounds  ;  and  he  giving  out  he 
knew  Harwell  healthy  and  like  to  live,  and  the  plaintiffs  relying  on  such 
information,  underwrote  the  polic}'.  Whittingham  for  a  hundred 
2)ounds,  the  other  four  for  fifti/  2)0unds  apiece.  Harwell  soon  after 
died. 

It  appearing  that  Thornburgh  had  no  estate  or  interest  that  depended 
on  Harwell's  life ;  that  Marwood's  subscription  was  only  colorable  to 
draw  in  others,  and  that  Harwell  was  in  a  languishing  condition; 
though  Marwood  affirmed  and  pretended  he  was  his  neighbor  and  a 
healthful  man,  and  the  plaintiff  having  on  the  first  discovery  of  the  con- 
trivance offered  to  return  \\\q  premium,  and  published  the  fraud  to  pre- 
vent others  from  being  drawn  in  ;  and  the  defendants  intending  to  get 
a  very  large  subscription,  having,  by  a  like  contrivance,  got  between 
one  and  two  thousand  ^younds,  on  making  the  like  insurance  on  the 
life  of  William  Sweeting,  the  court  tlicrefore  decreed  the  policy  of  in- 
surance to  be  delivered  up  to  be  cancelled,  and  a  perpetual  injunction 
against  the  verdict  thereon  obtained  at  law,  and  the  plaintiffs  their  full 
costs  botli  at  law  and  in  this  court,  and  the  money  received  for  the 
premium  to  go  in  part  of  their  costs.- 

1  s.  c.  sub.  nom.  "Wittingham  v.  Thoruborough,  Free.  Ch.  20,  where  it  is  stated : 
"  They  agreed  with  one  Marwood,  a  known  merchant  upon  the  Exchange,  and  a  lead- 
ing man  in  such  cases,  to  subscribe  first ;  but  in  case  Harwell  died  within  the  year, 
Marwood  was  to  lose  nothing,  but  on  the  contrary  was  to  share  what  should  be 
gained  from  the  other  subscribers." — Ed. 

2  The  editor  of  Vernon  adds :  "  The  decree  so  as  to  the  payment  of  costs,  &c.  but 
nothing  said  as  to  the  money  received  for  the  premium  to  go  in  part  of  costs.  Keg. 
Lib.  1680,  B,  fol.  264."  — Ed. 


SECT.  III.]  STACKPOLE   V.    SIMON.  285 

STACKPOLE  V.  SIMON. 
Nisi  Prius,  1779.     2  Park  Ins.  8th  eel.  932. 

It  was  an  action  on  a  polic}-  of  insurance  for  £150,  at  four  guineas 
per  cent,  in  case  Drury  Slieppey  should  die  at  any  time  between  the 
1st  of  April,  1777,  and  the  1st  of  April,  1778,  both  days  included, 
and  during  the  lifetime  of  John  Sheppey,  the  father  of  Drury :  but  in 
case  the  said  John  should  die  before  the  said  Drury  the  policy  to  be 
void  ;  the  question  was,  as  to  the  representation  of  the  life  at  the  time 
of  the  insurance.  The  interest  in  the  insurance  was  £900,  due  from 
Drury  Sheppey  to  the  plaintiff.  It  was  admitted,  that  the  life  expired 
within  the  time  limited  in  the  policy.  Drury  Sheppey  had  a  place  in  the 
custom-house  of  Ireland,  and  was  in  bad  circumstances.  He  went  to 
the  south  of  France  for  the  benefit  of  his  health,  or  to  avoid  his  cred- 
itors, and  there  died.  The  broker  who  effected  the  policy,  told  the 
underwriters  that  the  gentleman  for  whom  he  acted,  would  not  warrant, 
but  from  the  account  he  (the  broker)  had  received,  he  believed  it  to  be 
a  good  life. 

Lord  Mansfield.  "  As  to  the  interest,  this  policy  may  be  considered 
as  a  collateral  security  for  the  debt  due  to  the  plaintiff.  Where  there 
is  no  warranty,  the  underwriter  runs  the  risk  of  its  being  a  good  life  or 
not.  If  there  be  a  concealment  of  the  knowledge  of  the  state  of  the 
life,  it  is  a  fraud.  It  is  a  rule  that  every  subsequent  underwriter  gives 
credit  to  the  representation  made  to  the  first ;  and  it  is  allowed  that 
any  subsequent  underwriter  may  give  in  evidence  a  misrepresentation 
to  the  first.  The  broker  here  does  not  pretend  to  any  knowledge  of  his 
own,  but  speaks  from  information.     There  is  no  fraud  in  him." 

There  was  a  verdict  for  the  plaintiff.^ 

1  In  Schwarzbach  v.  Ohio  Valley  Protective  Union,  25  W.  Va.  622,  655-658  (1885), 
Green,  J.,  for  the  court  said  :  — 

"  There  has  been  a  considerable  diversity  of  opinion  as  to  what  constitutes  a  mis- 
representation which  avoids  a  policy.  Some  hold  that,  if  the  representation  is  mate- 
rially untrue,  it  avoids  the  policy,  even  when  it  is  made  in  good  faith  and  is  the  result 
of  ignorance.  (Campbell  v.  New  England  Mutual  Life  Ins.  Co.,  98  Mass.  381,  and 
Vose  V.  Eagle  Life  and  Health  Ins.  Co.,  6  Cusii.  42.)  But  there  are  other  cases,  in  which 
it  is  held  that  a  representation  as  to  a  material  fact  will  not  necessarily  avoid  a  policy, 
simply  because  it  is  untrue,  and  that  in  addition  to  its  untruth  its  falsity  must  be 
known  to  the  insured  (Wheelton  v.  Hardisty,  8  E.  &  B.  2.32  ;  Anderson  r.  Fitzgerald, 
4  H.  L.  C.  484.  See  also  remarks  of  Lord  Mansfield  in  Ross  v.  Bradshaw,  1  W.  Bl. 
312,  and  in  Stackpole  v.  Simon,  2  Park  Ins.  8th  ed.  932.  See  also  Rawlins  v.  Des- 
borougli,  2  Moo.  &  R.  328,  333 ;  Huckmau  v.  Fernie,  3  M.  &  W.  505  ;  Swete  v.  Fairlie, 
6  C.  &  P.  1.)  It  seems  to  me  that  no  peculiar  or  arbitrary  rule  should  be  applied  to 
life  policies.  After  a  long  controversy  in  England  it  may  now  be  regarded  as  well  settled 
there,  that  to  make  a  vendor  responsible  in  damages  for  a  representation,  which  turns 
mt  to  be  untrue,  it  must  be  made  muki  fide  and  not  in  the  bonajide  belief  that  it  is 
,rue.  And  this  is  supported  by  the  weight  of  American  authorities.  See  Crislip  v. 
Cain,  19  W.  Ya.  438,  471-472,  where  these  English  cases  are  all  cited.  But  it  should 
always  in  this  connection  be  borne  in  mind,  that,  if  one  represents  as  personally  known 


:8G  WAINWRIGIIT   V.    BLAND.  [CHAP.  IV. 


WAINWRIGHT,  Executok,  v.  BLAND  and  Others. 
Exchequer,  1836.     I  M.  &  W.  32. 

Assumpsit  against  the  defendants,  three  of  the  directors  of  the 
Imperial  Life  Insurance  Companj",  on  a  polic3'  of  insurance  for  £3,000 
dated  22d  October,  1830,  for  insuring  the  life  of  the  deceased,  Miss 
Helen  Frances  Phoeby  Abercromb}-,  for  the  period  of  two  years  from 
that  date.  The  declaration  averred  the  death  of  Miss  Abercromby  on 
the  21st  of  December,  1830,  and  the  plaintiff's  appointment  as  her  sole 
executor,  by  her  will  dated  the  13th  of  the  same  month.  Plea,  the 
general  issue. 

At  the  trial  before  Lord  Abinger,  C.  B.,  at  the  Middlesex  Sittings 
after  Michaelmas  Term,  it  clearlj-  appeared  that  the  policy  was  effected 
by  the  deceased,  by  the  persuasion  and  for  the  benefit  of  Mr.  Wain- 
wright,  the  plaintiff,  and  his  wife,  who  was  the  deceased's  half-sister ; 
that  the  premiums  were  paid  by  the  plaintiff ;  that  on  the  deceased's 
first  attendance  at  the  company's  office,  on  the  14th  October,  1830,  in 

to  him  what  is  not  true,  though  he  may  believe  it,  he  has  in  contemplation  of  law 
acted  mala  Jide,  and  is  guilty  of  a  legal  fraud  though  he  may  in  point  of  fact  have 
acted  bona  Jide ;  and  in  such  a  case  he  is  responsible  for  any  injury  resulting  from  liis 
false  representation.  (Cabot  v.  Cliristie,  42  Vt.  121  ;  Hammatt  v.  Emerson,  27  Me. 
308,  326  ;  Bennett  v.  Judson,  21  N.  Y.  238;  Stone  v.  Denny,  4  Met.  151  ;  Hazard  v. 
Irwin,  18  Pick.  95  ;  Fisher  v.  Mellen,  103  Mass.  506.)  These  cases  are  cited  and  this 
doctrine  considered  and  approved  in  Crislip  v.  Cain,  19  W.  Va.  438,  491-493. 

"  Tliis  doctrine  has  peculiar  and  special  application  to  policies  of  life  insurance,  for 
it  is  obvious,  that  most  of  the  facts  set  out  especially  in  the  applications  now  generally 
attached  to  the  policy  and  expressly  made  a  part  of  it  are  facts  peculiarly  within  the 
knowledge  of  the  insured  and,  whether  he  says  so  or  not,  must  be  regarded  as  stated 
on  his  own  personal  knowledge ;  and  hence  with  reference  to  most  facts,  especially 
wiien  stated  in  answer  to  questions  propounded  to  him,  he  must  be  regarded  as  mak- 
ing them  on  his  own  personal  knowledge  and  as  being  by  him  intended  to  be  so  under- 
stood by  the  insurer.  This  being  the  case,  if  a  part  of  this  description  is  untrue  in 
point  of  fact,  he  is  guilty  of  legal  fraud,  though  he  may  not  have  intended  to  deceive, 
and  really  did  not  act  mala  Jide  in  point  of  fact.  But  sometimes  facts  are  stated  by 
the  insured,  whicli  the  insurer  must  from  the  nature  of  the  fact  stated  have  known 
were  not  stated  as  facts  abs<jlutely  true  and  within  tlie  personal  knowledge  of  the 
insured.  When  the  fact  stated  is  of  this  description,  on  the  principles  we  have  laid 
down  the  policy  should  not  be  avoided  merely  because  the  statements  turn  out  after- 
wards to  be  in  point  of  fact  untrue,  if  the  statement  was  made  iu  perfect  good  faith 
and  with  the  full  belief,  when  the  statement  was  made,  that  it  was  true.  Of  this 
character  would  be  a  statement  in  an  application  that  the  insured  was  of  '  sound  body  ; ' 
for  of  course  the  insurer  must  have  understood  such  a  statement  as  made  not  upon 
the  personal  knowledge  of  the  insured,  but  upon  his  belief  from  all  the  knowledge  he 
had  of  his  constitution.  For  of  course  men  sometimes  believe  that  they  are  of  '  sound 
body  '  when  in  point  of  fact  they  have  some  'internal  disease,'  which  in  its  character 
is  fatal.  When  such  a  statement  as  this  is  made  in  an  application  for  a  life  policy,  on 
the  principles  we  have  laid  down  the  policy  is  not  forfeited,  if  the  statement  turns  out 
to  be  untrue,  if  when  it  was  made,  the  insured  believed  that  he  was  of  '  sound  body,'  and 
had  no  suspicion  that  he  was  the  suliject  of  an  'internal  disease  '  fatal  in  its  character. 
If,  on  the  other  hand,  the  insured  in  his  application  should  state  in  answer  to  a  ques- 


SECr.  III.]  WAINWRIGHT  V.   BLAND.  287 

company  with  Mrs.  "Wainwright,  she  represented  that  the  insurance 
was  intended  to  secure  a  sum  of  money  to  her  sister,  which  she  should 
be  able  to  do  if  she  outlived  the  term  of  two  j^ears  ;  and  that,  on  beino" 
asked  bj-  the  actuary  whether  she  had  effected  insurances  with  anv 
other  office,  she  answered,  "  1  wish  to  insure  £5,000,  but  as  vour  office 
only  takes  £3,000,  I  shall  propose  £2,000  to  some  other  office."  The 
defendants  having  subsequently  ascertained  that  she  had  effected  a 
policy  for  £5,000  with  another  office,  and  had  made  a  proposal  to  a 
third  which  had  been  declined,  on  her  attending  again  at  the  Imperial 
Office,  on  the  22d  October,  the  actuary  informed  her  that  the  directors 
were  much  displeased  at  her  not  answering  his  former  question  in  a 
straightforward  waj'.  She  said,  "  I  know  \e\'y  little  of  the  business 
myself;  I  do  as  my  friends  direct  me."  It  was  proved  that  she  had, 
previous!}'  to  this  time,  effected  insurances  with  various  offices,  all  of 
them  for  a  period  of  two  years  onl}',  to  the  amount,  in  the  whole,  of 
£11 ,000.  Miss  Abercromb}'  died  suddenly'  on  the  21st  December,  1830, 
having  b}'  her  will,  dated  the  13th,  bequeathed  the  benefit  of  her  policies 
to  her  sister,  and  appointed  the  plaintiff  her  sole  executor.  It  appeared 
that  she  had  executed  two  wills,  both  of  which  were  in  the  possession 
of  the  plaintiff,  who  was  proved  to  have  stated  (showing  them  to  the 

tion  that  he  had  not  liad  a  serious  illness  for  seven  years,  this  statement  the  insurer 
must  have  regarded  as  made  on  his  own  personal  knowledge  ;  and  if  in  point  of  fact 
it  was  untrue,  on  the  principles  we  have  stated  it  must  forfeit  the  policy,  though  he 
did  not  make  the  statement  in  point  of  fact  mahijide,  that  is,  with  a  purpose  of  de- 
ceiving, but  only  from  thoughtlessness  or  forgetfuluess,  or  because  he  had  forgotten 
that  a  serious  illness,  which  he  had  had,  was  within  seven  years. 

"  I  apprehend  tliat  the  conflict  of  authorities  on  the  question,  whether  there  must  be 
fraud  in  a  misrepresentation  of  a  fact  in  order  to  avoid  a  policy,  has  arisen  principally 
from  a  failure  to  distinguish  between  actual  fraud,  that  is,  a  misstatement  of  a  fact 
nuide  with  the  intention  of  deceiving,  and  legal  fraud,  which  is  a  misstatement  of  a 
matter  within  the  personal  knowledge  of  the  insured,  or  of  such  a  character  that  the 
insurer  must  have  regarded  it  as  within  the  personal  knowledge  of  the  insured.  Such 
a  misstatement  of  a  matter  of  this  cliaracter  is  a  legal  fraud,  tliough  it  was  not  made 
witii  intent  to  deceive.  And  I  apprehend  tlie  law  to  be  tliat  a  misrepresentation 
of  a  fact  made  by  the  insured,  whether  such  misrepresentation  bo  an  actual  fraud  or  a 
legal  fraud,  will  avoid  a  policy;  but  if  there  be  an  absence  of  all  fraud  legal  or  actual 
iu  the  mfsrepresentation  of  a  fact,  such  misrepresentation  will  not  avoid  a  policv. 

"  I  will  now  apply  this  law  to  the  facts  proven.  .  .  .  This  defence  says  further 
that  tlie  statements  and  declarations  in  tlie  application  of  the  insured  were  found  iu 
material  respects  untrue  in  three  particulars.  .  .  .  2.  '  The  statement  that  he  was  iu 
good  health  and  of  sound  body  was  untrue.'  There  is  no  evidence  to  show  that  ho 
was  not  then  in  good  health.  But  the  evidence  does  show  that  he  was  not  then 
'of  sound  body.'  The  evidence  shows  that  for  at  least  three  or  four  montlis 
before  he  had  this  policy  issued  and  made  this  statement,  he  had  a  cancer  of  the 
stomach,  and  that  this  disease  continued  exhibiting  itself  only  occasionally  till  his 
death  some  eight  months  after  he  was  insured.  This  representation  was  therefore 
untrue.  But,  as  we  have  seen,  it  belongs  to  that  class  which,  the  insurer  must  have 
known,  was  not  made  on  the  personal  knowledge  of  the  insured.  And  this  being  the 
case,  if  the  insured  acted  in  perfect  good  faith  in  making  the  statement,  and  had  then 
no  suspicion  that  he  was  not  '  sound  of  body,'  such  a  statement,  though  it  turned  out 
afterwards  to  be  untrue  when  the  statement  was  maile,  would  not  forfeit  the 
policy."  —  Ed. 


288  WAINWRIGHT   V.    BLAND.  [CHAP.  IV. 

witness)  a  short  time  after  Miss  Abercromb3''s  death,  that  they  were 
made  ''in  order  that  if  the  one  failed,  the  other  might  do  for  him." 
The  plaintiff,  as  her  executor,  swore  her  personal  property'  not  to  ex- 
ceed £100  ;  and  it  was  proved  tliat  she  was  in  fact  in  indigent  circum- 
stances, and  without  the  means  of  paying  the  premiums.  In  the 
printed  list  of  questions  required  by  the  articles  of  the  Imperial  Office 
to  be  answered  by  the  assured,  no  question  was  stated  as  to  insurances 
effected  by  the  party  with  other  offices.  The  Lord  Chief  Baron  left  it 
to  the  jury  to  say,  first,  whether  the  insurance  was  effected  by  the 
deceased  bona  fide  for  her  own  benefit,  or  as  tlie  agent  of  AVain- 
wright ;  secondly,  whether  the  false  representations  made  by  Miss 
Abercromby  to  the  defendants  related  to  a  matter  material  to  be  known 
by  them  as  insurers.  The  jury  found  that  she  effected  the  insurance  as 
the  plaintiff's  agent,  and  for  his  benefit,  and  that  the  false  representa- 
tions were  on  material  points  ;  and  a  verdict  was  thereupon  entered  for 
the  defendants. 

Erie  now  moved  for  a  rule  nisi  for  a  new  trial.  —  Assuming  that  the 
policy  w^as  effected  for  the  benefit  of  the  plaintiff,  still,  as  Miss  Aber- 
cromby was  of  full  age,  and  could  be  no  party  to  a  scheme  of  securing 
the  payment  of  the  money  within  the  two  years,  the  plaintiff's  intention  to 
obtain  the  benefit  of  the  policy  could  not  operate  to  relieve  the  defend- 
ants from  their  contract  with  the  deceased,  in  whose  right  the  plaintiff 
now  sues  as  her  executor.  Even  his  expectation  of  her  speedy  death, 
supposing  it  to  have  existed,  was  no  answer  to  an  action  on  the  policy 
by  the  party  lawfully  entitled  to  the  benefit  of  it.  The  question, 
whether  she  knew  that  the  plaintiff  intended  all  this,  was  not  left  to 
the  jury.  [Parke,  B.  She  might  not  know  the  whole  ;  but  she  must 
have  known  she  had  not  funds  to  pay  the  premiums,  and  that  she  in- 
tended Wainwright  to  have  the  benefit  of  the  insurances,  if  they  be- 
came payable.]  But  where  she  herself,  b3'  her  representative,  claims 
the  benefit  of  the  policj",  the  defendants  cannot  set  up  that  there  was 
an  intention  that  a  third  party  should  have  the  benefit  of  it.  [Pakke,  B. 
Your  argument  is,  that  an}'  person  may  lawfully  insure  his  life,  for  the 
benefit  of  another,  whatever  be  the  intention  of  that  other  part}-,  and 
from  whomsoever  the  funds  are  to  come.]  That  is  the  argurhent :  if 
she  has  tlie  legal  interest,  that  satisfies  the  statute.  [Lord  Abinger, 
C.  B.  Independent!}'  of  this  point,  the  jury  found  that  she  made  a 
false  representation  that  it  was  for  her  sister,  and  also  as  to  her  appli- 
cations to  other  offices.]  It  is  questionable  whether  the  defendants  are 
at  liberty  to  rely  on  representations  made  in  answer  to  parol  inquiries, 
when  their  articles  contain  stipulations  only  as  to  written  inquiries  and 
the  answers  to  them.  The  policy  is  framed  so  as  to  be  void  only  on  a 
false  representation  in  writing.  [Gurney,  B.  There  may  be  many 
questions  material  to  be  asked,  preparatory  to  the  written  contract.] 
The  questions  did  not  bear  on  the  probability  of  the  life  enduring  for 
two  years. 

Lord  Abinger,  C.  B.     There  may  perhaps  be  some  doubt  on  the 


SECT.  III.]       VALTON   V.    NATIONAL   FUND    LIFE   ASSUR.    CO.  289 

first  point ;  but  it  is  clear  the  policy  was  avoided  bj'  the  false  repre- 
sentations.    There  can  therefore  be  no  rule. 

Parke,  B.  From  the  nature  of  the  contract,  a  suppression  of  any 
material  fact,  or  a  false  answer  to  any  material  question,  must  avoid 
the  policy ;  Lindenau  v.  Desborough,  3  C.  &  P.  350  ;  8  B.  and  C.  586  ; 
3  Man.  &  Ry.  45,  s.  c.  On  the  other  point  there  may  be  some  doubt, 
but  it  is  unnecessary  to  give  any  opinion  upon  it. 

GcRNEY,  B.,  concurred.  I^uie  refused?- 


VALTON  ET  AL.  V.  NATIONAL  FUND  LIFE  ASSURANCE 

COMPANY. 

Court  op  Appeals  of  New  York,  1859.     20  N.  Y.  32.^ 

Appeal  from  the  Supreme  Court.  Action  upon  a  policy  on  the  life 
of  Conrad  Schumacher  for  the  sum  of  $10,000,  dated  May  15,  1850, 
issued  to  Schumacher.  The  claim  of  the  plaintiffs  to  the  sum  insured 
was  this:  On  the  30th  May,  1850,  Valton,  Daniel  Martin  (who  had 
assigned  to  the  other  plaintiff),  and  Schumacher,  entered  into  articles 
of  partnership  for  the  purpose  of  carrying  on  a  wholesale  business  in 
foreign  and  domestic  liquors  in  the  city  of  Albany.  The  capital  stock 
was  to  be  contributed  by  Valton  and  Martin.  Schumacher  was  to 
transact  all  the  outside  business  of  the  copartnership,  and  whenever 
requested  by  his  partners,  or  the  business  should  require,  to  make  all 
necessary  journeys  at  the  expense  of  the  firm.  The  articles  referred  to 
the  policy  of  insurance,  and  provided  that  in  case  of  the  death  of  Schu- 
macher during  the  continuance  of  the  copartnership,  unmarried,  then 
the  policy  and  money  secured  thereby  should  become  the  absolute  prop- 
erty of  Valton  and  Martin. 

On  the  trial  at  the  Albany  Circuit  before  Mr.  Justice  Wright,  the 
plaintiffs  proved  the  policy,  and  a  receipt  indorsed  thereon  by  the  de- 
fendant acknowledging  tlie  payment  by  Schumacher,  August  23,  1850, 
of  868.15,  premium  for  the  quarter  then  to  ensue.  For  the  purpose  of 
proving  the  death  of  Schumacher  in  September,  1850,  they  introduced 
and  read  in  evidence  the  deposition  of  one  Frederic  Oltman,  taken 
under  a  commission.  The  defendant  took  an  exception  to  it,  the 
grounds  of  which  are  stated  in  the  following  opinion,  as  are  also  the 
grounds  of  its  exceptions  to  the  judge's  refusal  to  dismiss  the  com- 
plaint and  to  his  charge  and  refusals  to  charge. 

In  the  written  application  for  the  policy,  Schumacher  was  represented 
as  a  merchant.    The  negotiation  with  one  Lacy,  the  agent  of  the  defend- 

1  Compare  Germania  Ins.  Co.  v.  Rudwig,  80  Ky.  223,  230-232  (1882).  —  Ed.    . 

2  s.  c.  in  the  Supreme  Court,  sub  nom.  Valton  v.  National  Loan  Fund  Life  Assur- 
ance Society,  22  Barb.  9  (1854).  —Ed. 

19 


290  VALTON   V.    NATIONAL   FUND    LIFE   ASSUR.    CO.       [cHAP*  IV. 

ant  for  the  insurance,  was  commenced  b}-  Martin  in  the  month  of 
April,  1850.  He  represented  that  the  life  to  be  insured  was  that  of  his 
partner  or  a  friend  of  his  partner.  On  the  14th  or  15th  May,  he  pro- 
cured from  Lacy  tiie  proper  papers  to  go  before  the  medical  examiner 
of  the  company,  and  upon  returning  with  them  properly  filled  up  gave 
the  names  of  himself  and  Valton  as  the  only  persons  who  could  be  the 
private  referees  of  the  assured  for  the  purpose  of  answering  the  inter- 
rogatories propounded  according  to  the  rules  of  the  compan}-.  Shortly 
after  he  brought  Schumacher  to  Lac}',  who  then  for  the  first  time  learned 
that  Schumacher  was  the  person  to  be  insured.  Lac}'  expressed  surprise 
that  so  large  an  insurance  should  be  wanted  upon  the  life  of  a  person 
having  the  appearance  of  Schumacher,  and  stated  to  Martin  that  he 
had  seen  Schumacher  sweeping  the  street  with  a  green  apron  on  in 
front  of  the  store  occupied  by  Martin  and  Valton,  and  had  supposed 
him  to  be  their  porter.  He  stated  that  he  would  not  take  so  large  a 
risk  on  Schumacher's  life  if  he  was  only  their  porter.  Martin  replied, 
"Oh,  it  is  his  way;  he  is  my  partner,  he  likes  to  work."  On  Lacy's 
reiterating  his  disinclination  to  take  the  risk,  and  that  he  did  not  like 
the  look  of  the  thing,  Martin  said,  ''Oh,  it  is  all  right ;  he  is  the  moneyed 
man  of  the  concern." 

The  first  premium  on  taking  out  the  policy  was  handed  to  Lacy  b}' 
Martin,  as  was  also  the  subsequent  one  in  August,  which  was  receipted 
as  having  been  paid  by  Schumacher. 

The  plaintiffs  had  a  verdict  and  judgment,  which  having  been 
aflSrmed  at  general  terra  in  the  third  district,  the  defendant  appealed 
to  this  court. 

Henry  N'icholl,  for  the  appellant. 

John  K.  Porter^  for  the  respondents. 

Grover,  J.^  .  .  .  The  defendants'  motion  to  dismiss  the  complaint 
was  properly  denied.  The  grounds  of  the  motion  were  that  the  articles 
of  copartnership  did  not  amount  to  an  assignment  of  the  policy  to  Val- 
ton and  Martin  ;  and  that  the  polic}',  so  far  as  the  assignees  were  con- 
cerned, was  a  wager  policy  and  void  by  statute,  the  plaintiffs  showing 
no  claim  or  debt  against  the  deceased.  By  the  articles  of  copartnership 
it  was  provided  that  in  case  of  the  death  of  Schumacher  during  its  con- 
tinuance, unmarried,  then  the  said  polic}-  of  insurance,  and  all  benefit 
and  advantage  therefrom,  and  the  money  secured  to  be  paid  thereby, 
should  become  and  be  the  absolute  property  of  the  said  Gerhart  Valton 
and  Daniel  Martin.  This,  in  the  happening  of  the  contingency,  vested 
the  title  to  the  policy  absolutely  in  Valton  and  Martin  as  against  the 
defendants,  and  under  the  Code  authorized  them  to  sue  for  the  money 
payable  thereon  in  their  own  names.  The  answer  did  not  set  up  the 
defence  that  the  policy  was  made  in  contravention  of  the  statute  against 
betting  and  gaming.  This  would  be  a  suflficient  answer  to  the  last 
ground  upon  which  the  motion  was  based.     There  was  nothing  in  the 

*  The  omitted  passages  held  that  no  error  appeared  la  the  rulings  as  to  certain 
points  foreign  to  Insurance.  —  Ed. 


SECT.  III.]       VALTON   V.    NATIONAL   FUND    LIFE    ASSUR.    CO.  291 

evidence  authorizing  the  judge  to  hold  that  the  polic}'  was  made  in  vio- 
lation of  the  statute,  had  the  answer  interposed  that  defence. 

The  judge,  among  other  things,  charged  the  jury  that  if  the  insured 
untruly  represented  that  he  was  a  partner  of  the  firm  of  Valton,  Martin 
&  Co.,  or  that  if  he  untruh*  represented  that  he  was  the  moneyed  man 
of  the  firm,  and  either  or  both  of  such  untrue  representations  were  mate- 
rial to  the  risk,  then  the  policy  was  avoided  and  there  could  be  no  re- 
cover}-. That  if  Schumacher  was  dead  in  September,  1850,  and  his 
occupation  that  of  a  merchant  at  the  time  the  proposals  were  signed, 
and  the  representations  of  his  being  a  partner  or  the  moneyed  man  of 
the  firm  were  either  not  untrue  or  not  material  to  the  risk,  then  the 
action  was  lyritna  facie  sustained.  The  defendants'  counsel  requested 
the  court  to  charge  the  jury  that  if  Schumacher  himself,  or  by  Martin  in 
his  behalf,  represented  to  the  agent  of  the  defendants  that  Schumaclier 
was  a  partner  of  the  firm  of  Martin,  Valton  &  Co.,  when  in  fact  at  that 
time  he  was  not  such  partner,  and  if  the  defendants  would  not  have 
issued  the  policy  if  the  representation  had  not  been  made,  tlien  the 
policy  was  void  and  tlie  plaintiffs  could  not  recover.  The  judge  de- 
clined so  to  charge,  and  the  defendants' counsel  excepted.  The  defend- 
ants' counsel  also  requested  the  judge  to  charge  the  jury  that  if  they 
found  that  Schumacher  himself,  or  b}-  Martin  in  his  behalf,  represented 
to  the  agent  of  the  defendants  that  Schumacher  was  the  moneyed  man 
of  the  concern  of  Valton,  Martin  &  Co.,  when  in  fact  at  that  time  he 
was  not  such,  and  that  the  defendants  would  not  have  issued  the  pohcy 
if  the  representations  had  not  been  made,  then  the  policy  is  void  and  the 
plaintiffs  cannot  recover.  The  judge  refused  so  to  charge,  and  the  de- 
fendants' counsel  excepted.  The  charge  of  the  judge  was  correct  as  far 
as  given.  If  the  representations  were  made  and  false,  the  falsit}-  must 
have  been  known  to  Schumacher  and  Martin.  The  facts  were  within 
their  knowledge,  and  the  representations  fraudulent.  The  requests  to 
charge,  considered  in  connection  with  the  charge  given,  present  the 
question  whether  fraudulent  representations  made  by  the  assured  to  the 
insurer  upon  his  application  for  a  policy,  though  not  material  to  the  risk, 
yet  material  in  the  judgment  of  the  insurer,  and  which  induced  him  to 
take  the  risk,  will  avoid  the  poUcy.  This  question  has  not  been  deter- 
mined by  any  adjudged  case  in  this  State,  so  far  as  I  have  been  able  to 
discover.  The  elementary  writers  hold  that  the  policy  may  be  avoided. 
(1  Arnould  on  Ins.,  §  189  :  2  Diier,  681,  682,  683  ;  3  Kent,  282.)  In 
Sibbald  r.  Hill  (2  Dow's  Pari.  R.  263),  it  was  held  that  when  the  assured 
fraudulently  represented  to  the  underwriter  that  a  prior  insurance  by 
another  underwriter  upon  the  same  risk  had  been  made  at  a  less  premium 
than  it  was  in  fact  made,  the  policy  was  vitiated.  In  this  case  it  is 
obvious  that  the  risk  itself  was  not  affected  by  the  representations. 
Lord  Eldox  in  his  opinion  says  that  it  appeared  to  him  settled  law  tliat 
if  a  person  meaning  to  effect  an  insurance,  exhibited  a  policy  under- 
written by  a  person  of  skill  and  judgment,  knowing  that  this  would 
weigh  with  the  other  party  and  disarm  the  ordinary  prudence  exercised 


292  VALTON  V.  NATIONAL  LOAN  FUND  ASSUR.  SOCIETY.       [cHAP.  IV. 

in  the  common  transactions  of  life,  and  it  turned  out  tliat  tliis  person  had 
not  in  fact  underwritten  tlie  policy,  or  had  done  so  under  such  terms 
that  he  came  under  no  obligation  to  pay,  it  appeared  to  him  to  be  set- 
tled law  that  this  would  vitiate  the  policy.  The  courts  in  this  country 
would  say  that  tliis  was  a  fraud  ;  not  on  the  ground  that  the  misrepre- 
sentation affected  the  nature  of  the  risk,  but  because  it  induced  a  con- 
fidence without  which  the  party  would  not  have  acted.  The  principle 
of  this  case,  when  applied  to  the  one  under  consideration,  shows  that 
the  judge  committed  an  error  in  refusing  to  charge  as  requested.  It  is 
clear  that  the  circumstance  of  a  party  being  engaged  in  commercial 
business,  possessed  of  large  means,  might  induce  an  insurer  to  make  an 
insurance  upon  his  life  for  a  large  amount,  while  were  he  a  mere  porter 
the  risk  would  be  rejected,  although  the  chance  of  life  would  be  as  good 
in  the  latter  situation  as  the  former. 

Altliough  the  judgment  must  be  reversed  for  this  error,  yet  as  there 
will  probably  be  another  trial  it  is  proper  to  add  a  few  words  upon  an- 
other question  presented  by  the  case.  The  defendants'  counsel  requested 
the  court  to  charge  the  jury  that  if  Martin  and  Valton,  or  either  of  them, 
procured  or  paid  for  this  policy  for  their  or  either  of  their  benefit, 
though  with  the  assent  of  Schumacher,  then  the  policy  was  void,  being 
a  wager  polic}-.  The  judge  refused  so  to  charge,  and  the  defendants 
excepted.  It  is  unnecessary  to  determine  whether  previous  to  the  statute 
making  void  all  wagers,  bets,  &c.  (1  R.  S.  662),  an  insurance  effected 
by  a  party  upon  the  life  of  a  person  in  which  he  had  no  interest,  was 
valid.  Since  the  statute,  such  contract  would  clearly  be  void.  Upon 
the  trial  there  was  no  proof  but  that  Schumacher  obtained  the  policy 
for  his  own  benefit.  If  he  so  obtained  it,  he  had  the  right  to  dispose 
of  it  as  he  saw  fit,  and  it  would  be  no  defence  against  his  assignees 
that  they  had  no  interest  in  his  life. 

The  judgment  should  be  reversed,  and  a  new  trial  ordered. 

Selden  and  Allen,  Js.  ,  took  no  part  in  the  decision  ;  all  the  other 
judges  concurring.  Judgment  reversed^  and  neio  trial  ordered. 


VALTON   V.   NATIONAL  LOAN  FUND   ASSURANCE 
SOCIETY. 

Court  of  Appeals  of  New  York,  1864.     1  Keyes,  21.* 

Appeal  from  the  Supreme  Court. 

A  new  trial  having  been  ordered  as  reported  cmte,  p.  289,  the  second 
trial  was  before  Mr.  Justice  Miller  and  a  jury,  in  February,  1862. 

1  8.  c.  sub  mm.  Valton  v.  National  Loan  Fund  Life  Assurance  Society.  4  Abbott's 
App.  Dec.  437  ;  and,  in  the  Supreme  Court,  17  Abb.  Pr.  268  (186.3).  The  statement 
in  the  latter  report  has  been  used  in  framing  the  statement  here  given  ;  but  matter 
not  bearing  on  the  point  decided  in  the  Court  of  Appeals  has  been  omitted.  The  re- 
port in  Keyes  gives  no  statement.  —  Ed. 


SECT.  III.]       YALTON  V.  NATIONAL  LOAN  FUND  ASSUR.  SOCIETY.         293 

Dr.  Barent  P.  Staats,  called  as  a  witness  on  behalf  of  the  defendants, 
testified  that  he  was  their  local  physician  in  Albany  in  1850 ;  that  he 
recollected  the  application  for  the  insurance  on  Schumachers  life.  Re- 
ferring to  the  certificate,  he  said  it  was  the  one  given  by  him  ;  that  on 
the  morning  of  its  date  Martin  called  on  him  to  know  at  what  time  he 
could  examine  his  partner  Schumacher.  Witness  appointed  one  o'clock 
of  that  day,  at  which  time  Martin  called  with  Schumacher  upon  witness. 
Witness  stated,  that  as  his  pay  was  graduated  by  the  amount  of  insur- 
ance, witness  asked  him  how  much  he  was  going  to  insure  for.  Schu- 
macher said  it  was  §10,000.  Witness  replied  to  him,  he  must  take 
off  his  coat  or  jacket,  he  must  have  a  good  iudorser ;  it  was  a  large 
amount,  and  he  must  have  a  good  iudorser  for  so  large  an  amount. 
Witness  said  he  meant  thereby  he  must  have  a  more  thorough  ex- 
amination. Martin  observed  to  witness  he  must  not  judge  from  appear- 
ances ;  that  Schumacher  was  the  moneyed  man  of  the  concern.  The 
witness  testified  that  Schumacher  was  dressed  very  common,  and  looked 
like  a  laboring  man.  The  certificate  of  the  medical  examiner  consisted 
in  answers  to  nine  questions,  all  of  which  he  was  requested  to  answer 
minutely. 

The  last  and  ninth  one  was,  "  Opinion  on  the  life."  |^  "  A  decided 
opinion,  recommending  the  acceptance  or  rejection,  and  of  the  pro- 
posal." To  this  latter  question,  Dr.  Staats,  the  medical  examiner, 
certified  as  follows  :  — 

"  A  good  risk  ;  I  recommend  acceptance."  The  witness  further  tes- 
tified that  he  was  accustomed  to  give  an  opinion  on  the  whole  case ; 
that  opinion  was  required  to  be  decided.  The  witness  was  then  asked 
by  defendants'  counsel  the  three  following  questions:  1.  "If  it  had 
not  been  for  the  representation  tliat  Schumacher  was  the  moneyed  man 
of  the  concern,  would  you,  from  your  knowledge  and  observation  of 
Schumacher,  have  recommended  the  acceptance  of  the  proposal?'* 
2.  "  Did  the  representation  in  question  produce  any,  and  if  any, 
what  effect  on  your  mind?"  3.  "Did  the  said  representation  have 
any  influence,  and  if  any,  what,  upon  your  subsequent  action  in  making 
your  certificate  and  report  ?  "  These  questions  on  being  put  to  the 
witness  were  severally  objected  to  by  plaintifl"s'  counsel,  and  excluded 
by  the  court,  and  defendants'  counsel  excepted. 
"  The  plaintiffs  had  a  verdict  and  judgment,  and  the  judgment  was 
affirmed  at  general  term  in  the  third  district.  Thereupon  the  defendant 
company  appealed  to  this  court. 

MuLLiN,  J.  The  object  of  a  physical  examination  of  a  person  pro- 
posing to  insure  his  life  in  an  insurance  company,  by  a  competent  phy- 
sician, is  to  ascertain  whether  he  is  laboring  under,  or  is  subject  to,  any 
diseases  or  defect  which  may  have  a  tendency  to  shorten  life.  The 
inquiry  involves  an  examination  not  only  into  the  present  state  of  the 
various  organs  and  functions  of  the  body,  but  into  the  tendency  of  those 
organs  and  functions  to  take  on  diseases  as  affected  by  habits  of  mind 
as  well  as  of  body,  temperament,  tendency  to  disease  from  hereditary 


294  TKAILL    v.    BAKING.  [cHAP.  IV. 

causes,  and  the  occupation  and  condition  in  life  of  the  subject.  Of  two 
persons  of  the  same  age  and  present  bodily  health,  the  one  niaj-  present 
a  risk  entirely  safe  and  proper  to  be  taken  —  the  other  unsafe  and  im- 
proper to  be  taken.  It  is  impossible  to  affix  limits  to  the  subjects  into 
which  it  is  not  only  proper  but  necessary'  for  an  examining  surgeon  to 
inquire,  in  order  to  arrive  at  a  conclusion  upon  which  he  can  safel}" 
advise  the  acceptance  or  rejection  of  a  risk. 

Whether  I  am  right  or  wrong  in  these  views,  I  entertain  no  doubt 
that  in  man}-  cases  a  knowledge  of  the  pecuniary  circumstances  of  a 
person  desiring  to  be  insured  is  material  to  the  risk  as  affecting,  in 
some  degree,  the  life ;  and  the}'  are  a  legitimate  subject  of  inquiry  for 
the  examining  physician  or  surgeon. 

Tills  inquiry  may  not  be  material  in  every  case,  but  the  surgeon  alone 
can  tell  whether  it  was,  or  was  not,  so  in  a  given  case.  It  is  therefore 
competent  to  ask  him  whether  he  made  the  inquiry,  and  what  response 
was  given,  and  how  far  he  deemed  such  answer  mateiial  in  deciding  to 
advise  the  taking  of  tlie  risk. 

In  such  cases  the  very  point  of  inquiry  is,  whether  the  pecuniar}-  cir- 
cumstances were  deemed  by  him  material,  and  whether  he  would  have 
advised  the  acceptance  of  tlio  risk  if  it  had  not  appeared  that  the  person 
desiring  to  be  insured  was  a  man  of  means.  Tliis  is  the  only  inquiry 
by  which  the  real  importance  of  the  inquir}'  and  answers  can  be  as- 
certained. 

P'or  these  reasons  I  think  the  learned  justice  who  tried  this  cause 
erred  in  rejecting  the  question  put  to  Dr.  Staats,  as  to  the  effect  upon 
his  mind  and  action  in  respect  to  said  application  ;  and  tlie  judgment 
should  for  this  reason  be  reversed,  and  a  new  trial  ordered,  costs  to 
abide  the  event. ^ 

Wright,  J.,  expressed  no  opinion  ;  all  the  other  judges  concurred. 


TRAILL   V.   BARING. 

Court  of  Appeal  in  Chancery,  1864.     4  DeG.,  J.  &  S.  318. 

This  was  an  appeal  by  the  defendants  from  a  decree  of  the  Vice- 
Cliancelior  Sir  John  Stuart,  whereby  his  Honor  directed  a  certain  policy 
of  reassurance  for  £1,000,  granted  by  the  Reliance  Mutual  Life  Assur- 
ance Society  to  the  Provident  Clerks'  Mutual  Life  Assurance  Associa- 
tion on  the  life  of  one  Mrs.  Lydia  Taylpr,  to  be  delivered  up  to  be 
cancelled  with  ancillary  relief,  and  ordered  the  appellants  to  pay  the 
costs  of  the  suit. 

1  Comi-are  IIigl;ie  v.  Guardian  ?ilutual  Life  Ins.  Co.,  53  N.  Y.  G0.3  (1873).  — Ed. 


SECT.  III.]  TRAILL    V.    BARING.  295 

The  case  in  the  court  below  is  reported  in  the  -ith  volume  of  Mr. 
Gitfurd's  Reports,  p.  485. 

The  facts  were  as  follows ;  — 

In  1838  the  International  Life  Assurance  Societ}'  assured  the  life  of 
Lydia  Taylor  for  a  very  large  sum  of  money. 

In  May,  18G1,  they,  in  accordance  with  a  common  practice  of  the 
London  assurance  offices,  reassured  her  life  with  the  Provident  Clerks' 
Mutual  Life  Assurance  Association,  hereinafter  called  the  association, 
for  £3,000  so  as  thereby  to  diminish  their  own  risk.  The  risk  of  the 
association  to  the  International  Life  Assurance  Society  commenced  on 
the  9th  of  May,  1861. 

On  the  10th  of  Ma}',  1861,  Mr.  Linford,  the  secretary  of  the  associa- 
tion, called  on  the  secretary  of  the  Reliance  Mutual  Life  Assurance 
Society,  hereinafter  called  the  society,  at  the  office  of  the  society,  and 
proposed  on  behalf  of  the  association  that  the  society  should  take  part 
of  their  risk  in  Lydia  Taylor's  life  by  way  of  reassurance,  alleging  that 
another  office,  the  Victoria  office,  had  agreed  to  undertake  that  risk  to 
the  extent  of  £1,000  or  more,  but  that  the  association  would  themselves 
retain  £1,000  of  it;  and  proposing  that  the  society  should  take  the  re- 
maining £1,000.  He  further  stated  that  Lydia  Taylor  was  alleged  to 
be  in  her  sixty-second  year ;  that  no  fresh  medical  examination  could 
be  had,  but  that  from  information  which  he  had  obtained  the  directors 
of  the  association  were  satisfied  that  tlie  life  was  a  first-class  life,  and 
tliat  they  had  accepted  the  proposal  and  granted  the  assurance  for 
£3,000  upon  that  footing. 

This  verbal  proposal  of  the  secretary  of  the  association  was  enter- 
tained and  accepted  on  the  same  10th  of  May,  1861,  by  the  secretary 
of  the  society  in  these  words  :  "  This  office  will  join  you  in  the  risk  on 
the  life  of  Mrs.  Lydia  Taylor  to  the  extent  of  £1,000." 

This  acceptance  was  confirmed  on  the  14th  of  May,  and  notice  given 
to  the  association  on  the  following  day. 

It  was  alleged  that  it  was  in  reliance  on  the  representations  made  by 
the  secretary  of  the  association  that  the  association  had  confidence  in 
the  goodness  of  the  life,  and  that  they  would  retain  £1,000  as  their 
proportion  of  the  risk  under  the  assurance  for  £3,000  which  they  had 
granted  on  her  life,  that  the  proposal  was  accepted  as  a  partnership 
risk  by  the  society,  who  dispensed  with  the  usual  investigation  or 
inquiry  into  the  age,  health,  or  habits  of  Lydia  Taylor. 

On  the  18th  of  May,  1861,  the  society  issued  the  policy  in  question 
in  the  suit  as  of  that  date  to  the  association,  and  the  association  paid 
to  the  society  the  sum  of  £79  13.9.  4(7.  for  the  first  year's  premium  on 
the  reassurance.  This  sum  was  merely  the  amount  of  one-third  of  the 
premium  charged  by  the  association  to  the  International  Life  Assurance 
Society  for  that  society's  £3,000  policy,  and  was  not  the  sum  which 
under  ordinary  circumstances  would  have  been  the  society's  premium 
on  a  £1,000  assurance  of  a  first-class  life  of  sixty-two.  The  risk  on 
this  policy  commenced  on  the  18th  of  May,  1861. 


296  TllAILL    V.    BAPJNG.  [CHAP.  IV. 

On  the  30th  of  January,  1862,  Lydia  Taylor  died  suddenlj'.  Notice 
of  her  death  was  not  given  to  the  society  by  the  association  until  the 
21st  of  May  following. 

After  her  death  the  societ}'  discovered  that  the  association,  instead  of 
retaining  the  £1,000  risk  on  her  life  which  they  had  represented  to  the 
society  they  would  retain,  and  in  contravention  of  that  representation, 
had  on  the  loth  of  May,  1861,  assured  by  way  of  reassurance  with  the 
Victoria  office  the  further  sum  of  £1,000  in  addition  to  the  £1,000  in 
which  they  had  already  reassured  in  that  office  ;  thus  b}'  reassurance 
getting  rid  of  the  whole  of  their  liability  in  respect  of  the  policy  granted 
bj'  them  to  the  International  office.  No  notice  of  this  fact  was  given  by 
the  association  to  the  societ}'  prior  to  the  18th  of  May,  1861. 

The  reason  alleged  by  the  defendants  for  this  departure  from  the  ear- 
lier representations  of  the  secretarj-  of  the  association  was,  that  at  a 
meeting  of  directors  held  on  the  loth  of  May,  1861,  remark  was  made 
upon  the  large  amount  of  reassurance  business  transacted  with  the 
International  Life  Assurance  Society'  during  the  week,  and  it  was  re- 
solved to  retain  no  part  of  the  risk  of  the  present  reassurance,  the  case 
happening,  as  was  remarked  b}'  a  director  present,  to  be  the  only  one 
then  before  the  meeting  where  no  fresh  medical  evidence  could  be  ob- 
tained, and  the  Victoria  being  willing  to  take  £2,000  of  the  risk  instead 
of  £1,000.  It  was  also  alleged  that  the  resolution  was  in  no  sense  de- 
pendent on  any  want  of  confidence  in  the  goodness  of  Lydia  Taylor's 
life  existing  on  the  part  of  either  the  individual  director  or  the  meeting. 

After  a  correspondence  between  the  secretaries  and  solicitors  of  the 
societ}'  and  the  association  ensuing  upon  the  announcement  by  the  lat- 
ter to  the  former  of  Lydia  Taylor's  death,  the  societj-  finall}-  refused  to 
pa}'  the  £1,000  assured  with  them  by  the  association  ;  and  the  associa- 
tion consequently,  in  October,  1862,  commenced  an  action  on  the  policy 
against  the  plaintiffs  in  this  suit. 

The  society  was  an  luiincorporated  association,  and  the  plaintiffs  in 
this  suit  were  those  three  of  its  directors  who  had  signed  the  polic}'  in 
question.  The  defendants  in  the  suit  were  the  trustees  and  secretar}-  of 
the  association,  a  body  registered  by  the  registrar  of  friendly  societies. 

The  bill  was  filed  in  November,  1862,  stating  the  facts  of  the  case, 
alleging  in  effect  that  it  was  the  custom  and  understanding  with  Lon- 
don assurance  offices  upon  such  reassurances  as  the  present  (in  the 
absence  of  a  special  stipulation  or  statement  to  the  contrary)  that  the 
office  effecting  the  reassurance  should  itself  retain  a  substantial  portion 
of  the  risk  covered  by  the  original  assurance,  and  for  the  office  with 
which  the  reassurance  was  effected  to  dispense  with  the  usual  medical 
examination  on  their  own  behalf  of  the  person  whose  life  was  assured, 
and  with  the  usual  inquiries  as  to  his  or  her  health  and  habits,  and  to 
rel}'  on  the  retention  by  the  office  granting  the  original  assurance  of 
their  fair  portion  of  the  risk  as  a  guarantee  of  their  good  faith  in  reas- 
suring ;  and  alleging  further,  that  the  societ}'  would  not  have  effected 
the  reassurance  if  it  had  not  been  that  the  association  were  to  retain 


SECT.  III.]  TRAILL    V.    BAKING.         '  297 

£1,000  of  the  £3,000  risk  themselves ;  and  praying  a  declaration  that 
the  £1,000  policy  of  assurance  of  the  18th  of  May,  1861,  was  fraudu- 
lently obtained  and  ought  to  be  set  aside  and  delivered  up  to  be  can- 
celled ;  and  for  an  injunction  to  restrain  the  action  and  any  other 
proceedings. 

It  appeared  that  the  Victoria  office  had  reassured  the  whole  of  the 
£2,000  with  knowledge  that  the  association  was  retaining  no  part  of 
the  risk,  and  had  paid  the  full  £2,000  so  assured  by  them. 

The  general  effect  of  the  evidence  in  other  respects  sufficiently  appear 
from  the  judgments  of  the  Lords  Justices  and  from  Mr.  Giffard's  report 
of  the  case  in  the  court  below. 

Mr.  Bacon  and  Mr.  Dauney,  for  the  respondents. 
Mr.  3Iollns  and  Mr.  E.  K.  Kavslake,  for  the  appellants. 
Knight  Bruce,  L.  J.  It  is  in  my  judgment  a  just  inference  from  the 
evidence  in  this  cause  that  the  society  represented  by  the  plaintiffs  was 
induced  to  agree  to  grant,  did  agree  to  grant,  and  did  grant  the  reas- 
surance policy  in  question,  dated  the  18th  of  May,  1861,  on  the  faith 
and  in  consequence  of  a  representation  made  to  them  on  the  part  of  the 
assured,  the  society  represented  by  the  defendants,  that  the  defendants' 
society  would  retain  and  remain  subject,  to  the  extent  of  £1,000,  to 
the  liability  upon  the  assurance  for  £3,000,  as  to  £1,000,  other  part  of 
which,  the  assurance  in  question  was  granted. 

It  may  be  that  until  the  loth  of  May,  1861,  the  society  represented 
by  the  defendants  continued  to  intend  to  abide  by  that  representation, 
but  on  the  loth  of  Ma}-,  1861,  that  intention  was  changed.  The  notion 
of  retaining  any  portion  of  the  liabiUty  to  the  £3,000  was  abandoned 
and  a  different  course  was  adopted. 

If  that  change  of  intention,  if  that  abandonment,  if  that  different 
course,  if  that  intention  of  not  retaining  any  portion  of  the  risk,  had 
been  communicated  to  the  society  represented  by  the  plaintiffs,  as  it 
ought  lo  have  been,  without  delay,  all  might  have  been  well.  But  no 
such  thing  was  done,  and  three  days  after  this  uncommunicated  change 
of  intention  the  assurance  was  allowed  to  be  completed.  That  assurance 
should  not  have  been  allowed  to  be  completed,  without  a  full  and  clear 
communication  that  the  intention  represented  to  exist  of  retaining  the 
liability  under  the  £3,000  policy  to  the  extent  of  £1,000  had  been 
abandoned. 

In  my  judgment  the  misrepresentation  was  material.  The  represen- 
tation is  proved  to  have  been  an  indecement,  an  important  inducement, 
to  the  plaintiffs'  society  to  accept  the  assurance,  in  the  circumstances  in 
which  it  was  accepted,  without  more  inquiry  and  more  investigation 
than  was  then  made.  It  appears  to  me,  I  repeat,  that  the  plaintiffs  are 
entitled  to  assert,  and  to  be  believed  in  asserting,  that  they  would  not 
have  acted  as  they  have  done  if  they  had  known,  as  they  ought  to  have 
been  informed  by  the  society  represented  by  the  defendants  of,  the  real 
facts. 

Accordingly,  in  my  judgment  the  decree  is  right.     The  contract  was 


298  TKAILL   V.   BARING.  [CHAP.  IV. 

obtained  by  means  of  an  untrue  representation,  a  representation  posi- 
tively intended  to  be  carried  into  effect  at  the  time,  but  abandoned 
afterwards,  and  the  abandonment  not  communicated.^  .   .  . 

TuRNEu,  L.  J.  I  agree- 
In  disposing  of  the  case  I  desire,  in  the  first  place,  to  absolve  the  de- 
fendants from  all  imputation  of  any  intention  of  actual  fraud  ;  actual 
fraud  has  not  been  imputed  at  the  bar,  and  the  circumstances  of  the 
case  in  my  judgment  entirely  exclude  that  consideration. 

But  that  by  no  means  disposes  of  the  case  ;  for  there  are  man}'  states 
of  circumstances  in  which  there  is  technical  fraud,  in  which  transactions 
are  fraudulent  in  the  eyes  of  this  court,  or  characterized  by  the  desig- 
nation of  fraud,  although  there  may.be  no  actual  moral  fraud.  The 
question  really  here  is  whether  this  case  does  or  does  not  fall  within 
the  range  of  those  cases  in  which  this  court  holds  a  transaction  to  be 
fraudulent,  although  it  may  not  be  morally  so. 

The  case  has  been  dealt  with  b^'  the  defendants  as  if  it  were  one  of 
implied  contract. 

I  give  no  opinion  whether  or  not  that  view  of  the  case  would  be  right 
if  the  question  depended  wholly  on  the  custom  of  assurance  offices. 
But  the  case  does  not  in  my  view  of  it  in  any  waj'  depend  upon  that 
question.  It  depends  in  my  judgment  entirely  upon  the  representations 
■which  were  made  and  which  induced  the  plaintiffs  to  accept  the  burthen 
of  the  reassurance  in  question. 

The  question  really  is,  whether,  representations  having  been  made 
that  a  liability-  would  be  retained  on  the  part  of  the  defendants,  and 
that  intention  having  been  changed  before  the  liability  attached  upon 
the  plaintitTs  —  for  there  is  no  evidence  in  support  of  the  contention  at 
the  bar  to  the  contrar}'  —  there  ought  not  to  have  been  a  communication 
of  that  change  of  intention  to  the  plaintiffs  before  they  undertook  the 
liability  for  the  £1,000  in  question, 

I  take  it  to  be  quite  clear,  that  if  a  person  makes  a  representation  by 
which  he  induces  another  to  take  a  particular  course,  asd  the  circum- 
stances are  afterwards  altered  to  the  knowledge  of  the  party  making 
the  representation,  but  not  to  the  knowledge  of  the  party  to  whom  the 
representation  is  made,  and  are  so  altered  that  the  alteration  of  the  cir- 
cumstances may  affect  the  course  of  conduct  which  may  be  pursued  by 
the  party  to  whom  the  representation  is  made,  it  is  the  imperative  duty 
of  the  part}'  who  has  made  the  representation  to  comuuniicate  to  the 
part}'  to  whom  the  representation  Ijas  been  made  the  alteration  of  those 
circumstances ;  and  that  this  court  will  not  hold  the  party  to  whom  the 
representation  has  been  made  bound  unless  such  a  communication  has 
been  made. 

Thus,  suppose  a  man  agrees  to  execute  a  deed  releasing  his  debtor 
upon  certain  terms  on  the  assurance  that  another  person,  also  a  creditor 
of  the  debtor,  has  agreed  to  do  the  same,  and  the  other  creditor  has  in 
fact  agreed  to  do  so  at  the  time  but  has  afterwards  withdrawn  from  the 

1  Passages  on  costs  and  equitable  jurisdiction  have  been  omitted.  —  Ed. 


SECT.  III.]  PKOVIDENT   LIFE    INS.    CO.    V.    FEXNELL.  299 

agreement,  and  the  withdrawal  is  not  communicated  to  the  person  who 
has  agreed  to  give  the  release  upon  the  faith  of  another  creditor  having 
agreed  to  do  the  same,  although  it  is  known  to  the  person  upon  the 
faith  of  whose  assurance  he  agreed  to  give  the  release  ;  and  he  executes 
the  deed.  This  court  would  not  hold  him  bound  b}'  the  deed  he  had 
executed.  Underhill  r.  Horwood,  10  Ves.*  225,  is  a  case  in  point  on 
such  a  state  of  circumstances  ;  but,  independently  of  cases,  I  adhere 
entireh-  and  litcralh'  to  the  opinion  expressed  b}-  Lord  Cranworth  in  the 
case  of  Reynell  v.  Sprye,  1  DeG.,  M.  &  G.  GGO,  and  I  think  that  the 
opinion  is  perfectl}'  decisive  upon  a  question  of  this  description. 

It  is  said  here  that  the  change  of  circumstances  was  not  such  as  could 
in  any  way  have  changed  the  course  of  the  plaintiffs'  conduct,  and  the 
evidence  of  witnesses  has  been  relied  upon  in  support  of  that  view. 
But  the  real  question  is  not  what  the  witnesses  thought  —  not  whether 
jMr.  Ratray  thought  that  those  were  circumstances  which  were  so  mate- 
rial as  that  they  might  change  the  intention  of  the  plaintiffs  —  but  what 
the  plaintiffs  themselves  would  have  thought  if  the  change  of  intention 
on  the  part  of  the  defendants  had  been  communicated  to  them,  the 
plaintiffs.  The  argument,  therefore,  is  entirely  beside  the  question. 
Had  this  representation  of  what  had  occurred  and  of  the  change  of  in- 
tention on  the  part  of  the  defendants  been  communicated  to  the  plain- 
tiffs, it  is  impossible  to  say  what  course  tlie  plaintifls  would  have  pursued 
—  whether  they  would  or  would  not  have  accepted  the  polic}-.  The}' 
might  have  done  so :  but  it  is  equally  clear  that  they  might  not ;  and 
we  cannot  say  whether  they  would  or  would  not:  but  it  was  to  them 
that  the  communication  should  have  been  made,  in  order  that  they  might 
exercise  their  option  upon  the  subject.^  .   .   . 

In  my  judgment  a  case  of  equitable  jurisdiction  is  well  proved  in  this 
case ;  the  decree  is  right,  and  this  appeal  must  be  dismissed.^ 


PROVIDENT  LIFE  INSURANCE   COMPANY  v.  FENNELL. 

Supreme  Court  of  Illinois,  18G8.     49  111.  180. 

Appeal  from  the  Superior  Court  of  Chicago. 
The  facts  in  this  case  sufficiently  appear  in  the  opinion. 
Mr.  Geortje  H.  Harding,  for  the  appellant. 
Messrs.  Hervey,  Anthony,  &  Gait,  for  the  appellee. 
Mr.  Justice  Lawrence  delivered  the  opinion  of  the  court: 
This  was  a  suit  brouglit  by  INIary  Fennell  against  the  Provident  Life 
Insurance  Company,  upon  a  policy  issued  upon  the  life  of  her  deceased 

1  The  omitted  passage  deah  with  equitable  jurisdiction.  — Ed. 
-  Compare  Prudential  Assurance  Co.  j;.  ^tna  Life  Ins.  Co.,  23  Blatch.  223  (1885)  ; 
B.  0.  52  Conn.  576.  —  Ed. 


300       YIVAR   V.    SUPRExME   LODGE    KNIGHTS   OF   PYTHIAS.       [CHAP.  IV. 

husband.      The  plaintiff  had  a  verdict  and  judgment  and  the  defendant 
appealed. 

It  is  now  urged  for  appellant,  that  the  court  erred  in  not  permitting 
the  defendant  to  give  in  evidence  the  application  of  deceased  for  the 
insurance,  showing  that  his  occupation  at  the  time  of  the  insurance  was 
that  of  a  switchman  on  a  railway,  and  to  prove  in  connection  with  this 
evidence  that  he  was  killed  while  performing  the  duties  of  a  brakeman. 
The  insurance  was  against  death  by  accident.  The  evidence  offered,  if 
admitted,  would  have  been  immaterial.  The  representation  was  merely 
that  the  occupation  of  the  deceased  was  then  that  of  a  switchman,  the 
truth  of  which  is  not  denied,  and  did  not  amount  to  a  covenant  that  he 
would  do  no  act  not  connected  with  such  occupation,  or  that  he  would 
not  engage  in  any  different  occupation.  N.  E.  M.  &  F.  Ins.  Co.  v. 
Whitmore,  32  111.  223.  The  policy  was  not  against  accidents  occur- 
ring in  the  course  of  his  occupation,  but  against  accidents  generally, 
and  provided  expressly  in  what  particular  cases  the  company  was  not 
to  be  liable,  but  did  not  provide  that  it  would  not  be  liable  for  death 
occurring  from  a  cause  not  connected  with  the  occupation  of  the  assured, 
or  that  he  should  not  change  his  occupation.  If  the  company  had  de- 
sired to  protect  itself  from  all  liabilitj',  except  for  accidents  occurring 
in  a  particular  occupation,  it  should  have  so  expressly  stipulated. 
That  it  did  not  understand  its  own  policy  as  only  covering  so  narrow  a 
ground  is  evident  from  the  fact  that  it  did  expressly  guard  itself  against 
liability  for  death  or  injury  incurred  through  war,  riot,  or  invasion,  or 
while  the  assured  was  in  a  state  of  intoxication,  or  from  riding  races, 
duelling,  or  fighting. 

It  is  also  objected  that  the  court  did  not  permit  the  company  to  prove 
the  premium  had  not  been  fully  paid.  The  policy  acknowledged  the 
receipt  of  payment,  and  we  have  decided  in  a  case  not  yet  reported 
that  this  statement  of  a  policy  could  not  be  controverted. 

Judgment  affirmed} 


VIVAR  V.  SUPREME   LODGE   OF  KNIGHTS   OF   PYTHIAS. 
Supreme  Court  of  New  Jersey,  1890.     52  N.  J.  L.  455. 

On  contract. 

For  the  rule,  E.  Q.  Keashey. 

Contra,  J.  T.  Dunn  and  J.  H.  Baches. 

Dixon,  J.  This  suit  was  brought  to  recover  the  amount  due  on  two 
certificates,  in  terms  as  follows  :  — 

"  Certificate  of  membership.  First  class.  $1,000.  No.  6118.  En- 
dowment Rank  of  the  Order  of  Knights  of  Pythias. 

1  Ace:  Prudential  Assurance  Co.  v.  ^tna  Life  Ins.  Co.,  23  Blatch.  223  (1885) • 
s.  c.  52  Conn.  576.  —  Ed. 


SECT.  Ill,]      VIVAR   V.   SUPREME   LODGE   KNIGHTS   OF   PYTHIAS.        301 

"This  certifies  that  Brother  Darius  Vivar  has  received  the  Endow- 
ment Rank  of  the  Order  of  Kniglits  of  Pythias  in  Section  No.  311,  and 
is  a  member  in  good  standing  in  said  Rank.  And  in  consideration  of 
the  representations  and  declarations  made  in  his  application,  bearing 
date  of  June  24,  1879,  wliich  application  is  made  a  part  of  this  con- 
tract, and  the  pa^yment  of  the  prescribed  admission  fee,  and  in  con- 
sideration of  the  pa?nient  hereafter  to  said  Endowment  Rank  of  all 
assessments  as  required,  and  the  full  compliance  with  all  the  laws  gov- 
erning this  Rank,  now  in  force  or  that  may  hereafter  be  enacted,  and 
shall  be  in  good  standing  under  said  laws,  the  said  sum  of  one  thousand 
dollars  will  be  paid  b}'  the  Supreme  Lodge  Knights  of  Pythias  of  the 
World,  to  Emil}'  Louisa  Vivar,  his  wife,  as  directed  by  said  Brother  in 
his  application,  or  to  such  other  person  or  persons  as  he  may  subse- 
quentl}'  direct,  b}'  will  or  otherwise,  and  entered  upon  the  records  of 
the  Supreme  Master  of  Exchequer,  upon  due  notice  and  proof  of  death 
and  good  standing  in  the  Rank  at  time  of  death,  and  the  surrender 
of  this  certificate  ;  provided,  however,  that  if  at  the  time  of  the  death 
of  the  said  Brother  Darius  Vivar,  there  shall  be  less  than  one  thousand 
members  in  this  class,  there  shall  onl}-  be  paid  a  sum  equal  to  one  dollar 
for  each  member  in  good  standing  in  this  class.  And  it  is  understood 
and  agreed  that  any  violation  of  the  within  mentioned  conditions,  or  the 
requirements  of  the  laws  in  force  governing  this  Rank,  shall  render  this 
certificate,  and  all  claims,  null  and  void,  and  that  the  said  Supreme 
Lodge  shall  not  be  liable  for  the  above  sum,  or  any  part  thereof. 

"  In  witness  whereof,  we  have  hereunto  subscribed  our  names  and 
affixed  the  seal  of  the  Supreme  Lodge  Knights  of  Pythias  of  the  World. 

"  D.  B.  Woodruff, 

[l.  s.]  "  Supreme  Chancellor. 

"Joseph  Dowdall, 
"  /Supreme  Keeper  of  Records  and  Seal, 

"  Issued  this  5th  day  of  July,  1879,"  &c. 

The  other  certificate  is  in  the  same  form,  but  in  the  second  class,  for 
$2,000. 

Darius  Vivar  died  April  24th,  1882,  and  suit  on  these  certificates  was 
brought  by  Emily  Louisa  Vivar  in  July,  1888,  on  the  trial  of  which 
action  the  learned  justice  directed  a  verdict  for  the  plaintiff,  and  gave 
the  defendant  a  rule  to  show  cause  why  the  verdict  should  not  be  set 
aside,  which  rule  is  now  to  be  decided.^  .   .  . 

The  next  ground  on  which  the  defendant  seeks  a  new  trial  is  that 
although  Vivar,  in  his  application  for  membership  in  tlie  Endowment 
Rank,  in  response  to  the  question,  "  State  definitely  to  whom  3'ou  wish 
the  benefit  made  payable  and  relationship  to  you."  had  answered,  "  To 
my  wife,  Emily  Louisa  Vivar,"  and  although  by  the  certificates  sued  on 

1  In  reprinting  the  opinion,  passages  have  heen  omitted  to  the  effect  that  the  de- 
ceased was  a  member  in  good  standing  at  the  time  of  his  death,  that  the  statement  of 
relationship  was  not  a  warranty,  and  that  a  beneficiary  need  not  have  an  interest  in 
the  life  insured.  For  some  of  the  omitted  passages,  see  post,  p.  410,  n.,  nnd  ante, 
p.  23,  n.  —  Ed. 


302         V1^^VR   V.    SUPREME   LODGE    KNIGHTS    OF   PYTHIAS.       [CHAP.  IV. 

the  sums  insured  were  mode  payable  to  "  Emily  Louisa  Vivar,  his  wife," 
yet  the  trial  judge  rejected  evidence  offered  by  the  defendant  to  sliow 
that,  before  and  at  the  time  of  the  plaintiff's  marriage  to  Vivar,  he  had 
a  lawful  wife  living,  and  both  he  and  tlie  plaintiff  knew  it.  .  .  . 

In  order  to  invalidate  a  contract,  a  representation  made  during  the 
negotiations  must  not  only  be  wilfully  untrue,  but  must  also  be  material, 
or°at  least  must  appear  "to  have  been  thought  material  by  the  party  to 
whom  it  was  made.     To  quote  the  language  of  Professor  Parsons  :  "  It 
is  obvious  that  the  fraud  must  be  material  to  the  contract  or  transaction 
which  is  to  be  avoided  because  of  it,  for  if  it  relate  to  another  matter, 
or  to  this  only  in  a  trivial  or  unimportant  way,  it  affords  no  ground  for 
the  action  of  the  court.     It  must  thei-efore  relate  distinctly  and  directly 
to  this  contract,  and  must  affect  its  very  essence  and  substance.   .  .  . 
Nor  can  we  give  a  better  rule  for  deciding  the  question  (whether  the 
fraud  be  material  or  not)  than  this:  If  the  fraud  be  such  that,  had  it 
not  been  practised,  the  contract  would  not  have  been  made  or  the  trans- 
action completed,  then  it  is  material  to  it;  but  if  it  be  shown  or  made 
probable  that  the  same  thing  would  have  been  done  by  the  parties  in 
the  same  way,  if  the  fraud  had  not  been  practised,  it  cannot  be  deemed 
material."     2  Pars.  Cont.  760.     So  in  Anderson  v.  Fitzgerald,  4  II.  L. 
Cas.  484,  Lords  Cranworth  and  St.  Leonards  both  express  the  opinion 
that  a  wilfully  false  representation  made  in  obtaining  a  policy  of  life 
insurance  will  not  vitiate  the  contract,  unless  it  be  material  or  be  deemed 
material  by  the  insurer,  or  the  policy  declare  that  the  mere  falsity  of  the 
statement  shall  avoid  the  insurance.     A  similar  view  was  announced  in 
Valton  V.  Tiie  National  Fund  Life  Ass.,  20  N.  Y.32,  and  in  many  other 
cases  cited  in  notes  to  Carter  v.  Bochm,  1  Sm.  Lead.  Cas.  *619,  *641. 
Where  the  defence  is,  that  a  representation  collateral  to  the  contract 
was  false  and  fraudulently  made,  the  gist  of  the  defence  is  the  fraud  of 
the  plaintiff,  by  which  the  insurer  was  misled  and  induced  to  make  the 
contract  of  insurance.     Franklin  Fire  Ins.  Co.   v.  Martin,  11  Vroom, 
568,  573.     If  the  representation  made,  though  known  by  the  insured  to 
be  false,  did  not  differ  from  the  truth  in  any  respect  which  was,  either 
in  fact  or  in  the  view  of  the  insurer,  material  to  the  contract,  then  the 
falsehood  did  not  mislead  the  insurer,  or  induce  the  contract,  and  should 
not  be  allowed  to  avoid  it. 

Usually  the  materiality  of  a  representation  will  be  inferred  from  the 
fact  that  it  was  made  pending  the  negotiations,  in  response  to  a  specific 
inquiry  by  the  insurer  ;  but  this  rule  is  not  universal ;  for  the  purpose 
of  the  inquiry  must  be  considered,  to  see  whether  the  information  is 
sought  to  aid  the  insurer  in  fixing  the  terras  on  which  he  will  contract, 
or  with  an  entirely  different  object.  Thus,  if  a  mutual  insurance  com- 
pany should  require  its  premiums  to  be  paid  within  a  definite  time  after 
the  mailing  of  notice  addressed  to  the  residence  of  the  insured,  and  with 
this  rule  in  view  should  require  every  applicant  for  insurance  to  state 
his  residence  in  his  application,  and  an  applicant  should  give  as  his 
residence,  not  the  truth,  but  the  place  where  he  ordinarily  received  hia 


SECT.  III.]      YIVAR   V.   SUPREME   LODGE    KNIGHTS    OF   PYTHIAS.        fi03 

mnil,  it  would  seem  absurd  to  hold  that  such  circumstance  could  invali- 
date the  contract. 

In  the  present  case,  the  inquir}'  related  merel}*  to  the  pa3-ee  of  the 
mone}'  for  which  the  insurer  was  to  become  responsible,  and  b}*  the 
very  terms  of  the  contract  subsequently  made  the  insurer  expressly  left 
the  designation  of  the  payee  to  tlie  absolute  discretion  of  the  insured, 
the  language  of  the  certificates  being  that  the  supreme  lodge  will  pay  the 
sum  insured  to  "Emily  Louisa  Vivar,  his  wife,  as  directed  b}-  said 
Brother  [Vivar]  in  his  application,  or  to  such  other  person  or  persons 
as  he  may  subsequently-  direct,  b}-  will  or  otherwise."  A  similar  power 
is  given  to  the  insured  by  Article  IX.  of  the  constitution  of  the  rank. 
It  seems  manifest  that  a  subject  tluis  committed  to  the  control  of  the 
Insured  was  not  material  to  the  contract  of  the  insurer,  nor  so  regarded 
by  the  insurer,  and  that  if  Vivar  had  declared  Emily  Louisa  Vivar  to  be 
not  related  to  him,  as  the  lodge  now  alleges  the  truth  to  have  been,  the 
contract  would  have  been  made  on  precisely  the  same  terms  as  at  present. 
While,  therefore,  the  fact  that  the  question  was  put  might  justify  an  in- 
ference that  relationsliip  between  the  payee  and  the  member  was  thought 
material,  yet  the  express  terms  of  the  certificates  and  the  provisions 
of  the  constitution  force  the  conclusion  that  it  was  not.  In  this  respect 
the  Endowment  Rank  of  the  Knights  of  Pythias  differs  from  those 
benevolent  societies  which  are  organized  for  the  benefit  of  members  and 
their  families  solely,  and  with  regard  to  wliich  it  has  been  properly  held 
that  the  relationship  of  the  payee  is  material.  Supreme  Council  Amer- 
ican Legion  of  Honor  v.  Green,  17  Atl.  Rep.  1048  ;  American  Legion 
of  Honor  v.  Smith,  18  Stew.  Eq.  466.  .   .  . 

Our  conclusion  is  that  the  relationship  of  Vivar  to  the  plaintiff  was 
not  material  to  the  contract,  either  in  fact  or  in  contemplation  of  the 
insurer,  and  that,  therefore,  the  falsity  of  Vivar's  statement  regarding 
it  could  not  invalidate  llie  insurance. 

The  last  reason  urged  for  a  new  trial  is  that  Vivar  in  his  application 
misstated  his  age.  There  was,  however,  no  testimony  produced  at  the 
trial  which  would  warrant  a  finding  to  that  effect. 

On  the  whole,  we  think  that  justice  was  done  by  the  verdict,  and  that 
the  rule  to  set  it  aside  should  be  discharged.^ 

^  On  the  topic  of  this  section,  see  also  :  — 

Watson  V.  Mainwaring,  4  Taunt.  763  (1813) ; 

Morrison  v.  Muspratt,  12  Moo.  231  (1827)  ;  s.  c.  4  Bing.  60; 

Swete  V.  Fairlie,  6  C.  &  P.  1  (1833)  ; 

Hartman  v.  Keystone  Ins.  Co.,  21  Pa.  466  (1853) ; 

Bridgman  v.  London  Life  Assurance  Co.,  44  U.  C.  Q.  B.  536  (1879)  ; 

Goucher  v.  Northwestern  Traveling  Men's  Association,  20  Fed.  Rep.  596  (1884)j 

Perine  i-.  Grand  Lodge  of  A.  0.  U.  W,,  51  Minn.  224  (1892) ; 

Standard  Life  and  Accident  Ins.  Co.  v.  Martin,  133  Ind.  376  (1892) ; 

Grand  Lodge  Ancient  Order  of  United  Workmen  v.  Belcham,  145  III.  308  (1893) 

Mutual  Life  Ins.  Co.  v.  Thomson,  94  Ky.  253  (1893) ; 

Fidelity  and  Casualty  Co.  v.  Alport,  28  U.  S.  App.  393  (1895).  —  Ed. 


304  JEFFERY   V.   LEGENDER.  [CHAP.  V. 


^ 


CHAPTER  V. 
WARRANTY. 


SECTION   I. 

Marine  Insurance.^ 

JEFFERY  V.  LEGENDER. 

King's  Bench,  1691.     3  Lev.  320.2 

Assumpsit  on  a  policy  of  assurance  made  in  the  usual  form  ;  and  in 
the  conclusion  of  the  policy  were  the  words  usually  there  inserted  ;  viz., 
"  Warranted  to  depart  with  convoy."  And  the  voyage  was  to  be  from 
London  to  Naples;  and  June  17  the  ship  departed  from  London  with 
convoy;  but  the  19th  of  June  the  ship  and  the  convoy  were  separated 
by  tempest ;  and  the  ship  was  by  the  tempest  driven  into  Foy,  and  the 
convoy  into  Torbay,  ten  leagues  distant  from  Foy ;  and  the  ship  and 
the  convoy  continued  in  the  said  several  ports  till  March  1,  when  the 
wind  changed,  and  so  continued  till  March  3,  which  was  time  enough 
for  the  convoy  to  have  arrived  at  the  ship ;  and  that  the  ship  sailed  out 
of  Foy  to  go  to  the  convoy,  but  before  she  reached  the  convoy  she  was 
by  another  tempest  drove  seventj'  leagues  out  to  sea,  the  convoy 
remaining  all  this  time  at  Torbay  ;  and  the  ship  being  so  out  at  sea 
was  taken  by  pirates.  And  upon  a  special  verdict  finding  the  whole 
matter  (on  the  issue  non-assumpsit)  the  question  was  whether  the 
insurer  should  be  charged.  And  (1)  it  was  agreed  and  admitted  of 
both  sides  that  by  the  custom  of  merchants  those  words  "  Warranted 
to  depart  with  convoy  "  are  the  words  of  the  assured,  and  not  of  the 
assurer,  and  by  them  the  assured  is  to  find  the  convoy  ;  (2)  it  was  held 
by  the  Chief  Justice  (Holt)  and  the  most  part  of  the  court  that,  althougli 
the  words  are  only  "  to  depart  with  convo}*,"  yet  they  extend  to  sail 
with  convoy  throughout  the  whole  voyage ;  but  (3)  that  this  sepa- 
ration being  by  the  tempest  at  the  first,  and  the  ship  and  the  convoy 
never  after  meeting,  and  the  ship  sailing  to  meet  with  the  convoy  to  go 

1  For  the  topics  often  treated  as  instances  of  implied  warranty,  see  post,  Chap.  VI., 
Sect.  I.  —  Kd. 

2  8.  c.  sub  nom.  Jefferves  v.  Legendra,  1  Shower,  320;  sub  nom.  Jefferies  v.  Legendra, 
Carthcw,  216,  4  Mod.  58,  and  Holt,  4G5 ;  and  sub  nom.  Jeffries  ;;.  Legandra,  2  Salk. 
443.  —  Ed. 


SECT.  I.]  WOOLMER    V.   MUILMAX.  305 

with  it  tlie  rest  of  the  vo3-age,  and  being  again  driven  awa}'  byiempest 
and  taken  by  the  pirates,  though  the  convoy  remained  all  this  time  at 
Torbay,  yet  this  was  not  such  a  neglect  in  the  convoj-  as  to  discharge 
the  insurer,  who  might   have  stayed  at  Fo}'  till  the  convoy  came-t^/ 
him,  and  therefore  they  gave  judgment  for  the  plaintiff.^ 

Thompson,  King's  Sergeant,  for  the  plaintiff. 

Levinz,  for  the  defendant. 


LETHULIER'S    CASE. 

King's  Bench,  1692.     2  Salk.  443. 

Action  on  a  policy  of  insurance  by  the  defendant  at  Loudon,  insur- 
ing a  ship  from  thence  to  the  East  Indies,  •'  warranted  to  depart  with 
convoy,"  and  shows  that  the  ship  went  from  London  to  the  Downs, 
and  from  thence  with  convoy,  and  was  lost.  After  a  frivolous  plea 
and  demurrer,  the  case  stood  upon  the  declaration ;  to  which  it  was 
objected  that  here  was  a  departure  without  convoy.  Et  per  Cur. 
The  clause  "  warranted  to  depart  with  convoy"  must  be  construed  ac- 
cording to  the  usage  among  merchants,  —  i.  e.  from  such  place  where 
convoys  are  to  be  had,  as  the  Downs,  &,c.^  Holt,  C.  J.,  contra :  We 
take  notice  of  the  laws  of  merchants  that  are  general,  not  of  those  that 
are  particular  usages.  It  is  no  part  of  the  law  of  merchants  to  take 
convoy  in  the  Downs.      Vide  Yelv.  13G. 


WOOLMER  V.  MUILMAN. 

King's  Bench,   1763.     1  W.  Bl.  427.' 

Action  on  a  policy  of  insurance,  dated  Sept.  23,  1762,  at  and  from 
North  Bergen  to  London,  at  two  guineas  per  cent.     The  ship,   &c., 

1  In  Lilly  v.  Ewer,  1  Doug.  72  (1779),  the  undenvriter  agreed  "to  return  £2  per 
cent  if  the  ship  sailed  with  convoy  from  Gibraltar,  and  arrived;"  and  Lord  ]\L\ns- 
FiELD,  C.  J.,  for  the  court,  said  :  "  On  the  word.s,  I  was  strongly  of  opinion  that  the 
policy  meant  a  departure  with  convoy  intended  for  the  voyage.  The  parties  could  not 
mean  a  departure  with  convoy  which  might  be  designed  to  separate  from  the  ship  in  a 
minute  or  two ;  though,  when  convoy  for  the  whole  of  a  voyage  is  clearly  intended, 
an  unforeseen  separation  is  an  accident  to  which  the  underwriter  is  liable ;  for  the 
meaning  of  such  a  warranty  is  not  that  the  ship  and  'convoy  must  continue  and  arrive 
together."  —  Ed. 

■^  Other  cases  on  convoy  are  Gordon  v.  Morley,  2  Str.  1265  (1747-8)  ;  Hibbert  v. 
Pigou,  .3  Doug.  224  (178.3) ';  s.  c.  2  Park  Ins.,  8th  ed.,  694  ;  Philips  v.  Baillie,  3  Doug. 
374  (1784)  ;  D'Eguino  i'.  Bewicke,  2  H.  Bl.  5.51  (1795)  ;  Cohen  u.  Hmckley,  1  Taunt. 
249  (1808)  ;  Warwick  v.  Scott,  4  Camp.  62  (1814).  — Ed. 

3  s.  c.  3  Burr.  1419.  — Ed. 

20 


306  HOKE    V.    WHITMOKE.  [CHAP.  V. 

were  warranted  to  be  neutral  ship  and  property- ;  but  in  truth  the 
plaintiffs  were  British  subjects,  having  interest  on  board  to  the  amount 
of  the  sum  insured.  Tlie  ship  foundered  at  sea  ;  and  the  defendant 
now  refuses  to  pay  the  insurance,  on  account  of  the  untrue  fact  war- 
ranted  by  the  plaintiff. 

Wallace,  for  the  plaintiff,  insisted  that  this  warranty  was  onl}^  meant 
to  secure  the  insurers  against  the  peril  of  enemies,  and  therefore  was 
equivalent  to  a  warranty  free  from  capture  ;  and  that  the  loss  had  not 
hai)pened  in  such  manner  as  to  make  the  truth  or  falsehood  of  this 
warranty  at  all  material. 

But  b\-  Lord  Mansfield,  C.  J. :  The  point  is  too  clear  to  be  argued. 
There  was  a  falsehood  in  respect  to  the  condition  of  the  thing  insured ; 
therefore  it  was  no  contract.  Judgment  for  defendant. 


HORE  V.  WHITMORE. 
King's  Bench,  1778.     2  Cowp,  784. 

This  came  before  the  court  upon  a  rule  to  show  cause  why  the 
verdict  given  for  the  plaintiff  in  this  case  should  not  be  vacated,  and 
judgment  entered  for  the  defendant,  as  in  case  of  a  nonsuit.  The  dec- 
laration stated,  that  upon  a  policy  of  insurance  on  the  ship  ''New  West- 
moreland," at  and  from  Jamaica  to  London,  warranted  to  sail  on  or  be- 
fore the  26th  of  July,  1776,  free  from  capture,  and  from  all  restraints 
and  detainments  of  kings,  princes,  and  people  of  what  nation,  condition, 
or  quality  soever,  the  said  ship  was  preparing  and  ready  to  sail,  and 
would  have  sailed  on  the  25th  of  July,  on  her  intended  voyage,  if  she 
Lad  not  been  restrained  by  the  order  and  command  of  Sir  Basil  Keith, 
the  then  governor  of  Jamaica,  and  detained  beyond  the  da}'.  Tiiat  she 
afterwards  sailed,  and  was  captured,  &c. 

Mr.  Wallace,  who  showed  cause,  objected,  that  the  usual  clause 
against  the  detention  of  rulers  and  princes  being  inserted  in  this 
policy,  the  embargo  by  which  the  ship  was  prevented  from  sailing  on 
the  da}-  mentioned  in  the  warrant}'  came  expressly  within  the  meaning 
of  it ;  and  therefore  excused  the  delay. 

Mr.  Dunning,  contra,  contended  that  the  loss  of  the  ship  could  in  no 
possible  respect  be  connected  with  the  embargo.  That  the  warranty 
was  positive  and  express,  that  the  ship  should  depart  on  or  before  the 
day  appointed,  and  therefore  must  be  complied  with.  And  of  this 
opinion  was  the  court.  Accordingly,  the  rule  for  the  nonsuit  was  made 
absolute. 


A 


SECT.  I.]  BEAN   V.    STUPAKT.  307 

BEAN  V.  STUPART. 
King's  Bench,  1778.     1  Doug.  11. 

The  plaintiff  insured  the  ship  called  the  "  Martha,"  at  and  from  Lon- 
don to  New  York,  the  voyage  to  commence  from  a  daj'  specified  ;  and 
on  the  margin  of  the  polic}'  were  written  these  words,  "Eight  nine- 
pounders  with  close  quarters,  six  six-pounders  on  her  upper  decks, 
thirty  seamen,  besides  passengers."  The  ship  sailed  from  the  Downs 
on  the  1st  of  March,  and  was  taken  on  the  lOih  b^-  an  American  priva- 
te^*, and  was  sent,  with  a  prize-master  on  board,  to  make  the  port  of 
Boston.  On  tlie  30th  of  May,  the  plaintiff  brought  this  action  against 
Stupart,  an  underwriter  on  the  polic}' ;  on  wliich  Stupart  paid  the 
premium  into  court,  and  pleaded  the  general  issue.  About  the  6th 
of  July,  and  before  the  trial,  accounts  were  received  that  the  ship  had 
been  retaken  some  time  in  INIay  and  carried  into  Halifax.  The  cause 
came  on  for  trial  before  Lord  Mansfikld,  and  a  special  jury,  at  Guild- 
hall, at  the  sittings  after  Trinity  term,  18  Geo.  3.  The  defence  set  up 
•was,  that  there  were  not  thirty  seamen  on  board  the  ship,  according  to 
the  terms  of  the  stipulation  in  the  margin  of  the  polic\' :  and,  in  fact,  it 
appeared  upon  the  evidence  that,  to  make  up  that  number,  the  plaintiff 
reckoned  the  steward,  cook,  surgeon,  some  boys,  and  apprentices,  and 
some  persons  described  as  men  learning  to  be  seamen ;  and  that  only 
twenty-six  persons  had  signed  the  ship's  articles.  It  also  appeared  that 
there  were  seven  or  eight  passengers  on  board. 

Jjearcroft,  of  counsel  for  the  defendant,  contended  that  this  was  a 
warranty,  not  a  representation,  and  that  being  so,  it  must  be  literally 
and  strictly  complied  with.  The  seamen  meant  men  trained  to  the 
occupation  of  mariners,  eitlier  such  as  are  called  able-bodied,  or  at  least 
ordinar}'  seamen,  in  opposition  to  landmen,  and  could  never  include 
boys,  or  the  steward,  cook,  and  surgeon  of  a  ship.  That,  at  any  rate, 
none  but  those  who  had  signed  the  articles  were  to  be  considered  as 
seamen,  and  then  the  number  warranted  was  not  complete.  That,  in  the 
late  case  of  Pawson  against  Ewer,  2  Cowp.  785,  it  had  been  determined 
that  the  strict  words  of  a  representation  need  not  be  fulfilled,  provided 
the  departure  from  them  is  not  materialh'  to  the  prejudice  of  the  insur- 
ers, but  that,  in  the  case  of  a  warranty,  it  is  otherwise,  that  being  a 
condition,  and  taken  as  part  of  the  policy  ;  and  that  the  circumstance 
of  the  stipulation,  in  this  Instance,  being  written  on  the  margin,  made 
no  sort  of  difference.  He  said  the  nature  of  the  voyage,  which  was  of 
a  very  dangerous  sort,  explained  the  condition  ;  and  the  real  seamen 
must  have  been  meant.  He  also  argued  (though  but  slightly)  that, 
whatever  might  be  the  construction  of  the  policy,  the  plaintiff  was  not 
entitled  to  recover  as  for  a  total  loss,  because  the  ship  had  been  retaken, 
and  had  never  been  infra  prm%idia  hostiiim.  Witnesses  were  exam- 
ined to  explain  what  is  generally  understood  bj-  the  word  "  seamen," 


308  BEAN    V.    STUPAET.  [C^IAP.  V. 

and  it  was  either  in  proof,  or  admitted,  tliat  at  the  custom-house  and 
Greenwich  hospital  bojs  are  included  in  that  word. 

Lord  Mansfield  observed,  in  summing  up  to  the  jury,  that  the 
import  of  words  must  be  collected  from  the  subject  to  which  they  are 
applied.  That  if,  in  the  present  case,  the  insured  had  stipulated  for 
thirty  seamen,  besides  boys  and  landmen,  then  it  would  have  been  clear 
that  the  terms  had  not  been  complied  with ;  but  that,  in  this  policy, 
seamen  were  contrasted  with  passengers,  and,  in  that  sense,  the  word 
seemed  to  include  boys  as  well  as  men  :  but  he  left  the  construction  to 
the  jury. 

The  jury  having  found  a  verdict  for  the  plaintiff  as  for  a  total  loss, 
the  defendant,  in  this  term,  obtained  a  rule  to  show  cause  why  there 
should  not  be  a  new  trial. 

On  the  day  for  showing  cause,  Lord  Mansfield,  after  reporting  the 
facts  as  above  related,  and  that  he  had  left  the  construction  of  the  word 
"  seamen"  to  the  jur}',  observed  that  he  himself  had  thought  there  was 
little  doubt  on  the  question,  after  what  had  passed  in  the  cause  of  Paw- 
son  V.  Ewer.  That  the  warranty  might  have  been  so  worded  as  only 
to  include  able  seamen  (as  if  seamen  had  been  opposed  to  landmen)  ; 
but  that,  as  expressed  here,  the  contrast  being  with  passengers,  the 
whole  of  the  crew  or  ship's  company  appeared  to  be  meant.  That  this 
was  the  general  maritime  sense  of  the  word. 

Bearcroft  and  Lee  argued  in  support  of  the  rule  for  a  new  trial. 
They  observed  that,  although  the  Solicitor-General  who  had  conducted 
the  cause  for  the  plaintiff  had  not  opened  the  stipulation  in  the  policy 
expressly  either  as  a  warranty,  or  as  a  representation,  but  had  insisted 
that  it  had  been  complied  with,  his  Lordship  had  assumed  it  to  be  a  war- 
ranty, as  they  said  it  certainly  was.  That  being  a  warrant^-,  the  case  of 
Pawson  V.  Ewer  did  not  apply.  That  the  sense  of  the  word  "  seamen  " 
is  well  understood,  and  the  distinction  between  seamen  and  landmen  or 
boys  as  fully  established  as  that  between  clergymen  and  laymen.  That 
a  seaman  is  only  such  a  person  as  is  liable  to  be  pressed.  As  to  the 
question  whether  it  was  a  total  or  an  average  loss,  they  cited  the  case 
of  Hamilton  v.  Mendez,  2  Burr.  1198,  and  contended  that  the  jury  had 
never  taken  that  point  into  their  consideration. 

Lord  Mansfield.  The  whole  argument  for  the  defendant  turns  upon 
begging  the  question.  There  is  no  doubt  but  that  this  is  a  warranty. 
Its  being  written  on  the  margin  makes  no  difference.  Being  a  warranty, 
there  is  no  doubt  but  that  the  underwriters  would  not  be  liable,  if  it 
were  not  complied  with,  because  it  is  a  condition  on  which  the  contract 
is  founded.  But  the  question  is,  whctlier,  in  this  warrant}-,  the  word 
"seamen''  was  used  in  the  strict  literal  sense  or  not.  If  it  was,  the 
warranty  has  not  been  complied  with.  It  is  a  matter  of  construction. 
Boys  are  reckoned  seamen,  not  onl}-  at  the  custom-house,  and  Green- 
wich hospital,  but  in  the  distribution  of  prizes.  I  think  the  parties  were 
not  sanguine  at  the  trial.  The  special  jury,  and  the  bystanders,  were 
perfectly  clear.    They  hardly  seemed  to  think  it  a  serious  question  in  this 


SECT.  I.]  VEZIAN   V.    GRANT.  309 

cause.  There  is  scarcely  now  such  a  thing  as  a  ship  entirel}'  manned 
with  seamen  strictly  so  called.  Even  on  ^ard  the  king's  ships,  they  are 
satisfied  with  a  few  strict  seamen,  and  able-bodied  landmen  make  up  the 
rest  of  the  crew.  I  had  no  doubt  of  the  sense  of  the  word  in  this  polic}-, 
and  the  jury  decided  it.  With  regard  to  the  other  question,  it  was  stated 
as  a  forlorn  hope  ;  but  certainl}',  when  the  action  was  brought,  there  was 
no  prospect  of  a  recapture  of  the  ship ;  she  was  considered  as  totally 
lost  in  a  remote  part  of  the  world.  The  report  which  afterwards  pre- 
vailed of  her  being  retaken,  some  months  after  the  capture,  was  loose 
and  general ;  no  circumstances  known,  no  account  of  her  situation  nor 
of  what  part  of  the  cargo  might  be  saved.  In  short,  there  is  no  doubt 
but  that  it  was  a  case  where  the  owner  might  abandon. 

The  rule  discharged. 


VEZIAN  V.  GRANT. 

Nisi  Prius,  1779.     2  Park.  Ins.  8th  ed.  670. 

On  the  8th  of  December,  1777,  a  policy  was  underwritten  by  the  de- 
fendant on  goods  in  a  French  ship,  "  Le  Compte  de  Trebon,"  "at 
and  from  Martinico  to  Havre  de  Grace,  with  liberty  to  touch  at  Guada- 
loupe ;  warranted  to  sail  after  the  12th  of  January,  and  on  or  before 
the  1st  of  August,  1778."  The  insurance  was  made  by  the  plaintiff  on 
account  of  Jacques  Horteloupe  and  Louis  de  Lamare  of  Havre  dc 
Grace,  owners  of  the  ship  and  cargo ;  at  which  time  it  was  not  known 
whether  she  would  load  at  Martinico  or  Guadaloupe,  they  having  goods 
to  come  from  both  places  ;  the  policy  was  therefore  intended  to  cover 
the  risk  from  both,  or  either  of  them.  The  ship,  having  finished  her 
outward  voyage  at  Martinico,  sailed  from  thence  on  the  6th  of  Novem- 
ber, 1777,  for  Guadaloupe,  where  she  took  in  her  whole  loading  with- 
out returning  to  Martinico,  which  the  captain  intended  to  do  had  he  not 
got  a  complete  cargo  at  Guadaloupe ;  from  whence  she  sailed  on  the 
26th  of  June,  1778,  and  was  t&ken  on  the  3d  of  September.  The 
plaintiff  demanded  payment  of  the  loss  from  the  underwriters,  which 
being  refused,  he  brought  actions  against  them  for  the  recovery  thereof. 
This  cause  came  on  to  be  tried  at  Guildhall,  before  Mr.  Justice  Buller, 
when  the  defendant's  objections  were  that,  according  to  the  words 
of  the  policy,  the  voj'age  was  to  cdlhmcnce  from  Martinico,  and 
not  from  Guadaloupe,  and  that  the  warranty  of  the  time  of  sailing 
was  not  complied  with,  the  ship  having  sailed  from  Martinico  before 
the  12th  of  Januar}^  1778,  to  wit,  on  the  6th  of  November,  1777.  The 
jury,  under  the  direction  of  the  learned  judge,  were  of  that  opinion, 
and  accordingly  found  a  verdict  for  the  defendant. 


310  EDEN    V.    PARKISON.  [CHAP.  V. 


PAWSON  V.  BARNEVELT. 

Nisi  Prius,  corcon  Lord  Mansfield,   C.  J.,  1779. 
1  Doug.  12,  n.  4. 

The  policy  was  the  same  as  in  the  case  of  Pawson  r.  Ewer.*  The 
counsel  for  the  defendant  offered  to  produce  witnesses  to  prove  that  a 
written  memorandum  enclosed  was  always  considered  as  part  of  the 
polic}'.  But  his  Lordship  said  it  was  a  mere  question  of  law,  and 
would  not  hear  the  evidence,  but  decided  that  a  written  paper  didjiot 
become  a  strict  warranty  by  being  folded  up  in  the  polic}'.^ 


KENYON  V.  BERTHON. 

Nisi  Prius,   coram  Lord  ^Maxsfield,  C.  J.,  1779.     2  Park   Ins. 

8th  ed.  6G5.3 

Ix  an  action  on  a  polic}'  of  insurance  it  appeared  that  the  following 
words  were  written  transversel}-  on  the  margin  of  the  policy  :  "In  port, 
20th  Juh',  1776."  In  fact,  the  ship  had  sailed  on  the  18th  of  Julj'. 
The  question  was  whether  this  marginal  note  was  a  warranty  or  a 
representation. 

Lord  Mansfield.  The  question  is  whether  the  ship's  being  in  port 
on  the  20th  is  part  of  tlie  condition  of  the  instrument.  When  it  is  on 
the  face  of  the  instrument,  it  is  a  part  of  the  policy  ;  so  that  here,  if  the 
ship  was  not  in  port,  it  is  no  contract.  As  to  its  being  only  in  the 
margin,  that  makes  no  difference  ;  it  is  all  part  of  the  contract  when  it 
is  once  signed.  And  though  the  difference  of  two  days  may  not  make 
any  material  difference  in  the  risk,  3'et  as  the  condition  has  not  been 
complied  witli,  the  underwriter  is  not  liable. 


EDEN  AND  Another  v.  PARKISON. 

King's  Bench,  1781.     2  Doug.  732. 

The  plaintiffs  insured  the  ship  the  "  Yonge  Herman  Iliddinga  "  and 
her  cargo,  "  at  and  from  L'Orient  to  Rotterdam  ;  warranted  a  neutral 
ship  and  neutral  property."  The  ship  being  captured  in  the  course  of 
her  voyage  by  some  English  men-of-war,  the  plaintiffs  brought  this 

1  Ante,  p.  212. —  Ed. 

2  See  Pawson  v.  "Watson,  ante,  p.  212  (1778),  and  Bize  v.  Fletcher,  anie,  p.  216 
(1779).  — Ed. 

'  8.  c.  I  Doug.  12,  n.  (4).  — Ed. 


SECT.  I.]  EDEX    V.    PARKISON.  311 

action  against  the  defendant,  one  of  the  underwriters  on  the  policy 
stating  in  their  declaration  that  the  defendant  subscribed  the  policj-  on 
the  28th  of  November,  1780,  and  averring  that  the  ship  and  cargo  were 
at  that  time  neutral  property.  The  trial  came  on  before  Lord  jMaxs- 
FiELD  at  Guildhall,  at  tlie  sittings  after  last  Easter  term,  when  a  verdict 
was  found  for  the  plaintiffs,  subject  to  the  opinion  of  the  court,  on  a 
case  which  set  forth  (as  far  as  is  material)  as  follows  :  — 

The  ship  in  question  sailed  from  L'Orient  on  the  voAage  insured  on 
the  11th  of  December,  1780,  having  the  insured  cargo  on  boaid,  and 
both  the  ship  and  cargo  were  neutral  property  at  tlie  time  of  the  ship's 
departure  from  L'Orient,  and  so  continued  until  the  20th  of  December, 
1780,  on  which  da}-,  hostilities  having  commenced  between  the  English 
and  the  Dutch,  the  Dutch  ceased  to  be  a  neutral  power,  and  the  ship 
and  cargo  ceased  to  be  neutral  propert}-.  They  were  taken  on  the  25th 
of  December,  1780,  and  condemned  as  lawful  prize  in  the  Admiralty 
Court  on  the  19th  of  February,  1781. 

/Smith,  for  the  plaintiffs. 

Iloioorth,  for  the  defendant. 

For  the  plaintiffs  it  was  contended  that  the  warrant}'  was  complied 
with  by  the  neutrality  of  the  ship  and  cargo  at  the  time  when  the  vo}'- 
age  commenced.  It  is  a  general  principle  laid  down  bj'  Blackstone,  J., 
in  his  Commentaries,  "That  a  warranty  can  only  reach  to.  things  in 
being  at  the  time  of  the  warrant}-  made,  and  not  to  things  in  future,  — 
as  that  a  horse  is  sound  at  the  buying  him,  not  that  he  will  be 
sound  two  years  hence."  3,  Bl.  Coram.  165.  In  the  case  of  Wool- 
mer  v.  Muilman,  3  Burr.  1419,  s.  c.  1  W.  Bl.  427,  where  the  war- 
ranty was  in  the  same  words  as  here,  the  judgment  of  the  coui't 
was  for  the  defendant,  because  the  ship  and  goods  were  not  neu- 
tral from  the  first.  There  was  no  fraud  upon  the  defendant  in  this 
case.  The  insurer  is  to  inform  himself  "  of  the  probability  of  safety 
from  the  continuance  of  peace,"  as  was  laid  down  by  Lord  Mansfield  in 
the  case  of  Carter  v.  Boehra,  3  Burr.  1905,  1910;  s.  c.  1  ^y.  Bl.  593, 
594.  If  indeed  the  property  had  ceased  to  be  neutral  by  the  act 
of  the  party  himself,  the  case  would  have  been  different.  But  he  is 
not  answerable  for  the  consequences  of  a  war  breaking  out  during  the 
voyage.  To  make  him  so,  express  words  ought  to  have  been  used ; 
otherwise  the  construction  is  to  be  in  the  largest  and  most  advantageous 
way  for  the  insured,  according  to  the  principle  of  the  decision  in  the 
case  of  Gordon  r.  Morley,  2  Str.  1265.  The  plaintiffs  were  ready  to 
have  proved  at  the  trial  that  the  premium  at  the  time  of  this  insurance 
would  have  been  the  same  if  the  warranty  had  been  "  Dutch  property  '* 
instead  of  "  neutral  property." 

For  the  defendant  it  was  said  that  this  was  a  new  question,  and 
called  for  peculiar  attention,  as  it  would  affect  a  great  deal  of  property. 
It  is  certainly  a  question  of  construction  upon  the  face  of  the  policy ; 
but,  both  from  the  "words  and  from  the  nature  of  the  subject,  it  must 
be  interpreted  to  mean  a  warranty  coextensive  with  the  voyage.     It 


312  EDEN    V.    TARKISON.  [CHAP.  V. 

is  admitted  bj-  the  arguirent  on  tlie  other  side  that,  if  the  neutrality  had 
ceased  before  the  ship  sailed,  the  underwriters  would  not  have  been 
liable.  But  what  expression  of  intention  is  there  that  the  warranty 
should  not  extend  througliout  ?  There  are  no  restraining  words.  The 
sense  is  the  same  as  if  the  policy  bad  run,  ' '  warranted  neutral  ship  and 
neutral  property  at  L'Orient,  and  from  L'Orient  to  Rotterdam."  If 
the  words  were  to  be  thought  equivocal,  yet  the  nature  of  the  thwig 
speaks  in  favor  of  this  construction.  The  merchant  proposes  to  insure 
the  ship  and  cargo.  Upon  this  the  underwriter  requires  a  description 
of  the  subject-matter  of  the  insurance.  The  merchant  answers,  "I 
warrant  it  neutral."-  This  puts  an  end  to  all  inquiry  about  the  country, 
whether  Dutch,  Swedish,  Norwegian,  &c.  Surely,  if  it  had  been 
mentioned  that  the  property  was  Dutch,  the  underwriters  would  have 
insisted  on  a  much  higher  premium  ;  for  there  was  at  the  time  of  the 
insurance  an  universal  rumor  of  a  war  between  this  country  and  Holland. 
At  the  trial  this  was  compared  to  the  case  of  a  warranty  to  carry  a 
stipulated  number  of  men,  or  so  many  guns.  But  those  instances  do 
not  resemble  this.  If  guns  are  thrown  overboard  to  save  the  ship  in  a 
storm,  that  is  a  circumstance  arising  out  of  the  very  risk  insured  against, 
—  viz.  sea  hazard  ;  and  if  some  of  the  crew  die,  it  cannot  be  supposed 
that  the  insured  meant  to  undertake  that  men  should  be  immortal.  lu 
the  case  of  Lilly  v.  Ewer,  1  Doug.  72,  the  warranty  was  ''  to  sail  with 
convoy  from  Gibraltar;"  and  because  there  were  no  restraining  words 
it  was  held  that  the  convoy  must  be  for  the  whole  voyage.  Suppose 
there  had  been  a  voyage  for  two  or  three  years,  —  as  to  China,  &c.,  — 
it  cannot  be  thought  that  the  underwriters  would  have  been  satisfied  if 
the  property  happened  to  be  neutral  at  the  commencement  of  the  risk, 
and  without  some  large  addition  of  premium  would  have  taken  the 
chance  of  war  during  so  long  a  voyage  upon  themselves.  It  is  the 
understanding  of  all  persons  conversant  with  the  subject  that,  unless 
there  be  restraining  words,  the  warranty  extends  to  the  whole  duration 
of  the  voyage.  The  cases  cited  on  the  other  side  do  not  appl}' ;  they 
prove  principles  which  the  defendant  has  no  occasion  to  dispute. 

Lord  Mansfield  told  Smith  he  had  no  occasion  to  reply. 

Lord  Mansfield.  !Many  points  have  been  gone  into  on  both  sides 
whicli  are  not  necessary  for  the  decision  of  this  case.  For  instance, 
there  is  no  doubt  but  you  may  warrant  a  future  event.  But  the  single 
question  here  is,  What  is  the  meaning  of  this  policy?  I  had  not  a  par- 
ticle of  doubt  at  the  trial,  and  I  know  the  jury  had  none  ;  but  Mr.  Lee 
pressed  for  a  case,  and  I  granted  one  out  of  respect  to  him.  What  is 
the  case?  It  is  an  insurance  upon  a  ship  and  her  cargo,  at  and  from 
L'Orient  to  Rotterdam.  The  insured  warrant  them  neutral ;  and  the 
defendant  would  have  the  court  to  add  by  construction,  "  And  so 
shall  continue  during  the  whole  voyage."  The  contract  is  not  so.  The 
insured  tell  the  state  of  the  ship  and  goods  then,  and  the  insurers  take 
upon  themselves  all  future  events  and  risks  from  men  of  war,  enemies, 
detentions  of  princes,   &c.     The  parties   themselves  could   not  have 


SECT.  I.]  HIDE    V.    BRUCE.  313 

changed  the  nature  of  the  pi'operty  ;  but  the}'  did  not  mean  to  run  the 
risk  of  war.  If  it  made  a  ditference  what  country  the  property  belonged 
to,  the  underwriters  should  have  inquired.  The  risk  of  future  war  is 
taken  by  the  underwriter  in  every  policy.  By  an  implied  warranty 
every  ship  insured  must  be  tight,  stanch,  and  strong  ;  but  it  is  suffi- 
cient if  she  is  so  at  the  time  of  her  sailing.  She  may  cease  to  be  so  in 
twenty-four  hours  after  her  departure,  and  3'et  the  underwriter  will  con- 
tinue liable.  The  case  of  Lilly  v.  Ewer  turns  quite  the  other  way.  The 
decision  there  was  that  the  ship  must  sail  with  convoy  according  to  the 
usage  of  the  trade,  —  i.  e.  convoy  destined  to  go  as  far  as  usual  in  that 
voyage.  The  present  is  the  clearest  case  that  can  be.  The  warranty 
is  that  things  stand  so  at  the  time,  not  that  they  shall  continue. 

Wjlles  and  Ashhurst,  JJ.,  of  the  same  opinion. 

BuLLEK,  J.  The  case  of  Lilly  v.  Ewer  is  much  against  the  defend- 
ant ;  for  it  was  not  contended  there  that  the  ship  must  continue  with 
the  convoy  during  the  whole  voyage. 

Thejyosiea  to  be  delivered  to  the  plaintiffs.^ 


HIDE  V.  BRUCE. 
King's  Bench,  1783.     3  Doug.  213. 

This  was  an  action  upon  a  policy  of  insurance  on  goods,  lost  or  not 
lost,  at  and  from  Leghorn  to  Gibraltar.  There  was  a  warranty  in  the 
policy  that  the  ship  had  twenty  guns.  It  appeared  in  evidence  that 
she  had  twenty  guns,  but  only  twentj'-flve  men,  and  that  it  required 
sixty  men  to  man  twenty  guns.  It  was  contended  for  the  defendant 
that  the  warranty  implied  that  there  should  be  a  proportionable  number 
of  men.  A  verdict  was  given  for  the  plaintiff;  and  a  rule  having  been 
obtained  for  a  new  trial, 

Wallace,  A.  6^.,  and  Xee,  showed  cause.  There  is  no  implied  war- 
ranty as  to  men,  nor  could  it  be  so  intended,  for  the  ship  was  in  a 
foreign  port,  and  the  captain  could  not  get  as  many  men  as  he  pleased. 
The  construction  contended  for  on  the  other  side  would  make  a  war- 
ranty extend  to  implications. 

Cowper,  contra.  This  was  a  warranty  that  the  ship  was  a  ship  of 
the  force  of  twenty  guns.  Was  she  a  ship  of  that  force?  It  is  not 
necessary  to  contend  that  this  was  a  warranty  of  guns,  and  also  a 
warranty  of  men  ;  but  it  was  a  warranty  of  the  number  of  guns,  and  a 
representation  that  she  had  a  reasonable  quantity  of  men  in  proportion 
to  the  guns.  For  the  purposes  of  fighting,  twenty-five  men  were  quite 
useless,  for  seventeen  or  eighteen  would  be  necessary  to  work  the  ship 
while  in  action.     Yet,  in  consequence  of  this  warranty  of  force,  she  is 

»  Arc.  Tyson  v.  Gurney,  3  T.  R.  477  (1789).  — Ed, 


314 


DE   HAHN   V.   HARTLEY.  [CHAP.  V. 


permitted  to  chase  and  go  into  danger,  to  take  prizes,  and  to  weaken 
lierself  still  further.  There  has  therefore  been  a  misrepresentation  by 
which  the  policy  is  avoided. 

Lord  Mansfield.  A  warranty  makes  a  contingency,  without  which 
the  contract  is  void.  But  a  representation,  if  true,  is  not  to  have  the 
same  effect  unless  there  is  fraud. 

WiLLES,  AsHHURST,  and  BuLLER,  JJ.,  were  of  the  same  opinion. 

Mule  discharged. 


DE  HAHN  V.   HARTLEY. 
King's  Bench,  1786.     1  T.  R.  343. 

Tins  was  an  action  upon  promises  brought  by  the  plaintiff  (an  under- 
writer) to  recover  back  the  amount  of  a  loss  which  he  had  paid  upon  a 
policy  of  insurance. 

Plea,  the  general  issue. 

The  cause  was  tried  before  Buller,  J.,  at  the  sittings  after  last  Easter 
term  at  Guildhall,  when  the  jury  found  a  special  verdict ;  which  stated, 

That  the  defendant  on  the  14th  June,  1779,  at  London,  gave  to  one 
Alexander  Anderson,  then  being  an  insurance  broker,  certain  instruc- 
tions in  writing  to  cause  an  insurance  to  be  made  on  a  certain  ship  or 
vessel  called  the  "Juno,"  which  were  in  the  words  and  figures  follow- 
ing: "Please  get  £2000  insured  on  goods  as  interest  may  appear; 
slaves  valued  at  £30  per  head  ;  comwood,  £40  per  ton  ;  ivory,  £20  per 
hundred  weight ;  gum  copal,  £5  per  ton  ;  at  and  from  Africa  to  her 
discharging  port  or  ports  in  the  British  West  Indies  warranted  copper 
sheathed  and  sailed  from  Liverpool  with  14  six-pounders  (exclusive 
of  swivels,  &c.),  50  hands  or  iqnoards,  at  12,  not  exceeding  15  guineas. 
Juno  —  Beavei*.     S.  Hartley  and  Compan}-,  June  14th,  1779." 

That  the  said  Alexander  Anderson,  in  consequence  of  the  said 
written  instructions  from  the  said  defendant  on  the  said  14th  June, 
1779,  at  London  aforesaid,  «S:c.,did  cause  a  certain  writing  or  policy  of 
assurance  to  be  made  on  the  said  ship  or  vessel  called  the  "Juno  "  in 
the  words  and  figures  following  (reciting  the  policy),  which  was  upon 
any  kind  of  goods  and  merchandises,  and  also  upon  the  body,  tackle, 
apparel,  «&c.,  of  and  in  the  ship  "Juno"  at  and  from  Africa  to  her 
port  or  ports  of  discharge  in  the  British  West  Indies,  at  and  after  the 
rate  of  £15  per  cent. 

The  verdict,  after  reciting  two  memoranda,  which  are  not  material, 
then  proceeded  to  state,  that  in  the  margin  of  the  said  policy  were 
written  the  words  and  figures  following,  "Sailed  from  Liverpool  with 
14  six-pounders,  swivels,  small  arms,  and  50  hands  or  upwards,  copper 
sheathed." 

That  on  the  said  14th  June,  1779,  and  not  before,  at  London  afore- 


SECT.  I.]  DE    HAHX    V.    HARTLEY.  315 

said,  &c.,  the  plaintiff  iinderwrote  the  said  policy  for  the  sum  of  £200, 
and  received  a  premium  of  £31   10s.  Od.  as  the  consideration  thereof. 

That  tlie  said  ship  or  vessel  called  tlie  "  Juno"  sailed  from  Liverpool 
aforesaid  on  the  13th  October,  1778,  having  then  only  46  hands  on 
hoard  her,  and  arrived  at  Beaumaris,  in  the  isle  of  Anglesea,  in  six 
hours  after  her  sailing  from  Liverpool  as  aforesaid,  with  the  pilot  from 
Liverpool  on  board  her,  who  did  pilot  her  to  Beaumaris  on  her  said 
voyage  ;  and  that  at  Beaumaris  aforesaid  the  said  ship  or  vessel  took  in 
six  hands  more,  and  then  had,  and  during  the  said  voyage  until  the 
capture  thereof  hereinafter  mentioned  continued  to  have,  52  hands  on 
board  her. 

That  the  said  sliip  or  vessel  in  the  said  voyage  from  Liverpool  afore- 
said to  Beaumaris  aforesaid,  until  and  when  slie  took  in  the  said  six 
additional  hands,  was  equally  safe  as  if  she  had  had  50  hands  on 
board  her  for  that  part  of  the  said  voyage. 

That  divers  goods,  wares,  and  merchandises,  of  the  said  defendant, 
of  great  value,  were  laden  and  put  on  board  the  said  ship  or  vessel,  and 
remained  on  board  her  until  and  at  the  time  of  the  capture  thereof 
hereinafter  mentioned.  And  that  on  the  14th  March,  1779,  the  said 
ship  or  vessel,  while  she  remained  on  the  coast  of  Africa,  and  before 
her  sailing  for  her  port  of  discharge  in  the  British  West  India  Islands, 
was,  upon  the  high  seas,  with  the  said  goods,  wares,  and  merchandises 
on  board  her  as  aforesaid,  met  with  by  certain  enemies  of  our  lord  the 
now  king,  and  captured  by  them,  «&:c.,  and  thereby  all  the  said  goods, 
wares,  and  merchandises  of  the  said  defendant,  so  laden  on  board  her 
as  aforesaid,  were  wholly  lost  to  him. 

That  when  the  said  plaintiff  received  an  account  of  the  said  loss  of 
the  said  ship  or  vessel,  he  paid  to  the  said  defendant  the  said  sum  of 
£200  so  insured  by  him  as  aforesaid,  not  having  then  had  any  notice 
that  the  said  ship  or  vessel  had  only  46  hands  on  board  her  when  she 
sailed  from  Liverpool  as  aforesaid.  But  whether  upon  the  whole 
matter,  &c. 

Laic,  for  the  plaintiff,  was  stopped  by  the  court. 

Wood,  for  the  defendant. 

Admitted,  that  a  marginal  note  in  a  policy  of  insurance  may  be  a 
•warranty  ;  but  contended  that  this  was  distinguishable  from  the  case  of 
Bean  v.  Stupart,  1  Doug.  11,  and  all  the  other  cases  on  the  subject. 
In  the  cases  decided,  it  has  always  been  a  warranty  of  a  fact  relat- 
ing to  the  voyage  insured  ;  but  in  the  present  case,  that  which  is 
written  in  the  margin  has  no  relation  whatever  to  the  voyage,  for  it 
relates  merely  to  the  force  of  the  ship  at  Liverpool,  before  the  voyage 
commenced,  and  is  totally  unconnected  with  the  risk  insured.  The 
insurance  is  "at  and  from  Africa  to  her  port  of  discharge  in  the 
British  West  Indies  ;  "  and  the  warranty  is  from  Liverpool ;  which  is 
antecedent  to  the  voyage  insured,  and  is  merely  a  representation  of  the 
state  of  the  ship  when  she  set  out  on  her  voyage  from  Liverpool. 
Then  if  it  be  only  a  representation,  it  is  immaterial  whether  complied 


316  BLACKHURST  V.   COCKELL.  [CHAP.  V. 

with  or  not,  because  it  is  found  by  the  verdict  that  the  ship  was  equally 
safe  with  the  number  of  hands  she  had  on  board,  as  if  she  had  had  the 
whole  number  contained  in  the  warranty.  The  warrant}'  then  can 
only  relate  to  her  being  copper-sheathed :  that  part  indeed  was  ex- 
tremely material,  because  otherwise  the  risk  would  have  been  consider- 
ably increased  ;  and  that  extended  to  the  voyage  insured :  but  the 
other  part  of  the  marginal  note  was  merely  a  representation,  because 
the  manner  of  sailing  from  Liverpool  was  unconnected  with  the  risk 
insured. 

But  even  if  the  court  should  consider  the  whole  as  a  warranty,  it  has 
been  substantially  complied  with. 

Lord  Mansfield,  C.  J.  There  is  a  material  distinction  between  a 
warrant}'  and  a  representation.  A  representation  may  be  equitably 
and  substantially  answered  ;  but  a  warranty  must  be  strictly  complied 
with.  Supposing  a  warranty  to  sail  on  the  1st  of  August,  and  the  ship 
did  not  sail  till  the  2d,  the  warranty  would  not  be  complied  with.  A 
warranty  in  a  policy  of  insurance  is  a  condition  or  a  contingency,  and 
unless  that  be  performed,  there  is  no  contract.  It  is  perfectly  imma- 
terial for  what  purpose  a  warranty  is  introduced ;  but  being  inserted, 
the  contract  does  not  exist  unless  it  be  literally  complied  with.  Now, 
in  the  present  case,  the  condition  was  the  sailing  of  the  ship  with  a 
certain  number  of  men  ;  which  not  being  complied  with,  the  policy  is 
void. 

AsHHURST,  J.  The  very  meaning  of  a  warranty  is  to  preclude  all 
questions  whether  it  has  been  substantially  complied  with  ;  it  must  be 
literally  so. 

BuLLER,  J.  It  is  impossible  to  divide  the  words  written  in  the 
margin  in  the  manner  which  has  been  attempted  ;  that  that  part  of  it 
which  relates  to  the  copper  sheathing  should  be  a  warranty,  and  not 
the  remaining  part.  But  the  whole  forms  one  entire  contract,  and 
must  be  complied  with  throughout. 

Judgment  for  the  plaintiff.^ 


BLACKHURST  v.    COCKELL. 

King's  Bench,  1789.     3  T.  R.  360. 

This  was  an  action  on  a  policy  of  insurance  on  goods  from  the  lading 
of  them  on  board  the  ship  at  London  to  Liverpool  "lost  or  not  lost;" 
at  the  bottom  of  the  policy  was  added  "  warranted  well  December  9th, 
1784."  At  the  trial  at  the  last  Guildhall  sittings,  before  Lord  Kenyon, 
it  appeared  that  the  defendant  underwrote  the  policy  between  one  and 

Mn  2  T.  R.  186,  the  reporter  states  that  in  Michaelmas  Term,  1787,  the  judgment 
of  the  King's  Bench  in  De  Hahn  v.  Hartley  was  "  unanimoualy  affirmed  in  the  Ex- 
chequer Chamber."  —  Ed. 


SECT.  I.]  BLACKHURST   V.   COCKELL.  317 

three  o'clock  in  the  afternoon  of  that  day,  and  that  the  ship  was  lost 
about  eight  o'clock  the  same  morning.  A  nonsuit  was  entered,  with 
liberty  for  the  plaintiff  to  move  to  enter  the  verdict  for  him,  in  case 
the  court  should  be  of  opinion  that  he  was  entitled  to  recover  on  the" 
above  facts. 

A  rule  to  that  effect  having  been  obtained  ; 

Erskine  and  Lawes  now  showed  cause  against  it.  Though  in  general 
by  the  words  "lost  or  not  lost"  the  underwriter  is  liable  even  though 
it  should  turn  out  that  the  ship  was  lost  at  the  time  of  subscribing  the 
policy,  yet  the  latter  words  in  this  case  were  inserted  in  the  policy  for 
the  express  purpose  of  restraining  their  operation  to  the  point  of  time 
when  the  policy  was  underwritten.  And  though  the  ship  were  safe  on 
part  of  the  da}-  when  she  was  warranted  to  be  so,  yet  she  was  lost  before 
the  time  when  the  policy  was  subscribed  ;  and  the  day  may  be  divided 
to  answer  the  real  ends  of  justice.  Dyer,  345.  Sir  R.  Howard's  Case, 
Salk.  625.  Roe  v.  Ilersey,  3  Wils.  274  ;  Morris  v.  Pugh  and  ITarwood, 
3  Burr.  1241 ;  Combe  v.  Pitt,  3  Burr.  1434,  and  Pugh  v.  Robinson,  ante, 
1  vol.  116.  But  supposing  the  day  not  to  be  divisible  in  this  instance, 
then  the  warranty  extended  to  the  ichvle  of  the  day  ;  and  it  was  not 
complied  with,  so  that  either  way  the  underwriter  is  not  liable. 

Chamhre.,  in  support  of  the  rule,  was  stopped  by  the  court. 

Lord  Kenton,  C.  J.  The  single  question  is  whether  the  warranty 
at  the  bottom  of  the  policy  means  warranted  well  at  the  time  when  the 
defendant  subscribed  it,  or  any  time  on  that  day.  And  we  are  all  of 
opinion  that,  if  the  ship  were  well  at  any  time  of  that  day,  it  is  suffi- 
cient; and  the  underwriter  is  consequently  liable. 

AsHHURST,  J.  This  is  the  only  way  of  giving  effect  to  all  the  words 
of  the  policy.  The  underwriter  insured  the  goods  on  board  the  ship 
"  lost  or  not  lost ; "  but  the  assured  engaged  that  she  was  safe  on  some 
part  of  that  day. 

BuLLER,  J.  The  nature  of  a  warranty  goes  a  great  way  to  determine 
this  question.  It  is  a  matter  of  indifference  whether  the  thing  war- 
ranted be  or  be  not  material ;  but  it  must  be  literally  complied  with  ; 
and  if  it  be  so,  that  is  sufiicient.  Here  the  ship  was  warranted  safe  on 
the  9th  of  December,  and  there  was  great  reason  for  inserting  those 
words,  because  they  protected  the  underwriter  against  all  losses  before 
that  day ;  to  which  he  would  otherwise  have  been  hable,  as  the  policy 
was  on  the  goods  from  the  lading  of  them  on  board  the  ship. 

Grose,  J.  If  this  were  not  the  true  construction  of  the  warranty, 
one  underwriter  might  be  liable,  and  another  not,  though  they  both 
executed  the  same  policy  on  the  same  day.  Rul'i  absolute. 


318  CL.VPHAM   V.   COLOGAN.  [CHAP.  V. 


CLAPHAM  AND  Another  v.  COLOGAN. 

Nisi  Prius,  coram  Lord  Ellenborough,  C.  J.,  1813. 
3  Camp.  382. 

This  was  an  action  on  a  policy  of  insurance  on  goods.  One  count 
of  the  declaration  stated  tlie  ship  to  be  "the  'Three  Sisters,'  at  and 
from  Cadiz  and  Seville  to  Liverpool,"  and  another  count,  "the  '  Tres 
Hermanas,'  or  'Three  Sisters,'  at  and  from  Cadiz  and  Seville,  both 
or  either,  to  Liverpool." 

The  policy  was  originally  filled  up  "on  the  'Three  Sisters,'  at  and 
from  Cadiz  and  Seville  to  Liverpool."  After  it  had  been  signed  by  the 
underwriters,  the  broker  inserted  the  words  "  Tres  Hermanas  or,"  and 
"  both  or  either."  Several  of  the  underwriters  put  their  initials  to 
the  alteration  ;  but  the  defendant  refused  to  do  so.  When  the  broker 
effected  the  policy,  he  merely  called  the  ship  the  "  Three  Sisters,"  with- 
out making  any  representation  as  to  the  country  she  belonged  to.  In 
point  of  fact,  she  was  originally  a  Dane,  and  was  purchased  by  the 
bankrupt,  a  merchant  at  Liverpool.  While  at  Seville  on  the  adventure 
in  question,  he  changed  her  name  to  the  "  Tres  Hermanas,"  manned  her 
with  a  Spanish  crew  commanded  by  a  Spanish  captain,  and  put  her 
under  the  Spanish  flag.  She  was  lost  on  the  voyage  home  by  the  perils 
of  the  sea. 

On  the  part  of  the  underwriters,  it  was  sworn  that  if  the  ship,  instead 
of  being  English,  as  her  name  in  the  policy  denoted,  had  been  known 
to  be  manned  with  Spanish  seamen,  and  navigated  as  a  Spaniard,  it 
would  have  made  a  difference  of  two  per  cent  in  the  premium. 

Lord  Ellenborough,  however,  held,  that  under  these  circumstances 
the  defendant  was  liable.  The  mere  calling  the  ship  by  an  English 
name,  he  said,  could  not  amount  to  a  warranty  or  representation  that 
she  was  English  ;  she  might  have  been  an  American,  or  an  English 
prize  preserving  her  original  name,  or  a  ship  built  on  the  continent, 
whose  name  was  translated  into  English.  Suppose  a  ship  were  insured 
by  the  name  of  the  "  Mark  Anthony,"  if  there  was  no  representation  of 
her  country,  it  would  be  too  much  to  say,  the  policy  would  be  void, 
should  she  turn  out  to  be  an  Italian  called  "  II  Marco  Antonio."  If  the 
premium  would  be  governed  by  the  ship's  nationality,  the  underwriters 
must  ask  for  information  ;  they  must  not  trust  to  the  name.  No  harm, 
therefore,  could  be  done  by  inserting  the  "Tres  Hermanas"  in  the 
policy,  that  being  a  mere  trai)slation  of  the  "Three  Sisters."  So  the 
other  alteration  could  not  vitiate  the  policy,  being  in  an  immaterial 
part.  Without  the  words  "  both  or  either,"  the  sliii)  had  the  option  of 
going  both  to  Cadiz  and  Seville  or  not  as  it  might  suit  the  exigencies 
of  the  adventure,  so  that  if  she  went  to  both,  she  took  them  in  their 
proper  order ;  and  with  the  insertion,  she  still  would  have  enjoyed  the 


SECT.  I.]  NELSON   V.    SALVADOR.  319 

libert}'  under  the  same  limitation.     The  legal  operation  of  the  instru- 
ment therefore  is  in  no  degree  affected. 

'Verdict  for  the  plaintiffs.^ 

Garrow,  S.  G.,  Park,  and  Puller,  for  the  plaintiffs. 

Fark,  Scarlett,  and  Campbell,  for  the  defendant. 


NELSON  AND  Others  v.  SALVADOR. 
Nisi  Prius,  1829.     Moo.  &  M.  309.   . 

Assumpsit  on  a  policy  of  insurance  on  sugars  on  board  the  ship 
"  George  "  at  and  from  Tobago,  "  warranted  to  sail  on  or  before  the  1st 
of  August,  1827  ;  "  the  time  of  sailing  being  afterwards  altered  by  the 
substitution  of  the  10th  of  August  for  the  1st. 

F.  Pollock^  for  the  plaintiffs  stated  to  the  jury,  that  the  ship  was 
cleared  outwards  on  the  9th  of  August,  tliat  the  whole  of  her  cargo 
and  all  her  passengers  were  on  board  on  the  morning  of  the  10th,  and 
that  on  the  afternoon  of  that  day  she  prepared  to  leave  the  port.  She 
was  then  moored  by  two  anchors.  One  of  them  was  weighed,  some  of 
the  sails  set,  and  the  ship  proceeded  about  thirty  fathoms,  by  heaving  in 
that  quantity  of  the  cable  of  the  remaining  anchor.  When  they  were 
about  to  heave  that  anchor,  the  captain  observed  a  very  heavy  swell 
setting  into  the  bay,  and  feared  to  take  his  departure  lest  he  should 
be  lost  in  getting  out.  Nothing  more  therefore  was  done  until  the 
morning  of  the  11th,  when  the  ship  actually  left  the  port.  She 
was  lost  on  her  way  home.  The  learned  counsel  said,  that  the  point 
arising  on  these  circumstances  was  quite  a  new  one  ;  and  the  question 
was.  Whether  such  a  warranty  meant  more  than  that  the  ship 
should  be  in  condition,  and  ready  to  sail  if  the  weather  permitted?  It 
cannot  be  required  that  she  should  actually  sail,  to  the  imminent 
hazard  of  the  ship  and  crew ;  and  the  underwriters  would  have  had 
little  reason  to  be  satisfied,  if  she  had  sailed  to  fulfil  the  warranty,  and 
had  been  lost  in  getting  out  of  the  harbor. 

The  circumstances  opened  were  then  proved. 

Sir  J.  Scarlett,  for  the  defendant.  Does  not  your  Lordship  think  the 
case  is  over? 

Lord  Tenterdex,  C.  J.  I  think  so ;  there  is  no  sailing  here.  The 
warranty  means  that  the  ship  shall  be  on  her  voyage  on  the  given  day. 
If  tlie  circumstances  proved  amounted  to  a  compliance  with  it,  the  ship 
might  be  detained  by  bad  weather  for  a  fortnight  or  more  without  un- 

1  Other  cases  on  warranty  of  nationality  are  Mayne  v.  Walter,  3  Doug.  79  (1782)  ; 
Tyson  v.  Guruey,  3  T.  R.  477  (1789)  ;  Wilson  v.  Backhouse,  Peake,  Add.  Ca^.  119 
{1797) ;  Rich  v.  Parker,  7  T.  R.  705  (1798)  ;  Le  Mesurier  v.  Vaughau,  6  East,  382  (1805) ; 
Mackie  v.  Pleasants,  2  Binn.  363  (1810J ;  Lewis  v.  Thatcher,  15  Mass.  431  (1819) 
—  Ed. 


320  .       SAWYER  V.  coasters'  mutual  ins.  CO.         [chap.  v. 

mooring  ;  and  in   that  case  the  risk  might  be  materially  altered.     The 
plaintiff  must  be  nonsuited. 

His  Lordship  then  turned  to  the  jury,  which  was  special,  and  said,  — 
"  I  hope,  gentlemen,  you  agree  with  me  ;  "  and  several  of  them  imme- 
diately expressed  their  concurrence. 

I^onsuit} 

F.  Pollock  and  R.   V.  Richards,  for  the  plaintiffs. 

Sir  James  Scarlett  and  Maule,  for  the  defendant. 


SAWYER  V.  COASTERS'  MUTUAL  INSURANCE  COMPANY. 
Supreme  Judicial  Court  of  Massachusetts,  1856.     6  Gray,  221. 

Assumpsit  on  a  polic}'  of  insurance  dated  October  19th,  1847,  on  the 
brio-  "  Sussex,"  for  one  ^^ear  from  the  24th  of  September,  1847,  at  noon. 
The  grounds  of  defence  relied  on  were,  1st,  A  breach  of  the  warranty 
contained  in  this  clause  on  the  face  of  the  policy:  "  Said  vessel  not 
allowed  to  carry  grain  in  bulk  across  the  Atlantic ;  "  2d,  False  repre- 
sentations of  the  plaintiff's  agent  at  the  time  of  effecting  the  policy. 

The  case  was  submitted  to  the  decision  of  the  court  upon  the  deposi- 
tion of  the  plaintiff's  agent,  and  the  following  facts:  The  "Sussex" 
sailed  from  New  York  on  the  21st  of  August,  1847,  with  grain  in  bulk, 
bound  to  Ballisidore  in  the  district  of  the  port  of  Sligo,  Ireland  ;.  and  on 
the  24th  and  25th  of  September,  while  passing  the  bar,  and  entering 
the  harbor  of  Ballisidore,  grounded  and  received  the  injuries  to  recover 
for  which  this  action  was  brought. 

The  plaintiff's  agent  testified  that  on  the  17th  of  September,  1847,  he 
applied  to  the  defendants'  president  in  Boston  for  insurance  on  the 
"  Sussex  "  from  New  York  to  Ballisidore,  with  a  cargo  of  grain  in  bulk  ; 
but  he  refused  to  issue  a  policy  on  the  brig  with  her  cargo  on  board, 
but  said  he  would  take  her  when  clean  of  her  cargo  ;  and  so  things 
remained  until  the  plaintiffs  agent  saw  her  arrival  reported,  when  he 
renewed  the  application,  the  president  asked  him  whether  she  had  ar- 
rived safe  and  was  clean  of  her  cargo,  and  he  replied  that  she  had,  and 
the  policy  was  thereupon  filled  out. 

R.  C/ioate  c&  J.  M.  Bell,  for  the  plaintiff,  1.  The  clause,  "not 
allowed  to  carry  grain  in  bulk  across  the  Atlantic,"  being  a  warranty, 
is  to  be  construed  literally.     1  Arnould  on  Ins.  581.     When  the  policy 

1  Other  cases,  on  complying  with  a  warranty  as  to  sailing  on  a  certain  day,  are 
Bond  I'.  Nutt,  2  Cowp.  GOl'  (1777)  ;  Earle  v.  Harris,  1  Doug.  .357  (1780) ;  Ridsdale  v. 
Newnham,  .3  M.  &  S.  4.56  (1815);  Moir  u.  Royal  Exchange  Assurance  Co.,  6  Taunt. 
241  (1815)  ;  8.  c.  1  Marsh.  570;  Lang  v.  Anderson,  3  B.  &.  C.  405  (1824)  ;  s.  C.  3  D.  & 
R.  393  ;  Pittegrew  i-.  I'ringle,  3  B.  &  Ad.  514(1 832) ;  Graham  v.  B.irras,  5  B.  &  Ad.  101 1 
(1834)  ;s.r.  3N.&M.  125;  Cockrane  r.  Fisher,  1  C,  M.  &  R.  809  (Ex.  Ch.  1835);  s.  c. 
suh  nom.  Fisher  v.  Cochran,  5  Tyr.  496.  —  Ed. 


SECT.  I.]  SAWYER    V.    c'OASTEKS'    MUTUAL    IXS.    CO.  321 

took  effect,  the  vessel  was  entering  the  harbor,  having  almost  finished 
her  voyage,  and  did  not  afterwards  cross  the  Atlantic  with  grain  in 
bulk. 

2.  The  repi'esentalion  that  the  vessel  had  arrived  was  substantially 
complied  with,  for  she  had  entered  the  harbor ;  and  as  it  does  not 
appear  that  it  was  known  to  be  false,  or  that  tlie  risk  was  increased  after 
arriving  at  the  bar  by  the  cargo  of  grain  in  bulk,  or  that  the  defendants 
would  have  refused  the  risk  because  the  vessel  had  not  cast  anchor,  the 
plaintiff  is  entitled  to  recover.     1  Arnould  on  Ins.  492,  520,  522,  523. 

C.W.  Lorbuj,  for  the  defendants.  1.  On  the  24th  of  September, 
1847,  the  vessel  was  carrying  grain  in  bulk  on  a  voyage  across  the 
Atlantic,  which  had  not  yet  terminated,  as  she  had  not  arrived  at  the 
wharf.  Taber  v.  Nye,  12  Pick.  ICo.  Meigs  r.  Mutual  Marine  Ins.  Co. 
2  Cush.  439.  The  warranty  on  the  face  of  the  policy  was  broken  by 
carrying  grain  in  bulk  any  part  of  a  voyage  across  the  Atlantic.  1 
Arnould  on  Ins.  581. 

2.  The  misrepresentation  of  the  plaintiff's  agent,  that  the  vessel  had 
arrived  safe  and  was  clean  of  her  cargo,  avoided  the  policy.  Bryant 
V.  Ocean  Ins.  Co.  22  Pick.  203.  1  Arnould  on  Ins.  495.  Fitzherbert 
V.  Mather,  1  T.  R.  12.  Kemble  v.  Bowne,  2  Caines,  75.  Macdowall  r. 
Fraser,  1  Doug.  260. 

Metcalf,  J.  The  misrepresentation  of  the  condition  of  the  vessel  at 
the  commencement  of  the  risk  avoids  this  policy.  She  was  represented 
as  having  safely  arrived  at  Ballisidore,  and  having  been  clean  of  her 
cargo  of  grain  in  bulk,  on  the  24th  of  September,  1847.  On  that  day, 
neither  of  these  alleged  facts  existed.  The  defendants  were  led  into 
error  by  this  representation,  and  computed  the  risk  on  false  grounds. 
And  whenever  this  happens  it  is  immaterial,  as  to  the  underwriters' 
liability,  whether  the  representation  be  made  by  the  assured  or  by  his 
agent,  and  whether  it  be  intentionally  false  or  false  from  mere  mistake 
and  misapprehension  of  facts.  3  Kent  Com.  (Gth  ed.)  282.  Hughes 
on  Ins.  347.  1  Phil.  Ins.  §  537.  Bryant  v.  Ocean  Ins.  Co.  22  Pick. 
203.  In  tffe  present  case,  it  is  not  suggested  that  the  misrepresenta- 
tion was  made  designedly.  And  we  need  not  expi'ess  an  opinion  upon 
a  point  about  which  writers  differ,  namely,  whether  in  such  a  case  the 
policy  is  avoided  on  the  ground  of  constructive  or  legal  fraud,  or  on 
the  ground  that  a  positive  representation  as  to  a  material  fact  is  as 
essentially  a  part  of  the  contract  as  a  warranty  is,  and  that  its  sub- 
stantial truth  is  as  much  a  condition  precedent  to  the  insurer's  liability 
as  is  the  literal  truth  of  a  warranty.  It  is  sufFicient  for  this  case  that 
the  policy  is  avoided  by  misrepresentation. 

We  are  also  of  opiaion  that  the  defendants'  other  ground  of  defence 
is  well  taken,  that  the  poUcy  does  not  insure  the  vessel,  if  laden  with 
grain  in  bulk,  on  a  voyage  across  the  Atlantic.  At  the  time  of  the  loss 
for  which  this  action  is  brought,  the  vessel  was  carrying  grain  in  bulk 
on  such  a  voyage. 

Plaintiff  nonsuit, 
21 


322  COGSWELL    V.    CHUBB    AND    MYERS.  [CHAP.  V. 


COGSWELL,  Appellant,  v.  CHUBB  and  MYERS,  Respondents. 

Appellate  Division,  Supreme  Court  of  New  York,  First  Depart- 
ment, 1896.     1  N.  Y.  App.  Div.  93. 

Appeal  by  the  pLnintiff,  William  B.  Cogswell,  from  a  judgment  of 
the  Superior  Court  of  the  city  of  New  York  in  favor  of  the  defendants, 
entered  in  the  office  of  the  clerk  of  said  court  on  the  18th  day  of  May, 
1895,  upon  the  verdict  of  a  jury  rendered  by  direction  of  tlie  court,  and 
also  from  an  order  entered  in  the  office  of  the  clerk  of  said  court  on  the 
20th  day  of  May,  1895,  denying  the  plaintiff's  motion  for  a  new  trial 
made  upon  the  minutes. 

UverettP.  IFA^^gZer,  for  the  appellant. 

J.  Langchm  Ward,  for  the  respondents. 

Patterson,  J.  The  defendants  in  this  action  were  undei*^Titers  on 
a  policy  of  marine  insurance  on  the  steam  yacht  "  Fieseen,"  the  prop- 
erty of  the  plaintiff.  The  insurance  for  the  term  of  one  year,  begin- 
ning April  10,  1893,  was  for  $21,000,  at  which  sura  the  vessel  was 
valued,  and  these  defendants  were  by  the  terms  of  the  policy  to  pay 
the  one  one-hundredth  part  of  any  loss  or  damage  occasioned  by  any 
of  the  perils  insured  against.  On  the  9th  of  September,  1893,  while  in 
the  lower  New  York  bay  and  under  way  and  in  tow  of  another  yacht, 
she  came  into  collision  with  a  steamship  and  was  damaged  to  the  ex- 
tent of  about  SI  G, 000,  and  this  action  was  brought  to  recover  the  one- 
hundredth  part  thereof.  The  trial  resulted  in  a  direction  to  the  jury  to 
find  a  verdict  for  the  defendants,  from  the  judgment  entered  upon 
which,  and  from  an  order  denying  a  motion  for  a  new  trials  the  plaintiff 
has  appealed. 

A  stipulation  of  the  policy,  written  in  between  printed  portions 
thereof,  is  in  the  following  words:  "  Warranted  to  navigate  only  the 
inland  waters  of  the  United  States  and  Canada,  and  not  below  the 
Thousand  Islands."  It  appears  in  the  record  that  on  the  9th  day  of 
September,  1893,  the  "  Fieseen,"  before  the  collision  referred  to,  went 
out  upon  the  high  seas,  beyond  the  Sandy  Hook  and  Scotland  lightships, 
and  into  the  open  waters  of  the  Atlantic  Ocean  \  and  that  fact  is  set  up 
as  a  breach  of  warranty,  avoiding  the  policy  and  preventing  a  recovery 
thereon. 

There  does  not  appear  to  be  any  doubt  on  the  evidence  that  the  ves- 
sel, on  the  ninth  of  September,  had  been  on  the  open  ocean,  at  least 
ten  miles  off  from  the  Sandy  Hook  lighthouse,  to  the  southward  and 
eastward,  as  testified  by  Captain  Wicks  of  the  "  Electra,"  and  she  was 
south  and  southeast  of  the  Scotland  light.  Captain  Pressey  of  the 
"  Vamoose"  says  the  "•  Fieseen"  raced  with  the  boat  commanded  by 
him  that  day,  and  that  the  race  began  about  two  miles  to  the  south  and 
east  of  the  Scotland  light,  and  they  ran  about  eighteen  miles  in  vary- 
ing courses.     The  witness  Bulin  says  the  "  Fieseen "  ran  about  ten 


SECT.  I.]  COGSWELL    V.    CHUBB    ANI)    MYEKS.  323 

miles  east  from  tlie  Scotland  lightship.  Mr.  Stanwood  swears  she  went 
about  twelve  miles  east-northeast  directl}-  from  Sandy  Hook.  The 
effect  of  the  whole  evidence  is  that  the  vessel  went  out  of  inland  waters. 
Such  waters  are  canals,  lakes,  streams,  rivers,  watercourses,  inlets, 
baj's,  etc.,  and  arms  of  tlie  sea  between  projections  of  land.  That 
ordinar}-  and  accepted  signification  of  the  words  "  inland  waters"  must 
be  considered  the  sense  in  which  the  parties  used  them  in  their  eon- 
tract  of  insurance,  unless  bj-  agi-eement  or  understanding  some  other 
was  assigned  to  them  ;  and  there  is  nothing  in  the  record  to  show 
that  a  different  or  wider  meaning  was  intended  to  be  given  them. 
Going  to  the  open  ocean  and  then  returning  was  a  plain  breach  of  the 
warrant}',  the  consequence  of  which  was  to  avoid  the  policy,  for,  haid 
as  the  artificial  rule  may  be,,  it  is  too  firmly  settled  to  be  questioned 
that  the  breach  of  an  express  warranty,  whether  material  to  the  risk  or 
not,  whether  a  loss  happens  through  the  breach  or  not,  absolutely 
determines  the  policy  and  the  assured  forfeits  his  rights  under  it. 
(Chase  v.  Hamilton  Ins.  Co.,  20  N.  Y.  52 ;  Stevens  v.  Commercial 
Mutual  Ins.  Co.,  26  id.  397;  Day  v.  Orient  Mutual  Ins.  Co.,  1  Daly, 
13  ;  Westfall  r,  Hudson  River  F.'  Ins.  Co.,  2  Duer,  490  ;  1  Phillips  on 
Ins.  418,  %  762.) 

It  is  claimed,  however,  on  the  part  of  the  appellant,  that  the  words 
"inland  waters,"  as  used  in  the  polic}',  are  not  limited  to  their  ordinary 
signification,  but  that  a  usage  existed  respecting  the  waters  frequented 
by  yachts,  such  as  the  '■'  Fieseen,"  in  view  of  wliich  usage  tlie  polic\'  was 
written,  and  that  the  warranty  should  be  construed  by  that  usage,  and 
a  broader  meaning  applied  to  the  words,  one  that  would  include  in  the 
category  of  inland  waters  the  roadstead  outside  of  Sandy  Hook  and  as 
far  as  the  yacht  went  out  upon  the  sea  on  the  ninth  of  September. 
Evidence  of  usage  to  explain,  or  rather  to  give  effect  to,  the  meaning 
of  the  polic}',  is  very  commonh'  resorted  to  in  cases  of  this  character ; 
and  as  said  by  Mr.  Phillips' (1  Phillips  on  Ins.  73,  1l  119)  :  "The 
subject-matter  of  marine  insurance  and  other  written  mercantile  con- 
tracts makes  it  necessary  to  go  out  of  the  written  instruments  in  order 
to  interpret  them,  more  frequently  than  in  most  other  contracts." 
But  before  usage  can  be  appealed  to,  there  must  be  proof  that  there 
really  is  a  usage  ;  something  existing,  and  in  connection  with  which 
the  underwriter  is  assumed  to  have  taken  the  risk.  All  that  is  in 
evidence  on  the  subject  is,  that  it  is  customary  for  many  yachts  and 
other  craft  of  large  and  small  dimensions,  whenever  an  international 
yacht  race  takes  place,  to  accompany  the  competing  boats  over  an 
ocean  course.  This  scarcely  establishes  a  usage  of  the  character  to 
qualif}'  an  express  warrant}'.  International  yacht  races  are  of  infre- 
quent occurrence.  That  yachts  covered  by  insurance  go  upon  the 
ocean  to  follow  them  does  not  appear.  This  policy  was  written  April 
11,  1893.  It  is  not  shown  that  an  international  yacht  race  was  in  con- 
templation for  the  year  during  which  the  policy  was  to  run.  Attending 
the  yacht  race  at  Newport,  and  the  custom  of  yachts  to  assemble  at 


324  COGSWELL   V.    CHUBB    AND   MYEKS.  [CHAP.  V. 

that  port  in  the  summer  for  the  squadron  races,  does  not  cstal)lish 
a  usage  for  the  same  reasons.  All  of  this  testimony  is  insufficient  to 
prove  that  the  parties  contracted  for  anything  other  than  what  is  ex- 
pressed in  the  plain  and  accepted  meaning  of  the  words  of  the 
warranty. 

The  further  contention  is  made  that,  the  loss  happening  after  the 
policy  attached,  and  the  breach  of  tlie  warranty  in  no  wise  producing 
or  contributing  to  the  loss,  but  it  being  occasioned  by  independent 
causes,  the  plaintiff  may  recover,  notwithstanding  the  breach.  The 
•learned  counsel  for  the  plaintiff  admits  that  the  English  authorities  are 
against  this  view,  as  the}-  very  decidedh'  are.  The  American  cases  of 
breaches  of  implied  warranties  of  seaworthiness  cited  on  the  argument 
and  in  the  appellant's  brief  do  not  establish  a  contrary  rule  affecting 
the  ex[)ress  warrantv  contained  in  this  policy. 

AVe  fail  to  see  the  pertinency  of  the  ai-gument  made  respecting  lights 
carried  by  certain  vessels,  under  the  requirements  of  the  navigation 
laws  of  the  United  States.  That  steamers  plying  between  New  York 
and  Newport,  and  New  York  and  Long  Branch,  and  New  York  and 
Coney  Island,  carry  the  lights  prescribed  for  vessels  navigating  inland 
waters  in  addition  to  those  of  ocean-going  steamers  is  doubtless  true  ; 
but  they  are  the  same  lights  required  of  coastwise  steamers  ;  and  those 
plying  between  the  places  mentioned  may  be,  and  probablj-  are,  classed 
as  such. 

The  judgment  and  order  appealed  from  must  be  affirmed,  with  costs. 

Van  Bruxt,  P.  J.,  Barrett,  Williams,  and  O'Brien,  JJ.,  concurred. 

Judgment  and  order  affirmed  with  coats} 

1  lu  Philips  V.  Baillie,  3  Doug.  374,  378  (1784),  Lord  Mansfield,  C.  J.,  for  the 
court,  said  :  "  The  doctrine  of  warranty  and  representation  applies  only  to  policies,  and 
confounds  any  other  subject." 

In  Behn  v.  Buruess,  3  B.  &  S.  751,  753  (Ex.  Ch.  1863),  Williams,  J.,  for  the  court, 
said  :  "  The  question  in  this  case  is,  whether  the  statement  in  the  charter-party,  that 
the  ship  is  '  now  in  the  port  of  Amsterdam,'  is  a  '  representation  '  or  a  'warranty,' 
using  the  latter  word  as  synonymous  with  '  condition ; '  in  which  sense  it  has  been 
for  many  years  understooil  with  respect  to  policies  of  insurance  and  charter-parties." 
On  the  topic  of  this  section,  see  also  :  — 

Muller  V.  Thompson,  2  Camp.  610  (1811) ; 

Colby  V.  Hunter,  Moo.  &  M.  81  (1827)  ;  s.  c.  3  C.  &  P.  7  ; 

St.  Louis  Ins.  Co.  v.  Glasgow,  8  Mo.  713  (1844) ; 

Grant  i-.  ^tna  Ins.  'Co.,  15  Moo.  P.  C.  516  (1862)  ;  s.  c.  12  Lower  Canada,  386, 

Grant  v.  Equitable  F.  Ins.  Co.,  14  Lower  Canada,  493  (1864) ; 

Birrell  v.  Dryer,  7  App.  Cas.  345  (1884)  ; 

Roddick  v.  Indemnity  Mutual  Marine  Ins.  Co.,  '95,  2  Q.  B.  380  (C.  A.); 

General  Ins.  Co.  v.  Cory,  '97,  1  Q.  B.  335  (Commercial  Court,  1896).  — Ed. 


SECT.  II.]       NEWCASTLE   FIRE   INS.    CO.   V.    MACMORRAN   &   CO. 


325 


SECTION  II. 

Fire  Insurance. 

NEWCASTLE  FIRE   INS.   CO.,  Appellants,  v.  MACMORRAN 
&   CO.,  Respondents. 

House  of  Lords,  1815.     3  Dow,  255. 

Appeal  from  the  Court  of  Session  of  Scotland,  Second  Division. 

Macmorran  &  Co.,  cotton  and  woot  spinners,  at  Garscliew,  insured 
their  premises  witli  tlie  Newcastle-upon-Tyne  Fire  Insurance  Com- 
pany'. The  policy  was  dated  April  16,  1805,  and  contained  a  re- 
ceipt for  the  premium,  which  was  accounted  for  to  the  company  by 
Hamilton,  their  agent  at  Glasgow,  through  whom  the  insurance  had 
been  effected.  The  policy  was  retained  by  Hamilton  till  Sept.  5,  1805, 
when  it  was  delivered  to  the  insured  upon  their  paying  the  premium. 
The  policy  referred  to  certain  printed  proposals,  a  copy  of  which  was, 
according^  to  the  practice  of  the  office,  always  delivered  to  the  person 
transacting  the  insurance,  in  which  proposals  it  was  stated  that,  where 
the  persons  insuring  gave  a  description  of  the  subject  in  order  to  its 
being  insured  at  a  lower  premium,  and  that  where  there  should  be  fraud 
or  false  swearing  in  stating  the  amount  of  the  loss,  the  policy  was  to 
be  of  no  force.  Certain  classes  of  buildings  were  likewise  specified, 
according  to  the  particulars  of  which  the  premium  was  to  be  lower  or 
higher,  and  the  premises  in  question  were  warranted  to  be  of  the  first 
class,  for  which  the  lower  premium  only  was  charged.  On  December  7, 
1805,  the  mill  was  burnt,  and  the  insurers  refusing  to  pay  the  sum 
claimed  for  the  loss,  the  insured  brought  an  action,  regularly  preceded 
by  an  arrestment  ad  Fund.  Jur.  before  the  Court  of  Session,  conclud- 
ing for  payment  of  £1647,  and  interest  from  December  7, 1805.  A  con- 
descendance  having  been  ordered,  the  insurers  stated  two  charges  as 
the  ground  of  their  refusal  to  pay  :  first,  that  there  was  fraud  and  false 
swearing  as  to  the  amount  of  the  loss  ;  second,  that  the  fire  was  inten- 
tional. Upon  proof  it  appeared  that  there  was  no  foundation  for  this 
latter  charge  ;  but  it  also  appeared  that,  at  the  time  of  the  date  of  the 
policy,  the  premises  were  of  the  second  class,  contrary  to  the  warranty. 
In  answer  to  this  it  was  alleged  that  Hamilton,  the  agent  of  the  New- 
castle Company,  had  taken  it  for  granted  that  the  premises  were  of  the 
first  class,  and  made  out  the  policy  accordingly,  without  any  represen- 
tation on  the  part  of  the  insured,  and  that  before  the  policy  was  deliv- 
ered, and  the  loss  happened,  the  premises  had  been  altered  so  as  to  bring 
them  within  the  first  class.  It  did  not  appear  very  distinctly  in  proof 
how  the  demand  of  £1647  was  made  up.      The  court  below  decerned 


326  NEWCASTLE   FIKE   INS.   CO.   V.   MACMORRAN   &   CO.       [CHAP.  V. 

against  tlie  insurers  in  terms  of  the  libel,  and  from  this  decision  the 
Newcastle  Company  appealed. 

Homilhj  and  liichardson,  for  appellants. 

Park  iind  Brougham,  for  respondents. 

July  8,  1815.  Lord  Eldon,  C.  This  is  an  appeal  by  the  Newcastle- 
upon-Tyne  Fire  Insurance  Company,  from  a  judgment  of  the  Court  of 
Session  by  which  they  were  held  liable  in  the  payment  of  a  sum  of 
£1647  upon  a  policy  of  insurance,  and  the  question  is  whether  this 
judgment  was  right  or  not.  The  summons,  which  is  in  the  nature  of 
our  declaration,  stated  that  the  Newcastle  Company  were  indebted  to 
the  pursuers  in  a  sum  of  £1G47,  in  terms  of  a  policy  dated  April  16, 
1805  (your  Lordships  will  note  the  date),  and  concluded  for  payment 
accordingly. 

The  policy  itself  was  in  these  terms  :  "  Whereas  Mr.  Hugh  M'Mor- 
ran  and  Co.,  &c.  have  paid  the  sum  of  £21  5s.  8(7.  to  the  society  of  the 
Newcastle-upon-Tyne  Fire  Office  ;  and  do  agree  to  pay  or  cause  to  be 
paid  to  the  said  society,  at  their  office  in  Newcastle-upon-Tyne,  the 
sum  of  £17  17s.  on  the  2.4th  day  of  June,  1806,  and  the  like  sum  of 
£17  17s.  yearly  on  the  24th  day  of  June,  during  the  continuance  of  this 
policy,  as  a  premium  for  the  insurance  from  loss  or  damage  by  fire,  of 
£50  on  millwright's  work,  including  all  the  standing  and  going  gear  in 
their  mill,  which  is  used  as  a  cotton  and  woollen  mill,  situated  at  Gar- 
schew  as  aforesaid,  being  in  their  own  occupation  onl}-,  and  stone  built 
and  slated  ;  £550  on  clockmakers'  work,  carding  and  breaking  engines, 
and  all  movable  utensils  in  the  second  floor,  occupied  as  a  cotton  mill ; 
£160  on  stock  of  cotton  in  the  same  ;  £600  on  clockmakers'  work, 
carding  and  breaking  engines,  and  all  movable  utensils  in  the  first 
floor,  occupied  as  a  woollen  mill ;  and  £350  on  stock  of  wool  in  the 
same  ; "  tlien  followed  this  very  materia!  passage,  "  warranted  that  the 
above  mill  is  conformable  to  the  first  class  of  cotton  and  looollen  rates 
delivered  hereicith." 

The  materiality  of  it  consisted  in  this  (though  in  one  view  whether  it 
was  material  or  not  did  not  signify,  if  it  was  a  condition  precedent), 
that  if  it  was  of  the  second  class,  and  not  of  the  first,  a  larger  premium 
ought  to  have  been  given.  And  then  it  goes  on  :  "  Now  know  all  men 
by  these  presents,  that  from  the  day  of  the  date  hereof,  until  the  said 
24th  day  of  June,  1806,  and  so  from  year  to  year  so  long  as  the  said 
Hugh  M'Morran  and  Co.  siiall  duly  pay,  &c.,  tlie  sum  of  £17  17s.,  &c., 
and  the  same  shall  be  accepted  l)y  the  trustees  or  acting  members  of 
the  said  society  for  the  time  being,  the  stock  and  fund  of  the  said 
society  shall  be  subject  and  liable  to  pay,  &c.,  all  such  damage  and  loss 
as  the  said  Hugh  M'Morran  and  Co.  shall  suffer  by  fire,  not  exceeding 
the  sum  of  £1700,  &c."  And  then  followed  at  the  bottom  an  entry  of 
receipt  of  the  government  duty  of  £2,  from  April  16,  1805,  up  to  June 
24,  1806.  Their  Lordships  would  ol)serve  tlie  materiality  of  that,  as 
this  instrument  could  never  have  been  produced  in  court,  if  it  were 
only  on  account  of  the  revenue,  save  as  a  policy  of  April  16,  1805,  on 


SECT.  II.]       NEWCASTLE    FIRE    INS.    CO.    V.   MACMORKAN   &   CO.  327 

which  as  a  policy  so  dated  the  demand  could  have  been  made.  But 
whether  that  was  so  or  not,  the  demand  was  made  on  this  polic}'.  On 
June  24,  1806,  the  premium  must  again  be  paid,  and  the  duty  to  gov- 
ernment, and  whether  the  demand  was  on  the  policy  originally  entered 
into,  or  on  the  renewed  policy,  it  must  be  on  a  policy  liable  to  such  a 
duty,  and  of  this  date. 

In  the  appellants'  case  it  is  stated  that  the  printed  proposals  formed 
jDart  of  the  contract,  and  that,  besides  being  referred  to,  a  copy  is 
always  delivered  to  the  party  insuring  ;  and  that  it  is  there  set  out, 
among  otlier  things,  that  if  any  "  i)erson  or  persons  shall  insure  his, 
her,  or  their  houses,  mills,  &c.,  and  shall  cause  the  same  to  be  described 
in  the  policy  otherwise  than  as  they  really  are,  so  as  the  same  shall  be 
insured  at  a  lower  premium  than  proposed  in  the  table,  such  insurance 
shall  be  of  no  force."  As  to  their  so  setting  it  out  in  tlieir  printed 
proposals,  in  the  case  of  a  warranty,  it  is  unnecessary  to  consider  that : 
for  if  there  is  a  warranty,  the  person  warranting  undertakes  that  the 
matter  is  such  as  .he  represents  it ;  and  unless  it  be  so,  whether  it  arises 
from  fraud,  mistake,  negligence  of  an  agent,  or  otherwise,  then  the 
contract  is  not  entered  into ;  there  is  in  reality  no  contract. 

Then  they  further  state  that,  by  another  article  of  these  proposals, 
it  is  provided  "  that  all  persons  insured  by  this  society  sustaining  any 
loss  or  damage  by  fire,  are  forthwith  to  give  notice  thereof  at  their 
office  in  Newcastle,  and  as  soon  as  possible,  after  to  deliver  in  as  par- 
ticular an  account  of  their  loss  or  damage  as  the  nature  of  the  case  will 
admit,  and  make  proof  of  the  same,  by  their  oath  or  affirmation,  accord- 
ing to  the  form  practised  in  the  said  office,  and  by  their  books  of 
accounts,  or  other  proper  vouchers,  as  shall  be  reasonably  required." 
That  they  shall  also  procure  a  certificate,  under  the  hands  of  the  minis- 
ter, &c.,  and  others,  relative  to  the  cause  of  the  loss ;  "  and  until  such 
affidavit  and  certificate  shall  be  made  and  produced,  the  loss-money 
shall  not  be  payable  ;  and  if  there  appear  any  fraud  or  false-swearing, 
such  sufl'erers  shall  be  excluded  from  all  benefit  by  their  policies." 

They  further  represent  that  in  the  second  set  of  proposals  for  the 
insurance  of  cotton  mills,  &c.,  certain  classes  of  buildings  were  speci- 
fied, according  to  the  particulars  of  which  the  premium  is  at  a  lower  or 
higher  rate. 

Thus,  class  1  comprehends  "  buildings  of  brick  or  stone,  and  covered 
with  slate,  tile,  or  metal,  having  stoves  fixed  in  arches  of  brick  or  stone 
on  the  lower  floors,  with  upright  metal  pipes  carried  to  the  whole  height 
of  the  building,  through  brick  flues  or  chimneys,  or  having  common 
grates,  or  close  or  open  metal  stoves  or  coakles,  standing  at  a  distance 
of  not  more  than  one  foot  from  the  wall,  on  brick  or  stone  hearths,  sur- 
rounded with  fixed  fenders,"  I  request  3'our  Lordships'  particular  atten- 
tion to  the  following  words,  "  and  oiot  having  more  than  two  feet  of 
jnpe  leading  therefrom  into  the  chimney,  and  in  which,  or  in  any  build- 
ing adjoining  thereto,  although  not  communicating  therewith,  no  dry- 
ing stove  or  singeing  frame  shall  be  placed." 


323  NEWCASTLE   FIRE   INS.    CO.    V.    MACMOUHAN    &   CO.       [CHAP.  V 

Class  2  comprehends  "  buildings  of  brick  or  stone,  and  covered  witb 
slate,  tile,  or  metal,  which  contain  an}-  singeing  frame,  or  any  stove  or 
stoves,  liaving  metal  pipes  or  flues,  more  than  two  feet  in  length,  and 
in  which,  or  in  any  building  adjoining  thereto,  although  not  communi- 
cating therewith,  no  drying  stove  shall  be  placed." 

As  I  understand  this,  very  possibly  misunderstand  it.  but  it  is  of  no 
consequence  in  my  view  of  the  case  whether  1  do  so  or  not ;  but  as  1 
undei-stand  it,  the  reason  for  requiring  a  higher  premium  for  mills  of 
tlie  second  class  is  that  the  greater  length  of  the  pipe  increases  the 
danger.  If  the  pipe  of  the  stove  is  a  yard  in  length,  for  instance,  the 
diffei-ence  arises  from  this,  that  if  the  pipes  be  more  than  two  feet, 
the  danger  is  increased  beyond  what  belongs  to  pipes  of  that  length. 
But  it  is  immaterial  whether  I  misunderstand  this  or  not ;  for  if  the 
mill  was  warranted  as  being  of  the  first  class,  it  must  be  such  as  it  is 
warranted  to  be,  unless  there  is  something  to  oust  the  warranty,  other- 
wise there  is  no  contract. 

Then  this  mill  was  burnt ;  and,  as  generally  happens  in  these  cases, 
the  insured  were  very  anxious  to  get  their  money,  and  the  others  were 
not  very  ready  to  pay.  An  action  was  then  brought  to  compel  pay- 
ment, to  which  defences  were  given  in.  As  to  that  defence  which  was 
the  most  unwelcome  to  hear,  viz.,  that  the  premises  have  been  wilfully 
set  on  fire,  it  appeared  that  there  was  no  ground  for  it ;  and  the  Court 
of  Session  seem  to  have  thought  that  there  was  no  ground  for  the 
imputation  of  fraud  and  overvalue.  It  is  not  likely  at  any  rate  that  the 
articles  were  undercharged  ;  and  it  was  extremely  difficult  to  make  out 
a  case  of  overvalue  where  the  books  and  papers  were  all  destroyed,  and 
when  the  amount  of  these  improvements,  and  the  value  of  spinning- 
jennies,  and  such  articles,  were  to  be  calculated.  But  though  one  can- 
not help  believing  that  enough  was  charged,  yet  it  might  be  dangerous 
to  sav  under  the  circumstances  that  that  defence  ought  to  be  sus- 
tained. 

But  there  was  another  very  material  point  of  defence  stated,  that  this 
mill,  which  was  warranted  as  being  of  the  first  class  with  a  pipe  of  two 
feet,  was  in  reality  of  the  second  class  ;  and  that  being  of  the  second 
class,  whether  there  was  fraud  or  not,  whether  the  misstatement  on  the 
part  of  the  insured  arose  from  fraud,  or  from  mere  error  or  inattention, 
or  the  mistake  of  an  agent  (unless  they  were  misled  by  the  agent  of  the 
Newcastle  Company),  or  from  whatever  other  cause,  the  contract  never 
had  eflTect. 

Then  evidence  was  gone  into  as  to  whether  the  mill  was  of  the  first 
or  second  class.  The  Court  of  Session  seems  to  have  thought  it  im- 
material whether  it  was  or  not.  But  if  the  mill  was  warranted  as  of 
the  first  class,  and  was  really  of  the  second  class,  the  judgment  of  the 
court  below  was  clearly  erroneous  ;  for  it  is  a  first  principle  in  the  law 
of  insurance,  on  all  occasions,  that  where  a  representation  is  material 
it  must  be  complied  with  — if  immaterial,  that  immateriality  m.ay  be 
inquired  into  and  shown  ;  but  that  if  there  is  a  warranty,  it  is  part  of 


SECT.  II.]       NEWCASTLE   FIRE    INS.    CO.    V.    MACMOKEAN   &   CO.  329 

the  contract  that  the  matter  is  such  as  it  is  represented  to  be.  There- 
fore the  materiality  or  immateriality  signifies  nolliing.  The  only  ques- 
tion is  as  to  the  mere  fact.  It  is  proposed  then  that  the  matter  should 
stand  over  for  a  day  or  two  in  order  to  examine  the  ease  again  for  the 
purpose  of  further  inquiry  as  to  that  fact ;  but  my  present  impression 
is  that  the  mill  was  not  such  as  it  was  warranted  to  be,  and  that  there- 
fore all  consideration  of  fraud  or  overvalue  is  out  of  the  question,  un- 
less it  can  be  effectually  answered  that  the  insured  were  misled  by  the 
insurers,  or  their  agent.  Then  they  say  that  the  misrepresentation  was 
owing  to  the  agent  of  the  Newcastle  Fire  Company.  I  cannot  say, 
however,  that  they  have  made  out  that  point,  and  it  is  denied  on  the 
other  side,  and  may  therefore  be  laid  out  of  the  question. 

Then  they  say  further  that  there  was  no  effectual  policy    till   the 
premium  was  paid,  and  refer  to  the  terms  of  the  4th  article  of  the 
printed  proposals,  which  declares  ''that  no  insurance  is  considered  by 
this  office  to  take  place  till  the  premium  be  actually  paid  by  the  insured, 
his,  her,  or  their  agent,  or  agents."     The  premium,  they  say,  was  not 
paid  till  a  considerable  time  after  the  date  of  the  policy,  that  the  alter- 
ation was  made  which  brought  this  mill  within  the  description  of  the 
first  class  of  mills  before  the  premium  was  paid,  and  that  the  alteration 
had  been  communicated  to  the  agent  of  the  company.     The  company 
deny  that  any  such  communication  was  made,  and  even  if  it  had  been 
made  it  would  have  been  still  necessary  to  consider  how  far  that  cir- 
cumstance could  alter  the  law  as  applicable  to  the  case.     But  as  the 
fact  was  denied,  and  there  was  no  proof  of  it,  that  point  may  be  con- 
sidered as  out  of  the  question.     With  respect  to  the  effect  of  the  article 
referred  to,  the  appellants  contend  that  it  did  not  relate  to  the  first 
policy,  but  to  the  renewals  of  policies.     But  in  the  present  case  it  is 
not  necessary  to  consider  whether  it  related  to  the  first  policy  or  any 
renewals  of  it,  as  they  say  that  as  between  the  respondents  and  them 
the  premium  had  in  point  of  fact  been  paid  before  the  alteration  took 
place,  as  the  Scotch  agent  had  accounted  for  it  to  his  constituents,  the 
Newcastle   Company,'  before  the   period  of  the  alteration,  and  it  had 
therefore  become  a  personal  debt  due  to  him  from  the  Scotch  Company. 
That  may  be  considered  as  an  answer  to  the  argument  raised  upon  that 
ground.     But  suppose  that  were  entirely  out  of  the  question,  we  must 
in  this  case  as  in  all  others  proceed  secimdum  allegata  et  probata,  ac- 
cording to  what  is  alleged  and  proved.     If  they  could  succeed  at  all  on 
this  summons,  it  must  be  on  a  policy  or  contract  dated  April  16,  1805, 
and  when  they  have  founded  upon  that  only,  they  cannot  afterwards  in 
that  action  turn   round  and  say,   though  we  cannot  succeed  on  that 
policy,  we  are  entitled  to  recover  on  a  subsequent  contract.     See  how 
the  contract  would  be  varied.     This  was  a  bilateral  contract  of  the  date 
of  April  16,  1805,  from  which  period  to  June  24,   1806,  the  premium 
was  acknowledged  to  have  been  paid  ;  and  it  was  agreed  that  a  certain 
premium  should  continue  to  be  paid  on  June  24,  de  anno  in  anymm. 
Can  3-our  Lordships  convert  that  into  a  transaction  commencing  not  in 
April,  but  in  September,  1805? 


330  NEWCASTLE   FIRE    INS.    CO.    V.    MACMOREAN   &   CO.       [CHAP.  Y. 

Suppose  the  fire,  after  being  smothered  for  some  time  ia  the  mill, 
had  burst  out  the  da^'  before  the  money  was  paid  to  the  agent  of  the 
Newcastle  Compan}-,  could  that  company  say,  "Though  the  premium 
has  been  paid  us  bj-  our  agent,  and  we  own  the  receipt  of  the  mone}-,  yet 
as  you  did  not  pa}'  the  agent  we  are  not  bound."  Acquitting  M'Morran 
find  Co.  then  of  all  fraud  in  the  business,  the  question  is  reduced  to 
this  :  "  Are  you,  M'Morran  &  Co.,  looking  to  the  facts  and  evidence  as 
applicable  onl}-  to  the  policy  of  April,  1805,  entitled  to  recover  under 
this  contract?" 

I  have  said  so  much  because  I  consider  it  as  of  the  greatest  impor- 
tance that  the  mercantile  law  should  be  uniform  all  over  the  country, 
and  because  it  is  dangerous  therefore  to  decide  these  questions  of  in- 
surance without  being  sure  what  ma}'  be  the  effect  of  the  decision  and 
the  nature  of  the  doctrine  which  may  result  from  it.  If  this  is  to  be 
taken  as  a  contract  of  April,  1805,  and  the  premises  were  not  of  the 
class  of  which  they  were  warranted  to  be,  it  appears  to  me  quite  clear 
that  the  respondents  ought  not  to  recover.  If  the  Court  of  Session  was 
of  opinion  that  the  danger  and  risk  was  not  greater  in  mills  of  the 
second  class  than  in  those  of  the  first  class,  though  that  were  sworn  to 
by  five  hundred  witnesses,  it  would  signif}'  nothing.  The  only  question 
is,  "What  is  the  building  de facto  that  I  have  insured." 

July  10,  1815.  Lord  Eldon,  C.  Since  I  had  the  honor  of  address- 
ing your  Lordships  the  other  da}'  on  this  case,  I  have  looked  again  at 
all  the  papers.  I  repeat  what  I  before  said,  and  what  indeed  the  ap- 
pellants themselves  have  authorized  me  to  say,  that  there  is  no  ground 
whatever  for  the  imputation  that  the  mill  had  been  wilfully  set  on  fire. 
As  to  the  question  of  fraud  and  false  swearing,  on  the  best  considera- 
tion I  have  been  able  to  apply  to  the  case,  though  there  appears  a  ten- 
dency to  state  the  loss  as  high  as  it  can  be  fairly  carried,  I  cannot  say 
that  there  is  anything  which  amounts  to  fraud  and  falsehood.  Another 
ground  was  that  this  summons  proceeded  on  a  policy,  dated  April  16, 
1805,  and  that  it  contained  a  warranty  that  the  building  belonged  to 
the  first  class,  described  as  having  the  stoves  not  more  than  one  foot 
fi-om  the  wall,  with  pipes  or  flues  not  more  than  two  feet  in  length.  I 
stated  the  doctrine  of  warranty,  and  on  the  best  consideration  I  have 
been  able  to  give  the  case,  I  do  not  think  that  the  warranty  was  made 
good.  The  remaining  question  then  was  whether  attending  to  the 
nature  of  the  summons  the  respondents  could  be  considered  as  having 
insured  of  a  date  posterior  to  April,  1805,  and  after  the  alteration  had 
taken  place  in  the  description  of  the  building.  I  stated  my  opinion 
that  they  could  not  on  this  summons.  It  appears  to  me  then  that  the 
appellants  ought  to  be  assoilzied  in  this  action,  and  if  the  respondents 
have  other  special  circumstances  to  allege,  they  may  take  advice  whether 
they  ought  to  proceed  upon  another  summons.  But  I  tliink  they  can- 
not succeed  on  this,  and  I  am  therefore  of  opinion  that  the  judgment 
of  the  court  below  ought  to  be  reversed. 

Judgnun t  accordingly. 


SECT.  II.]  SCOTT    V.    QUEBEC   FIRE   ASSURANCE    CO.  331 


SCOTT  V.   QUEBEC  FIRE  ASSURANCE  COMPANY. 

King's  Bench  for  the  District  of  Qcebec,  1821. 
Stuart,   Low.  Cuu.   147. 

On  August  21,  1820,  the  plaintiff  insured  the  sum  of  £2,600  at  the 
office  of  the  Quebec  Fire  Assurance  Company,  upon  a  house  which  he 
inhabited  in  Montreal,  and  upon  the  goods  and  merchandise,  furniture, 
plate,  etc.,  which  it  contained,  all  of  which  were  consumed  b\-  the  fire 
on  August  15,  1821,  while  the  policy  was  in  full  force.  It  was  proved 
that  the  fire  began  in  an  adjoining  house,  and  spread  from  thence  to  a 
wooden  building  on  the  premises  of  the  plaintiff,  from  which  it  was 
communicated  through  a  doorway  of  the  dwelling-house,  tchich  was 
open  although  it  had  an  iron  door,  to  the  interior  of  the  last-mentioned 
edifice,  and  that  it  broke  out  between  eiglit  and  nine  o'clock  in  the 
evening.  In  the  policy  of  insurance  it  was  stated  "  that  the  dwelling- 
house  of  the  assured  was  built  of  stone  and  covered  with  tin,  gables 
through  the  roof  and  plafond,  iron  doors  and  shutters,"  and  for  the 
defendants  it  was  contended,  that  these  words  "iron  shutters  and 
doors  "  amounted  in  law  to  a  warranty,  which  according  to  the  facts 
above  stated  had  not  been  performed. 

Sewell,  C.  J.  The  rule  as  to  contracts  in  general  is  to  give  lan- 
guage  its  true  effect  according  to  the  intention  of  the  speaker  or  writer, 
as  inferred  from  the  whole  expressions  and  the  nature  of  the  occasion 
to  which  the}-  are  applied.^  And  policies  of  insurance  are  to  be  con- 
strued by  the  same  rules  as  other  instruments,  unless  where  b}-  the 
known  usage  of  trade  certain  words  have  acquired  a  peculiar  sense 
distinct  from  their  ordinary  and  popular  sense.-  In  this  case  the 
description  of  the  premises  which  was  furnished  by  the  insured  is 
inserted  in  the  policy,  and  if  in  point  of  fact  it  be  true,  as  it  un- 
doubtedly is,  that  they  were  "  built  of  stone  and  covered  with  tin," 
bad  "gables  through  the  roof  and  plafond,  iron  doors  and  shutters," 
whether  we  consider  these  expressions  in  the  policy  as  a  representation, 
or  as  a  icarranty,  is  immaterial.  For,  in  either  instance,  the  express 
contract  of  the  assured  has  been  substantially  and  strictly  performed,' 
and  being  an  e'xpress  contract  there  is  no  room  for  implication  :  expres- 
sumfacit  cessare  taciturn.  The  doors  and  windows  being  open  in  the 
middle  of  August,  at  half-past  eight  o'clock,  is  no  proof  of  negligence. 

Judgment  for  the  plaintiff , 

1  1  Ev.  Poth.  59,  in  notis.  —  Rep. 

2  Robertson  v.  French,  4  East,  130.  —  Rep. 

3  3  Sehv.  N.  P.  881.— Rep. 


332  FOWLER   V.   ^TNA   FIRE    IXS.    CO.  [cHAP.  V. 


FOWLER   AND  Others   v.  JET^A   FIRE  INSURANCE  . 
COMPANY. 

Supreme  Court  of  New  York,  1827.     6  Cow.  673. 

Assumpsit,  on  a  policy  of  insurance  against  fire  ;  tried  at  tlie  New 
York  Circuit,  July  6tli,  1826,  before  Edwards,  C.  Judge. 

The  plaintiffs,  at  tlie  trial,  proved  a  polic}'  executed  by  the  defend- 
ants, on  the  stock  in  trade  of  the  plaintiffs,  consisting  of,  &c.,  contained 
in  a  two-stor}'  frame  house,  ^filled  in  with  hrick^  situate  at  No.  152, 
Chatham  Street,  in  the  city  of  New  York.  It  appeared  that  the  house 
No.  152,  Chatham  Street,  was  burned,  with  the  plaintiffs'  stock  in 
trade ;  but  that  the  house  was  a  wooden  building,  with  holloio  walls, 
and  not  filled  in  v-ith  brick.  That  one  of  the  conditions  attached  to 
the  policy  was,  that  if  any  person  insuring  any  building  or  goods  at  the 
-ZEtna  office  should  describe  the  same  otherwise  than  as  they  reallj' 
were,  so  that  the  same  might  be  insured  at  less  than  the  rate  of 
premium  specified  in  the  printed  proposals  of  the  companj ,  such  insur- 
ance should  be  void  and  of  no  effect. 

Evidence  was  given  at  the  trial,  on  the  question  whether  the  plaintiffs 
had  been  guilty  of  fraud  in  procuring  an  over-valuation  of  the  goods 
destroyed  ;  and  among  other  evidence,  the  judge  allowed  proof  on  the 
part  of  the  plaintiffs,  of  their  good  character  ftr  integrit}-.  This  was 
objected  to,  and  made  one  point  of  exception  by  the  defendants. 

The  defendants  insisted  that  the  description  of  the  goods,  as  being 
in  a  howse  filled  in  with  brick,  was  a  warrant}'  which  must  be  strictly 
complied  v/ith.  The  judge  so  considered  it ;  but  he  received  evidence 
to  show  that  the  wrong  description  was  either  a  mistake  of  the  plain- 
tiffs, or  of  the  agent  of  the  defendants  ;  and  charged  the  jury,  that  if 
the  plaintiffs  made  no  representation  of  the  character  of  the  property 
insured,  but  the  agent  of  the  compan}'  took  it  upon  himself  to  de- 
scribe it,  the  plaintiffs  were  not  bound  to  answer  for  the  error.  That 
if  the  plaintiffs  did  make  the  description,  but  not  fraudulently,  for  the 
purpose  of  getting  insurance  at  a  reduced  rate,  but  through  mistake, 
still  they  were  entitled  to  recover. 

The  defendants'  counsel  excepted  to  the  decisions  and  charge  of 
the  judge. 

Verdict  for  the  plaintiffs  for  $3,042.80. 

On  the  bill  of  exceptions. 

Talcott,  Attorney-General,  for  the  defendants,  now  moved  for  a  new 
trial. 

G.  C.  Bronsoyi  and  H.  Maxwell,  contra. 

Savage,  C.  J.^  ...  I  think  it  ver}' immaterial  as  regards  this  action, 
whether  the  error  in  description  arose  from  design  or  mistake.  The 
question  is,  did  this  description  amount  to  a  warranty  that  the  property 

1  The  omitted  passage  held  evidence  of  character  inadmissible.  —  Eu. 


SECT.  II  ]  FOWLER    V.   .ETNA    FIRE    INS.    CO.  333 

answered  the  description  ?  The  judge  at  tlie  circuit  so  considered  it ; 
and  it  was  admitted  on  the  argument,  that  if  the  principles  of  marine 
insurance  are  appUcable  to  fire  insurance,  it  is  a  warranty.  In  the  case 
of  Stetson  v.  Mass.  Mutual  Fire  Ins.  Co.  (-t  Mass.  Rep.  337)  Sewall, 
Justice,  la^'s  down  the  law  thus  :  ''  The  estimate  of  the  risk  undertaken 
by  an  insurer  must  generally  depend  upon  the  description  of  it  made 
1)3'  the  insured  or  his  agent.  A  mistake  or  omission  in  his  representa- 
tion of  the  risk,  whether  wilful  or  accidental,  if  material  to  the  risk 
insured,  avoids  the  contract."  For  this,  he  cites  1  Marsh,  on  Ins.  335, 
339.  That  writer  states  that  a  warranty,  being  in  the  nature  of  a  con- 
dition precedent,  must  be  fulfilled  by  the  insured,  before  performance 
can  be  enforced  against  the  insurer ;  and  whether  the  thing  warranted 
was  material  or  not,  whether  the  breach  of  it  proceeded  from  fraud, 
negligence,  misinformation,  or  any  other  cause,  the  consequence  is  the 
same.     (1  Marsh.  347.) 

In  relation  to  the  sale  of  personal  property,  it  is  held  that  a  bill  of 
parcels  is  not  a  warranty  that  the  goods  are  what  they  are  represented 
to  be.  (2  Caines,  48,  and  other  cases  down  to  the  20  John.  198.) 
But  in  relation  to  policies  of  insurance,  it  is  held  that  a  description  of 
a  vessel  is  a  warrant}'.  For  instance,  the  description  of  a  vessel  as 
Swedish,  is  a  warrant}'  of  her  national  character.  (Phil,  on  Ins.  12o, 
and  the  cases  there  cited.  8  John.  237,  319.)  Several  cases  in  2  H. 
Bl.  574,  &c.,  show  that  the  conditions  attached  to  the  policy  are  to  be 
considered  parcel  of  the  instrument. 

No  cases  have  been  produced  to  show  that  a  description  of  property 
insured  b}'  a  policy  against  fire  is  to  be  construed  differently  from  a 
description  in  a  marine  policy.  I -can  perceive  no  reason  why  there 
should  be  a  difference.  "  Insurance,"  sa3's  Lord  Mansfield,  "  is  a  con- 
tract upon  speculation."  (3  B.urr.  1909.)  "The  special  facts  upon 
which  the  contingent  chance  is  to  be  computed  'lie  most  commonly  in 
the  knowledge  of  the  insured  only  ;  the  underwriter  trusts  to  his  repre- 
sentation," &c.  He  says  the  insured  need  not  state  what  the  insurer 
knows  ;  but  the  keeping  back  the  true  state  of  the  property  is  a  fraud. 

In  this  case,  the  plaintiffs  ought  to  have  known  the  true  state  and 
condition  of  their  house,  and  have  truly  represented  it.  Not  having 
done  so,  they  fail  in  their  action.  The  property  burned  is  not  the 
property  insured. 

This  is  not  a  case  in  which  equities  should  be  considered.  It  is  a 
sort  of  gambling,  a  speculating  upon  chances  ;  and  the  parties  must 
be  held  strictly  and  literally  to  their  contract. 

I  think  the  judge  misdirected  the  jury,  and  that  a  new  trial  should 
be  granted.  New  trial  granted.^ 

1  In  Fowler  v.  ^tnaFire  Ins.  Co.,  7  "Wend.  270,  274-275  (1831),  ScxHERLAyo,  J., 
for  the  court,  said  :  — 

"  Two  new  trials  have  already  been  granted  in  this  case ;  this  is  the  third  verdict 
which  the  plaintiffs  have  had  in  their  favor.  When  the  case  first  came  before  us, 
in  6  Cow.  673,  we  held  that  the  description  in  the  policy  of  the  house  which  contained 


334  FOWLER   V.    JET^SA   FIRE    INS.    CO.  [CHAP.  V. 

the  goods  insured,  as  a  frame  house  filled  in  with  brick,  amounted  to  a  warrant  1/  that  it 
was  a  house  answering  that  description,  and  that  the  plaintiffs  could  not  recover  unless 
the  proof  strictly  sustained  tlie  warranty.  The  well-established  principle  in  marine 
insurance  that  a  warranty  is  in  the  nature  of  a  condition  precedent  and  must  he  ful- 
filled or  performed  by  the  insured  before  performance  can  be  enforced  against  the 
insurer,  we  held  to  be  equally  applicable  to  fire  as  to  marine  policies  ;  we  knew  of  no 
case  or  principle  which  would  authorize  a  different  rule  of  construction  in  the  one 
case  from  that  which  tlie  same  terms  had  uniformly  received  in  the  other.  The  ver- 
dict was  then  set  aside  on  account  of  the  misdirection  of  the  judge.  He  instructed  the 
jury  that  if  the  description  was  made  by  mistake,  and  not  fraudulently  for  the  purpose 
of  getting  insurance  at  a  reduced  rate,  the  plaintiff  was  entitled  to  recover.  In  a  case 
of  warranty  it  is  perfectly  immaterial  whether  the  misdescription  is  the  result  of  fraud 
or  mistake  ;  it  is  a  condition  precedent,  and  no  excuse  can  be  received  for  the  non-per- 
formance of  it. 

"  The  second  verdict  was  set  aside  as  being  against  the  weight  of  evidence  on  the 
controlling  point,  whether  the  house  in  question  was  or  was  not  filled  in  with  brick. 

"  At  the  last  trial  the  charge  of  the  judge  in  the  abstract  was  correct.  It  was  un- 
doubtedly competent  for  the  plaintiffs  to  show  that  the  words  '  a  frame  house  filled  in 
with  brick,'  had,  by  the  custom  or  usage  of  insurers  and  insured,  acquired  a  particular 
technical  meaning,  different  from  that  which  the  words  might  generally  be  understood 
to  import.  ...  I  still  think  the  verdict  on  this  point  is  against  the  weight  of  evidence ; 
but  after  two  concurring  verdicts  in  a  case  where  there  were  many  witnesses,  and  a 
great  deal  of  testimony  on  both  sides  upon  a  mere  question  of  fact,  ...  I  should  not 
think  it  a  discreet  exercise  of  the  power  of  this  court  again  to  interfere  with  the 
finding  of  the  jury." 

In  Wall  V.  East  River  Mutual  Ins.  Co.,  7  N.  Y.  370,  372-373  (1852),  Johnson,  J., 
with  whom  the  majority  of  the  court  concurred,  said  :  — 

"  The  only  point  which  it  seems  to  me  material  to  notice  is  the  ruling  of  the  judge 
that  the  description,  in  the  policy,  of  the  premises  containing  the  property  insured, 
was  not  a  warranty  that  the  building  was  occupied  as  a  storehouse  only.  The  insur- 
ance was  $2,000  on  plaintiffs'  '  stock  as  rope  manufacturers,  their  own  or  held  by  them 
in  trust  or  on  commission,  contained  in  the  brick  building  with  tin  roof,  occupied  as  a 
storehouse,  situated  on  the  northerly  side  of  and  about  forty-two  feet  distant  from  tlie 
ropewalk  at  Bushwick,  L.  I.'  I  know  of  no  principle  of  construction  applicable  to 
written  agreements,  which  will  permit  us  to  hold  a  stipulation  not  to  be  a  warrantv  in 
a  fire  policy,  which  we  should  hold  to  be  a  warranty  in  a  marine  policy.  None  of  the 
cases  in  this  State  deny  the  identity  of  the  rule.  Ever  since  Fowler  v.  ^tna  Fire 
Ins.  Co.,  6  Cow.  673,  and  7  Wend.  270,  it  has  been  conceded,  and  in  tiie  latter  case  is 
stated  in  terms.  .  .  .  Since  those  cases  the  contest  has  been  whether  the  warranties 
contained  in  the  body  of  policies  have  been  complied  with,  and  whether  statements 
not  in  the  body  of  the  policy  but  referred  to  in  different  ways  were  thereby  con- 
stituted warranties. 

"  As  to  what  constitutes  a  warranty  in  a  contract  of  insurance,  the  rule  is  well 
stated  by  Sherman,  J.,  in  Wood  v.  Hartford  Fire  Ins.  Co.,  13  Conn.  533,  544  :  'Any 
8tatfiin£iil;  or  descxiption,  ...  on  the  face  of  the  policy,  which  relates  to  the  risk  is  a 
warranty.'  In  the  case  before  us,  the  identity  of  the  building  which  contained  tlie 
property  insured  was  distinctly  ascertained  by  other  facts  of  the  description,  and  the 
terms  '  occupied  as  a  storehouse  '  are  not  only  in  themselves  fitly  chosen  to  express  a 
fact  relating  to  the  risk,  but  cannot  be  regarded  as  employed  for  any  other  purpose. 
The  warranty  is  in  terms,  that  the  building  was  occupied  as  a  storehouse.  ...  In  point 
of  fact,  at  the  time  when  the  policy  was  executed,  the  building  was  occupied  in  part  for 
the  purpose  of  storing  hemp  and  in  part  for  the  purpose  of  preparing  the  hemp  to  be 
spun  by  machinery  into  rope-yarn  and  of  spinning  it.  This  was  not  occasional,  but 
was  the  legitimate  use  to  which  the  building  was  applied.  It  is  contended  on  the 
part  of  the  plaintiffs  that  the  warranty  is  complied  with  because  it  was  partly  occupicvl 
as  a  storehouse,  and  that  in  order  to  make  the  warranty  large  enough  to  exclude 
another  but  partial  use  negative  words  were  necessary,  as,  for  instance,  occupied  for 
a  storehouse  'only.'     We  think  this  position  is  not   well  founded.    It  would  bo 


SECT.  II.J     SNYDER  V.   FARMERS'  INS.  AND  LOAN  CO.  335 


SNYDER  V.   FARMERS'  INSURANCE  AND  LOAN 
COMPANY. 

ScPREiiE  Court  of  New  York,  1834.     13  Wend.  92. 

This  was  an  action  on  a  policy/  of  insurance  against  fire,  tried  at  the 
Ulster  Circuit  in  October,  1832,  before  the  Hon.  Charles  H.  Ruggles, 
one  of  the  circuit  judges. 

The  plaintiff  was  insured  $4,000  on  his  stock  of  merchandise  con- 
tained 'Mn  the  stone  building  with  shingle  roof,  occupied  bj- himself 
and  others,  situated  at,  &c.  more  particularly  described  in  application 
and  survey  furnished  by  himself,  fled  Ro.  928,  in  this  office,"  i.  e. 
the  office  of  the  defendants.     The  property  was  insured  for  one  year, 
and  within  the  term  the  building  mentioned  in  the  pohcy,  with  its  con- 
tents of  merchandise,  was  burnt  and  destroyed  by  fire.     The  defend- 
ants, upon  the  call  of  the  plaintiff,  and  pursuant  to  notice   for   that 
purpose,  produced  the  application  and  survey  No.  928,  mentioned  in 
the  policy ;  it  was  in  these  words :  "  Survey  of  a  building  at  Bolton, 
&c.  56  by  35  feet,  built  of  stone,  shingled  roof,  one  story  higli,  garret 
over  the  whole,  thick  stone  partition  running  lengthwise  through  the 
building  to  the  roof;  one  part  occupied  by  Alexander  Snyder,  the  other 
part  by  Charles  M'Inty  as  a  store-room."     It  was  proved  on  the  part 
of  the  defendants  that  the  gable  ends  of  the  building  were  of  stone, 
that  the  roof  was  on  the  building  lengthwise,  coming  down  to  the  side 
walls,  which  rose  about  5  feet  above  the  chamber  floor,  and  on  them 
the  eaves  of  the  roof  rested.     There  was  a  stone  partition  lengthwise 
through  the  store,  dividing  it  into  two  apartments,  one  of  18,  and  the 
other  of  16  feet,  one  of  which  was  occupied  by  Snyder;  this  partition 
did  not  extend  higher  than  the  chamber  floor,  and  on  the  partition  tHe 
I5elTiis--OtT!rriKiamber'Hoor7ested7anH""T^     was  no  partition  in  the 
garret.     The  judge  charged  the  jury  that  the  survey  was  not  a  part  of 
the  policy  so  as  to  become  a  warranty  ;  that  the  misdescription  of  the 
building  in  regard  to  the  partition  wall  was  not  in  itself  a  bar  to 
the  action ;  that  it  would  be  for  the  jury  to  determine  whether  there 
was  any  fraudulent  misrepresentation  or  concealment  in  respect  to  the 
survej',  or  whether  the  risk  or  hazard  was  increased  by  the  facts  or 
circumstances  in  regard  to  which  the  building  was  misdescribed,  and 
that  if  they  should  find  either  of  those  points  in  the  aflflrmative,  the 
verdict  should  be  for  the  defendants,  otherwise  for  the  plaintiff.     The 
jury  found  for  the  plaintiff,  and  assessed  his  damages  at  $3,452.     The 
defendants,  having  excepted  to  the  charge  of  the  judge,  moved  for  a 
new  trial. 

J".  Tallmadge,  for  the  defendants. 

N.  Sickles  dt  S.  Shericood,  for  the  plaintiff. 

strange  indeed  if  a  term  which,  like  'occupied,'  in  its  own  meaning  [is]  exclusive, 
needed  any  further  qualiffeatiou  to  f:ive  it  effect.  '  Occupied  aa  a  storehouse'  neces- 
sarily imports  not  o^cupis.'.  for  ;;iiy  ethos  pvirposc."  —  Ei>. 


336  SNYDER  V.   farmers'  INS.  AND  LOAN  CO.     [CHAR  T. 

By  the  Court,  Savage,  C.  J.  The  only  question  in  this  case  is, 
whether  the  sui'vey  furnished  by  the  plaintiff  is  to  have  the  effect  of  a 
warranty,  or  of  a  representation.  This  question  must  be  considered 
as  settled  on  authority  in  this  court.  It  arose  and  was  decided  in  The 
Jefferson  Ins.  Co.  v.  Cotheal,  7  Wendell,  72.  That  was  an  action  . 
upon  a  polic}'  for  $5,000,  on  a  steam  saw-mill,  built  of  wood,  situate 
on  the  river  Nantikoke,  near  Vienna,  in  the  State  of  Maryland,  as 
described  in  report  No.  193.  In  the  application  for  insurance,  it  was 
described  as  130  feet  long  by  30  broad.  It  was  in  fact  132  feet  long; 
part  of  it  was  30  feet  broad,  but  about  40  feet  of  it  was  40  feet  broad. 
The  boiler  and  furnace  were  placed  on  the  outside  of  the  building  and 
covered,  being  about  30  feet  in  length,  10  high  and  10  wide.  It  was 
insisted  that  the  representation  made  by  the  plaintiffs  was  a  warrant}'. 
The  Chief  Justice  of  the  Superior  Court  of  the  cit}-  of  New^  York,  before 
whom  the  cause  was  tried,  decided  that  it  was  not  a  warranty,  but  a 
representation,  and  that  the  variance  did  not  defeat  the  policy,  unless 
in  consequence  of  the  variance  the  premises  were  insured  at  a  less 
premium  than  they  would  have  been  if  they  had  been  truly  described. 
The  cause  came  into  this  court  b^-  writ  of  error,  and  the  opinion  of  the 
court  was  given  In-  Mr.  Justice  Sutherland,  who  examined  the  cases 
on  the  point,  and  came  to  the  co^jclusion  that  a  warranty  is  never  to 
be  created  by  construction  —  must  appear  on  the  face  of  the  polic}' ; 
that  there  ma}'  be  unequivocal  evidence  of  a  stipulation,  the  non- 
compliance with  which  is  to  have  the  effect  of  avoiding  the  contract. 
The  only  exception  to  the  generality  of  this  proposition  is,  that  the 
proposals  and  conditions  attached  to  the  policy  form  part  of  the  con- 
tract. In  the  case  of  Dow  v.  "Whetton,  8  Wendell,  16G,  the  cliancellor 
says,  the  policy  itself  is  the  onl}-  legal  evidence  of  the  agreement 
between  the  parties.  Vice-Chancellor  M'Coun  has  also  clearly  stated 
the  difference  between  a  warrant}'  and  a  representation.  The  former  is 
the  affirmation  of  a  fact  asserted  in  the  policy,  and  forming  a  condition 
wliich  must  be  strictly  complied  with  ;  the  latter  the  statement  of  some 
collateral  circumstances  not  embodied  in  the  policy,  though  made  be- 
fore the  contract  was  completed.  Callaghan  v.  Atlantic  Ins.  Co.,  1 
Edw.  Ch.  64,  74.  This  subject  has  been  much  considered  in  the  Supe- 
rior Court  of  the  city  of  New  York.  Delonguemare  v.  Tradesmen's  Ins. 
Co.,  2  Hall,  N.  Y.  Super.  Ct.  589,  608,  627-8.  Chief  Justice  Jones 
says,  it  is  a  general  rule  that  a  representation,  to  have  the  effect  of  a 
warranty,  must  be  contained  in  the  deed  or  policy  itself.  And  Mr. 
Justice  Oakley  says,  "In  determining  what  shall  constitute  a  war- 
ranty, and  what  shall  be  a  representation  merely,  the  general  principle 
seems  to  be  well  settled  that  an  express  warranty  must  appear  on  the 
face  of  the  policy,  and  that  any  instructions  for  insurance,  unless  in- 
serted in  the  instrument  itself,  do  not  amount  to  a  warranty."  Again  ; 
"  The  insurers, -having  a  description  of  the  property  in  their  possession, 
.ire  presumed  to  insert  in  the  policy  itself  as  much  of  tliat  description 
as   they  deem   material}  and  by  omitting  any  part  of  it,  they  show 


SECT.  II.]     SNYDER  V.   FARMERS'  IXS.  AND  LOAN  CO.  337 

that  thev  cae  content  to  take  such  part  as  a  representation  merely,  and 
to  look  to  it  only  for  estimating  the  risk."  These  cases  have  been 
referred  to  with  approbation  by  Chancellor  Kent,  3  Kent's  Coram.  373, 
and  are  believed  to  be  in  unison  with  the  English  cases  found  in 
Cowper,  785,  Dougl.  \'2,n.,  and  1  Condy's  Marshall,  451.  It  is  not 
necessary  to  deny  that  a  separate  paper  may  by  exjyress  stipulation  be 
made  part  of  the  policy ;  but  there  is  no  such  reference  in  the  present 
policy  as  to  authorize  the  court  to  give  the  survey  the  force  of  a  war- 
ranty ;  indeed,  from  the  manner  of  referring  to  it,  it  would  seem  that 
the  defendants  were  satisfied  to  look  to  it  only  for  the  purpose  of  esti- 
mating the  risk.  It  is  not  pretended  that  the  judge  did  not  present 
the  question  of  fraud  fairly  before  the  jury.  The  only  question  which 
we  decide  now  is,  that  the  survey  referred  to  in  the  policy  must  be  con- 
sidered a  representation  merely,  and  not  a  warranty. 

New  trial  denied.^ 

1  This  judgment  was  affirmed  iu  the  Court  of  Errors.  Farmers'  Ins.  aud  Loan 
Co.  v.  Snyder,  16  Wend.  481  (1833). 

Ace:  Commonwealth's  Ins.  Co.  v.  Monniuger,  18  Ind.  352  (1862). 

Contra:  Sheldon  i-.  Hartford  F.  Ins.  Co  ,  22  Conn.  235  (1864). 

In  Burritt  v.  Saratoga  County  Mutual  F.  Ins.  Co.,  5  Hill,  188,  190-191  (184.':),  s.  c. 
ante,  p.  178,  Broxson,  J.,  for  the  court,  said  :  — 

"  In  the  law  of  insurance  a  representation  is  not  a  part  of  the  contract,  but  is  col- 
lateral to  it.  An  express  warranty  is  always  part  of  the  contract,  and  a  reference  in 
the  policy  to  a  survey  or  other  paper  will  not  make  such  paper  a  part  of  the  contract, 
so  as  to  change  what  would  otherwise  be  a  mere  representation  into  a  warranty. 
(Jefferson  Ins.  Co.  v.  Cotheal,  7  Wend.  72;  Snyder  v.  Farmers'  Ins.  Co.,  13  Wend.  92, 
and  s.  0.  in  error,  16  Wend.  481  ;  Delonguemare  v.  Tradesmen's  Ins.  Co.,  2  Hall,  5s9  ; 
]  Marsh  Ins.  (Condy),  346-350,  451  ;  1  Phil.  Ins.  -346,  7,  ed.  of  '40).  But  these  cases 
admit,  what  no  one  could  well  deny,  that  the  policy  may  so  speak  of  another  writing 
as  to  make  it  a  part  of  the  contract,  although  not  actually  embodied  in  the  policy. 
And  to  that  effect,  see  Routedge  v.  Burrell  (1  H.  Black.  254);  Worsley  v.  Wood, 
(6  T.  R.  710)  ;  Roberts  v.  Chenango  Ins.  Co.  (3  Hill,  501).  Now  here,  the  policy  not 
onlv  refers  to  the  plaintiff's  written  application  '  for  a  more  particular  description ' 
of  the  property  insured,  but  it  refers  to  it  'as  forming  a  part  of  this  policy.'  The  ap- 
plication was  thus,  by  express  words,  made  part  and  parcel  of  the  contract,  and  the 
two  instruments  must  be  read  in  the  same  manner  as  though  they  had  been  actually 
moulded  into  one. 

"  How  then  stands  the  question  of  warranty  '  The  plaintiff  was  required  by  the 
'  conditions  of  insurance,'  and  by  the  form  of  application  with  which  he  was  furnished, 
to  state  the  '  relative  situation  [of  the  store]  as  to  other  buildings  —  distance  from 
each,  if  less  than  ten  rods.'  To  this  he  answered  by  mentioning  five  buildings  as 
standing  within  the  ten  rods.  Although  he  did  not  in  terms  say  there  was  no  other 
building  within  the  ten  rods,  he  must  have  intended  that  his  answer  should  be  re- 
ceived and  understood  by  the  company  as  affirming  that  fact ;  and  as  the  answer  is  to 
be  regarded  as  parcel  of  the  contract,  I  find  it  difficult  to  resist  the  conclusion  that 
the  plaintiff  has  agreed  that  there  were  no  other  buildings  within  the  ten  rods  than 
those  mentioned  iu  the  application.  Men  are  not  at  liberty  to  put  a  different  con- 
struction upon  their  language  when  the  contract  is  to  be  enforced,  from  that  in  which 
they  intended  the  words  should  be  received  by  the  other  party  at  the  time  the  con- 
tract was  made.  I  am  strongly  inclined  to  the  opinion  that  there  was  a  warranty ; 
biit  there  is  another  feature  in  the  case  which  renders  it  unnecessary  to  settle  that 
question." 

And  .'iee  Murdock  v.  Chenango  County  Mutual  Ins.  Co.,  2  N.  Y..  210  (1849)  ;  Citi- 
zens' Ins.  Co.  V.  Hoffman,  128  Ind.  370  (1891).  —  Ed. 

22 


333  WOOD    V.    HAKTEOED   FIRE    INS.    CO.  [CHAP.  V. 


WOOD  AXD  Another  v.  HARTFORD   FIRE   INSURANCE     ' 
COMPANY. 

Supreme  Court  of  Connecticut,  1840.     13  Conu.  533. 

This  was  an  action  on  a  policy  of  insurance  against  loss  or  damage 
by  fire,  to  the  amount  of  $5,000,  on  the  one  undivided  half  of  the 
paper-mill  owned  by  the  plaintiffs,  in  Westville,  in  New  Haven,  to- 
gether with  one  half  of  the  machinery,  gearing,  &c.,  from  Feb.  11, 
1837,  to  Feb.   11,  1838.^  ... 

At  the  time  of  effecting  the  insurance,  the  plaintiffs  resided  in  tlie 
city  of  New  York ;  and  the  premises  insured  were  in  the  possession 
and  immediate  occupancj'  of  William  Buddington,  the  owner  of  the 
other  undivided  moiety,  to  whom  the  plaintiffs  had,  in  March,  1832, 
given  a  lease  for  five  years.  At  the  date  of  the  polic}-,  the  paper-mill 
and  its  machinery  were  in  full  operation,  being  used  bj'  Buddington  in 
making  paper,  and  so  continued  until  May  23,  1837,  when  he  discon- 
tinued the  use  of  the  machinery  for  the  purpose  of  making  paper ;  and 
it  has  not  since  been  used  for  that  purpose.  In  the  month  of  August, 
1837,  Buddington,  being  so  in  possession,  and  having  so  discontinued 
the  use  of  the  paper-mill,  introduced  into  the  establishment,  without 
the  knowledge  or  consent  of  the  plaintiffs,  a  pair  of  mill-stones  for  the 
grinding  of  grain.  .  .  .  After  May  26,  1837,  and  at  tlie  time  of  the  fire, 
Buddington  held,  claiming  to  be  tenant  of  the  property,  by  virtue  of 
his  lease  from  the  plaintiffs,  and  denying  the  right  of  the  plaintiffs 
to  enter  upon  or  use  the  premises ;  and  so  held  against  the  will  and 
consent  of  the  plaintiffs.  The  risk  by  the  use  of  the  mill-stones  was 
made  greater  than  it  would  have  been  if  no  use  had  been  made  of  the 
premises  ;  but  the  introduction  of  the  grist-mill  machinery  did  not  make 
tlie  risk  to  the  premises  greater  than  if  the  paper-mill  only  had  been  in 
full  operation. 

A  case  embracing  these  facts  was  made,  partly  by  agreement  of  the 
parties  and  partly  by  the  finding  of  the  jury,  and  reserved  for  the  ad- 
vice of  this  court  as  to  what  judgment  sliould  be  rendered  thereon  ;  it 
being  admitted,  that,  if  for  the  plaintiff,  it  should  be  for  the  whole  sum 
insured  by  the  policy,  and  interest  thereon  from  the  time  it  was 
payable. 

Bahhoin  and  lumberhj,  for  the  plaintiffs. 

I^lssell  and  IIurKjerford,  for  the  defendants. 

Sherman,  J.  It  is  not  necessary  to  advert  to  all  the  points  which 
have  been  discussed  in  this  case  by  the  learned  counsel.  The  general 
rule  in  regard  to  what  constitutes  a  warranty,  in  a  contract  of  insur- 
ance, is  well  settled.     Any  statement  or  descriiitionf  or  any  undertak-^ 

1  The  statement  has  been  shortened  by  omitting  some  facts  foreign  to  warranty  or 
summarized  in  the  opinion.  —  Ed. 


SECT.  II.]  WOOD   V.    HARTFOED    FIRE    INS.    CO.  339 

ing  on  the  part  of  the  insured^n  the  face  of  the  polic}',  which  rehites 
to  tleTisTiT  is~a  warrautyT  Whether  this  is  declared  to  be  a  warrant}' 
totldem  verbis^  or  is  ascertained  to  be  such,  by  construction,  is  imma- 
terial. In  either  case,  it  is  an  express  warrant)-,  and  a  condition  pre- 
cedent. If  a  house  be  insured  against  fire,  and  is  described  in  the 
polic}'  as  being  "  copper  roofed,"  it  is  as  express  a  warranty  as  if  the 
language  had  been  '-'•warranted  to  be  copper  roofed;  "  and  its  truth  is 
as  essential  to  the  obligation  of  the  policy  in  one  case  as  in  the  other. 
In  either  case,  it  must  be  strictly  observed.  There  may  often  be  much 
difficulty  in  ascertaining  from  the  construction  of  the  policy,  whether  a 
fact,  quality,  or  circumstance  specified  relates  to  the  risk,  or  is  inserted 
for  some  other  purpose,  —  as  to  show  the  identity  of  the  article  insured, 
&c.  This  must  be  settled  before  the  rule  can  be  applied.  But  when 
it  is  once  ascertained  that  it  relates  to  the  risk,  and  was  inserted  in 
reference  to  that,  it  must  be  strictly  observed  and  kept,  or  the  insur- 
ance is  void.  Tlie_word  "  warranted"  di.spels  all  ambiguity,  and  super- 
sedes the  necessitY_oLconalmjCdiflii.  If  a  house  be  insured  against  fire, 
and  the  language  of  the  policy  is,  "  warranted,  during  the  policy,  to  be 
covered  with  thatch,"  the  insurer  will  be  discharged  if,  during  the  in- 
surance, tlie  house  should  be  covered  witli  wood  or  metal,  although  his 
risk  is  diminished  ;  for  a  warranty  excludes  all  argument  in  regard  to 
its  reasonableness,  or  the  probable  intent  of  the  parties.  '•  It  is  quite 
immaterial,"  says  Marshall  [on  Insurance,  249],  "for  what  purpose, 
or  with  what  view,  it  is  made  ;  or  whether  the  assured  had  any  view  at 
all  in  making  it,  —  unless  he  can  show  that  it  has  been  literally  ful- 
filled, he  can  derive  no  benefit  from  the  policy."  And  he  adds  [page 
251],  that  "it  is  also  immaterial  to  what  cause  the  non-compliance 
is  attributable  ;  for  if  it  be  not  in  fact  complied  with,  though  perhaps 
for  the  best  of  reasons,  the  policy  is  void."  These  positions  are  in  con- 
formity with  numerous  and  high  authorities,  and  with  the  reason  of  the 
rule.  Parties  may  contract  as  they  please.  When  a  condition  pre- 
cedent is  adopted,  the  court  cannot  inquire  as  to  its  wisdom  or  folly, 
but  must  exact  its  strict  observance.  An  entry  on  the  margin  of  the 
[)olicy,  or  across  the  lines,  or  on  a  separate  paper,  expressly  referred 
to  in  the  policy,  will  be  construed  a  warranty,  if  it  relates  to  the  risk ; 
that  is,  if  it  defines,  or  in  any  respect  limits,  the  risk  assumed.  It 
may,  indeed,  where  the  explicit  language  of  a  warranty  is  not  adopted, 
be  difficult  to  ascertain  whether,  on  a  fair  construction,  the  clause  was 
meant  to  define  or  limit  a  risk  ;  but  when  this  is  ascertained,  the  in- 
sured has  no  right  to  dispense  with  it,  or  substitute  in  its  place  another 
risk,  however  advantageous  to  the  insurer.  No  man  can  be  compelled 
to  adopt  a  better  bargain  than  his  own. 

It  is  immaterial  whether  the  non-performance  or  violation  of  the 
warranty  be  with  or  without  the  consent  or  fault  of  the  insured.  Its 
strict  observance  is  exacted  by  law  ;  and  no  reason  or  necessity  will 
dispense  with  it. 

The  argument  of  the  defendants  is  therefore  conclusive  if  the  policy 


340  WOOD   V.    HARTFORD   EIRE   INS.    CO.  [CHAP.  V. 

warrants  this  building  to  be  and  continue  a  paper-mill,  and  it  was  not 
one,  at  the  time  of  tlie  loss. 

In  the  policy,  this  establishment  is  described  as  "  the  one  undivided 
half  of  the  paper-mill,  which  they  [the  insured]  own  at  Westville,  to- 
gether with  the  half  of  the  machinery  wheels,  gearing,  &c.  ;  the  other 
half  being  owned  by  William  Buddington.*'  If  this  relates  to  the 
lisk,  it  is  a  warranty.  That  it  does  is  evident  from  the  memorandum 
in  the  conditions  of  the  policy,  where  "paper-mills"  are  enumerated 
among  those  articles  which  "will  be  insured  at  special  rates  of  pre- 
mium ;  "  that  is,  a  paper-mill  is  the  subject  of  peculiar  risks,  and  is  to 
be  insured  upon  special  stipulations.  Therefore  the  description  of  this, 
in  the  policy,  as  a  "paper-mill,"  relates  to  the  risk,  and  is,  conse- 
quently, a  warranty.  It  is  the  only  subject  of  insurance  ;  and  if  it  was 
not  a  paper-mill  at  the  time  of  the  loss,  the  warranty  was  not  kept,  and 
the  plaintiffs  cannot  recover,  although  the  change  may  have  diminished 
the  hazard,  and  been  effected  without  their  knowledge,  or  against  their 
will. 

It  is  contended  that  the  paper-mill  had  become  converted  into  a 
grist-mill.  The  policy  is  dated  in  February,  1837.  In  the  August  fol- 
lowing, the  use  of  the  paper-mill  was  discontinued,  and  a  pair  of  mill- 
stones were  added  for  grinding  grain.  They  were  located  in  the  place 
previously  occupied  by  the  rag-cutter  and  duster ,  and  were  moved  by 
the  same  gearing,  and  by  the  power  of  the  same  water-wheel.  No 
other  machinery  was  used  for  the  grindstones.  All  remained  as  it  was 
except  the  rag-cutter  and  duster,  —  which  were  dismounted,  —  and  all 
the  other  machinery  might,  at  any  time,  have  been  employed  in  mak- 
ing paper.  It  was  to  all  intents  and  purposes  a  paper-mill,  ready  for 
use.  The  character  of  the  establishment  was  no  more  altered  than  if 
a  cri-indstone  had  been  attached  by  a  band  to  the  water-wheel,  and  all 
the  other  machinery  left  at  rest.     The  warranty  was  duly  kept.^  .  .  . 

Judgment  for  plaintiffs.'^ 

1  A  passage  not  bearing  on  warranty  has  been  omitted.  —  Ed. 

2  See  Wiliiains  v.  New  England  Mutual  Ins.  Co.,  31  Me.  219  (1850). 
Conijiare  Billings  v.  Tolland  County  Mutual  F.  Ins.  Co.,  20  Conn.  139  (1849). 

In  Richards  v.  Protection  Ins.  Co.,  .30  Me.  273  (1849),  the  policy  was  upon  "  a  stock 
in  trade,  consisting  of  not  hazardous  merchandi.se  "  Sheplev,  C.  J.,  for  the  majority 
of  the  court,  said  :  — 

"  Four  classes  of  hazards  are  named  in  the  conditions  annexed  to  the  policy,  de- 
nominated not  hazardous,  hazardous,  extra-hazardous,  and  memorandum  of  sjtecial 
risks.  ... 

"  Insurance  is  proposed  to  be  made  upon  goods  contained  in  these  different  classes 
at  different  rates  of  premium.  Tlie  cla.^ses  of  hazard  and  the  conditions  of  insurance 
annexed  to  the  policy  form  a  part  of  the  contract  between  the  parties.  That  contract 
re  luires  mutual  good  faith  and  fair  dealing.  The  law  presumes  that  the  parties  acted 
with  intelligence.  The  defendants  did  not  proi)ose  to  insure  goods  of  the  class  de 
nominated  hazardous  at  tlie  premium  affixed  for  tlie  class  denominated  not  hazardous. 
Nor  did  they  propose  to  insure  goods  composed  partly  of  one  class  and  jiartly  of  the 
other  at  the  rate  of  premium  affixed  to  the  least  hazardous.  This  appears  from  the 
lanfna,"-e  used  ;  for  '  groceries  with  any  hazardous  articles  '  are  enumerated  in  the  class 
of  liazaldous.     If  the  plaintiffs,  having  procured  insurance  on  their  stock  in  trade 


SECT.  II.J   KENTUCKY,  ETC.  MUTUAL  INS.  CO.  V.    SOUTHARD.     341 


KENTUCKY  AND   LOUISVILLE   MUTUAL   INS. 
CO.   V.   SOUTHARD. 

Court  of  Appeals  of  Kentucky,   1848.     8  B.  Mon.  634. 

Error  to  the  Jefferson  Circuit. 

Chief  Justice  Marshall  delivered  the  opinion  of  the  court :  — 
This  action  of  covenant  was  brought  bj-  Southard  to  recover  for  the 
destruction  b}-  fire  of  his  dwelling-house,  insured  by  the  Kentucky  and 
Louisville  Mutual  Insurance  Company.  The  policy  on  which  the  action 
is  founded  insures  the  plaintiff  to  the  amount  of  S7,000,  against  loss  by 
fire  from  the  6th  day  of  March,  1841,  to  the  6th  day  of  March,  1847, 
upon  his  "  one-story  brick  mansion-house,  situated,  &c.,  adjoining  the 

consisting  of  not  hazardous  articles,  could  have  kept  a  stock  of  goods  for  sale  com- 
posed entirely  of  hazardous  articles,  and  could  have  recovered  for  a  loss  of  them  by 
fire,  they  could  do  so  only  by  compelling  the  defendants  to  become  insurers,  and  to 
bear  the  loss  for  a  compensation  less  than  the  one  affixed  to  such  a  class  of  goods,  and 
less  than  the  one  agreed  upon  by  the  parties  as  appropriate  to  such  a  risk.  So  if  they 
could  have  kept  goods  for  sale  composed  partly  of  the  first  and  partly  of  the  second 
class  of  risks,  and  could  after  a  loss  of  them  by  fire  liave  recovered  for  them,  the  de- 
fendants would  have  been  compelled  to  bear  the  loss  for  a  premium  less  than  that  for 
which  they  would  have  knowingly  assumed  the  risk.  The  injustice  in  the  latter  case 
would  not  be  so  great  as  in  the  former,  but  a  recovery  would  be  equally  unauthorized 
according  to  the  terms  of  the  contract. 

"  The  description  of  the  property  insured  in  the  body  of  the  policy,  when  the  rate 
of  premium  is  thereby  affected,  operates  as  a  warranty  that  the  property  is  of  the 
character  and  class  described.  And  that  the  property  is  all,  and  not  partly,  of  that 
character  and  class.  Such  a  warranty  is  in  the  nature  of  a  condition  precedent,  and 
performance  of  it  must  be  shown  by  the  person  insured  before  he  can  recover  upon 
the  policy.  .  .  . 

"  In  the  present  case,  the  warranty  that  their  stock  in  trade  consisted  of  not  haz- 
ardous merchandise  has  not  been  complied  with,  but  violated  by  keeping  goods  for 
sale  of  a  different  class  denominated  hazardous,  for  the  insurance  of  which  a  greater 
premium  was  required.  .  .  . 

"  All  tlie  cases  decided  upon  the  effect  of  a  stipulation  contained  in  the  body  of 
the  policy,  and  operating  as  a  warranty,  determine  that  there  must  be  a  compliance 
with  the  warranty  to  entitle  the  assured  to  recover.  Not  because  any  of  the  condi- 
tions of  the  policy  declare  that  it  shall  be  void  if  articles  of  a  different  class  or  de- 
scription are  kept  for  sale,  but  because  one  who  has  violated  his  own  contract  of 
warranty  cannot  enforce  it  against  the  other  party  to  it. 

"  The  position  that  the  insurance  in  this  case  attached  only  to  goods  of  the  denom- 
ination not  hazardous,  and  that  its  validity  was  not  affected  by  the  presence  of  goods 
of  a  different  class,  cannot  be  admitted.  If  it  were,  the  as.sured  might,  contrarv  to 
his  own  stipulation  to  have  goods  of  only  one  class,  keep  goods  of  different  classes, 
thereby  greatly  enhancing  the  risk,  and  yet  recover  for  the  loss  of  the  goods  composed 
of  the  class  insured.  Nor  can  the  warranty  be  considered  as  attaching  to  part  of  the 
goods  only.  It  relates  to  their  stock  in  trade,  and  not  to  a  portion  of  it.  Xor  can  the 
warranty  upon  any  known  principles  of  law  or  justice  be  considered  as  attaching  onlv 
to  the  goods  in  the  store  at  the  time  it  was  made,  and  as  not  operative  to  prevent  the 
introduction  and  sale  of  a  class  of  goods  of  a  much  more  hazardous  character.  Such 
a  warranty  would  be  of  little  or  no  value.  The  premium  is  predicated  upon  the  same- 
description  of  risk  during  its  continuance."  —  Ed. 


342     KENTUCKY,  ETC.  MUTUAL  INS.  00.  V.    SOUTHARD.   [cHAP.  V. 

city  of  Louisville,  lately  occupied  by  James  Southard,  &c. ;  a  mortgage 
on  the  building  and  the  land  on  which  it  stands,  in  favor  of  James 
Buriis  for  $3,500.  Tiie  aforesaid  building  is  occupied  as  a  dwelling- 
house."  And  it  ie  provided  that  "  if  the  premises  aforesaid  shall  at 
an}-  time  when  a  tire  may  happen,  be  occupied  in  whole  or  in  part  for 
purposes  more  hazardous  than  tliat  which  exists  at  the  date  hereof, 
unless  liberty  so  to  occupy,  &c.,  be  expressl}-  given  in  writing  on  this 
policy,  every  clause,  article,  &c.,  to  be  wholly  void.  Reference  being 
had  to  the  application  of  the  said  Southard,  and  survey  filed,  for  a  more 
particular  description,  and  as  forming  part  of  this  policy."  ^  .   .  . 

The  defendants  demurred  to  the  declaration,  and  at  the  same  time 
filed  pleas  1,  2,  3.  and  4,  to  which  the  plaintiff  demurred.  And  the 
declaration  having  been  adjudged  good,  and  the  pleas  bad,  time  was 
given  to  the  defendant  to  plead  de  novo.  At  a  subsequent  term  the 
defendant  filed  pleas  5,  6,  and  7  ;  to  the  first  of  which  the  plaintiff 
replied  by  wa}-  of  traverse,  on  whi*h  issue  was  joined  ;  and  to  the  two 
others  he  filed  demurrers,  which  were  sustained.  The  defendant  then 
offered  plea  number  8,  said  to  be  in  lieu  of  his  demurrer  to  the  declara- 
tion, which  had  been  overruled.  But  the  court  would  not  allow  it  to  be 
filed,  and  tiie  defendant  having  excepted  to  the  refusal,  a  trial  was  had 
upon  the  issue  made  upon  the  oth  plea,  and  a  verdict  and  judgment 
were  rendered  for  the  plaintiff  for  $6,804.43.  The  defendants'  motion 
for  a  now  trial  was  afterwards  overruled,  and  tliey  had  brought  the  case 
to  this  court  for  revision,  questioning  by  the  assignment  of  errors,  the 
correctness  of  the  several  opinions  of  the  court  in  overruling  the 
demurrer  to  the  declaration,  and  in  sustaining  the  demurrers  to  pleas 
1,  2,  3,  4,  6,  7,  and  in  refusing  to  allow  plea  number  8  to  be  filed,  as 
well  as  of  the  opinions  given  during  the  progress  of  the  trial,  and  on 
the  motion  for  a  new  trial. 

We  are  inclined  to  the  opinion,  that  the  defendants  must  be  under- 
stood to  have  waived  their  demurrer  to  the  declaration,  and  to  have 
withdrawn  their  four  first  pleas,  b}'  taking  time  to  plead  de  }wvo,  and 
by  offering  new  pleadings  under  the  privilege  thus  allowed.  But  as  the 
questions  on  all  of  the  demurrers  were  elaboratelj'  argued  here,  we  shall 
notice  tiiem  all.    .  .   . 

Then  as  to  the  three  first  pleas,  the}'  stand  upon  the  assumption  that 
tlie  application  of  Southard  for  insurance,  and  the  surve}'  of  the  build- 
ing being  referred  to  in  the  policy  as  forming  a  part  of  it,  are  to  be 
taken  as  if  they  were  actually  inserted  in  it,  and  that  ever}-  descriptive 
statement  of  tlie  property  contained  in  cither  of  them,  is  by  the  law  of 
insurance  a  warrant}',  the  breach  or  untruth  of  which  in  any  particular, 
whether  material  to  the  risk  or  not,  avoids  the  policy. 

But  in  the  first  place  it  is  questionable  whether  even  in  the  law  of 
marine  insurance,  the  principle  which  converts  into  a  warranty  every 
matter  of  fact  or  description  relative  to  the  property  insured,  which  the 
parties  have  inserted  in  the  policy,  i*  to  be  applied  to  any  such  matter 

^  lu  rpjirliitiiig  tlie  opiiiiou,  passages  foreign  to  ^\virranty  have  been  omitted.  —  Ed. 


SECT.  II.]       KENTUCKY,    ETC.    MUTU.\L   INS.    CO.    V.    SOUTHARD.  343 

not  inserted  in  tlie  policy  nor  written  upon  it,  though  it  be  referred  to 
therein  as  a  part  of  the  polic}'.  For  the  question  might  still  arise,  for 
■u'hat  purpose  is  it  made  a  part  of  the  ix)licy,  and  why  was  it  not 
inserted  in  it  ?  In  ordinarj-  contracts  such  matter,  though  actually 
inserted  in  the  written  memorial,  has  not  necessarih'  the  force  of  a 
covenant  or  warrant}'.  In  marine  insurances,  it  acquires  the  force  of  a 
warranty  from  the  ver}'  fact  of  being  inserted  in  the  policy.  And  as 
the  insurer  may  insert  so  much  of  the  applicant's  description  or  state- 
ment as  he  intends  to  have  the  force  of  a  warranty,  there  is  room  for 
the  inference  that  so  much  as  is  not  inserted  is  intended  to  have  the 
effect  of  a  representation  merely,  and  is  refen-ed  to  as  such.  The 
general  rule  is  well  settled  that  an  express  warranty  must  appear  on 
the  face  of  the  polic}',  and  that  instructions  for  insurance,  unless 
Inserted  in  tha  policy  itself,  do  not  amount  to  a  warranty.  So  a  memo- 
randum upon  a  paper  attached  to  the  polic}'  by  a  wafer,  or  rolled  up  in 
it,  when  it  was  shown  to  the  underwriter  and  executed  b^'  him,  has 
been  held  not  to  be  a  warranty,  but  a  representation  merely.  These 
positions  are  fulh'  sustained  by  the  cases  stated  in  the  notes,  pages  11 
and  12  of  Douglas'  Reports.  Chancellor  ^yal\^'orth  in  Snyder  v. 
Farmer's  Loan  Company,  16  Wend.  481,  admitting  that  the  parties 
might,  by  stipulation,  inserted  in  the  policy,  give  the  effect  of  a  war- 
ranty to  a  statement  of  facts  contained  in  a  separate  paper,  maintains 
the  opinion  that  (in  the  absence  of  such  stipulation)  the  principle  which 
converts  everything  in  the  polic}'  into  a  warrant}'  is  not  to  be  extended 
to  anything  not  contained  in  the  policy  or  written  on  the  same  paper. 
And  in  Delonguemare  v.  The  Tradesman's  Insurance  Companv,  2  Hall, 
589,  Cliief  Justice  Jones  and  Judge  Oakley,  upon  the  authority  of  the 
cases  just  referred  to  and  others,  express  the  same  opinion  :  1  Cond. 
Marsh.  349,  451  ;  3  Kent's  Com.  235  ;  13  Mass.  Rep.  96  ;  3  Dow,  255. 

But  in  the  second  place.  "Whatever  might  be  the  doctrine  in  case 
of  marine  policies,  in  making  which  the  insurer  is  in  general  wholly 
dependent  upon  the  statements  of  the  insured,  with  regard  to  the  prop- 
erty and  the  risk,  it  has  been  seriously  doubted  (by  Chancellor  Wal- 
worth, uhi  supra),  and  so  far  as  we  know,  has  not  been  established  b}' 
judicial  decisions,  whether  "  the  principle  of  construing  every  matter  of 
mere  description  contained  in  the  body  of  the  policy  into  a  warranty, 
should  be  applied  with  the.  same  strictness  io  fire  j^olicies,  where  the 
misdescription  is  most  generally  the  mistake  of  the  under-writer's  own 
surveyor."  And  in  the  third  place.  These  warranties  being  conditions 
precedent,  which  must  be  performed  or  be  true,  however  immaterial, 
there  is  an  obvious  propriety  that  they  should  be  contained  in  the 
policy  which  is  to  be  kept  bj-  the  insured,  not  onlv  that  he  ma}-  be 
enabled  to  make  the  proper  averments  when  he  comes  to  declare,  but 
that  he  may  be  fully  apprised  of  the  effect  intended  to  be  given  to  his 
statements.  Since  if  they  are  considered  morel}-  as  representations,  it 
is  sufficient  that  they  were  made  without  fraud  and  are  substantially 
true  in  every  point  material  to  the  risk. 


344  KENTUCKY,    ETC.    MUTUAL    IXS.    CO.    V.    SOUTHARD.       [cHAP.  V. 

Under  these  considerations  we  are  of  opinion  that  it  is  at  least  safe 
to  conclude  that  the  reference  in  this  polic}'  to  the  application  and  sur- 
ve}'  as  a  part  thereof,  being  a  part  of  the  clause  which  vacates  the 
polic}-  if  the  premises  should,  at  the  time  of  an}'  fire,  be  occupied  for 
purposes  more  hazardous  than  at  the  date  of  the  instrument,  should  be 
understood  as  merely  identifying  the  description  and  condition  of  the 
property  at  that  time,  for  the  purpose  and  as  the  standard  of  compari- 
son in  case  of  fire  ;  that  no  other  force  or  eflfect  was  intended  to  be  given 
to  the  writings  referred  to,  than  as  being  a  description  of  the  nature  or 
purposes  of  the  occupation  of  the  building  at  the  time  ;  and  that  as  the 
clause  points  expressly  to  the  sort  of  variance  against  which  it  intends 
to  guard  (viz.  :  a  more  hazardous  occupation),  and  declares  expresslv 
the  consequence  of  such  variance,  these  declarations  should  be  regarded 
as  expressing  the  entire  scope  and  object  of  the  reference,  bej'ond  which 
it  cannot  be  carried  without  violating  the  apparent  intention  of  tlie 
parties.  The  entire  clause,  including  the  reference  to  the  application 
and  the  surve}-,  was  intended  to  secure  the  insurers  from  loss  b}-  a 
change  in  the  occupancy  of  the  premises  which  should  increase  tlie  risk 
and  not  to  bind  the  other  party  to  the  truth  of  immaterial  statements 
not  affecting  the  risk,  nor  to  preclude  him  from  changes  either  in  the 
plan  or  occupation  of  the  premises,  unless  the  hazard  should  be  thereby 
increased.  And  the  written  application  and  survej'  were  referred  to  as 
fixing  the  standard  of  comparison,  and  not  for  the  purpose  of  creating 
or  evidencing  an}-  covenant  or  warranty  on  the  part  of  the  insured,  as 
to  the  condition  or  occupation  of  the  premises  at  the  time  the  insurance 
was  made.  The  only  covenant  or  warranty  on  this  subject  is  contained 
in  that  part  of  the  policy  which  describes  the  building  as  a  mansion 
situated,  &c.,  and  states  that  it  was  then  occupied  as  a  dwelling-house. 
The  facts  alleged  in  these  pleas,  that  one  room  was  occupied  as  a 
kitchen,  cannot  be  taken  as  a  breach  of  this  warranty. 

Since  then  the  statements  made  in  the  survey  or  even  in  the  plain- 
tiffs application  for  insurance,  are  not  warranties,  these  pleas  do  not, 
in  alleging  the  untruth  of  those  statements,  show  a  breach  of  warranty, 
and  are,  therefore,  insufficient  on  that  ground,  to  avoid  the  policy  or 
bar  the  action.  But  although  the  pleas  allege  a  warranty  and  a  breach 
of  it,  they  should  perhaps  be  deemed  substantially  good  if  they  show 
such  a  misrepresentation  as  should  avoid  the  policy.  Considered  in  this 
view,  tlie  application  and  survey  may  be  regarded  as  representations, 
and  the  alleged  breach  of  warranty  as  an  averment  of  the  untruth  of  the 
representation.  But  in  order  to  make  the  pleas  good  in  this  aspect,  they 
should  show  not  only  the  untruth  of  the  representation,  but  its  materi- 
ality.    And  this,  in  our  opinion,  they  fail  to  show.  .   .   . 

Wherefore,  the  judgment  is  aflSrmed.^ 

Guthrie  and  Pirtle,  for  plainliflfs. 

TiOnghboroufjh,  for  defendant. 

1  See  Houghton  v.  Manufacturers'  Mutual  F.  Ins.  Co.,  8  Met.  114  (1844) ;  Hartford 
Protection  Ins.  Co.  v.  Harmer,  2  Ohio  St.  452  (1833) ;  Elliott  v.  Hamilton  Mutual  Ins. 


SECT.  11.]   KENTUCKY,  ETC.  MUTUAL  IXS.  CO.  V.    SOUTHARD.     345 

Co.,  13  Gray,  139  (1859)  ;  Garcelon  v.  Hampden  F.  Ins.  Co.,  50  Me.  580  (1862) ;  Wil- 
kins  V.  Germania  F.  Ins.  Co.,  57  Iowa,  529  (1881) ;  Eddy  i-.  Hawkeye  Ins.  Co.,  70 
Iowa,  472  (1886)  ;  Waterbury  v.  Dakota  F.  &  M.  Ins.  Co.,'6  Dak.  468  "(1889). 

In  Lindsay  v.  Union  Mutual  F.  Ins.  Co.,  3  li.  I.  157,  159,160  (1855),  Bosworth,  J., 
for  the  court,  said :  "  There  are  many  other  interrogatories  put  and  answered  in 
the  written  application  referred  to,  and  the  whole  are  concluded  with  the  following 
express  agreement :  '  And  the  said  applicant  covenants  and  agrees  with  said  company 
that  the  foregoing  is  a  correct  description  of  the  property  requested  to  be  insured, 
as  far  as  regards  the  risk  and  value  of  the  same.'  This  concluding  clause  in  the  appli- 
cation itself  indicates  the  extent  of  the  warranty  which  the  party  making  and  the 
party  receiving  it  understood  the  application  to  be.  And  being  referred  to  in  the 
policy  and  made  a  part  of  it,  it  is  a  warranty,  according  to  its  terms.  The  making 
of  the  application  a  part  of  tlie  policy  cannot  have  the  effect  to  make  the  answers  to 
the  questions  put  and  answered  a  warranty  of  a  different  character  than  that  which 
the  application  represents  it  to  be.  The  giving  to  it  such  effect  would  contradict  the 
terms  of  the  policy,  that  the  application  is  made  a  part  of  it.  The  warranty  is,  there- 
fore, that  '  the  description  of  the  property  requested  to  be  insured  is  a  correct  descrip- 
tion, as  far  as  regards  the  risk  and  value.'  " 

In  Wilson  v.  Conway  Fire  Ins.  Co..  4  R.  I.  141,  156-158  (1856),  Ames,  C.  J.,  for 
the  court,  said :  "  Many  cases  were  cited  ...  to  show  that  where  applications  or 
surveys  were  referred  to  and  embraced  in  policies,  every  fact  stated  in  them  was  a 
warranty.  Certainly  they  would  not  be  warranties  if  termed  or  treated  iu  the  policy 
as  representations,  as  shown  by  Catlin  v.  Springfield  Fire  Ins.  Co.,  1  Sumner,  435, 
443;  Houghton  v.  Manufacturers'  Mutual  Ins.  Co.,  8  Met.  114,  120;  Jones  Manufac- 
turing Co.  V.  Manufacturers'  Mutual  F.  Ins.  Co.,  8  Cush.  82,  84.  And  where  certain 
answers  and  certain  plans,  surveys,  or  descriptions  in  an  application,  as  in  the  one  in 
question,  are  expressly  made  warranties  in  one  place,  and  the  policy  declared  to  be  on 
that  account  void,  if  they  are  not  correct,  in  another,  the  implication  is  strong  that  the 
Application  is,  in  other  respects,  to  be  deemed  not  a  warranty  but  a  representation. 
If  the  insurers,  by  the  language  they  employ  in  their  policy,  leave  a  matter  of  this  sort 
doubtful,  if  they  seem  inclined  to  use  ambiguous  language  upon  such  a  subject,  or 
choose  to  render  the  meaning  of  the  policy  uncertain  with  regard  to  it  by  inserting 
clauses  contradictory  or  useless  except  upon  the  idea  that  they  are  intended  to  dis- 
guish  in  this  respect  between  different  parts  of,  or  different  answers  in,  the  applica- 
tion, it  is  certainly  the  duty  of  the  court  to  construe  the  policy,  with  all  its  appendages, 
most  strongly  against  them,  and  to  hold  the  application,  or  so  much  of  it  as  is  not  de- 
clared to  be  warranted,  a  representation  merely.  See  opinion  of  Lord  St.  Leonards 
in  Anderson  v.  Fitzgerald,  4  H.  L.  C.  484.  In  some  aspects  and  for  some  purposes, 
such  a  distinction  would  be  material ;  but  we  do  not  see  its  materiality  in  the  case  .  .  . 
now  before  us.  .  .  .  We  are  perfectly  satisfied,  considering  that  the  questions  falsely 
answered  related  to  things  in  themselves  material  for  an  insurer  to  know,  —  that  in, 
who  occupied,  who  operated  this  miU,  and  therefore  whose  interests  were  concerned  in 
its  safety,  who  superintended  or  took  care  of  it,  —  that  the  parties,  by  asking  and 
answering  questions  of  this  character,  are  precluded  afterwards  from  agitating  their 
materiality,  which  they  have  thus  settled  for  themselves.  ...  It  will  be  remarked, 
too,  that  if  the  application  in  all  its  parts  in  this  case  were  not  made  a  warranty,  it 
was  made,  ...  by  the  express  terms  of  the  policy,  '  a  condition  of  the  policy.'  As 
no  proof  is  necessary  to  prove  a  condition  aflBxed  by  the  parties  to  their  contract  to  be 
material,  since  they  have  chosen  to  aflBx  it,  so  none  can  be  admitted  on  the  other  hand 
to  prove  it  to  be  immaterial." 

In  ^tna  Ins.  Co.  v.  Grube,  6  Minn.  82,  87,  88  (1861),  Flandbau,  J.,  for  the  court, 
said :  — 

"The  parties,  by  appropriate  words  in  a  policy,  may  adopt  and  make  part  of  the 
contract  any  other  writing  not  embodied  in  the  policy  (Burritt  v.  Saratoga  County 
Mutual  F.  Ins.  Co,  5  Hill,  188,  190,  per  Bronson,  J.),  and  thus  change  what  would 
otherwise  have  been  considered  representations  into  a  warranty.  The  language  used 
in  this  policy  is  incapable  of  misconstruction.     It  says, '  when  a  policy  is  made  and 


346  o'nIEL   v.   buffalo   fire   ins.    CO.  [OHAP.  V. 

O'NIEL  V.   BUFFALO   FIRE  INSURANCE   COMPANY. 
Court  of  Appeals  of  New  York,  1849.     3  N.  Y.  122. 

O'NiEL  sued  The  Buffalo  Fire  and  Marine  Insurance  Company,  in 
the  recorder's  court  of  the  cit}'  of  Buffalo,  on  a  fire  polic}',  and  had  a 
verdict  and  judgment.  The  Supreme  Court  affirmed  the  judgment  on 
error  brought,  and  the  defendants  appealed  to  this  court. 

C.  H.  S.  Williams,  for  appellants. 

jEJ.  Cook,  for  respondents. 

RuGGLES,  J.,  delivered  the  opinion  of  the  court. 

The  defendants  insured  the  plaintiff,  John  O'Niel,  against  loss  or 
damage  by  fire,  to  the  amount  of  two  thousand  dollars,  on  his  two-story 
frame  building  fronting  on  Ridout  and  Market  streets,  in  the  town  of 
London,  Canada  West,  occupied  by  the  Hon.  George  J\^Goodlme,  as  a 
private  clicellinc/.  The  insurance  was  for  one  year  from  the  26th  of 
April,  1847,  on  which  day  the  policy  bears  date.  The  house  was 
destroyed  by  fire  on  the  6th  of  December  of  the  same  year.  Goodhue, 
who  occupied  the  house  at  the  date  of  the  policy,  removed  from  and 
ceased  to  occupy  it  about  three  weeks  before  the  fire. 

It  does  not  appear  whether  the  policy  in  question  was  made  out 
according  to  the  written  application  of  the  plaintiff,  or  upon  a  survey 
made  by  the  agent  of  the  company.  If  on  a  written  application,  a 
falsity  in  the  description  avoids  the  policy,  according  to  the  printed 
conditions  annexed  to  it ;  but  by  the  same  conditions  the  company  is 
responsible  for  the  accuracy  of  a  survey  made  by  its  own  agent. 
Assuming  that  there  was  a  written  application  by  the  plaintiff,  describ- 
ing the  house  as  occupied  by  Goodhue,  the  description  in  the  policy 
must  be  regarded  as  a  warranty  of  the  fact  that  he  was  the  occupant  at 
the  date  of  the  policy,  and  nothing  more.  The  description  imports 
nothing  more.  The  defendant  insists  that  the  description  warrants  not 
only  that  he  waji^the  o^upant  at  the^  date  of  Uie  policy,  but  that  he  ~ 
wasl;o  remain  tiie^ occupanFduring  the  continuance  of  the  risk.  But 
tlie'  parties  have  nbOliouglit^pfoper  to  express  themselves  to  that 
effect.     A  warranty  may  be  either  affirmative,  as  where  the  insured 

issued  upon  a  survey  and  description  of  certain  property,  such  survey  and  description 
shall  be  taken  and  deemed  to  be  a  part  nnd  portion  of  such  policy  and  warranty  on 
the  part  of  the  assured.' 

"  The  application  in  this  case,  containing  the  survey  and  description  of  the  property, 
also  contained  this  stipulation  :  '  And  the  said  applicant  hereby  covenants  and  agrees 
to  and  with  said  company  that  the  foregoing  is  a  full,  just,  and  true  exposition  of  all 
the  facts  and  circumstances  in  regard  to  the  condition,  situation,  and  value  of  the 
property  to  be  insured,  so  far  as  the  same  are  known  to  the  applicant,  and  material  to 
the  risk.'  The  warranty  therefore  of  the  statements  contained  in  the  application  is 
not  an  absolute  warranty  that  they  are  as  stated,  but  only  that  they  are  true  so  far  as 
the  same  are  known  to  the  applicant  and  material  to  the  risk,  which  qualifies  the. war-.. 
Xanix,  and  gives  it  the  same  effect  as  a  representation  of  the  facts  would  have."  —  Ed, 


SECT.  II.]  O'NIEL   V.   BUFFALO   FIRE   INS,    CO.  347 

undertakes  for  the  truth  of  some  positive  allegation  ;  or  promissorj',  as 
where  the  insured  undertakes  to  perform  some  executory  stipulation. 
Marsh,  on  Ins.  347.  Here  was  an  affirmative  stipulation,  that  the 
house  was  then  occupied  by  Goodhue,  but  not  a  promissory  agreement 
that  he  should  continue  to  occupy  it.  If  it  had  been  the  intention  of 
the  parties  to  make  it  a  condition  that  he  should  remain  the  occupant 
during  the  term  of  the  insurance,  it  would  have  been  easy  to  say  so, 
and  there  is  no  good  reason  in  this  case  for  supposing  the  parties 
intended  what  they  have  not  expressed. 

The  defendants,  in  support  of  their  construction  of  the  contract, 
refer  us  to  the  cases  of  marine  policies.  In  those  cases,  if  the  vessel 
insured  is  described  as  a  Swedish,  American,  or  Spanish  ship,  the  de- 
scription is  in  most  cases  held  to  be  a  warranty,  not  only  that  the  vessel 
is  Swedish,  American  or  Spanish,  accordingly,  but  that  her  documents 
and  papers  are  in  conformity  with  her  nationality,  and  that  she  is  to 
remain  and  be  navigated  in  that  character,  as  long  as  the  risk  contin- 
ues. A  marine  policy  is  a  commercial  contract,  and  it  is  construed 
according  to  the  import  of  the  words  as  they  are  understood  among 
merchants.  Marsh.  347.  Without  the  proper  documents  and  papers 
the  ship  insured  would  have  no  national  character,  and  the  possession 
of  such  papers  are,  therefore,  a  part  of  what  is  warranted  ;  and  the 
continuance  of  that  character  is  manifestly  material  to  the  risk,  and 
indeed  the  main  object  of  the  warranty  ;  and  for  that  reason  it  is  held 
to  be  implied  for  the  purpose  of  carrying  out  the  clear  intention  of  the 
parties.  If  a  fact  be  in  plain  terms  expressly  warranted,  its  materiality 
to  the  risk  is  of  no  importance ;  it  becomes  a  condition  precedent, 
although  entirely  immaterial.  But  where  a  circumstance  is  sought  to 
be  included  by  implication  in  the  warranty,  it  never  can  be  supposed 
that  the  parties  intended  to  include  it  unless  it  be  manifestly  material 
to  the  risk.  In  the  case  of  a  marine  policy  where  the  vessel  was 
described  as  a  British  brig,  and  the  insurance  was  against  the  perils  of 
the  sea  only^  and  the  risk  to  terminate  on  capture,  it  was  held  that  the 
description  in  the  policy  was  not  a  warranty  that  the  brig  had  a  British 
register  and  other  papers  necessary  to  a  national  character,  because  it 
was  in  that  case  immaterial  to  the  risk  whether  she  had  or  not. 
Mackie  v.  Pleasants,  2  Binn.  363. 

In  the  case  under  consideration  there  is  nothing  in  the  contract  of 
insurance,  or  in  the  evidence,  to  show  that  the  hazard  on  the  house 
was  greater  when  vacant  than  if  it  had  been  occupied  by  Goodhue. 
The  rate  of  insurance  is  not  usually  made  to  depend  on  such  a  circum- 
stance, and  the  continuance  of  Goodhue's  occupation  as  tenant  not 
being  embraced  within  the  words  of  the  warranty,  and  not  being  mani- 
festly material  to  the  risk,  cannot  be  brought  within  it  by  inference  or 
implication. 

The  ground  of  complaint,  so  far  as  relates  to  the  point  under  con- 
sideration, is  that  the  house  was  insured  as  a  private  dwelling,  occupied 
by  Goodhue,  and  not  as  a  vacant  building  ;  but  that  it  was  suffered  by 


348  o'niel  v.  buffalo  fire  ixs.  co  [chap.  V, 

the  assured  to  become  vacant  without  the  assent  of  the  insurers.  On 
this  point  the  case  of  Catlin  v.  The  Springfield  Insurance  Compan}-, 
1  Sum.  435,  was  a  much  stronger  case  in  favor  of  the  insurers,  and  yet 
tlie  plaintiff  recovered.  The  insurance  was  "  on  a  dwelling-house  in  Ver- 
mont, owned  bj-  Hayden  &  Hobart  of  Burlington,  and  at  present  occu- 
pied by  one  Joel  Rogers  as  a  dwelling-house,  but  to  be  occupied  here- 
after as  a  tavern  and  privileged  as  such."  The  ground  of  defence  was 
that  the  building  was  insured  to  be  occupied  ;  that  when  burnt  it  had 
been  a  long  time  vacant,  often  deserted,  derelict,  and  was  destroyed 
by  foul  means  ;  and  that  had  the  house  been  occupied  as  insured,  the 
loss  could  not  have  occurred  from  the  cause  which  destroyed  it.  It  was 
held  that  the  words  in  the  policy  did  not  constitute  a  warrant}-  that  the 
house  should,  during  the  continuance  of  the  risk,  be  constantl}'  occu- 
pied as  a  tavern,  and  that  the  risk  continued  although  it  was  vacant. 
And  Mr.  Justice  Stor}',  in  delivering  his  opinion,  said  that  "  the  doc- 
trine had  never,  to  his  knowledge,  been  asserted,  nor  should  he  deem 
it  maintainable,  that  a  policy  against  fire  on  the  house  of  A.  in  Boston, 
described  as  a  dwelUng-house,  would  be  void,  if  the  house  should  cease 
for  a  time  to  have  a  tenant."  This  objection,  therefore,  to  the  plain- 
tiff's recovery  must  fail.^  .   .   .  Judgment  affirmed?' 

1  Passages  foreign  to  warranty  have  been  omitted.  —  Ed. 

2  Ace:  Jovce  v.  Maine  Ins.  Co.,  45  Me.  168  (1858);  Smith  v.  Mechanics' and 
Traders'  F.  Ins.  Co.,  32  N.  Y.  399  (1865). 

In  Sillem  v.  Thornton,  3  E.  &  B.  868,  879-884  (1854),  Lord  Campbell,  C.  J.,  for 
the  court,  said  :  — 

"  The  engagement  is,  '  to  insure  from  loss  or  damage  by  fire  a  brick  building,  used 
as  a  dwelling-house  and  store  (described  in  the  paper  attached  to  this  policy),  situated,' 
&c.,  '  belonging  to  Messrs.  Godeffroy,  Sillem  &  Co.'  '  valued  at  £4,000  sterling,  from 
noon,  Feb.  1,  1851,  to  Feb.  1,  1852,  at  noon.'  The  description,  in  the  attached  paper, 
must  be  supposed  to  be  introduced  into  the  body  of  the  policy  between  the  brackets, 
in.stead  of  the  reference  to  it.  .  .  .  The  following  is  the  commencement  of  this  descrip- 
tion :  '  Frontage  on  Clay  Street  30  feet,  on  Leidesdorff  Street  59^  feet,  more  or  les-s. 
The  house  is  composed  of  two  stories  with  a  basement  story.'  .  .  .  The  special  case 
finds  that  this  house  was  built  in  September,  1850,  .  .  .  and  that  Messrs.  Godeffroy, 
Sillem  &  Co.,  in  the  month  of  October  following,  being  desirous  of  effecting  an  insur- 
ance upon  it,  transmitted  to  their  agents  in  London  the  description  of  it  attached  to 
the  policy.  This  was  a  correct  description  of  it,  in  all  respects,  as  it  tlien  stood  ;  and, 
on  the  faith  of  this  description,  the  defendant  signed  the  policy,  dated  Apr.  7,  1851. 
But  in  March,  1851,  Messrs.  Goileffroy,  Sillem  &  Co  were  desirous  of  adding  a  third 
story  to  the  building.  They  commenced  doing  so  on  the  26th  of  that  month,  and  had 
completed  it  before  May  3.  when  the  premises  were  consumed  by  a  conflagration  which 
laid  in  ashes  almost  the  whole  of  San  Francisco.  ...  It  was  agreed  in  the  case  that 
the  new  works  '  are  to  be  taken  as  not  having  increased  the  hazard  or  probability  of 
fire,  except  .so  far  (if  at  all)  as  the  increase  of  the  area  of  a  building  by  a  third  story 
may  be  considered  by  the  court  to  have  necessarily  increased  such  hazard  or  proba- 
bilitv.'  We  are  now  to  consider  the  effect  of  the  description  of  the  premises  insured, 
which  has  been  introduced  into  the  policy.  And,  in  the  first  place,  we  are  of  opinion 
that  it  amounts  to  a  warranty  that  the  premises  corresponded  witli  it  on  the  7th  April, 
1851,  when  tlie  policy  was  effected,  or,  at  least,  that  the  premises  had  not  been  altered 
by  the  assured  in  the  intermediate  time,  so  as  to  increase  the  risk  of  the  insurer. 
Mr.  Bramwell  contended  that  it  referred  only  to  31  st  October,  1850,  the  date  of  the 
certificate  of  tiie  Burveyors,  in  California,  who  verified  its  accuracy  ;  and  that,  if  accu- 


SECT.  II.]  O'NIEL   V.   BUFFALO    FIuE    IXS.    CO.  349 

rate  at  that  tinie,  the  policy  would  not  be  vitiated  by  any  alteration  bctsveen  that  day 
and  the  date  of  the  policy,  so  that,  notwithstanding  the  alteration,  the  identity  of  the 
house  -was  not  destroyed.  But  we  think  that  this  position  is  wholly  at  variance  with 
the  effect  which  has  hitherto  been  given  to  the  description  of  the  subject-matter  in- 
sured in  policies  of  insurance,  and  would  utterly  defeat  the  object  for  which  such  a 
description  is  required.  It  would  seem  revolting  to  common  sense,  if  we  were  to  hold 
that,  as  soon  a.s  ilessrs.  Godeffroy,  Sillem  &  Co.  had  sent  off  the  description,  to  be 
shown  to  an  insurance  office  or  private  underwriter,  they  might  have  added  several 
stories  to  the  house,  and  removed  from  it  all  the  described  safe-guards  against  lire, 
and  that,  although  the  description  misdescribed  the  actual  state  of  the  premises  at  the 
date  of  the  policy,  a  fire  afterwards  happening,  an  indemnity  miglit  be  claimed,  for 
which  the  underwriter  had  received  no  adequate  consideration.  But  this  is  the  prm- 
ciple  contended  for  by  the  assured.  IS'ot  being  told  the  exact  progress  which  had 
been  made  in  the  alterations  between  the  26th  of  March  and  the  7tli  of  April,  we  are 
to  draw  inferences  from  the  facts  stated ;  and  we  infer  that,  on  the  7th  of  April,  the 
building  no  longer  corresponded  with  the  description  of  it  in  the  policy,  and  that,  by 
the  alteration,  the  risk  of  the  insurer  had  in  some  degree  been  increased.  This  alone 
would  be  a  bar  to  the  present  action. 

"  But  we  are  further  of  opinion  that  the  description  in  the  policy  amounts  to  a 
warranty  that  the  assured  would  not,  during  the  time  specified  in  the  policy,  volunta- 
rilv  do  anything  to  make  the  condition  of  the  building  vary  from  this  description,  so 
as  thereby  to  increase  the  risk  or  liability  of  the  underwriter.  In  this  case,  the  de- 
scription is  evidently  the  basis  of  the  ccmtract,  and  is  furnished  to  the  underwriter  to 
enable  him  to  determine  whether  he  will  agree  to  take  the  risk  at  all,  and,  if  he  does 
take  it,  what  premium  he  shall  demand.  The  a.ssured  no  doubt  wished  him  to  under- 
stand that,  not  only  such  was  the  condition  of  the  premises  wlien  the  policy  was  to  be 
effected,  but,  as  far  as  depended  upon  them,  it  should  not  be  altered  so  as  to  increase 
the  ri.-^k  during  the  year  for  which  he  was  to  be  liable,  if  a  loss  should  accrue.  With- 
out such  an  assurance  and  belief,  the  statement  introduced  into  the  policy  of  the 
existing  condition  of  the  premises  would  be  a  mere  delusion.  Identity  miglit  con- 
tinue, and  yet  the  quality,  condition,  and  incidents  of  the  subject-matter  insured  might 
be  so  changed  as  to  increase  tenfold  the  chances  of  loss,  which,  upon  a  just  calculation, 
might  reasonably  be  expected  to  fall  upon  the  underwriter.  Can  it  be  successful^ 
contended  that,  having  done  so,  the  assured  retain  a  right  to  the  indemnity  for  which 
they  had  stijnilated  upon  a  totally  different  basis  ?   .  .  . 

"  A  distinction,  however,  is  taken  in  this  respect  between  marine  policies  and  in- 
surances of  houses  against  fire.  It  would  probably  be  allowed  that,  if  during  war 
there  were  a  policy  on  a  merchant  ship  described  as  carrying  ten  guns  and  employed 
in  the  coal  trade,  and,  after  the  policy  was.  effected,  the  owner  should  reduce  her 
armament  to  five  guns,  or  load  her  with  oil  of  vitriol,  the  underwriter  would  not  be 
liable  for  a  subsequent  loss.  But  it  is  strenuously  asserted  that,  if  there  be  an  insu- 
rance against  fire  upon  a  house,  which  is  described  in  the  policy  as  being  of  a  particular 
specified  description,  and  in  which  it  is  stated  that  the  occupier  carries  on  a  certain 
specified  trade,  this  being  true  at  the  date  of  the  policy,  the  assured,  preserving  the 
identity  of  the  house,  may  alter  its  construction  so  as  to  render  it  more  exposed  to  fire, 
and  may  carry  on  in  it  a  different  and  more  dangerous  trade,  without  prejudice  to  tiie 
right  to  recover  for  a  subsequent  loss  by  fire,  the  warranty  extending  only  to  the  state 
and  use  of  the  premises  at  the  moment  when  the  policy  was  signed.  This  seems 
quite  contrary  to  the  principles  on  which  contracts  are  regulated." 

In  Stout  17."  City  Fire  Ins.  Co.,  12  Iowa,  .371  (1861),  the  policy  insured  a  mortgagee 
against  loss  by  fire,  for  one  year  from  October  18,  1857,  "on  the  five-story  brick 
building,  known  as  the  Lawrence  Block,  occupied  for  stores  below,  the  upper  portion 
to  remain  unoccupied,  during  the  continuance  of  this  policy."  The  building  was  con- 
sumed by  fire  on  January  21,  1858.  Baldwin,  J.,  for  the  majority  of  the  court, 
said  :  — 

"  The  testimony  is  that  a  portion  of  the  lower  story  of  the  building  was  occupied 
for  a  dancing  academy,  in  the  month  of  December,  1857.  Defendant  claims  that  the 
language  in  the  policy,  '  occupied  for  stores  below,'  is,  in  law,  a  warranty  that  the 


350  O^-IEL   V.    BUFFALO    FIRE   1X3.    CO.  [CHAP.  V. 

same  should  coutioue  to  be  thus  oc^.'upieJ,  during  the  coutiuuance  of  tlie  policy,  aud 
that  any  change  iu  the  use  of  the  rooms  below  was  a  breach  of  such  warranty,  aud 
avoided"  the  liability  of  the  company.  ... 

"  The  policy  iu  tliis  case  contains  both  affirmative  and  executory  warranties.  1st.  The 
acceptance  of  the  policy  with  the  clause  that  the  lower  story  of  the  building  insured 
was,  at  the  time  the  policy  was  effected,  occupied  for  stores,  was  an  aihrmative  or  ex- 
press warranty  that  the  same  was  at  the  time  so  occupied.  And  if  the  representation 
was  false,  in  other  words,  if  the  lower  story  was  not  then  so  occupied,  whether  material 
to  the  risk  or  not,  would  avoid  the  policy.  2d.  The  upper  portion  of  this  building 
insured,  as  set  forth  in  the  policy,  was  to  remain  unoccupied  during  the  continuance 
of  the  policy.  This  portion  is  promissory  or  executory,  and  must  be  strictly  complied 
with  on  the  part  of  the  assured,  or  the  policy  will  be  avoided,  whether  material  to  tlie 
risk  or  not.  The  distinction  between  the  affirmative,  or  express,  and  promissory,  or 
executory  warranties  is  very  perceptible  in  this  case.  The  former  represents  that  a 
certain  fact  did  exist  at  the' time  the  policy  was  effected;  and  the  latter,  that  a  cer- 
tain thing  should  exist  during  the  continuance  of  the  policy ;  — both  made  equally 
material  by  the  parties  themselves,  and  each  fatal  to  the  assured  if  false  or  not  exe- 
cuted. Even  if  it  be  admitted  iu  this  case  as  claimed  by  defendant,  the  evidence  fads 
to  show  that  the  plaintiff  had  the  control  of  the  building  insured  ;  he  did  not  stipulate 
that  the  lower  story  of  the  building  should  continue  to  be  occupied  for  any  particular 
purpose  during  the  continuance  of  the  policy.  There  is  nothing  of  that  kind  on  the 
face  of  the  policy,  nor  is  there  anything  iu  the  by-laws  or  conditions  annexed  to  the 
policy  preventing  a  change  of  busine.ss,  if  said  change  does  not  add  materially  to 
the  risk  taken.  The  policy  may  be  wholly  avoided  by  the  using  of  tlie  building  in- 
sured for  the  purposes  tliat  are  specially  prohibited  in  the  by-laws  or  conditions  annexed 
to  the  policv,  classified  as  hazardous  and  extra-hazardous.  Or  it  may  be  made  void  by 
materiallv  increasing  the  risk  in  any  other  manner.  The  representation  in  the  policy 
—  'the  lower  story  occupied  as  stores'  — indicates  that  the  same  was  so  occupied  at 
the  time  the  insurance  was  effected,  and  is  uot  a  continuous  warranty." 

In  Cumberland  Vallev  Mutual  Protection  Co.  v.  Douglas,  58  Pa.  419   (1868),  a 
policy  insured   a  building  for  five   years   from   May   19,   1859.     The   building   was 
burned  on  December  24,  1862.     The  application  was  agreed  to  make  part  of  the 
policv,  and  denominated  the  property  as  "  dwelling-house,  Caledonia  Springs  Build- 
ings."    The  policy  stipulated  that  if  the  "  premises  or  any  part  thereof  shall,  at  any 
time  during  tlie  continuance  of  this  policy,  be   so  altered,  or  be  appropriated,  ap- 
plied, or  used  to  or  for  the  purpose  of  carrying  on  therein  any  trade,  business,  or  voca- 
tion, which,  according  to  the  class  of  hazards  or  rates  adopted  by  the  company,  .  .  . 
would  increase  the  risk  or  hazard,  .  .  .  then  and  from  thenceforth  so  long  as  the  same 
shall  be  so  appropriated,  applied,  or  used,  this  policy  shall  cease  aud  be  of  no  force 
or  effect."     The  policv  called  the  property  uot  a  "  dwelling-house,"  but  a  "  building." 
Strong,  J.,  for  the  court,  said  :  "  There  is  no  representation  that  it  was  an  occupied 
dwelling-house  or  building  at  the  time  when  the  insurance  was  effected,  and  no  war- 
ranty that  it  should  be  occupied  during  the  continuance  of  the  risk.     At  least   there 
is  no  such  express  representation  or  warranty.     But  the  defendants  below,  now  plain- 
tiffs in    error,   contend   that   the   description    of   the    property  as  a   dwelling-liouse 
amounted  to  a  representation  that  it  was  tenanted,  or  occupied  when  the  policy  issued, 
and  an  engagement  that  it  should  continue  to  be  occupied.     Interpreting  tlie  contract 
of  the  parties  thus,  thev  offered  to  show  on  the  trial  that  the  plaintiffs  had  abandoned 
the  buildings  as  a  watering-place  to  be  kept  by  themselves  ;  that  for  three  or  four 
summers  before  the  fire  a  Mrs.  Cooper  occupied  them  aud  kept  boarders;  tliat  some 
three  months  before  the  fire  she  left  the  house  and  it  remained  vacant  until  it  was 
destroyed  by  the  work  of  an  incendiary ;  that  tlie  plaintiffs  were  notified  that  the  house 
■was  vacant,  and  that  the  doors  and  windows  were  fouml  open ;  that  the  defendants 
had  no  knowledge  of  the  fact  that  the  projierty  was  vacant,  and  never  consented  to  its 
remaining  unoccupied  ;   and  that  after  ISIrs.  Cooper  loft,  the  plaintiffs  removed  the 
most  valuable  part  of  their  furniture  and  in  so  doing  emptied  the  contents  of   straw 
beds  into  two  of  the  rooms  in  the  building.     Such  was  the  substance  of  tlie  <>ffer. 
It  was  rejected  by  the  court,  and  we  think  correctly.     It  embraced  two  propositions, 


SECT.  II.]        CEOCKER   V.    PEOPLE'S   MUTUAL   FIRE    INS.    CO.  351 

CROCKER  V.   PEOPLE'S   MUTUAL  FIRE  INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1851.    8  Cush.  79. 

This  was  an  action  on  a  polic}'  of  insurance,  whereby  the  defendants 
insured  the  plaintiff  "  two  thousand  dollars  on  his  machine  shop,  a 
watchman  kept  on  the  premises ;  with  the  privilege  to  insure  $2,000  at 
the  Fitchlxirg  office,  $500  at  the  New  England  office.  Concord." 

At  the  trial,  which  was  before  Fletcher,  J.,  the  only  ground  of  de- 
fence relied  on  was,  that  there  was  not  "  a  watchman  kept  on  the  prem- 
ises," and  that  the  plaintiff  therefore  could  not  recover.  To  meet  this 
defence  the  plaintiff  called  a  witness,  who  testified  that  on  the  14th  of 
November,  1849,  he  was  hired  to  watch  the  building  a  quarter  of  each 
night,  leaving  it  about  half-past  seven  in  the  evening  ;  that  on  the 
28th  of  November  he  was  hired  to  watch  what  was  called  half  the  night, 
going  in  at  half-past  five,  and  leaving  at  half-past  ten  o'clock,  and  con- 
tinued to  do  so  until  the  8th  of  December,  when  the  fire  occurred,  which 
destroyed  the  building,  about  one  o'clock  in  the  morning.  No  question 
was  raised  as  to  the  manner  in  which  the  watch  was  kept.    But  the  de- 

jfirst,  to  prove  that  the  building  was  left  unoccupied  with  the  knowledge  of  the  owners, 
and  without  tiie  knowledge  or  con.sent  of  the  insurers,  and,  second,  to  prove  that  the 
defendants  had  been  guilty  of  negligent  conduct,  either  by  themselves  or  by  their 
servants  or  agents,  though  it  was  not  alleged  that  the  fire  was  a  direct  consequence  of 
the  negligence.  Now,  it  is  obvious  that  the  evidence  offered  to  prove  that  the  building 
was  left  unoccupied  was  wholly  immaterial,  unless  it  tended  to  show  either  a  change 
in  the  subject  insured,  or  a  breach  of  a  warranty,  or  the  falsity  of  a  representation. 
It  did  neither.  I  think  it  has  never  been  held  that  the  insurance  of  a  dwelling-house 
implies  that  it  is  a  tenanted  house,  much  less  that  it  implies  an  engagement  of  the 
assured  that  it  shall  always  be  occupied  while  the  risk  taken  endures.  Policies  often 
contain  stipulations  in  regard  to  occupancy,  but  they  are  expressed  plainlv,  and  if 
considered  material,  they  are  stated  to  be  either  conditions  or  representations.  The 
policy  in  this  case  contains  nothing  of  the  kind.  On  the  contrary,  the  18th  article  of 
the  by-laws  allows  the  fullest  liberty  for  changes  of  tenants  without  notice,  if  the 
property  be  not  used  for  other  purposes  than  those  for  which  it  was  used  when  insured. 
And  even  if  a  building  be  insured  as  an  occupied  d well inrj -house,  even  if  application  be 
made  for  a  policy  on  an  occupied  dwelling-house,  while  it  might  amount  to  a  false 
representation  if  the  property  was  unoccupied  at  the  time,  it  is  not  an  assertion  that 
it  shall  remain  occupied.  It  is  matter  of  description  of  the  subject,  rather  than 
stipulation  respecting  its  use.  It  may  be  that  hazard  of  fire  is  greater  when  a  dwelling- 
house  is  left  untenanted.  So  it  is  greater  or  less  in  cases  of  tenancy  by  different  per- 
sons ;  but,  in  the  absence  of  express  stipulation  to  the  contrary,  a  change  of  tenants 
has  no  effect  whatever  on  the  contract  of  insurance  if  the  use  be  not  changed.  It  is 
vain  to  argue  that  no  use  at  all  is  an  use  for  other  purposes  than  those  for  which  the 
building  was  used  when  insured.  This  case  is  not  to  be  confounded  with  those  cases  in 
which  there  have  been  alterations  of  the  subject  insured,  and  where  the  question  has 
been  whether  the  danger  of  loss  was  increased.  Here  the  question  is  what  was  the  risk 
assumed  ?  Was  it  a  dwelling-house  simply  that  was  insured,  or  a  dwelling-house 
occupied  ?  Did  the  policy  bind  the  assured  to  any  use  ?  We  think  it  did  not,  further 
than  that  when  used  it  should  be  only  as  a  dwelling-house." 

See  Catliu  v.  Springfield  Fire  Ins.  Co.,  1  Sumner,  434  (18-33);  Blood  v.  Howard  F. 
Ins.  Co.,  12  Cush.  472  (1853).— Ed. 


352  CROCKER  V.  people's  mutual  fire  ins.  CO.     [chap.  v. 

fendants  contended  that  employing  a  watchman  for  the  times  above 
stated  was  not  such  a  compliance  with  the  terms  of  the  policj'  as  would 
entitle  the  plaintiff  to  recover. 

The  plaintiff,  to  show  that  in  different  establishments  there  was  a 
difference  in  the  hours  of  keeping  a  watch,  called  two  agents  and  man- 
agers of  insurance  companies,  who  were  allowed,  against  the  objection 
of  the  defendants,  to  testif}'  that  the  usages  of  different  establishments 
which  emplo^-ed  watchmen  varied  very  much,  some  keeping  a  constant 
watch  ;  some  only  for  a  limited  period  of  time,  for  certain  specified 
hours  ;  some  requiring  an  examination  to  be  made  at  a  certain  time 
after  the  workmen  had  left  the  building,  etc. ;  that  this  was  generally 
a  subject  of  particular  inquiry  at  the  time  of  making  insurance,  and  de- 
pended upon  the  stipulations  made  at  that  time  ;  and  that  it  was  the 
general  usage  of  compaiyes,  accustomed  to  insure  large  factory  build- 
ings, to  put  to  persons  applying  for  insurance  the  question,  "  Is  there  a 
constant  watch  ;  if  not,  what  is  3'our  arrangement  in  regard  to  it?"  to 
which  the  answers  were  various,  as  above  stated. 

One  of  the  tenants,  who  was  concerned  in  employing  the  watchman, 
bein<y  called  as  a  witness  for  the  defendants,  testified  that  he  thought  it 
safe  to  be  without  a  watchman  the  latter  part  of  the  night ;  that  until  the 
7lh  of  June,  1849,  a  watchman  had  been  kept  on  the  premises  all  night, 
when  the  time  was  changed  to  what  was  called  a  quarter  watch  ;  and  that 
there  were  four  separate  tenants  of  the  building,  who  employed  about 
one  hundred  and  fourteen  hands.  Two  manufacturers  testified  that  on 
their  premises  they  employed  watchmen  to  watch  all  night,  from  the  time 
tlie  workmen  left  till  they  came  to  work  again  in  the  morning.  And  two 
witnesses,  engaged  in  the  management  of  a  mutual  insurance  company 
for  insuring  manufacturing  establishments,  testified  that,  in  a  large  pro- 
portion of  the  establishments  insured  by  them,  the  custom  was  to  have 
a  watchman  enter  the  building  before  the  workmen  left  and  watch  till 
they  returned  in  the  morning.  The  secretary  of  the  defendants  testified 
that  the  plaintiff,  in  a  conversation  with  him  about  the  premises,  at  the 
time  of  applying  for  this  insurance,  stated  that  there  was  a  watch  kept 
there,  and  mentioned  a  tank  of  water  kept  in  the  attic,  and  other  facil- 
ities for  extinguishing  fires  ;  and  that  upon  this  representation  as  to  a 
watch,  he  inserted  the  clause  in  the  policy  upon  that  subject. 

Upon  the  foregoing  evidence,  the  presiding  judge  instructed  the  jury, 
that  the  clause  in  the  policy  on  which  this  case  turned  was  "  a  watch- 
man kept  on  the  premises  ;  "  that  the  clause  did  not  speak  of  a  constant 
watchman,  but  a  watchman,  some  watchman  ;  some  watchman  must 
therefore  have  been  kept  on  the  premises  in  order  to  comply  with  this 
clause.  It  must  not  have  been  a  pretence  mereh',  or  only  a  colorable 
keeping  of  a  watchman.  But  if  in  good  faith  and  without  fraud,  a 
watchman  was  kept  on  the  premises,  and  such  a  watcliman,  and  for 
such  portion  of  the  time,  or  at  such  specified  hours,  as  in  the  honest 
exorciso  of  ordinary  care  and  prudence  was  deemed  sufllciont  for  the 
safety  of  the  building,  that  wuukl  be  a  compliance  witli  the  provision 


SECT.  II.]  FRISBIE   V.   FAYETTE    MUTUAL    INS.    CO.  353 

of  the  polic}- ;  and  that  in  order  to  determine  wliettier  or  not  a  watch- 
man was  kept  on  the  premises,  in  good  faith  and  in  the  exercise  of  or- 
dinar}-  care  and  prudence,  the  jury  might  refer  to  the  evidence  in  the 
case,  as  to  what  was  common  and  usual  in  regard  to  keeping  watchmen 
in  other  similar  buildings. 

The  jury   returned  a  verdict  for  the  plaintiff,  and  the  defendants 
alleged  exceptions. 

E.  Washburn,  for  the  defendants. 

G.  F.  Farley  and   K.  Wood,  for  the  plaintiff. 

Shaw,  C.  J.  The  directions  to  the  jury  were  right.  The^tijmla- 
tion,  "  a  watchman^  kept  on  the  jaremises^"  inserted,  asJMs,  jn  the 
TDocIy'ofJheTpolicy,  in^mediaMy_aft£J:_the_description  of  the  property^ 
insuredaJs,iiLlJie^natnraafLa_JYMranty,  and  must  be  substantially  com- 
plied with  _bxJhe_assured.  But  the  terms  are  not  explicit  as  to  the 
time  and  m"annerofireeping  a  watch.  It  does  not  stipulate  for  a  con- 
slant  watcE  It  therefore  requires  construction  as  matter  of  law,  to 
determine  what  is  meant,  in  this  policy,  by  keeping  a  watch.  It 
relates  to  a  factory,  to  its  safety  against  fire,  and  this  depends  upon 
a  habit  or  practice,  in  this  respect,  and  upon  the  fact  whether  that  usage 
has  been  followed.  When  there  is  an  express  stipulation  that  a  thing 
shall  be  done,  but  the  contract  is  silent  as  to  the  time  and  manner,  the 
law  holds  that  it  must  be  reasonable  in  this  respect,  having  regard  to 
the  object  and  purpose  of  the  stipulation,  —  in  this  case  to  the  safety 
of  the  building.  If  it  is  done  in  the  manner  in  which  men  of  ordi- 
nary care  and  skill,  in  similar  departments,  manage  their  own  affairs  of 
like  kind,  this  is  one  strong  ground  to  hold  it  reasonable,  and  to  warrant 
the  admission  of  evidence  of  usage.  What  is  common  and  usual,  under 
given  circumstances,  is  evidence  tending  to  show  what  is  reasonable. 

Judgment  on  the  verdict} 


FRISBIE   V.   FAYETTE  MUTUAL   INS.   CO. 
Supreme  Court  of  Pennsylvania,  1856.     27  Pa.  325. 

Error  to  the  Common  Pleas  of  Fayette  County. 

This  was  an  action  of  debt  brought  on  a  policy  of  insurance  by  Orton 
Frisbie  against  the  Fayette  County  Mutual  Fire  Insurance  Company. 
The  policy  was  for  81500  upon  a  stock  of  dry  goods  and  groceries  de- 
stroyed by  fire  on  the  night  of  the  14th  January,  1852.  The  only 
question  in  this  case  arises  on  the  description  of  the  property  contained 
in  the  application  of  the  plaintiff  to  the  company  for  insurance,  which 
was  copied  by  the  secretary  into  the  policy.     That  part  of  the  appli- 

1  See  Loud  v.  Citizens'  Mutual  Ins.  Co.,  2  Gray,  221  (18.54);  Rankin  r.  Amazon 
Ins.  Co.,  89  CaL  203  (1891) ;  Virginia  F.  &  M.  Ins.  Co.  v.  Buck,  88  Va.  517  (1891).  — 

Ed. 

23 


354   '  FKISBIE   V.    FAYETTE    MUTUAL   INS.    CO.  [CHAP.  V. 

cation  material  to  the  case  is  as  follows:  "Application  of  Orton 
Frisbie,  of  Dunbar  township,  in  the  county  of  Fayette,  for  insurance 
against  fire  by  the  Fayette  County  Mutual  Fire  Insurance  Company, 
for  the  sum  of  $1500,  to  wit :  on  his  stock  of  merchandise,  to  wit, 
$1200  on  dry  goods  kept  in  a  frame  plastered  storehouse,  24  by  24 
feet,  l\  stories  high ;  merchandise  kept  on  the  first  floor,  and  groceries 
in  the  store-room  and  cellars :  said  store  attended  by  applicant  and 
clerk;  clerk  sleeps  iti  the  store/  one  stove  in  said  store-room;  pipe 
secured  by  crock  through  ceiling,  and  brick  chimney  through  roof; 
about  50  feet  from  a  frame  stable." 

It  was  contended  by  the  defendants  that  the  words  ' '  clerk  sleeps  in 
the  store  "  were  a  warranty  ;  and  that,  as  no  clerk  was  sleeping  in  the 
store  on  the  night  the  fire  occurred,  the  polic}'  was  forfeited.  Plaintiflf 
contended  that  the  words  were  but  a  representation,  and  did  not  affect 
the  policy. 

The  court  (Gilmore,  P.  J.)  charged  that  "the  words  mean  and  are 
tantamount  to  a  warranty,"  and  that  plaintiff  could  not  recover. 

Tliis  was  the  error  assigned. 

Kaine  and  Soicell,  for  plaintiff  in  error. 

Ewing  and  Patterson.,  for  defendants  in  error. 

LowKiE,  J.  This  suit  is  founded  on  a  policy  of  merchandise,  in  a 
house  which  is  thus  described,  "a  frame  plastered  storehouse,"  &c. 

For  several  months  prior  to  the  loss,  no  one  slept  in  the  store ;  and 
hence  the  question  is,  do  the  words,  "  clerk  sleeps  in  the  store,"  con- 
stitute a  warranty  for  the  future,  or  are  they  mere  matter  of  description 
of  the  mode  in  which  the  building  was  occupied.  The  court  below  re- 
garded them  as  a  warranty  for  the  future,  and  that  position  has  been 
very  skilfully  maintained  here,  but  we  are  not  convinced. 

These  words  have  notJUeJorm  of  a  warranty  ;  they  spea^of  present 
ti  me  and  notforThiTfatiire  ,_jjid^are  placed  in  jio,  connection  that  leads 
to  a  belief~thaFthey  were  intended  for  a  future  state  of  affairs.  They 
stand  in  the  midst  of  a  description  of  the  merchandise  insured,  and  of 
the  house  in  which  they  were;  and  when  we  notice,  in  addition,  that 
one  question  in  such  cases  always  is.  How  is  the  house  occupied?  we 
cannot  avoid  the  inclination  to  believe  that  these  words  were  inserted 
as  description  and  not  as  warrant}-. 

It  is  said  that  words  of  warranty  are  always  inserted  in  the  policy, 
which  means  in  the  body  or  by  reference,  and  representations  never. 
But  neither  of  these  propositions  is  universally  true,  for  many  warran- 
ties are  implied,  and  the  description  of  the  subject-matter  insured  is 
very  commonly  attended  by  mere  representations  concerning  the  con- 
dition of  things  ;  and  these  representations  are  often,  b}'  reference, 
made  part  of  the  policy,  though  actually  written  only  in  the  applica- 
tion:  2  Hall,  632;  16  Wend.  481. 

Whether  a  statement  shall  be  taken  as  a  wan'anty  is  a  mere  question 
of  interpretation,  to  be  ascertained  in  policies  of  insurance  just  as  in 
other  contracts.     If  it  relates  to  a  fact  that  we  can  know,  judicially,  to 


SECT.  II.]  GARRETT   V.    PROVINCIAL    INS.    CO.  355 

increase  the  risk,  as  in  the  numerous  cases  of  the  false  assumption  of  a 
neutral  national  character  for  a  ship  in  time  of  war,  then  it  is  treated 
as  a  warranty.  And  so  it  is  where  it  is  apparent  that  the  statements 
refer  to  the  precautions  taken  to  prevent  fire  :  8  Mete.  114  :  but  even 
the}'  are  entitled  to  a  liberal  interpretation,  and  call  only  for  a  substan- 
tial performance  according  to  the  customs  of  trade  and  business  :  1 
Moody  &  M.  90  ;  1  Hall,  226  ;  2  id.  589  ;  6  Wend.  623  ;  25  id.  374. 

Here  it  does  not  expressly  appear  that  the  clerk  was  to  sleep  in  the 
store  as  a  precaution  against  fire,  and  it  is  not  otherwise  obvious  that 
that  was  the  purpose  of  sleeping  there.  As  he  might  need  fire  and 
candle  there,  it  may  be  that  his  sleeping  there  would  increase  the  risk, 
or  be  so  regarded.  It  may  be  a  mere  license :  1  Sumn.  C.  C.  R.  435. 
We  may  illustrate  the  impossibility  of  the  arbitrary  construction  con- 
tended for  by  changing  the  sentence  and  making  it  read  —  clerk  cooks 
his  victuals  in  the  store.  It  would  hardly  be  insisted  that  he  should 
continue  to  do  so,  for  this  would  increase  the  risk.  Or  let  it  read  —  a 
tavern  is  kept  in  a  part  of  the  house.  This  would  not  be  regarded  as  a 
warranty  that  he  should  continue  to  do  so ;  for  the  by-laws  show  that 
the  company  regarded  such  a  use  of  the  house  as  adding  to  the  risk. 

The  rule  seems  to  be  that  such  representations  in  or  part  of  the 
policy  are  construed  to  be  warranties  when  it  appeared  to  the  court 
that  they  must  have  had,  in  themselves,  or  in  the  view  of  the  parties,  a 
tendency  to  induce  the  company  to  enter  into  the  contract  on  terms 
more  favorable  to  the  insured  than  without  them.  If  the  court  cannot 
say  so,  then  they  are  treated  as  representations,  and  it  is  left  to  the 
jury  to  say  whether  or  not  they  are  material  misrepresentations,  tending 
to  mislead  and  actually  misleading  the  insurers. 

Judgment  reversed  and  new  trial  awarded} 


GARRETT,   Executor  of  TAYLOR,  v.  PROVINCIAL   INS.  CO. 
Queen's  Bench  of  Upper  Canada,  1860.     20  U.  C.  Q.  B.  200. 

This  was  an  action  on  a  policy  of  insurance  against  fire,  effected  by 
testator  with  the  defendants  upon  a  steam  saw-mill. 

A  special  case  was  stated,  and  the  objection  mainly  relied  upon 
against  the  plaintiff's  recovery  was  that  the  insured  did  not  comi)Iy 
with  the  following  condition  inserted  in  the  policy;  *' The  assured 
hereby  agrees  to  keep~twerve  pails  full  ot^aleF^oneach  flat  of  said 
imOuring  the  "continuance  oflhjs  policy."  This  was  written  in  the 
'Body^nEe~poIicy,  and  there  was  no  mention  of  It  in  any  of  the  printed 
forms  or  conditions  indorsed  on  the  policy. 

The  affidavits  put  in  as  part  of  the  special  case  showed  that  the 

1  See  Schmidt  v.  Peoria  M.  &  F.  Ins.  Co,  41  111.  295  (1^6).  — Ed. 


356  TEBBETTS   V.    HAMILTON    MUTUAL   INS.    CO.  [CHAP.  V. 

number  of  buckets  required  by  the  policy  were  not  in  the  mill  when  it 
was  burned  ;  but  that  they  could  have  been  of  no  use  if  they  had  been 
there,  as  the  fire  was  not  discovered  until  it  was  so  far  advanced  as  to 
make  it  impossible  to  enter  the  building. 

C.  S.  PaUerso7i,  for  the  plaintiff. 

Duggan.,  Q.  C,  contra. 

Robinson,  C.  J.,  delivered  the  judgment  of  the  court. 

The  engagement  of  the  assured  to  keep  twelve  pails  full  of  water  on 
each  flat  of  the_miU_during_iha-CQiiliiiuajK;e  of  the  policy  is  a^ncTT- 
tToirotTwhich  the~insurance^wasje^^  is  termed  a  promissory 

warrant}'. 

Tl^e^erformance  of  it  is  necessary,  we  think,  to  the  right  to  sue 
upon  the  policy  ;  and  when  such  a  condition  is  not  observed,  the  insured 
loses  his  remedy  upon  the  policy,  even  though  it  should  not  appear  that 
the  failure  to  observe  that  condition  occasioned  the  loss. 

The  effect  of  what  is  shown  is  that  the  defendants  agreed  for  a  cer- 
tain premium  to  insure  the  mill,  provided  the  insured  would  always 
keep  in  the  mill,  at  hand,  certain  means  of  extinguishing  any  fire  that 
might  break  out.  If  the  insured  had  declined  to  come  under  that  con- 
dition, the  defendants  might  either  have  exacted  a  higher  premium  or 
declined  the  risk. 

We  think  the  law  compels  us  to  hold  that  the  plaintiff  lost  the  benefit 
of  his  policy  by  the  failure  on  his  part,  which  was  proved,  and  is  not 
denied.  Judgment  for  defendants. 


TEBBETTS  v.  HAMILTON   MUTUAL   INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1861.     1  Allen,  305. 

Contract  upon  a  policy  of  insurance.  At  the  trial  in  this  court, 
before  Hoar,  J.,  a  verdict  was  returned  for  the  plaintiff,  and  the  de- 
fendants alleged  exceptions.     The  facts  are  stated  in  the  opinion. 

J3.  F.  Butler  and  J.  W.  Perry,  for  the  defendants. 

B.  B.  Caverhj,  for  the  plaintiff. 

Hoar,  J.  The  application  upon  which  the  policy  of  insurance  was 
obtained  contained  tiiis  interrogatory:  "What  is  the  distance  and 
direction  of  said  Ixiilding  (i.  e.jthe  buiLding_containing  the  property  to 
T)^nsured)  from  other  buildings  within  one  hundred  feet,  and  how  are 
such  other  buildings  constructed  and  occupied?  Annex  a  grour.d-plan 
to  The  application."  The  answer  was,  "  See  diagram  ; "  and  a  de- 
scT-Tption  of  tiie  neighboring  propert}',  containing  these  words  :  "  East, 
Prescott  Street."  Prescott  Street  was  laid  down  on  the  diagram.  On 
the  opposite  side  of  Prescott  Street,  and  within  the  one  hundred  feet, 
were  several  buildings,  and  among  them  three  wooden  carpenters' 
shops,  which  Were  neither  represented  on  tlie  diagram  nor  mentioned 


SECT.  II.]  TEBBETTS    V.   HAMILTON    MUTUAL   INS.    CO.  357 

in  the  answei*.  The  jiny  found  that  these  buildings  were  not  material 
to  the  risk ;  and  the  question  presented  for  our  decision  is,  whether  the 
omission  to  disclose  these  buildings  is  a  bar  to  the  plaintiff's  recovery 
upon  the  policy? 

ThejijDplication  and  the  by-laws  of  the  company  are  expressly  made 
a  part  of  the  policy  of  hisurance,  a  copy  of  the  by-laws  being  appended 
to  it ;  and  the  defendants  rely  upon  the  stipulations  which  they  contain. 
By  the  6th  article  of  the  b3'-laws,  "  the  application  upon  which  a  policy 
is  founded  shall  be  held  to  be  a  warrant}'  on  the  part  of  the  assured, 
and  as  absolutely  a  part  of  said  policy  and  of  the  contract  of  insurance, 
as  if  it  were  actually  incorporated  therein  in  full." 

The  13th  article  of  the  by-laws  provides  that,  "  unless  the  applicant 
for  insurance  shall  make  a  correct  description  of  and  statement  of  all 
facts  required,  or  inquired  for  in  the  application,  and  also  all  other 
facts  material  in  reference  to  the  insurance  or  to  the  risk,  or  to  the 
value  of  the  property,  the  policy  issued  thereon  shall  be  void." 

The  application  contains  an  agreement  that  every  question  shall  be 
fully  and  distinctly  answered  ;  and  at  the  end  of  it  are  these  covenants, 
among  others:  "And  the  applicant  covenants  and  agrees  with  said 
company  that  the  foregoing  is  a  correct  statement  and  descriptioii~o? 
all  the  facts  inquired  for,  or  material  in  reference  to  this  insurance."^ 
"  The  applicant  further  agrees  that  the  misrepresentation  or  suppres- 
sion of  material  facts  shall  destroy  his  claim  for  a  damage  or  loss."     ' 

It  is  also  stipulated  in  the  application,  that  "  if  any  interrogatories 
are  not  full}-  answered  in  writing  by  the  applicant,  it  is  assumed  that 
the  facts  in  relation  to  them  are  most  favorable  to  the  title  and  to  the 
risk,  and  they  are  so  construed  in  writing  the  policy." 

It  is  apparent,  in  the  first  place,  that  the  answer  to  the  interrogatory 
in  the  application  does  not  "  make  a  correct  description  of  and  state- 
ment of  all  facts  required,  or  inquired  for  in  the  application."  The 
interrogatory  is  not  in  terms  confined  to  such  buildings  within  one 
hundred  feet  as  are  material  to  the  risk.  It  embraces  all  buildings 
within  the  distance  named,  and  inquires  as  to  their  construction  and 
occupation.  It  appears,  therefore,  that  the  defendants  directly  required 
the  information  included  in  the  terms  of  the  question.  Whether  a  jurv 
might  think  it  material  to  the  risk  could  be  of  no  consequence,  if  the 
defendants  chose  to  make  it  a  condition  of  the  validity  of  the  contract. 
Although  policies  of  insurance  are  to  be  liberally  construed,  and  in 
such  a  manner  as  to  secure,  if  possible,  the  protection  which  the}-  are 
designed  to  afford,  it  is  not  in  the  power  of  the  court  to  disregard  stip- 
ulations which  the  parties  have  expressly  made.  And  if,  taking  the 
whole  instrument  together,  it  is  obvious  that  the  defendants  have  made 
the  strict  and  literal  exactness  of  the  answers  to  certain  questions  a 
condition  of  the  contract,  and  a  warranty  on  the  part  of  the  insured, 
tliey  cannot  be  deprived  of  the  advantage  thus  secured.  Tliey  have  a 
legal  right  to  say,  "  We  choose  to  determine  for  ourselves  what  is  or  is 
not  material ;  and  to  base  our  contract  upon  such  information  as  the 


353  AUROIIA   FIRE    INS.    CO.    V.    EDDY.  [CHAP.  V. 

insured  is  required  to  communicate  in  answer  to  specific  interrogato- 
ries." Davenport  v.  New  England  Ins.  Co.,  6  Cush.  340 ;  Miles  v. 
Connecticut  Ins.  Co.,  3  Gra^-,  580. 

If  the  express  warranty  of  the  correct  statement  of  the  facts  inquired 
for,  according  to  the  13th  article  of  the  by-laws,  were  qualified  by  any 
other  agreement  or  clause,  as  in  the  case  of  Elliott  v.  Hamilton  Ins. 
Co.,  13  Gray,  139,  so  that  we  could  find  upon  the  whole  instrument 
that  the  parties  intended  to  limit  the  extent  to  which  the  insured  should 
be  held  responsible  for  the  accuracy  of  the  answers  given,  we  should 
gladly  apply  the  rule  of  construction  which  that  case  declares.  But  the 
cases  are  wholly  different.  In  that  case  the  insured  agreed  that  the 
description  of  the  property  contained  in  his  answers  was  correct  only 
so  far  as  regarded  "  the  condition,  situation,  value,  title,  and  risk  on 
the  same."  Here  that  agreement  is  omitted,  and  in  its  place  is  inserted 
the  explicit  and  stringent  covenant,  that  "  the  applicant  covenants  and 
agrees  with  said  compan}'  that  the  foregoing  is  a  correct  statement  and 
description  of  all  the  facts  inquired  for,  or  material  in  reference  to  this 
insurance."  We  think  the  only  fair  interpretation  of  this  is,  that  the 
insured  warrants  that  all  the  facts  inquired  for  are  correctly  given,  and 
all  other  facts  material  to  the  risk,  even  if  not  inquired  for.  The  pro- 
vision that  "  tlie  misrepresentation  or  suppression  of  material  facts 
shall  destroy-  his  claim  for  a  damage  or  loss  "  cannot  qualifj-  the  previ- 
ous covenant,  because  it  can  have  its  full  effect  consistently  with  it. 
The  answers  might  fail  to  give  the  information  inquired  for,  and  yet  no 
material  fact  be  misrepresented  or  suppressed.  On  the  other  hand,  the 
answers  might  be  complete  and  true,  and  material  facts  not  embraced 
in  the  interrogatories  might  be  incorrectly  represented  or  purposely 
omitted. 

The  result  to  which  we  have  come  upon  this  part  of  the  case  renders 
it  unnecessar}-  to  consider  the  other  questions  discussed  in  the  argu- 
ment which  arise  on  the  report,  and  some  of  which  are  of  considerable 
difficulty.  The  point  decided  is  conclusive  against  the  plaintiff's  right 
to  recover.     The  verdict  must  be  set  aside,  and  a 

New  trial  granted.'^ 


AURORA   FIRE   INS.    CO.  v.   EDDY. 

Supreme  Court  of  Illinois,  18G8.     49  III.  106. 

Appeal  from  the  Circuit  Court  of  De  Kalb  County  ;  the  Hon.  Theo- 
dore D.  Murphy,  Judge,  presiding. 
The  opinion  states  the  case. 
Mr.  *S'.  W.  Brrnon,  for  the  appellants. 
Mr.  Charles  Wheaton^  for  the  appellee. 

1  See  Munlock  v.  Chenango  County  Mutual  Ins.  Co.,  2  N.  Y.  210  (1849) ;  Graham 
V.  Fireman's  Ins.  Co.,  87  N.  Y.  C9  (1881  J.  — Ed. 


SECT.  II.]  AURORA    FIRE    INS.    CO.    V.    EDDY.  359 

Mr.  Chief  Justice  Bueese  delivered  the  opinion  of  the  court : 

This  was  an  action  of  assumpsit,  on  a  policy  of  insurance  of  four 
tliousand  dollars  on  a  three-story  flax  factory,  brought  bj-  James  W. 
Eddy  against  the  Aurora  Fire  Insurance  Company,  and  which  resulted 
in  a  verdict  and  judgment  for  the  plaintiff  for  three  thousand  five  hun- 
dred dollars. 

To  reverse  this  judgment  the  defendants  have  appealed  to  this  court, 
and  several  points  are  made,  but  one  of  which  we  deem  important  to 
notice. 

The  policy  contains  this  clause  : 

"  Itjs^xj^resslx^agrejHi,  that  the  assured  is  to  ke^p_eight  buckets 
filled  with  water  on  the  first  floor  where  the  machinery  is  run,  and  four. 
in  the  basement  by  the  reservoir,  readj-  for  use  at  all  times  in  case_of_ 

fire ;  also,  that  smoking  shall  be  strictlj'  prohibited  in  or  about  the 

bliilding." 

The  application  for  insurance  contained  a  like  agreement. 

There  was  proof  that  some  buckets  were  in  the  building,  and  that 
sometimes  all  of  them  would  be  above,  and  sometimes  all  below. 

The  court,  on  behalf  of  the  plaintiff,  instructed  the  jur}-  that  insur- 
ance policies  were  to  be  liberally  construed  in  favor  of  the  assured,  and 
strictly  construed  against  the  underwriters,  and  that  a  substantial  com- 
pliance with  the  stipulations  of  the  polic}"  was  all  that  was  required  on 
the  part  of  the  assured,  and  if  the  jury  believe,  from  the  evidence,  that 
the  plaintiff  substantially  complied  with  the  stipulation  concerning 
keeping  the  buckets  of  water  in  the  building  insured,  contained  in  the 
policy  in  this  case,  then  that  was  all  that  was  required  of  the  assured 
under  the  stipulation,  and  on  that  point  the  law  was  with  the  plaintiff. 

This  instruction,  and  one  refused  for  defendants  on  the  same  subject, 
is  the  part  of  the  case  we  have  considered. 

As  to  the  first  branch  of  plaintifTs  instruction,  we  have  always  under- 
stood that  the  rules  by  which  a  policj-  of  insurance  is  to  be  construed, 
and  the  principles  by  which  it  is  to  be  governed,  do  not  diflfer  from 
other  mercantile  contracts,  but  conditions  and  provisions  in  such  poli- 
cies are  to  be  construed  strictly  against  the  underwriters,  for  the  reason 
that  they  tend  to  narrow  the  range  and  limit  the  force  of  the  principal 
obligation  ;  but  this  was  not  a  condition  or  proviso  in  the  policy,  but 
an  express  agreement  of  the  assured,  to  be  construed  by  the  same  rules 
by  which  other  agreements  are  construed.  But  if  the  underwriters 
have  left  their  design  or  object  doubtful  by  the  use  of  obscure  language, 
the  construction  ought  to  be,  and  will  be,  most  unfavorable  to  them, 
but  nothing  of  that  kind  is  apparent  here.  It  was  an  express  agree- 
ment of  the  nature  of  a  promissory  warrant}-  that  the  assured  would 
have  the  number  of  buckets  specified  always  filled  with  water  and  dis- 
posed upon  the  floors  as  therein  stated. 

A[)pellee  has  referred  to  some  cases  in  which  a  stipulation  in  a  policy 
that  a  watchman  was  kept  on  the  premises  does  not  require  thnt  a 
watchman  be  kept  there  constantly,  but  only  at  such  times  as  men  of 


360 


AURORA   FIRE   INS.    CO.    V.    EDDY.  [CHAP.  V. 


ordinary  care  and  skill  in  like  business  keep  a  watchman  on  their 
premises.  Houghton  v.  Manuf.  Ins.  Co.,  8  Metcalf,  122,  and  Crooker 
V.  People's  Mutual  Ins.  Co.,  8  Cush.  69.  These  cases  go  to  the  extent 
claimed.  Those  cases  and  Hovey  v.  Amer.  Mutual  Ins.  Co.,  2  Doer, 
554,  proceed  upon  the  ground  that  the  spirit  of  the  warranty  was  that 
there  should  be  a  competent  night  watch  kept  on  the  insured  premises, 
and  one  who  might  be  confided  in  for  the  faithful  performance  of  such 

duty. 

Dther  respectable  courts  have  not  gone  quite  to  the  extent  of  those 
cales  on  this  point.  In  the  case  of  Glendale  TV^oolen  Co.  v.  The  Pro- 
tection Ins.  Co.,  21  Conn.  19,  it  was  held,  where  one  condition  of  the 
policy  was  there  should  be  a  watchman  nights,  that  was  a  warranty  by 
the  a'ssured,  that  they  would  keep  a  watchman  in  the  mill  through  the 
hours  of  every  night  in  the  week,  and  the  watchman  having  been  absent 
on  Sunday  morning  early,  when  the  fire  occurred,  there  could  be  no 
recovery  on  the  policy.  The  court  said,  where  there  is  no  imperfection 
or  ambiguity  in  the  language  of  a  contract,  it  will  be  considered  as 
expressing  the  entire  and  exact  meaning  of  the  parties,  and  no  evidence 
of  extrinsic  matters  or  usages  will  be  received  to  vary  the  terms 
expressed.  The  case  of  Sheldon  &  Co.  v.  The  Hartford  Fire  Ins.  Co., 
22  ib.  235,  is  to  the  same  effect. 

In  the  review  of  the  cases  on  this  subject  which  time  has  enabled  us 
to  make,  we  have  thought  there  was  a  just  mean  between  the  extremes 
of  the  diflferent  cases  examined,  which,  when  found,  would  establish  a 
satisfactory'  rule. 

Whilst  this  is  an  express  agreement  of  these  parties,  and  giving 
force  and  effect  to  the  well-recognized  rules  for  construing  agreements, 
in  which  the  intention  of  the  parties  is  an  important  element,  we  think 
the  court,  in  construing  it,  by  the  fourth  instruction  complained  of,  mis- 
led the  jury. 

It  coukf  not  have  been  in  the  reasonable  contemplation  of  either  of 
these  parties,  that  in  a  cold  mill,  where  fires  were-  not  allowed  in  the 
winter  season,  buckets  of  water  should  be  on  hand  at  all  times,  for  this 
might  have  been  an  impossibility ;  nor  could  it  have  been  understood 
that  the  buckets  should  be  covered  up  and  hid  from  ready  access  by 
piles  of  flax,  or  stowed  in  an  out-of-the-way  place. 

\Ve  think,  therefore,  that  the  jury  should  have  beenjold,  that,  whilst 
from  freezing,  or  othej^  unavoidable  causes,  a  literal  compliance  with^ 
the  warranty  might  have  been  impossible,  and.  could  not  haje  been  in 
the  contemplation  of  the  parties^stil^it  was  incunibcrrLjpn.  the  assured 
to  show  Jl)at^hexeq"ired~imml»er J)f  3uck£ts^jn ,good  and  serviceab_le_ 
condition^_jn\§--glJM-JjIqj^^^  designated  in  the.  ngreemejit  ready  for 
instant  use.  What  was  a  substantial  com[)liance  was  a  mixed  question. 
P>y  the  instruction  we  think  the  court  should  have  given,  as  above,  the 
attention  of  the  jury  would  be  fixed  upon  certain  facts  necessary  to  be 
proved,  which,  when  proved,  would  hold  the  underwriters  and  show  a 
compliance  with  the  agreement  in  its  spirit  and  intent.     As  given,  tho 


SECT.  II.]      FIEST  XAT'l  b'k,  ETC.  V.  INS.  CO.  OF  NORTH  AMERICA.      361 

iiistructiou  must  have  misled  the  jury,  —  it  gave  them  too  wide  a  dis- 
cretion,—  and  was  erroneous,  and  this  error  must  reverse  the  judg- 
ment. Taylor  v.  Beck,  13  111.  386.  These  remarks  render  any  notice 
of  the  defendants'  instructions  on  the  same  subject  unnecessary  at  this 
time. 

The  judgment  is  reversed  and  the  cause  remanded. 

Judgment  reversed} 


FIRST  NATIONAL  BANK  OF  BALLSTON  SPA,  Appellant, 
V.  THE  PRESIDENT  AND  DIRECTORS  OF  THE  INSUR- 
ANCE COMPANY   OF   NORTH   AMERICA,    Respondents. 

Court  of  Appeals  of  New  York,  1872.     50  N.  Y''.  45. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court, 
affirming  a  judgment  entered  upon  a  nonsuit,  directed  upon  trial  at 
circuit.     (Reported  below.  5  Lans.  203.) 

The  action  was  brought  to  recover  upon  a  policy  of  insurance  issued 
b}-  defendants  to  the  Pioneer  Paper  Company  for  one  year,  dated  18th 
December,  1868,  and  payable  to  the  First  National  Bank  of  Ballston,  to 
the  extent  of  any  claim  or  notes  the  bank  may  hold  against  the  com- 
pany. The  following  was  the  description  of  the  property  insured : 
"  Five  hundred  dollars  on  their  stone  and  frame  paper-mill,  with  slate, 
cement,  and  shingle  roof,  situate  on  the  Kayaderosseras,  near  West 
Milton,  in  the  town  of  Milton,  Saratoga  County,  N.  Y.  Reference 
being  had  to  survey  No.  86,  on  file  in  this  office,  which  is  hereby  made 
a  part  of  this  polic}",  and  §2,500  on  fixed  and  movable  machiner}^ 
and  fixtures,  shafting,  gearing,  belting,  piping,  and  rotary  and  steam 
boilers  contained  therein." 

The  policy  provided,  that  "  if  any  application,  survey,  plan,  or  de- 
scription of  the  property  herein  insured  is  referred  to  in  this  policy, 
the  same  shall  be  considered  a  part  of  this  contract  and  a  warranty 
by  the  assured  ;  and  if  the  assured  shall  make  any  false  representation 
as  to  the  character,  situation,  or  occupancy  of  the  property,  or  conceal 
any  fact  material  to  the  risk,  either  in  a  written  application  or  other- 
wise, .  .  .  this  policy  shall  be  null  and  void."  The  survey  contained 
the  following  question  and  answer  :  — 

"  27.   Watchman  rrrZs  one  kept  in  the  mill  or  on  the  premises  during 
the  night,  and  at  all^timesjvhen  the   mill  i.s  not-,  in  oppvatinn,  or  when" 
tTre~w_orkmen  are  not_Bre5ejit2-!!-,J'  Yes."  _ 

The  property  was  destroyed  by  fire  on  the  4th  of  March,  1869.  Other 
facts  appear  in  the  opinion.  At  the  close  of  the  testimony  defendants' 
counsel  moved  for  a  nonsuit,  which  was  granted. 

1  See  Aurora  Fire  Ins.  Co.  v.  Eddy,  55  III.  213  (1870),  a  later  stage  of  the  principal 
case.  —  Ed. 


'V^ 


362      FIRST  NAT'L  B'K,  etc.  v.  ins.  CO.  OF  NOKTH  AMERICA.     [CHAP.  V. 

IF.  A.  Beach,  for  the  appellant. 

A.  J.  Parker,  for  the  respondents. 

Grovek,  J.  Where  a  fire  policy  refers  to  a  surve}'  and  declares  that 
it  shall  constitute  a  part  of  the  polic}',  the  statements  therein  contained 
in  regard  to  the  situation,  use,  and  care  of  the  property-  are  to  be  re- 
garded and  construed  as  warranties.  (Le  Roy  v.  The  Market  Ins.  Co., 
39  N.  Y.  91 ;  Same  Case,  45  N.  Y.  80 ;  Ripley  v.  The  ^tna  Ins.  Co. 
30  N.  Y.  136.)  To  produce  this  effect,  the  policy  must  not  only  refer 
to  the  surve}',  but  it  must  be  made  a  part  of  it,  otlierwise  the  state- 
ments contained  therein  will  be  construed  as  representations  and  not 
as  warranties.  (The  Farmers'  Ins.  and  Loan  Co.  v.  Snyder,  16  Wend. 
481.)  Failure  to  comply  with  a  warrant^'  will  bar  a  recover}'  in  case  of 
loss,  whether  the  loss  was  caused  bj'  such  failure  or  not.  (Cases, 
supra.')'  In  the  present  case  the  surve}'  is  made  part  of  the  polic}'.  In 
t^ie -Survey  the  following  inquiry' is  made  :  "Watchman.  Is  one  kept 
in  the  mill- or  on  the  premises  during  the  night  and  at  all  times  when 
the  mill  is  not  in  operation  or  when  the  workmen  are  not  present? 
Ans.  Yes."  This  statement  was  promissor3%  but  the  rights  and  duties 
of  the  parties  were  the  same  under  it  as  though  it  had  been  affirmative. 
{HTpIey^rTheT^tna  Ins.  Co.,  supra.)  The  proof  was,  that  upon  the 
da}'  previous  to  the  destruction  of  the  property  by  fire,  the  sheriff  levied 
an  execution  against  the  assnred  upon  the  personal  property  in  the  mill, 
and  excluded  their  employes  therefrom,  took  the  keys  and  locked  up  the 
building.  The  counsel  for  the  appellant  insists  that  this  act  of  the 
sheriff,  being  an  act  that  it  was  his  legal  duty  to  perform,  must  be 
regarded  as  the  act  of  the  law,  and  cites  authorities  showing  that  when 
performance  of  a  contract  becomes  impossible  by  the  act  of  God  or  the 
law,  performance  will  be  excused.  The  answer  to  this,  in  the  present 
case,  is  that  it  was  the  default  of  the  assured  in  not  paying  the  judg- 
ment that  caused  the  issuing  and  levj'  of  the  execution.  The  lev}' 
does  not,  therefore,  excuse  it  from  the  obligation  to  perform  the  war- 
ranty. The  counsel  further  insists,  that  as  the  deputy  sheriff  and  one 
of  the  trustees  of  the  assured  remained  in  the  office  of  the  compan}', 
a  building  about  two  rods  from  the  mill,  during  the  niglit  and  until 
the  discovery  of  the  fire,  the}'  should  be  regarded  as  watchmen  w'ithin 
the  meaning  of  the  policy.  But  the  testimony  failed  to  show  that  they 
were  such,  or  even  so  regarded  themselves.  That  shows  that  they 
looked  through  the  building  twice  in  the  evening,  the  last  time  about 
eleven  o'clock,  and  then  went  into  the  office,  lay  down  and  dozed  until 
about  four  o'clock,  when  the  deputy  sheriff  turned  over  and  discovered 
the  mill  in  flames,  the  fire  being  so  extensive  as  to  render  all  attempts 
to  save  the  building  and  property  hopeless.  It  is  clear  that  these  per- 
sons never  undertook  with  the  assured  to  act  as  watchmen,  and  conse- 
quently incurred  no  lial)ilit}'  to  it  for  negligence  in  the  performance  of 
the  duties  of  such  employment.  In  case  of  a  recovery  in  the  action, 
the  defendant  would  have  no  riglit  by  subrogation  to  any  rcinodv 
against  them  upon  that  ground.     This  shows  that  they  were  not  watcli- 


SECT.  II.]  MICKEY   V.   BURLINGTON   INS.   CO.  363 

men  within  the  meaning  of  the  warrant}-.  The  evidence  shows  a  pretty 
clear  case  of  negligence  in  the  performance  had  they  nndertaken  that 
duty.  The  sheriff  remained  to  protect  himself  from  liability  incurred 
by  the  lev}'.  This  made  him  liable  in  case  the  property  was  stolen,  but 
not  for  its  destruction  by  fire.  What  Comstock  stayed  for,  the  case 
does  not  disclose.  It  does  appear  that  he  did  not  remain  as  watch- 
man.    That  is  sufficient  in  this  case. 

It  appearing  that  there  was  a  breach  of  the  warranty  to  keep  a 
watchman,  the  nonsuit  was  properly  granted,  and  the  judgment  must 
be  affirmed. 

All  concur.  Judgment  affirmed. 


MICKEY  V.   BURLINGTON   INS.   CO. 
Supreme  Court  of  Iowa,  1872.     35  Iowa,  174. 


^ 


Appeal  from  Des  Moines  District  Court. 

Action  upon  a  policy  of  insurance  against  loss  by  fire  upon  the 
dwelling-house  and  household  furniture  of  plaintitf.  By  stipulations 
in  the  policy  the  application  of  plaintiff  for  insurance  and  the  survey 
of  the  premises  are  made  parts  of  the  instrument  with  a  warranty 
on  the  part  of  the  assured.^  .   .  . 

The  application  of  the  plaintiff  for  insurance  contained  the  following 
interrogatory  and  answer  :  "  Are  j-our  chimneys,  fire-places,  fire-boards, 
stoves,  and  pipes  all  well  secured,  and  will  you  engage  to  keep  them 
so?"     Answer,  "  Yes." 

The  special  defences  to  the  action  set  out  in  the  answer  and  relied 
upon  at  the  trial  are  as  follows :  .  .  .  3.  Defective  stove-pipes,  kept  by 
plaintiff  in  violation  of  the  terms  of  the  policy,  by  reason  of  which  the 
property  was  destroyed  by  fire.  Upon  a  trial  to  a  jury  there  was  a 
verdict  and  judgment  for  plaintiff.      Defendant  appeals. 

N^ewman  &  Blake^  for  the  appellant. 

Halls  &  Baldwin^  for  the  appellee. 

Beck,  Ch.  J.  The  facts  in  regard  to  the  cause  and  origin  of  the 
fire  which  destroyed  the  property  insured  are  not  contested.  The}'  are 
as  follows :  The  pipe  of  a  stove  used  in  the  house  passed  through  the 
floor  of  an  upper  chamber,  thence  with  an  elbow  into  a  flue  built  in  the 
wall.  This  stove,  not  being  required  for  use  in  the  summer  months, 
was  usually  removed.  With  the  intention  of  removing  it,  the  wife  of 
plaintiff  took  down  the  pipe  in  the  second-story  chamber,  and  placed  a 
bed  over  the  hole  in  the  floor  through  which  the  pipe  passed,  but  she 
neglected  to  remove  the  stove.  A  few  days  after,  a  visitor  complaining 
of  the  cold,  the  wife  caused  a  fire  to  be  built  in  the  stove.     This  she 

1  In  reprinting  the  statement  of  the  case  and  the  opinion  of  the  court,  passages 
foreign  to  warranty  have  been  omitted.  —  Ed. 


364  MICKEY    V.    BURLINGTON    INS.    CO.  [CHAP.  V. 

did,  forgetting  that  the  pipe  had  been  removed.  The  result  was  fire 
communicated  to  the  bed,  and  the  house  was  consumed.  This  occurred 
in  tlie  month  of  July.  There  is  no  evidence  tliat  the  act  of  the  wife 
causing  a  fire  to  be  built  in  the  stove  was  with  the  intention  of  de- 
stro3ing  the  house,  but  was  simply  done  through  negligence  and 
forgetfulness. 

I.  It  is  claimed  that  the  removal  of  the  stove-pipe  was  a  breach  of 
the  covenant  of  the  application  (which  by  its  terms  became  a  condition 
of  the  policy)  to  keep  the  stoves  and  pipes  well  secured,  and  that  tlie 
policy  is  thereby  defeated  and  recovery  cannot  be  had  thereon. 

The  covenant  bouud  plaintiff'  to  keep  the  pipe  "  well  secured."  He 
was  obliged  thereb3'  to  keep  it  in  such  condition,  and  to  exercise  toward 
it  such  care,  as  a  man  of  ordinary  prudence  would  exercise  for  the  pro- 
tection of  his  property.  The  defendant  was  protected  by  this  covenant 
from  the  effects  of  defective  pipes  and  stoves.  It  did  not  bind  plaintiff 
to  keep  them  alwa^'s  up  and  constantly  in  use.  He  could,  if  his  com- 
fort or  convenience  so  required,  remove  them  and  dispense  with  their 
use.  This  would  not  increase  the  hazard  of  the  risk,  and  it  was  there- 
fore not  in  violation  of  the  conditions  of  the  polic}'.  The  contract  was 
entered  into  with  the  implied  assent  of  defendant  that  plaintiff"  should 
possess  this  right.  Therefore,  if  in  its  exercise  tlie  property  was  lost, 
defendant  is  liable.  Does  the  act  of  plaintiff  come  under  this  rule? 
The  pipe  was  removed  preparatory  to  removing  the  stove  ;  the  use  of 
both  was  intended  to  be  dispensed  with.  The  stove  was  put  in  a  con- 
dition not  to  be  used.  Its  use  was  just  as  much  intended  to  be  dis- 
pensed with  as  though  it  had  been  removed  to  another  room  or  into 
some  out-of-the-way  place  usually  set  apart  as  the  receptacle  of  such 
things  when  not  in  use.  Had  it  been  so  removed,  and  some  one, 
through  negligence  and  thoughtlessness,  should  have  kindled  a  fire 
therein,  resulting  in  the  destruction  of  the  property,  the  defendant 
would  have  been  liable.  And  this  would  have  been  so,  as  we  shall 
presently  see,  if  the  act  had  been  done  by  plaintiff  without  fraud  or  in- 
tention to  set  the  house  on  fire  ;  or  without  such  gross  negligence  as 
one  with  ordinary  prudence  under  no  circumstances  would  fall  into. 
The  covenant  under  consideration  does  not  ])ind  plaintiff  to  keep  the 
pipe  well  secured  when  not  in  use.  If  so,  he  could  not  take  it  down  or 
remove  it  even  temporarily.  But  it  cannot  be  denied  that  if,  during  a 
temporary  suspension  of  the  use  of  the  stove  and  pipe  for  the  purpose 
of  repairs  or  the  like,  a  fire  should  occur  through  negligence  of  the 
character  above  indicated  in  the  use  of  the  stove,  defendant  would  be 
liable  for  the  loss.  The  case  before  us  is  not  different  in  facts  and 
principles.  The  use  of  the  stove  had  been  dispensed  with,  the  pipe 
was  partly  removed  and  a  negligent  attempt  was  made  to  use  it,  from 
which  the  loss  of  the  property  resulted. 

These  views  do  not  give  assent  to  the  doctrine  that  the  covenants 
and  warranties  of  plaintiff  may  be  disregarded  and  not  literally  per- 
formed.    But  we  simply  maintain  that  the  act  of  plaintiff  in  removing 


Sr.CT.  II.]  NATIONAL   BANK    V.   INSURANCE   CO.  365 

the  pipe  was  not  covered  by  the  warranty.  As  all  covenants  between 
contracting  parties,  the  undertaking  of  plaintiff  to  keep  the  stoves  and 
pipe  secured  must  be  applied  to  the  subject  and  time  within  the  con- 
templation of  tlie  parties.  It  will  not  be  extended  beyond  thera  to  the 
prejudice  of  the  assured.  We  cannot  so  construe  it  that  it  will  impose 
restrictions  which  are  unreasonable.  Peterson  v.  The  Mississippi 
Valley  Ins.  Co.,  24  Iowa,  494;  Loud  v.  Citizens'  Mutual  Ins.  Co.,  3 
Gray,  221;  Sayles  v.  North  Western  Ins.  Co.,  2  Curt.  C.  C.  610; 
Tnrley  v.  North  American  Ins.  Co.,  25  Wend.  374;  Townsend  v. 
North  Western  Ins.  Co.,  18  N.  Y.  168  ;  Gloucester  Manufacturing  Co. 
V.  Howard  Fire  Ins.  Co.,  5  Gray,  497  ;  Troy  Fire  Ins.  Co.  v.  Carpenter, 
4  Wis.  20  ;  Gates  v.  Madison  Ins.  Co.,"  1  Seld.  469  ;  Hyde  v.  Bruce,  3 
Doug.  213  ;  Dobson  ?;.  Sotheby,  1  Moody  &  Malkin,  90. 

We  conclude  that  plaintiff's  warranty  did  not  forbid  the  temporary 
removal  of  the  pipe  at  a  time  tlie  stove  was  not  in  use,  such  restriction 
not  being  within  the  contemplation  of  the  parties.  .  .  . 

Affirmed. 

Miller,  J.,  dissenting.  I  am  unable  to  assent  to  the  views  ex- 
pressed in  the  first  paragraph  of  the  foregoing  opinion.  The  plain 
meaning  of  plaintiff's  agreement  is  that  the  stoves  and  stove-pipes  in 
the  house  insured  were  well  secured,  and  that  he  would  keep  them  so, 
in  order  to  guard  against  damage  to,  or  destruction  of,  the  property  in- 
sured by  fire  from  that  source,  while  using  the  stoves  in  his  house  for 
ordinary  purposes. 

The  evidence  shows  that  a  stove  in  its  usual  place  in  the  house  was 
used  in  the  ordinary  manner  by  plaintiff's  wife,  who  had  authority  so 
to  do,  building  a  fire  therein  to  warm  the  room,  and  that  ivhen  the  stove 
teas  so  icsed  the  i)\[:>e  thereto  was  not  ^^  icell  secured,"  in  consequence 
of  which  the  house  was  destroyed  by  the  fire  communicated  from  the 
stove.  This,  in  my  opinion,  is  a  most  palpable  breach  of  the  plaintiff's 
agreement  which  releases  the  defendants  from  their  obligation  to  pay 
any  portion  of  the  insurance.  Upon  this  ground  the  judgment  of  the 
court  below  should,  in  mj'  opinion,  be  Reversed. 


NATIONAL   BANK  v.   INSURANCE   COMPANY. 
Supreme  Court  of  the  United  States,  1877.     95  U.  S.  673. 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Western 
District  of  Missouri.'^ 

The  Hartford  Fire  Insurance  Company  issued  a  policy  to  W.  D.  Old- 
ham on  a  building  and  machinery.  Oldham  assigned  the  policy  to 
the  First  National  Bank  of  Kansas  City.  A  loss  having  occurred,  and 
the  insurance  company  having  refused  to  pay,  this  action  was  brought. 

1  The  statement  lias  Leen  rewritten.  —  Tu. 


366  NATIONAL   BANK   V.    INSURANCE    CO.  [CHAP.  V. 

The  policy  contained  these  passages :  "  Special  reference  being  had  to 
assured's  application  and  survey-,  No.  1462,  on  file,  which  is  his  warrant}' 
and  a  part  hereof.  ...  If  an  application  ...  is  referred  to  in  this  policy, 
such  application  .  .  .  shall  be  considered  a  part  of  this  policy  and  a_ 
warrant}'  b}'  the  assured  ;  andjf  .th,e_assured^n^  ajg-ritten  or  verbal 
application,  makp*^  ^ny  prr"?i^oiig  rf'pvf'gp"t.atirtn  ._j^^_this  policy  shall 
be  void."  The  application  required  the  applicant  to  state  separately' 
*'  the  estimated  vahie  of  personal  property  and  of  each  building;  .  .  . 
the  value  .  .  .  being  estimated  by  the  applicant,"  and  also  to  sign 
answers  to  certain  questions  "as  a  description  of  the  premises." 
Among  the  questions  were  these :  '*  What  is  the  cash  value  of  the 
buildings,  aside  from  hand  and  water  power?  What  is  the  cash  value 
of  the  machinery?"  These  questions  were  answered  thus  :  "  $15,000, 
building^;  $15,000,  machinery."  The  application  ended  thus ;  "  The^ 
said  applicant  hexeEy-x;ovenanta_iind  agrees  wiUi  smj^jcpmpa^ny_that 
the  foregoing  ia  a  just,  ful],  and  t^^''"p  pvpoaUjojT^fjvlj^ihp  facts  and 
circumstances  in  regard  to  the  condition,  situation,  value,  and  nik  of 
tlie  property^o^Jnsured,  so  far  as_the^ame^  are  known  to_the  appli- 
caht,  and  are  material  to  the  risk."  The  answers  were  made  in  good 
faTth.  Yet  when  the  policy  was  issued,  and  at  the  time  of  the  fire,  the 
casli  value  of  the  building,  aside  from  hand  and  water  power,  was  only 
$8,000,  and  the  cash  value  of  the  machiner}'  was  only  $12,000. 

A  jury  having  been  waived,  the  Circuit  Court  made  a  special  finding 
of  the  facts,  substantially'  as  hereinbefore  narrated,  and  found  as  a  con- 
clusion of  law  that "  under  the  provisions  of  the  policy  and  application, 
made  part  thereof,  .  .  .  the  answers  of  the  assured  as  to  the  value  of 
the  property  insured  defeat  the  right  to  recover  on  the  policy,"  and 
thereupon  gave  judgment  for  the  company. 

Mr.  John  K.   Cravens,  for  the  plaintiff  in  error. 

Mr.  John  C.  Gage,  contra. 

Mr.  Justice  Harlan  delivered  the  opinion  of  the  court. 

On  behalf  of  the  compan}',  it  is  contended  that,  under  an}-  proper 
construction  of  the  contract,  the  assured  warranted,  absolutely  and 
without  limitation,  the' truth  of  the  several  statements  in  the  applica- 
tion, including  tlie  statement  as  to  the  value  of  the  property.  If  this 
view  be  sound,  the  judgment  of  the  Circuit  Court  must  be  affirmed ; 
otherwise,  it  must  be  reversed. 

Our  conclusion  is  that  the  plaintiff  in  error,  who  is  the  beneficiary  of 
the  policy,  is  entitled  to  a  judgment  notwithstanding  the  overvaluation 
of  the  property  by  the  assured. 

The  entire  application  having  been  made,  by  express  words,  a  part 
of  the  policy,  it  is  entitled  to  the  same  consideration  as  if  it  had  been 
inserted  at  large  in  that  instrument.  The  policy  and  application  to- 
gether, therefore,  constitute  the  written  agreement  of  insurance ;  and, 
in  ascertaining  the  intention  of  the  parties,  full  eflfect  must  be  given  to 
the  conditions,  clauses,  and  stipulations  contained  in  both  instruments. 

Looking  first  into  the  application,  we  find  no  language  which  by  fait 


SECT.  II.]  NATIONAL   BANK   V.   INSURANCE    CO.  367 

construction  was  notice  to  the  assured  that,  in  answering  questions,  he 
was  assuming,  or  was  expected  to  assume,  the  strict  obligations  which 
the  law  attaches  to  a  warranty.  There  is  no  intimation  anywhere  in 
that  instrument  that  the  exact  truth  of  the  answers  was  a  condition 
precedent,  either  to  the  consideration  of  the  application  or  to  the 
issuinof  of  a  policy.  On  the  contrary,  the  application  contains  the 
covenant  of  the  assured  that  he  had  in  that  instrument  made  a  just, 
full,  and  true  exposition  of  all  material  facts  and  circumstances  in 
regard  to  the  condition,  situation,  value,  and  risk  of  the  property,  so 
far  as  known  to  him.  The  taking  of  that  covenant,  at  the  threshold 
of  the  negotiations,  was,  in  effect,  an  assurance  that  a  frank  statement 
of  all  such  material  facts  as  were  within  the  knowledge  of  the  applicant 
would  meet  the  requirements  of  the  company.  It  was  a  covenant  of 
goodfaith  on  the  part  of  the  assured^— -^notMng  more  ;  and,  so  far  as 
it  related  to  the  value  of  the  property,  was  not  broken,  unless  the 
estimates  by  the  assured  were  intentionally  excessive.  If  the  case 
turned  wholly  upon  the  construction  to  be  given  to  the  application,  it 
is  quite  clear  that  the  overvaluation  of  the  property  would  not  defeat  a 
recovery  upon  the  written  agreement,  since  the  assured,  by  the  special 
finding,  is  acquitted  of  any  purpose  to  defraud  the  company.  That  is 
equivalent  to  saying  that  the  assured  did  not  withhold  any  material 
fact  within  his  knowledge  concerning  the  condition,  situation,  value,  or 
risk  of  the  property. 

But  the  difficulty  in  the  case  arises  from  the  peculiar  wording  of  the 
policy,  considering  the  application  as  apart  thereof.  While  the  assured 
in  one  part  of  the  written  agreement  is  made  to  stipulate  for  a  war- 
ranty, and  in  another  the  policy  is  declared  to  be  void  if  the  assured 
"  makes  any  erroneous  representation,  or  omits  to  make  known  any 
fact  material  to  the  risk,"  in  still  another  part  of  the  same  agreement 
—  the  application  —  he  covenants  that,  as  to  all  material  facts  within 
his  knowledge,  respecting  the  condition,  situation,  value,  and  risk  of 
the  property,  he  has  made  a  full,  just,  and  true  exposition.  If  the 
purpose  of  the  company  was  to  secure  a  warranty  of  the  correctness  of 
each  statement  in  the  application,  and  if  the  court  should  adopt  that 
construction  of  the  contract,  there  could  be  n6  recovery  on  the  policy, 
if  any  one  of  these  statements  were  proven  to  be  untrue ;  and  this 
although  such  statement  may  have  been  wholly  immaterial  to  the  risk, 
and  was  made  without  any  intent  to  mislead  or  defraud.  Such  a  con- 
struction, according  to  established  doctrine,  might  defeat  the  recovery, 
even  if  the  overvaluation  had  been  so  alight  as  not  to  have  influenced 
the  company  in  accepting  the  risk.  But  if  such  was  the  purpose  of  the 
company,  why  did  it  not  stop  with  the  express  declaration  of  a  war- 
ranty? Why  did  it  go  fui'ther,  and  incorporate  into  the  policy  a 
provision  for  its  annulment  in  the  event  the  assured  should  make  an 
"erroneous  representation,  or  omit  to  m«ke  known  any  fact  material 
to  the  risk"  ? —  language  inconsistent  with  the  law  of  warranty.  Still 
further,  why  did  the  company  nuike  tlie  application  a  part  of  the  policy, 


363  NATIONAL    BANK    V.    INSURANCE    CO.  [CHAP.  V. 

and  thereb}-  import  into  the  contract  the  covenant  of  the  assured,  not 
that  he  liad  stated  every  fact  material  to  the  risk,  or  that  liis  state- 
ments were  literall}-  true,  but  only  that  he  had  made  a  just,  true,  and 
full  exposition  of  all  material  facts,  so  far  as  known  to  him  ? 

It  is  the  dut}'  of  the  court  to  reconcile  these  clauses  of  the  written 
agreement,  if  it  be  possible  to  do  so  consistently  with  the  intention  of 
the  parties,  to  be  collected  fiom  the  terms  used. 

It  will  be  observed,  from  an  examination  of  the  questions  pro- 
pounded to  the  assured,  that,  among  other  things,  he  was  asked 
whether  the  building  was  of  stone,  brick,  or  wood  ;  how  the  premises 
were  warmed  ;  what  materials  were  used  for  lighting  them  ;  whether  a 
watchman  was  kept  during  the  night ;  what  amount  of  insurance  was 
already  on  the  property  ;  whether  it  was  mortgaged,  &c.  These  and 
similar  questions  refer  to  matters  of  which  the  assured  had  actual 
knowledge,  or  about  which  he  might,  with  propriety,  be  required  to 
speak  with  perfect  accurac3\  They  are  matters  capable  of  precise 
ascertainment,  and  in  no  sense  depending  upon  estimate,  opinion,  or 
mere  probability.  But  his  situation  and  dut}'  were  wholly  different 
when  required  to  state  the  cash  value  of  his  property.  He  was  required 
to  give  its  "  estimated  value."  His  answers  concerning  such  value 
were,  in  one  sense,  and  perhaps  in  everj- just  sense,  only  the  expression 
of  an  opinion.  The  ordiuar}-  test  of  the  value  of  propert}'  is  the  price  it 
will  command  in  the  market  if  offered  for  sale.  But  that  test  cannot,  in 
the  very  nature  of  the  case,  be  applied  at  the  time  application  is  made 
for  insurance.  Men  may  honestly  differ  about  the  value  of  property,  or 
as  to  what  it  will  bring  in  the  market;  and  such  differences  are  often 
very  marked  among  those  whose  special  business  it  is  to  buy  and  sell 
property  of  all  kinds.  The  assured  could  do  no  more  than  estimate 
such  value  ;  and  that,  it  seems,  was  all  that  he  was  required  to  do  in  this 
case.  His  dut}'  was  to  deal  fairly  with  the  company  in  making  such 
estimate.  The  special  finding  shows  that  he  discharged  that  dut}'  and 
observed  good  faith.  We  shall  not  presume  that  the  company,  after 
requiring  the  assured  in  his  application  to  give  the  "estimated  value," 
and  then  to  covenant  that  he  had  stated  all  material  facts  in  regard  to 
such  value,  so  far  as  known  to  him,  and  after  carrying  that  covenant, 
b}'  express  words,  into  the  written  contract,  intended  to  abandon  the 
theory  upon  which  it  sought  the  contract,  and  make  the  absolute  cor- 
rectness of  such  estimated  value  a  condition  precedent  to  any  insurance 
whatever.  The  application,  with  its  covenant  and  sti[)ulations,  having 
been  made  a  part  of  the  policy,  that  presumption  cannot  be  indulged 
without  imputing  to  the  company  a  purpose,  b}-  studied  intricacy  or  an 
ingenious  framing  of  the  policy,  to  entrap  the  assured  into  incurring 
obligations  which,  perhaps,  he  had  no  thought  of  assuming. 

Two  constructions  of  the  contract  may  be  suggested.  One  is  to 
regard  the  warranty  expressed  in  the  policy  as  limited  or  qunlified  by 
the  terms  of  the  application.  In  that  view,  the  assured  would  he  held 
as   only  warranting  that  he   had  stated  all  material  facts  in  regard  to 


SECT.  II.]       NATIONAL  BANK  V.    INSURANCE  CO.  369 

the  coiKlition,  situation,  value,  and  risk  of  the  property',  so  far  as  they 
were  known  to  him.  This  is,  perhaps,  tlie  construction  most  consis- 
tent with  the  literal  import  of  the  terms  used  in  the  application  and 
the  polic}'.  The  other  construction  is  to  regard  the  warranty  as  relat- 
ing only  to  matters  of  which  the  assured  had,  or  should  be  presumed 
to  have  had,  distinct,  definite  knowledge,  and  not  to  such  matters  as 
values,  which  depend  upon  mere  opinion  or  probabilities.  But,  without 
adopting  either  of  these  constructions,  we  xest  the  conclusion  already 
indicated  upon  the  broad  ground  that  when  a  policy  of^insurance  co n - 
tains  contradictory  provisionsj,^  or  ha,s  been  so  framed  as  to  leave  room 
forconstFuction,  rendering  it  doubtful  whether  the  parties  intendecTnre 
exact  truth  of  the  applicant's  statements  to  be  a  condition  precedent  to 
any^ binding  contract,  the  court  should  lean  against  that  construction 
whrclrlmposes^Tipon  the  agsttred-^jfae-trbiigatious'i^t  a  warranty.  The 
company  cannot  justly  complain  of  such  a  rule.  Itslittorneys7~officers, 
or  agents  prepared  the  policy  for  the  purpose,  we  shall  assume,  both  of 
protecting  the  compan}-  against  fraud,  and  of  securing  the  just  rights 
of  the  assured  under  a  valid  contract  of  insurance.  It  is  its  language 
which  the  court  is  invited  to  interpret,  and  it  is  both  reasonable  and 
just  that  its  own  words  should  be  construed  most  strongly  against 
itself. 

Wherefore,  as  it  does  not  clearly  appear  that  the  parties  intended 
that  the  validity  of  the  contract  of  insurance  should  depend  upon  the 
absolute  correctness  of  the  estimates  of  value,  and  as  it  does  appear 
that  such  estimates  were  made  by  the  assured  without  any  intention  to 
defraud,  our  opinion  is  that  the  facts  found  do  not  support  the 
judgment. 

The  judgment  will,  therefore,  be  reversed,  and  the  cause  remanded 
with  directions  to  enter  a  judgment  upon  the  special  finding  for  the 
plaintiff  in  error ;  and  it  is  So  ordered.^ 

1  Ace. :  Lee  v.  Howard  F.  Ins.  Co.,  11  Cush.  324  (185.3)  ;  Elliott  i-.  Hamilton  Mu- 
tual Ins.  Co.,  13  Gray,  139  (t859)  ;  Rogers  v.  Phenix,  121  Ind.  570  (1890)  ;  National 
Bank  v.  Union  Ins.  Co.,  88  Cal.  497  (1891) ;  ^tna  Ins.  Co.  v.  Simmons,  49  Neb.  811, 
836  (1896). 

In  Houghton  v.  Manufacturers'  Mutual  F.  Ins.  Co.,  8  Met.  114,  120  (1844),  Shaw, 
C.  J.,  for  the  court,  said  :  "  1.  The  court  are  of  opinion  that  the  policy,  by  the  man- 
ner in  which  it  refers  in  terms  to  the  application  and  representations,  does  legally 
adopt  and  embody  them  as  part  of  the  contract,  to  the  same  effect  as  if  they  were 
recited  and  set  forth  at  large  in  the  policy.  2.  That  the  application  and  the  various 
answers  contained  in  it,  being  termed  '  representations  '  in  the  policy,  are  rather  to  be 
regarded  as  having  the  legal  effect  of  representations  than  of  warranties,  as  under- 
stood in  the  law  of  marine  insurance,  though  partaking  in  some  measure  of  the  charac- 
ter of  both.  They  are  like  representations,  in  requiring  that  the  facts  stated  shall  be 
suljstantially  true  and  correct,  and  so  far  as  they  are  e.xecutory,  that  they  shall  be 
substantially  complied  with ;  but  not  like  warranties,  in  requiring  an  exact  and 
literal  compliance." 

See  Pvedman  v.  Hartford  F.  Ins.  Co.,  47  Wis.  89  (1879);  Pickel  ;;.  Phenix  Ins. 
Co.,  119  Ind.  291,  298-299  (1889)  ;  \yaterbury  v.  Dakota  F.  &  M.  Ins.  Co.,  6  Dak. 
408  (1889);  Phoenix  Assurance  Co.  v.  Munger  Manufacturing  Co.,  92  Tex.  297 
(1898).— Ed. 

24 


)70         DOLLIVER  V.  ST.  JOSEPH  FIKE  AND  MARINE  INS.  CO.       [CHAP.  V. 


DOLLIVER  AND  Others  v.  ST.  JOSEPH  FIRE   AND 
MARINE   INS.   CO. 

Supreme  Judicial  Court  of  Massachusetts,  1881.     131  Mass.  39. 

Contract,  b}-  the  assignees  in  bankruptcy  of  Abraham  Day,  upon  a 
policy  of  insurance,  dated  July  9,  1875,  by  which  the  defendant  insured, 
for  one  year  from  July  3,  1875,  "  Abraham  Day,  against  loss  or  damage 
by  fire,  to  the  amount  of  fifteen  hundred  dollars :  SoOO  on  two  large 
frame  ice-houses,  §500  on  two  sheds,  $250  on  shed  about  two  feet 
distant  from  the  above,  all  used  for  storage  of  ice,  and  situate  in  rear 
of  east  side  of  road  leading  to  Rockport  in  Gloucester,  Mass.  8250  on 
frame  shed  attached  to  frame  ice-houses."  The  polic}'  contained  the 
following  provisions  :  — 

"If  an  application,  survey,  plan,  or  description  of  the  property 
herein  insured  is  referred  to  in  this  policy,  such  application,  survey, 
plan,  or  description  shall  be  considered  a  part  of  this  contract  and  a 
warranty  by  the  assured  ;  and  any  false  representation  by  the  assured 
of  the  condition,  situation,  or  occupancy  of  the  property,  or  any  omis- 
sion to  make  known  every  fact  material  to  the  risk,  or  an  overvaluation, 
or  any  misrepresentation  whatever,  either  in  a  written  application  or 
otherwise  ;  or  if  the  assured  shall  have,  or  shall  hereafter  make,  any 
other  insurance  on  the  property  hereby  insured,  or  any  part  thereof, 
without  the  consent  of  the  company  written  hereon  ;  or  if  the  above- 
mentioned  premises  shall  be  occupied  or  used  so  as  to  increase  the 
risk,  or  become  vacant  or  unoccupied,  and  so  remain  without  notice  to, 
and  consent  of,  this  company,  in  writing  ;  then,  and  in  every  such  case, 
this  policy  is  void. 

'•  It  is  a  part  of  this  contract,  that  any  person,  other  than  the  assured, 
who  may  have  procured  this  insurance  to  be  taken  by  this  comi)any, 
shall  be  deemed  to  be  the  agent  of  the  assured  named  in  this  policy, 
and  not  of  this  compan}*,  under  any  circumstances  whatever,  or  in  any 
transaction  relating  to  this  insurance."  ^  .   .   . 

After  the  former  decision,  reported  128  Mass.  315,  the  case  was  tried 
in  this  court  before  Colt,  J.,  who  reported  the  case  for  the  determina- 
tion of  the  full  court,  in  substance  as  follows  :  — 

It  was  admitted  that  the  premises  insured  were  destroyed  by  fire  in 
October,  1875,  and  the  amount  of  damages  chargeable  to  this  policy 
was  agreed  ui)on  by  the  parties.  Day  filed  his  petition  in  bankruptcy 
on  January  24,  1876,  and  the  assignment  to  the  plaintiffs  was  dated 
April  3,  1876.  .   .   . 

The  defendant  introduced  evidence  tending  to  show  that  the  ice- 
houses and  the  sheds,  wliich  had  been  built  for  storage  of  ice,  had  been 
leased  in  1873  to  one  Webster,  whose  business  was  the  cutting  and 

•  In  rcprintin<;  tlie  .statement  and  the  opinion,  passacres  as  to  the  sufficiency  of  the 
magistrate's  certificate  after  loss  have  been  omitted.  —  Ed. 


SECT.  II.]       DOLLIVER  l\  ST.  JOSEPH  FIRE  AND  MARINE  INS.  CO.  371 

selling  of  ice ;  that  they  were  not  filled  with  ice  during  the  winter  of 
1874-5  ;  that  there  may  have  been  a  few  cakes  of  ice  in  them  remaining 
over  from  the  previous  winter's  crop  ;  that  the  ice  crop  for  the  winter 
of  1874-5  failed,  because  there  was  no  water  in  the  pond  adjoining  the 
ice-houses,  and  that  this  was  the  only  reason  why  the  ice-houses  were 
not  filled  as  usual ;  that  there  was  no  ice  at  all  in  any  of  the  buildings 
after  April,  1875  ;  that  the  ice-houses  were  not  used  for  anything  after 
the  ice  was  out,  and  that  wagons  and  carriages  were  stored  in  the 
sheds. 

The  defendant  contended  that  these  facts  showed  that  the  premises 
were  not  "  used  for  the  storage  of  ice,"  as  stated  in  the  policy,  and  that 
the  policy  was  therefore  void,  but  the  judge  ruled  otherwise,  and  that 
the  words  in  the  policy  were  merely  descriptive  of  the  buildings. 

The  defendant  introduced  evidence,  against  the  plaintiffs'  objection, 
tending  to  prove  that  Day  applied  to  John  H.  Derby,  of  Salem,  to  pro- 
cure insurance  for  him  on  these  premises ;  that  Derb}-,  who  was  an 
insurance  broker,  thereupon  wrote  and  forwarded  an  application  to 
Jordan,  Lovett  &  Company,  of  Boston,  general  insurance  brokers,  with 
a  letter  requesting  them  to  procure  insurance ;  that  Jordan,  Lovett  & 
Company  thereupon  wrote  and  signed  an  application,  which  they  sent 
by  one  of  their  clerks  to  Henry  N.  Baker,  the  Boston  agent  of  the 
defendant  company  ;  that  Baker,  on  receiving  this  application,  made 
inquiry  of  the  clerk  in  regard  to  the  risk  and  the  occupancy  of  the 
buildings,  and  "bound"  the  risk  for  ten  days,  that  the  party  might 
furnish  information  as  to  those  particulars,  in  order  to  enable  him  to 
decide  whether  to  issue  a  policy  for  the  proposed  term  ;  that,  in  a  few 
days,  on  July  9,  the  same  clerk  again  called  on  Baker  and  told  him  there 
were  no  exposures  of  the  buildings,  and  that  they  were  then  full  of  ice  ; 
and  that  on  the  same  day  Baker  accepted  the  risk  and  wrote  the  policy 
declared  on,  made  it  valid  by  his  counter-signature,  and  delivered  it  to 
the  clerk ;  and  it  was  subsequently  sent  to  Derby,  who  delivered  it  to 
Day. 

There  was  no  evidence  that  Day  had  any  personal  knowledge  of  any 
of  these  proceedings ;  and  Derby,  called  as  a  witness  by  the  defendant, 
testified,  on  cross-examination,  that  Day  never  told  him  there  was  any 
ice  in  the  buildings ;  that  he,  Derby,  had  passed  by  the  buildings  and 
had  seen  them,  but  had  made  no  examination  of  them  or  their  contents  ; 
and  that  he  knew  that,  at  that  season  of  the  year,  they  would  not  be 
likely  to  have  much  ice  in  them  ;  that  he  had  never  told  an3body  any- 
thing inconsistent  with  this,  and  that  he  had  had  no  communication  or 
dealing  with  Jordan,  Lovett  &  Company  concerning  this  risk,  except 
to  send  them  the  application  and  letter. 

The  judge  ruled  that  even  if  the  clerk  of  Jordan,  Lovett  &  Company 
made  tlie  verbal  false  statement  that  the  buildings  were  full  of  ice  to 
Baker,  and  if  the  statement  was  material,  and  if  Baker  wrote  and  issued 
the  policy  relying  upon  this  false  statement,  it  would  not  avoid  the 
policy  ;  and  directed  the  jury  to  return  a  verdict  for  the  plaintiffs.     If 


372  DOLLIVER  V.  ST.  JOSEPH  FIRE  AND  MARINE  INS.  CO.       [CHAP.  V. 

either  ruling  was  wrong,  the  verdict  was  to  be  set  aside  and  a  new  trial 
granted  ;  otherwise,  judgment  to  be  entered  on  the  verdict. 
A.  S.   Wheeler  and  £J.  W.  Hutchvis,  for  the  defendant. 
S.  B.  Ives,  Jr.,  and  L.  S.  Tackerman,  for  tiie  plaintiffs,  were  not 
called  upon. 

SouLE,  J.  .  .  .  The  statement  in  the  polic}-,  that  the  buildings  were 
used  for  the  storage  of  ice,  was  not  a  warranty  that  ice  was  there  stored 
when  the  policy-  was  written.  The  policy  was  written  in  midsummer, 
at  a  time  when  it  would  naturally  be  expected  that  a  large  part  at  least 
of  the  ice  crop  of  the  previous  year  had  been  exhausted.  The  fact  that 
ice  is  produced  b}'  natural  causes  only  in  the  winter  season,  so  that  the 
houses  used  for  storing  it  will  ordinarily  be  empty  for  a  part  of  the 
year,  indicates  that  the  words  in  the  policy  were  not  intended  and  were 
not  understood  as  warranting  that  ice  was  actually  stored  in  the  build- 
ings at  the  moment  of  issuing  the  policy,  but  as  descriptive  of  the  busi- 
ness ordinarily  done  in  them.  In  this  sense  they  were  operative  as  a 
part  of  the  policy,  because  they  prevented  an}-  liabilitv  of  the  defendant 
for  I0S.S,  in  case  the  buildings  should  be  used  during  the  term  of  the 
policy  for  a  business  more  hazardous  than  that  of  storing  ice.  The 
case  is  unlike  that  of  Goddard  v.  Monitor  Ins.  Co.,  108  Mass.  50,  in 
which  it  was  held  that  a  policy  insuring  a  building  as  a  machine-shop, 
as  represented  by  one  applying  for  the  insurance,  when  in  fact  the  build- 
ing was  occupied  as  an  organ  factory,  on  which  the  risk  was  greater, 
was  void,  because  the  minds  of  the  parties  never  met.  There  existed 
in  that  case  a  state  of  facts  entirely  inconsistent  with  that  which  was 
represented  to  exist,  and  which,  if  known,  would  have  made  it  manifest 
that  the  building  was  not  a  machine-shop  in  any  sense,  and  was  a  shop 
used  for  a  different  and  more  dangerous  purpose.  In  the  cases  relied 
on  by  the  defendant,  the  point  was  that  the  state  of  things  represented 
as  existing,  or  warranted  to  exist,  did  not  exist.  In  the  case  at  bar, 
the  question  arises  on  the  proper  interpretation  of  the  language  used, 
there  being  no  doubt  that,  if  the  state  of  things  called  for  by  the  lan- 
guage used  did  not  exist,  the  policy  was  void.  We  are  of  opinion  that 
the  language,  properly  interpreted,  described  the  existing  state  of 
things  with  accuracy,  and  that  the  policy  took  effect. 

The  representation  by  the  clerk  of  the  insurance  broker  to  the  agent 
of  the  defendant,  that  the  buildings  were  full  of  ice,  though  false,  did 
not  vitiate  the  policy.  The  broker's  clerk  was  not  in  any  sense  the 
agent  of  the  assured,  and  was  not  the  person  who  procured  the  policy. 
The  application  for  the  policy  having  been  made  in  writing  to  the 
defendant,  it  had  no  right  to  rely  on  any  verbal  representations  or 
statements  made  by  a  messenger  sent  by  the  broker  to  its  agent,  nor 
to  assume  that  such  statements  or  representations  were  made  with 
the  knowledge  or  consent  of  the  assured.  In  the  cases  relied  on  by 
the  defendant,  on  this  branch  of  the  case,  the  false  representations 
were  in  writing,  and  referred  to  in  the  policy  as  representations  on 
which  the  policy  was  based,  and  on  the  truth  of  which   its  validity 


SECT.  II.]  BURLEIGH   V.   GEBHARD    FIRE    INS.    CO.  373 

depended.  The  assured,  by  accepting  the  policies  containing  those 
provisions,  adopted  the  representations  made,  whatever  they  miglit  be, 
and  assumed  the  risk  of  their  being  false.  Kibbe  v.  Hamilton  Ins.  Co., 
11  Gray,  163.  Draper  v.  Charter  Oak  Ins.  Co.,  2  Allen,  569.  In  the 
case  at  bar,  the  assured  assumed  nothing  which  the  policy  did  not 
show,  beyond  what  was  done  by  his  authority  or  by  his  agent. 

The  result  is  that  there  must  be  Judgment  on  the  verdict} 


BURLEIGH   ET  AL.,  Appellants,  v.  GEBHARD   FIRE   INS. 
CO.,  Respondent. 

CoL-RT  OF  Appeals  of  New  York,   1882.     90  N.  Y.  220. 

Appeals  from  orders  of  tlie  General  Term  of  the  Supreme  Court  in 
the  third  judicial  department,  made  February  7,  1881,  which  reversed 
judgments  in  favor  of  plaintiffs,  entered  upon  decisions  of  the  court  on 
trial  without  a  jury. 

The  action  in  each  case  was  brought  upon  a  policy  of  fire  insurance 
issued  by  the  defendant  to  plaintiffs  upon  certain  personal  propertj'. 
Each  policy,  after  a  description  of  the  property,  contained  tliis  state- 
ment, "  all  contained  in  their  frame  storehouse  with  slate  roof,  situate, 
detached  at  least  one  hundred  feet,  on  the  east  side  of  Lake  Champlain, 
in  the  town  of  Shoreham,  V^."  It  appeared  that  there  was  at  the  time 
the  policies  were  issued  a  small  building  about  seventy-five  feet  distant 
from  the  storehouse,  described  as  a  frame  building  about  ten  by  twelve 
feet,  clapboarded  and  ceiled  inside,  and  seven  feet  high,  with  a  chimney 
but  no  stove  ;  occupied  sometimes  as  an  office,  and  so  called.  It  was 
not  usually  used  for  storage  purposes.  At  the  time  of  the  fire  it  con- 
tained eighty-three  kegs  of  powder,  which  had  been  temporarily  stored 
therein.  The  court  found  substantially  that  such  building  was  not 
an  exposure  and  did  not  increase  the  risk,  and  refused  to  find  to  the 
contrary. 

Samuel  Hand,  for  appellants. 

James  Thomson,  for  respondent. 

Finch,  J.  "We  think  the  statement  contained  in  the  policies  issued 
bj'  the  defendants,  describing  the  building  vy^hich  contained  the  per- 
sonal property  insured  as  "detached  at  least  one  hundred  feet,"  is  a 
warranty.  We  cannot  hold  it  to  be  a  mere  description  of  the  building 
for  the  purpose  of  identifying  the  personal  property  insured  contained 
within  it.  The  phrase  is  not  adapted  to  any  such  purpose.  It  adds 
nothing  to  the  identity  of  the  storehouse,  already-  sufficiently  described 
by  its  ownership  and  situation  on  the  lake.  In  Wall  v.  The  East  Rivet 
Mut.  Ins.  Co.  (7  N.  Y.  370),  the  personal  property  insured  was  de- 

1  See  Louck  v.  Orient  Ins.  Co.,  176  Pa.  638  (1896).  —  Ed. 


374  BURLEIGH   V.    GEBHARD    FIKE    INS.    CO.  [ciI.AP.  V. 

scribod  as  "contained  in  the  brick  building  with  tin  roof,  occiqned  as 
a  storehouse,  situated  on  tlie  nortberl}-  side  of  and  about  forty-two 
feet  distant  from  their  ropewallv  at  Bushwick."     The  court  said  that 
tlie  identity  of  the  building  was  distinctly  ascertained  by  other  facts  of 
the  description,  and  that  the  phrase  "  occupied  as  a  storehouse"  re- 
lated to  the  risk  and  could  not  be  otherwise  applied.     The  language  in 
the  policies  before  us,  as  to  the  detaclied  character  of  the  building, 
applies  fitly  to  the  risk,  and  is  entirely  inappropriate  as  matter  of  de- 
scription.    We  must  hold  therefore,  what  indeed  was  not  denied  in  the 
dissenting  opinion  at  General  Term,  or  on  the  argument  at  our  bar, 
that  the  phrasejii  question  is  not  merely  descriptive  of^identityjjjut 
relates  to  the  character  of  the  risk.     Thus  understood  and  appearing 
on  the  face  of  the  policy  it  aroounts  to  a  wan^anty.     (Alexanaer  v~t?er- 
mania  F.Tn¥.  Cor,' 66  N.  Y.  464  ;  Richards  vTProtection  Ins.  Co.,  30 
Me.  273;  Parmelee  v.  Hoffman  Fire  Ins.  Co.,  54  N.  Y.  193.)     Such 
result  is,  however,  disputed  upon  the  ground  that  the  language  is  that 
of  the  insurers  and  is  vague  and  void  for  ambiguity.     The  argument  is 
that  to  avoid  a  forfeiture  the  words  used  must  be  most  strongly  con- 
strued against  the  insurer;    that  the  word   "detached"  will  not  be 
defined  so  as  to  destroy  the  contract ;  that  in  the  sense  of  separate,  or 
disengaged  from,  the  policy  does  not  add  from  what ;  that  it  may  mean 
"  detached  at  least  one  hundred  feet"  from  "  earth,  sea,  or  sky,"  or 
from  "  Lake  Champlain  ;  "  and  that  if  it  means  fi'om  any  building,  it 
must  be  construed  to  moan  any  building  which  constitutes  an  exposure 
and  increases  the  risk,  which  was  not  true  of  the  office  building,  since 
the  trial  judge  found  as  a  fact  that  it  did  not  so  increase  the  risk.    We 
do  not  think  the  language  is  so  vague  or  ambiguous  as  to  make  the 
warranty  void.     The  fair  import  of  the  words  and  the  intent  of  the 
parties  indicated  by  the  terms  of  their  agreement  must  guide  the  con- 
struction.    (Higgins  V.  Phoenix  Mut.  Life  Ins.  Co.,  74  N.  Y.  26.)     It 
cannot  be  doubted  that  both  parties  perfectly  understood  the  meaning 
of  the  phrase  to  be  that  the  storehouse  stood  by  itself  as  a  detached  or 
separate  building  and  apart  from  other  buildings  at  least  a  distance  of 
one  hundred  feet.     The  expression,  although  brief,  is  not  meaningless, 
but  to  the  common  understanding,  and  especially  in  connection  with  an 
insurance  against  fire,  conveys  unmistakably  the  idea  we  have  expressed, 
and  must  have  been  so  understood  by  each  of  the  contracting  parties. 
If  it  did  not  mean  that,  it  meant  nothing,  and  what  was  intended  as  a 
serious  business  transaction  becomes  an  idle  play  with  words.    But  the 
further  contention,  that  the  language  must  be  held  to  mean,  detached  one 
hundred  feet  from  any  other  building  of  such  character  as  to  constitute 
an  exposure  and  increase  the  risk,  seems  to  us  a  sensible  and  just  con- 
struction.     The  brevity  of  the  language  requires  that  something  be 
added  to  complete  and  elucidate  the  meaning.     The  phrase  may  mean 
detached  one  hundred  feet  from  any  other  building  whatever  its  size  or 
character.     This  would  be  a  rigorous  and  severe  interpretation,  most 
favorable  to  the  insurer  and  operating  harshly  npon  the  insured.     So 


SECT.  11.]  BURLEIGH   V.    GEBHARD   FIRE    IXS.    CO.  375 

construed,  it  would  make  an^-  thing  which  could  be  deemed  a  building, 
however  small  or  insignificant,  as  an  ice-house,  or  privj-,  or  open  shed, 
within  the  prescribed  distance,  operate  as  a  breach  of  the  warranty. 
If  a  construction  "so  literal  or  severe  is  intended  b\'  the  insurer,  he 
should  at  least  say  so  by  apt  and  appropriate  language,  and  not  ask 
the  courts  to  supply  it  by  intendment.  If  it  be  granted  that  such  small 
and  insignificant  structures  were  not  meant,  and  should  be  treated  as  if 
they  did  not  exist,  the  question  would  remain  how  small  and  how  insig- 
nificant must  they  be  to  be  disregarded,  and  how  large  and  of  what 
character  to  justify  a  conclusion  of  breach  of  the  warrant}',  and  where 
and  upon  what  principles  is  the  line  to  be  drawn  between  buildings 
strictly  such,  but  proper  to  be  disregarded,  and  those  whose  presence 
breaks  the  warrant}'.  These  questions  can  be  wisely  answered  in  but  one 
way.  The  test  must  be  whether  the  building  within  the  distance  named 
is  or  is  not  an  exposure  which  increases  the  risk.  One  which  does  not 
can  scarcely  be  supposed  to  come  within  the  warrantv,  unless  such  re- 
sult is  indicated  b}'  explicit  language  which  will  bear  no  other  reason- 
able interpretation.  No  such  language  is  contained  in  these  policies, 
and  when  the  courts  are  asked  to  supply  a  defect  and  complete  an 
imperfect  phrase,  they  should  remember  that  the  necessit}-  is  the  fault 
of  the  insurer,  and  construe  the  language  in  view  of  the  natural  under- 
standing of  the  parties,  and  with  justice  to  both.  Declining  to  hold  the 
phrase  in  the  policy  to  be  meaningless  and  void,  we  are  compelled  to 
choose  between  two  constructions  ;  the  one  rigorous  and  hard  and  pro- 
ducing a  forfeiture,  and  the  other  natural  and  reasonable  and  support- 
ing the  obligation.  We  have  heretofore  decided  that  in  such  ease  the 
latter  construction  is  to  be  preferred.  (Baile}'  v.  Homestead  Fire  Ins. 
Co.,  80  N.  Y.  21  ;  36  Am.  Rep.  570.)  We  hold,  therefore,  that  the 
warranty  in  this  case  was  that  no  other_buUdmg,  of  such  size  and  cbar^ 
acter  as  to  constitute  an  exposure  and  increase  the  risk,  stood  within 
one  hundred  feet  of  the  storehouse. 

Thus  construed,  it  is  apparent  that  the  warranty  was  not  broken. 
The  findings  of  fact,  taken  together,  show  that  the  only  building  within 
the  prescribed  distance  of  one  hundred  feet  was  the  small  office.  This 
was  described  as  being  ten  by  twelve  feet  on  the  ground  and  seven  feet 
high  ;  a  frame  building  clapboarded  and  ceiled  inside  ;  having  a  chirane}-, 
but  no  stove  in  it ;  used  sometimes  as  an  office,  and  at  the  time  of  the  fire 
containing  a  quantity  of  gunpowder,  temporarily  stored.  The  evidence 
showed,  or  at  least  tended  to  show,  that  this  building,  standing  seventy- 
five  feet  from  the  subject  of  insurance,  was  not  an  exposure  and  did 
not  affect  the  risk,  and  the  trial  court  found  that  fact  substantially,  and 
refused  to  find  the  contrary.  It  follows  that  there  was  no  breach  of  the 
warranty  and  that  the  General  Term  erred  in  so  deciding  and  in  reversing 
the  judgment. 

We  have  examined  the  other  grounds  upon  which  the  reversal  is 
sought  to  be  sustained,  and  do  not  think  they  can  be  deemed  sufficient 
for  that  purpose,  or  that  they  require  further  discussion. 


376  GODDARD  V.    EAST  TEXAS  FIRE  INS.  CO.      [CHAP.  V. 

The  orders  of  the  General  Term  should  be  reversed,  and  the  judg- 
ments on  trials  at  the  circuit  affirmed,  with  costs. 

All  concur,  except  Rapallo,  J.,  dissenting,  and  Miller,  J.,  not 
voting.  Orders  reversed  and  judgments  accordingly. 


GODDARD  V.  EAST  TEXAS   FIRE   INS.    CO. 
Supreme  Court  of  Texas,  1886.     67  Tex.  69. 

Appeal  from  Kaufman.     Tried  below  before  the  Hon.  Anson  Raine}'. 

Wood  &  Charlton,  for  appellant. 

Whitaker  &  Bonner,  for  appellee. 

Willie,  C.  J.  It  is  apparent  from  the  case  made  by  the  evidence 
that  the  failure  ofjGoddard  to  keep  his  books  and  inventory-  in  an Jron 
safe  at  night  did  not  arise  from  any  intention  on  his  part  to  deprive 
the  insurance  company  of  evidence  as  to  the  amount  of  the  stock, 
tools,  and  machinery'  he  had  on  hand  at  the  time  of  the  fire.  He  was 
wholly  ignorant  of  the  existence  of  an}-  clause  in  the  polic}'  imposing 
this  dut3'  upon  him. 

It  is  not  made  to  appear  that  the  compan}-  has  been  damaged  in  the 
least  b}'  reason  of  Goddard's  default  in  this  respect ;  for  the  value  of 
the  stock  at  the  time  the  inventory  was  made  was  fully  proved,  and  the 
amount  of  the  subsequent  sales  —  which  were  all  for  cash  —  could  be 
easily  ascertained  from  the  accounts  kept  in  the  books,  which  were  pre- 
served and  open  to  the  inspection  of  the  company  and  the  court.  If 
there  has  been  neither  fraud  on  the  part  of  Goddard,  nor  loss  to  the  com- 
pany by  reason  of  his  non-compliance  with  the  said  clause,  it  cannot  be 
said  that  it  was  material  to  the  risk,  and  the  policy  is  not  avoided  unless 
the  provisions  of  the  clause  constituted  a  warrant}'.  If  the}'  did,  the 
law  exacts  a  compliance  with  their  terms  according  to  their  true  intent 
and  meaning,  whether  material  or  not,  or  whetlier  known  to  be  assured 
or  not,  if  he  had  the  opportunity,  and  it  was  his  dut}',  under  the  circum- 
stances, to  acquaint  himself  with  them.  (Riple}'  v.  ^tna  Insurance 
Company,  30  New  York,  136  ;  Withwell  v.  Insurance  Company,  49 
Maine,  200;  May  on  Insurance,  161  ;  Wood  on  Insurance,  sections 
58,  176.) 

Treating  this  as  a  case  where  the  assured  was  charged  with  knowledge 
that  the  clause  in  question  was  attached  to  the  polic}',  as  it  appears  in 
the  original  sent  up  for  our  inspection,  the  question  is,  did  this  consti- 
tute it  a  warranty  that  the  assured  would  perform  the  promises  con- 
tained ih  the  clause  or  the  policy  should  be  void? 

It  is  a  cardinal  principle  of  insurance  law,  that  in  order  to  constitute 
any  statement  or  promise  of  the  insured  a  warranty,  it  must  be  made 
part  of  the  polic}',  either  by  appearing  in  the  body  of  the  instrument  or 


SECT.  II.]  GODDARD   V.    EAST    TEXAS    FIRE   INS.    CO.  377 

by  a  proper  reference  in  the  policy  to  some  other  paper  in  which  it  is  to 
be  found.     (Wood  on  Insurance,  section  176,  page  340.) 

It  is  in  the  nature  of  a  condition  precedent,  and,  as  such,  must  form 
part  of  the  contract  between  the  parties.  (Wood  on  Insurance,  section 
58;  Farmers'  Loan,  etc.  Company  v.  Snyder,  16  Wendell,  481.) 

The  policy  is  the  contract,  and,  if  outside  papers  are  to  be  imported 
into  it,  this  must  be  done  in  so  clear  a  manner  as  to  leave  no  doubt  of 
the  intention  of  the  parties.  (Farmers'  Loan,  etc.  Company  v.  Snyder, 
supra;  Insurance  Company  v.  Southard,  8  B.  Monroe,  634.) 

When  there  is  doubt  as  to  the  intention  of  the  parties  to  treat  the 
paper  as  part  of  the  policy,  the  courts  give  the  benefit  of  the  doubt  to 
the  assured,  and  construe  the  policy  liberally  in  his  favor.  (Stone  v. 
U.  S.  Casualty  Co.,  5  Vroom,  376.)  This  is  in  accord  with  the  general 
rule  that  the  language  of  the  policy  being  the  language  of  the  under- 
writers, if  susceptible  of  two  interpretations,  that  must  be  adopted 
which  will  sustain  the  claim  of  the  assured,  and  give  him  the  indemnity 
it  was  his  object  to  secure.  (Cropper  v.  Western  Ins.  Co.,  32  Pa.  St. 
351.) 

The  clause  which  appellee  seeks  in  this  case  to  have  construed  as 
part  of  the  policy  is  not  written  or  printed  upon  the  same  paper  with 
the  rest  of  that  instrument,  nor  is  it  referred  to  in  the  policy  as  forming 
a  part  of  the  contract  between  the  appellant  and  the  insurance  company. 
It  is  clear,  therefore,  that  its  conditions  cannot  be  treated  as  entering 
into  that  contract  if  it  is  to  be  considered  as  a  separate  and  detached 
paper.  But  the  edge  of  the  paper  upon  which  the  clause  is  printed  is 
made,  by  means  of  mucilage,  to  adhere  to  a  blank  space  on  the  face  of 
the  policy,  and  upon  this  single  fact  rests  the  whole  claim  of  the  appellee 
to  have  the  clause  considered  as  one  of  the  warranties  and  conditions  of 
that  instrument.  In  the  case  of  Bean  v.  Stupart,  Douglas,  11,  these 
words  were  written  on  the  margin  of  a  marine  policy  of  insurance : 
"Thirty  seamen  besides  passengers."  These  words  were  held  by 
Lord  Mansfield  to  constitute  a  warranty  that  the  insured  ship  sailed 
with  that  number  of  seamen,  so  that  the  policy  would  be  avoided  if  a 
less  number  of  seamen  manned  the  vessel.  He  gave  to  the  words  the 
same  eflfect  as  if  they  had  been  written  in  the  policy  itself.  In  the  sub- 
sequent case  of  Kenyon  v.  Buthen,  reported  in  a  note  to  Bean  v.  Stupart, 
the  same  principle  was  announced  by  the  same  judge,  and  the  words,  "  in 
port  twenty-ninth  of  July,  1776,"  written  transversely  on  the  margin  of 
the  policy,  were  held  to  constitute  a  warranty  which  if  not  strictly  com- 
plied with  to  a  day  would  avoid  the  policy.  In  the  subsequent  case 
of  Pawson  v.  Bannenlt,  Lord  Mansfield  held  that  though  a  written 
paper  be  wrapped  up  in  the  policy,  when  it  is  brought  to  the  under- 
writers to  subscribe,  and  shown  to  them  at  the  time,  it  is  not  a  war- 
ranty or  to  be  considered  as  a  part  of  the  policy  itself,  but  only  as  a 
representation.  He  hold  the  same  thing  in  Bize  v.  Fletcher,  in  refer- 
ence to  the  statements  in  a  piece  of  pnner  wafered  to  the  policy  at  the 
time  the  underwriters  subscribed  it.     The  statements  on  the  papers  iii 


378  GODDARD   V.   EAST    TEXAS    FIRE    INS.    CO.  [CHAP.  V. 

question  in  these  two  last  cases  were  similar  to  those  passed  upon  in 
Beau  V.  Stupart  and  Kenyon  v.  Buthen.  In  one  case  thej'  related 
to  the  equipment  of  the  ship  in  men  and  guns,  and  in  the  other,  to  her 
condition  as  to  repairs  and  strength,  several  particulars  of  the  intended 
V03'age  behig  also  mentioned. 

Thus  a  clear  distinction  is  drawn  bj'  that  eminent  judge  between 
statements  and  promises  written  in  the  polic}"  itself,  though  upon 
the  margin,  and  those  detached  from  it,  or  contained  in  a  separate 
piece  of  paper  and  made  to  adhere  to  the  polic}'.  In  the  former 
case  the}'  are  warranties ;  in  the  latter  the}'  are  at  best  no  more  than 
representations. 

These  cases  are  old,  but  we  are  not  informed  that  they  have  ever  been 
overruled.  On  the  contrarj^,  they  are  cited  with  special  approbation  by 
some  of  the  most  respectable  courts  of  the  United  States,  and  quoted 
b}'  text-writers  as  expressing  the  law  of  the  present  time.  (Ins.  Co. 
V.  Southard,  8  B.  Mon.  637;  Farmers'  Loan,  etc.  Co.  v.  Snyder,  16 
Wend.  492 ;  May  on  Ins.,  162,  163  ;  Wood  on  Ins.,  416,  419.) 

These  decisions  may  well  be  supported  b}'  the  principles  we  have 
already  announced.  The  underwriters  prepare  the  contract  to  suit 
themselves.  They  can  exact  an}'  lawful  conditions  they  choose  to 
guard  against  fraud,  negligence,  want  of  interest,  etc. ;  but  they  must 
do  so  in  a  manner  not  "calculated  to  mislead  the  parties  with  whom  they 
deal.  They  have  it  in  their  power  to  express  their  meaning  in  a  way  not 
to  be  misunderstood,  or  to  be  capable  of  any  other  construction,  except 
that  which  they  must  know  the  assured  will  give  to  the  language.  If 
they  do  not  embody  their  warranties  in  the  policy  itself,  or  import  them 
into  that  instrument  by  a  proper  reference  to  other  papers  in  which  they 
are  contained,  and  the  contract  is  capable  of  an  interpretation  which 
will  make  them  mere  representations,  they  must  expect  that  it  will  be 
so  construed. 

But  without  attempting  to  decide  that  there  are  no  circumstances 
under  which  a  foreign  paper  attached  to  a  policy,  without  any  reference 
to  it  made  in  that  instrument,  may  form  a  condition  of  the  contract  and 
be  construed  as  a  warranty,  or  that  this  clause  might  not  have  been 
attached  to  tlie  present  policy  at  such  place  and  in  such  a  manner 
as  to  give  it  that  effect,  we  are  clear  that  the  clause  under  considera- 
tion is  not  so  attached  to  the  policy  as  to  give  it  any  higher  dignity 
than  that  of  a  mere  representation.  It  is  placed  after  a  description  of 
the  property  insured,  and  in  the  midst  of  the  covenants  assumed  by  the 
underwriters,  and  makes  the  policy  read  thus  :  "  The  East  Texas  Fire 
Insurance  Company  of  Tyler,  Texas,  organized  January,  1875,  in  con- 
sideration of  eighty -four  dollars  and  of  the  agreement  herein  contained, 
does  insure  Goddard  &  Corley  to  the  amount  of  twelve  hundred  dol- 
lars :  one  thousand  dollars  on  their  stock  of  stoves  and  hollowwarc,  tin, 
tinware,  and  tinner's  materials,  and  two  hundred  dollars  on  their  tools 
and  machines,  all  while  contained  in  the  one-story  frame  sliingle-roof 
building  and  shed  adjoining  on  the  east,  occupied  by  assured  and  situ* 


ST-CT.  II.]  GODDAKD    V.    EAST    TEXAS    FIRE    INS.   CO.  379 

ated  at  No.  200,  on  Moove  Avenue,  corner  of  Adelaide  Street,  Block 
No.  77,  Terrell,  Texas.  Three-fourths  loss  and  iron  safe  clause.  It  is 
agreed  and  understood  to  be  a  condition  of  this  insurance,  that  in  case 
of  any  loss  or  damage  under  this  policy,  this  company  shall  be  liable 
only  for  three-fourths  of  said  loss,  not  exceeding  the  sum  lierein  in- 
sured, tlie  other  one-fourth  to  be  liorne  b}-  the  assured  ;  and  in  event 
of  other  insurance  hereon  this  compan}'  to  be  liable  only  for  its  pro- 
portion of  three-fourths  of  such  loss  or  damage. 

"  It  is  understood  and  agreed  that  the  assured  shall  keep  a  set  of 
books,  showing  a  record  of  his  or  their  business,  including  all  purchases 
and  sales,  both  for  cash  and  on  credit,  as  well  as  a  copy  of  his  or  their 
last  inventor}',  warranted  to  be  kept  in  an  iron  safe  at  night,  against 
all  such  immediate  or  proximate  loss  or  damage  b}'  the  assured  as  may 
occur  by  fire  to  the  property  above  specified,  but  not  exceeding  the  in- 
terest of  the  assured  in  the  propert}'  and  except  as  hereinafter  pro- 
vided," etc.,  setting  forth  the  time  the  policy  is  to  last,  how  the  damage 
is  to  be  estimated,  the  date  at  which  the  loss  is  to  be  paid,  etc. 

The  policy  then  concludes  by  reciting  the  terms,  conditions,  and 
warranties  upon  which  it  is  given.  It  will  be  seen  that  the  clause  in 
question  is  inserted  in  tlie  midst  of  a  sentence  witli  which  it  has  no 
proper  connection  ;  a  sentence  which  purports  to  contain  the  promises 
made  on  the  part  of  the  insurance  corapan}-,  and  not  those  entered  into 
by  Goddard  &  Corle\'.  It  is  therefore  not  onh*  out  of  place,  but,  taken 
in  connection  with  its  context,  is  devoid  of  meaning.  Not  only  so,  but 
the  policy  expressly  names  the  conditions  and  terms  upon  which  it  is 
executed,  and  the  warranties  which  the  assured  is  obligated  to  make 
good  and  perform,  and  3*et  no  warranty  or  condition  of  the  kind  stated 
in  the  clause  in  question  is  found  among  them. 

Now  there  are  some  other  principles  of  insurance  law  applicable  to 
the  state  of  case  made  by  the  policy  as  we  have  recited  it.  The  first  of 
these  is  :  "  Words  puj;]2orting  to^be  a  condition  upon  which  the  policy 
was  issued  must  be  set  forth  in  such  a  place,  and  in  s"^'^  mnnnpv  it^jjio^ 
policy,  as  leaves  no  doubt  the-y  were  so  intended ;  and  wordaJnserted 
mwn i s c u oil s ly  therein,  liaj'ino;  no  connection  with  other  canditiona  of 
the  policy LaUhou^jtlie_jyaixlj2QMZti2ZLjsAijed,_^^  treated  as  a_^ 

condition^^f  the  policy^"  Wood  on  Fire  Insurance,  sections  59,  60. 
See  also  May  on  Insurance,  170. 

This  principle  is  well  illustrated  by  the  case  of  Kingsley  v.  New  Eng- 
land Mutual  Fire  Insurance  Company,  8  Cush.  393.  There  the  words 
"  on  condition  that  the  applicant  take  all  risks  from  cotton  waste,"  in- 
serted between  the  statement  of  the  sum  insured  on  the  property  and 
the  description  of  its  location,  were  held  not  to  constitute  a  condition 
or  warranty.  The  present  case  is  much  stronger  than  the  one  cited. 
There  the  words  were  written  on  the  face  of  the  policy ;  here  they 
are  printed,  on  a  slip  and  attached  to  it.  There,  though  wrongly 
located,  they  do  not  interfere  materially  with  the  sense  of  the  sen- 
tence in  which  they  are  embodied  ;  here  they  do.     There  the   word 


380  GODDARD   V.    EAST    TEXAS    FIRE   INS.    CO.  [CHAP.  V. 

"  condition"  is  expressly  used  in  connection  with  the  clause;  here  it 
is  not.  Moreover,  whilst  it  is  used  in  the  preceding  sentence  fixing 
the  liabilit}'  of  the  companj-  at  three-fourths  the  value  of  the  prop- 
erty destroyed,  it  is  omitted  in  the  iron-safe  clause  altogether.  This 
must  have  been  done  through  design,  and  the  design  must  have  been 
to  prevent  the  latter  clause  from  being  construed  as  a  condition.  How- 
ever this  may  be,  the  policy  is  brought  fully  within  the  principle  of  law 
just  announced,  and  the  clause  under  decision  must  be  held  not  to  be  a 
warrant}'. 

There  is  still  another  rule  of  law  applicable  to  this  policy,  which  is 
that,  when  an  instrument  of  this  character  is  inconsistent  or  ambiguous 
in  its  provisions,  it  must  be  construed  most  favorably  for  the  assured. 
(Wood  on  Fire  Ins.,  sec.  59  and  notes;  Hoffman  v.  ^tna  Ins.  Co., 
32  N.  Y.  405;  ^tna  Ins.  Co.  v.  Jackson,  Ously  &  Co.,  16  B.  Mon. 
242  ;  May  on  Ins.,  183,  184.)  The  inconsistencies  and  ambiguities  of 
this  policy  have  alread}'  been  made  apparent.  In  the  first  part  it  recites 
certain  undertakings  assumed  b}-  the  assured  ;  and  then  in  the  latter 
part,  which  is  held  to  be  the  most  binding  portion  of  such  a  contract, 
it  sets  forth  specifically  what  are  the  terms  of  the  policj*  which  are  to  be 
considered  conditions  and  warranties.  To  take  the  most  favorable  view 
for  the  appellee,  the  policy  leaves  it  doubtful  whether  the  promises  ex- 
acted of  the  assured  in  the  first  part  of  the  instrument  are  to  be  super- 
added as  warranties  to  those  enumerated  in  the  last  part,  or  whether 
the  latter  are  to  be  considered  the  only  warranties,  leaving  the  former 
to  be  treated  as  representations.  In  such  case,  as  we  have  seen,  the 
doubt  must  be  resolved  in  favor  of  the  assured.  The  makers  of  the 
policy  could  have  made  their  meaning  clear  by  including  the  iron-safe 
clause  in  the  body  of  the  policy  at  its  proper  place ;  but  they  have 
chosen  to, place  it  where  its  meaning  and  construction  is  obscured,  and 
they  must  abide  the  consequences.  We  are  of  opinion  that  the  court 
below  should  have  held  the  clause  in  question  to  have  been  no  more 
than  a  representation,  and  as  it  was  not  pleaded  as  such  b}-  the  appellee, 
and  the  proof  did  not  show  an}'  fraud  committed  by  the  appellant,  or 
injury  suffered  by  the  company  b}'  reason  of  its  not  having  been  liter- 
ally fulfilled,  judgment  should  have  been  rendered  for  the  appellant  for 
the  full  amount  claimed  by  him  ;  the  court  having  found  that  three- 
fourths  of  the  value  of  the  property  lost  was  at  least  equal  to  the 
amount  for  which  it  was  insured. 

For  the  error  of  the  court  below  in  the  matter  stated,  its  judgment 
will  be  reversed ;  and  this  court,  proceeding  to  render  such  judgment 
as  should  have  been  rendered  below,  orders  and  adjudges  that  the  ap- 
pellant recover  of  the  appellee  the  sum  of  twelve  hundred  dollars,  with 
interest  thereon  from  November  30,  1885,  and  all  costs  of  this,  and  of 
the  lower  court.  Heversed  and  remanded. 


SECT.  II.]  HOSFORD   V.    GERMANIA   FIRE    INS.    CO.  381 

HOSFORD  V.  GERMANIA   FIRE  INS.   CO. 
ScPREME  Court  of  the  United  States,  1888.     127  U.  S.  399. 

Error  to  the  Circuit  Court  of  the  United  States  for  the  District  of 
Nebraska. 

This  was  an  action  b}'  Hosford  and  Gagnon  on  a  policy  of  insur- 
ance, dated  Maj'  14,  1883,  by  which  the  Germania  Fire  Insurance 
Compan}'  and  the  Hanover  Fire  Insurance  Company,  severally  and  not 
jointh",  and  as  if  by  separate  policies,  insured  the  plaintiffs  against 
loss  by  fire  for  a  year  from  that  date,  each  one-half  of  the  sum  of 
S8,000,  payable  in  sixty  days  after  notice  and  proof  of  loss,  upon  their 
flotJT-niill,  elevator,  and  machiner}-,  in  the  town  of  Rulo  and  State  of 
Nebraska;  "special  reference  being  had  to  assured  application  No. 
20,157,  which  is  hereby  made  a  part  of  this  policy  and  a  warranty  on 
the  part  of  the  assured;"  '-loss,  if  any,  payable  to  Israel  Maj',  mort- 
gagee, as  his  interest  ma}'  appear."  The  policy  contained  these  pro- 
visions : 

"  The  application,  survey,  plan,  or  description  of  the  property  herein 
insured  shall  be  considered  a  part  of  the  contract  and  a  warranty  by 
the  assured  ;  and  any  false  representation  by  the  assured  of  the  condi- 
tion, situation,  or  occupanc}'  of  the  propert}-,  or  any  omission  to  make 
known  every  fact  material  to  the  risk,  or  an}'  overvaluation,  or  any 
misrepresentation  whatever,  either  in  a  written  application  or  other- 
wise," shall  render  the  policy  void. 

'•  If  the  interest  of  the  assured  in  the  property  be  any  other  than  the 
entire,  unconditional,  and  sole  ownership  of  the  propert}'  for  the  use 
and  benefit  of  the  assured,  or  be  encumbered  b}'  any  lien,  whether  by 
deed  of  trust,  mortgage,  or  otherwise,  or  if  the  building  insured  stands 
on  leased  ground,  it  must  be  so  represented  to  the  companies  and  so 
expressed  in  the  written  part  of  this  policy  ;  otherwise,  this  policy  shall 
be  void." 

The  application  was  of  the  same  date  as  the  policy,  and  was  signed 
by  the  assured,  and  contained  a  great  number  of  printed  questions  and 
written  answers,  and  so  much  of  it  as  is  material  to  be  stated  was  as 
follows  : 

"  The  applicant  will  answer  particular!}'  the  following  questions,  and 
sign  the  same,  as  descriptive  of  the  premises,  and  forming  a  part  of  the 
contract  of  insurance  and  a  warranty  on  his  part: 

''  What  material  is  used  for  lubricating  or  oiling  the  bearings  and 
machinery?     Tallow,  lard,  and  machine  oils. 

"  Will  you  agree  to  use  only  lard  and  tallow,  or  sperm  and  lard  oils 
for  lubricating?     Lard  and  tallow,  or  lard  and  machine  oils. 

"  Is  the  machinery  regularly  oiled,  and  by  whom?  Yes,  by  regular 
attendant. 


382 


HOSFORD    V.    GERMANIA   FIRE    INS.    CO.  [CHAP.  V. 


"  Will  you  agree  to  keep  all  the  bearings  and  machinery  properly 
supplied  with  oil?     Yes. 

<.<.  Is  smoking  or  drinking  of  spirituous  liquors  allowed  on  the  pvem-. 

ises?     No. 

"Is  there  any  encumbrance  on  the  property ?     Yes. 

"  If  mortgaged,  state  the  amount.     $3,000." 

a  The~su5scriber  here"5y  coveuanls  and  agrees  to  and  with  the  said 
companies  that  the  same  is  a  just,  full,  and  true  exposition  of  all  the  • 
facts  and  circumstances  in  regard  to  the  condition,  situation,  value, 
and  risks  of  the  property  to  be  insured,  and  said  answers  are  consid- 
ered the  basis  on  which  insurance  is  to  be  effected,  and  the  same  is 
understood  as  incorporated  in  and  forming  a  part  and  parcel  of  the 
policy  ;  and  further  covenants  and  agrees  that  if  the  situation  or  cir- 
cumstances affecting  the  risk  shall  be  so  altered  or  changed  during  the 
time  of  any  policy  of  insurance  which  may  be  fixed  upon  the  applica- 
tion, or  any  renewal  of  said  policy,  as  to  render  the  risk  more  hazard- 
ous,' [he]  will  notify  the  officers  of  said  companies,  or  their  general 
agent,  forthwith  of  such  alteration." 

°The  case  was  tried  by  a  jury,  who  returned  a  special  verdict,  finding 
the  value  of  the  property  insured  and  its  loss  by  fire  on  August  1,  1883, 
and  so  much  of  the  rest  of  which  as  is  material  to  be  stated  was  as 

follows  : 

"  Thea)laintiffsJorbade  cmnTdnor^to  go  on  in  the  mill,  but  smoking 
was  done  on  the  grinding  flooii"_'iQne  of  them  himself  smoked  upon 
and  in  the  mill." 

~^'  At  the~time  of  the  application  there  was  due  Israel  May  on  his 
notes  and  mortgage  on  said  premises  the  sum  of  §3,079.45."  "  There 
were  taxeso£  the  county  and  State  on  said  premises  for  several  years 
pri?;n^rthe^ssue~of  the  policy,  which  were  delinquent  and  unpaid, 
^n.^  ciTiWprrmjii  iinpnid,  amounting  to  the  sum  of  8329.40  on  May  UT 

On  July  2, 1885,  the  Circuit  Court  gave  judgment  for  the  defendants. 
The  plaintiffs  brought  the  case  to  this  court  by  writ  of  erior,  with  a 
certificate  of  division  of  opinion  between  the  Circuit  Judge  and  the 
District  Judge  upon  the  following  questions: 

"  1st.  Whether  the  plaintiffs  or  the  defendants,  insurance  compa- 
nies, are  entitled  in  law  to  recover  judgment  on  said  verdict  and  special 
findings  of  the  jury  returned  in  said  cause. 

"  2d.  Whether  the  fact  that  delinquent  taxes  on  the  mill,  to  the 
amount  of  §329.40,  were  due  and  unpaid  at  the  time  the  application 
for  insurance  on  the  property  destroyed  was  made,  and  that  fact  was 
not  disclosed  by  the  applicants  to  the  insurers,  will  defeat  the  plain- 
tiffs' right  to  recover. 

"  3d.  Whether  the  fact  that  smoking  was  done  in  the  mill,  the  pro- 
prietor of  the  mill  being  one  that  smoked,  notwithstanding  the  plain- 
tiffs had  stated  in  their  application  for  insurance  that  smoking  was 
forbid  therein,  will  defeat  their  right  to  recover,  the  fire  that  destroyed 
the  properly  not  having  originated  from  that  cause." 


SECT.  II.]  HOSFOED    V.    GEPwMANIA   FIRE   INS.    CO.  383 

Mr.  T.  M.  Marquett  and  Mr.  Isham  Heavis,  for  plaintiffs  in  error. 

Mr.  /Samuel  Shellabarger  (with  whom  was  Mr.  J.  31.  Wilson  on  the 
brief),  for  defendants  in  error. 

Mr.  Justice  Gray,  after  stating  the  case  as  above  reported,  delivered 
the  opinion  of  the  court.^  .  .  . 

The  whole  scope  of  that  clause  of  the  policy,  which  requires  the 
interest  of  the  assured,  if  "  other  than  the  entire,  unconditional,  and 
sole  ownership  of  the  property  for  the  use  and  benefit  of  the  assured," 
or  if  •'  encumbered  by  any  lien,  whether  by  deed  of  trust,  mortgage,  or 
otherwise,"  to  be  so  represented  by  the  assured  and  so  expressed  in 
the  policy,  is  t6  ascertain  whether  his  interest  comes  within  either  of 
these  two  descriptions,  and  not  to  call  for  information  as  to  the  nature 
or  amount  of  any  encumbrances.  It  is  therefore  fully  satisfied  by  the 
statements  in  the  application  that  there  is  an  encumbrance  on  the  prop- 
erty, and  what  the  amount  of  mortgage  is,  and  by  the  expression  in 
the  polic}'  making  the  insurance  payable  to  a  mortgagee.  "Williams  v. 
Roger  Williams  Ins.  Co.,  107  Mass.  377. 

B\-  the  terms  of  this  policy,  and  of  the  application  made  part  thereof, 
the  answers  to  the  questions  in  tlie  application  are  doubtless  warranties, 
to  be  strictly  complied  with.  But  this  court  is  unanimously  of  opinion 
that,  so  far  as  regards  either  of  the  matters  presented  for  its  decision  iu- 
the  present  case,  these  answers  are  direct,  full,  and  true. 

The  only  questions  put  as  to  encumbrances  are,  first,  the  general  one, 
"  Is  there  an}'  encumbrance  on  the  property?  "  whicli  is  trul}-  answered, 
"Yes;"  and,  second,  the  particular  one,  "If  mortgaged,  state  the 
amount,"  in  answer  to  which  the  assured  states  the  principal  sum  due 
on  the  mortgage.  The  effect  of  omitting  to  include  the  additional  sum 
due  for  less  than  half  a  year's  interest  is  not  presented  bj-  the  certifi- 
cate of  division.  The  insurers  having  put  no  question  as  to  the  nature 
or  the  amount  of  encumbrances,  otherwise  than  by  mortgage,  can- 
not object  that  no  information  was  given  upon  that  subject.  Phoenix 
Ins.  Co.  V.  Raddin,  120  U.  S.  183.  There  was,  therefore,  no  breach  of 
warranty  in  not  disclosing  the  lien  for  unpaid  taxes,  independently  of 
the  question  whether  such  a  lien  was  an  encumbrance,  within  the  mean- 
ing of  this  contract ;  and  this  case  does  not  require  a  decision  of  that 
question. 

As  to  smoking,  the  only  question  put  in  the  application,  and  answered 
in  the  negative,  is  whether  smoking  is  "allowed  on  the  premises,"  — 
which  looks  only  to  the  rule  established  upon  the  subject  at  the  time  of 
the  application,  and  not  to  the  question  whether  that  rule  may  be  kept 
or  broken  in  the  future.  This  appears  by  the  language  of  the  question, 
as  well  as  by  the  circumstance  that  it  is  not,  as  other  interrogatories  as 
to  existing  precautions  against  fire  are,  followed  up  b}-  compelling  the 
assured  to  agree  that  the}'  will  continue  to  observe  the  same  precau- 
tions.    The  jury  having  found  that  the  assured  forbade  smoking  in  the 

^  A  passage  foreign  to  warranty  has  been  omitted.  —  Ed. 


384  BARNARD  V.    FABER.  [CHAP.  V. 

mill,  the  mere  fact  that  other  persons,  or  even  one  of  the  assured,  did 
afterwards  smoke  there,  was  not  sufficient  to  avoid  the  poHc}'. 

The  two  cases,  cited  by  the  defendants  from  the  Illinois  Reports, 
contain  no  adjudication  to  the  contrar}".  The  point  decided  in  each 
was  that  smoking  b}-  workmen  in  the  mill  did  not  avoid  the  policy,  and 
the  remark  of  the  judge  delivering  the  opinion,  that  in  such  a  case  the 
assured  undertakes  that  he  will  not  himself  do  the  act,  was  obiter 
dictum.  Ins.  Co.  of  North  America  v.  McDowell,  50  Illinois,  120, 
131 ;  Aurora  Ins.  Co.  v.  Eddy,  55  Illinois,  213,  219. 

Judgment  reversed^  and  case  remanded  to  the  Circuit  Court.,  with 

directions  to  render  judgment  for  the  plaintiff s  upon  the  special 

verdict.  ^ 


BARNARD  v.   FABER. 
Court  of  Appeal,  1892.     '93,  1  Q.  B.  340. 

Action  upon  a  policy  of  insurance  against  fire. 

At  the  trial  before  Wright,  J.,  without  a  jur}-,  it  appeared  that  the 
plaintiff,  having  insured  against  loss  or  damage  by  fire  the  furniture 
and  other  effects  in  Barnard's  Palace  of  Varieties  and  the  Bell  Tavern, 
Portsmouth,  with  the  Union  Assurance  Society  for  sums  amounting  to 
£800,  and  with  the  Glasgow  and  London  Insurance  Company,  Limited, 
for  sums  amounting  to  £700,  effected  a  Lloyd's  fire  polic}'  thereon  for 
£1000  at  256'.  per  cent  premium.  The  policy  covered  the  whole  of  the 
furniture  and  effects  as  one  interest,  and  contained  the  following  clause  : 
"  Wa_rianted  to  be  on  same  rate,  terms,  and  identical  jnterest  as  Union 
Insurance  Companv  £800.  and  Glasgow  and  London  £700,  and  to_fol- 
low  their  settlements.  The  North  British  and  Mercantile  have  £2500, 
and  London  and  Lancashire  £2000  on  building  and  fixtures." 

The  policy  was  subscribed  by  the  defendant  and  other  underwriters. 
The  property  described  in  the  policy  having  been  destro^-ed  or  damaged 
b}'  fire  to  the  amount  of  £1500,  the  plaintiff  brought  this  action  against 
the  defendant  for  payment  of  his  proportion  of  the  loss. 

The  substantial  defence  to  the  action  was  that  there  had  been  a 
breach  of  the  warranty  in  the  Lloyd's  policy,  more  especially  with  re- 
gard to  the  policy  of  the  Union  Company,  inasmuch  as  the  rate,  terms, 
and  interest  in  that  policy  were  not  "identical"  with  those  in  the 
Lloyd's  policy,  the  rate  or  premium  in  the  Union  polic}'  being  3l5.  Q>d. 
instead  of  25s.,  and  the  "interest"  insured  being  different,  the  sum 
insured  bj'  the  Union  policy  being  split  up  into  separate  sums  on  sepa- 

1  Compare  Glendale  Woolen  Co.  v.  Protection  Ins.  Co.,  21  Conn.  19  (18.51). 
See  Gilliat  v.  Pawtucket  Mutual  F.  Ins.  Co.,  8  II.  I.  282,  293-294  (1866) ;  Aiurora 
Fire  Ins.  Co.  v.  Eddy,  5&  111.  213  (1870).  — Ed. 


SECT.  II.]  B.\RNAKD   V.   FABER.  385 

rate  "  interests,"  or,  in  other  words,  upon  separate  sets  of  chattels; 
the  wording  of  the  policies  being  also  different. 

The  learned  judge  directed  judgment  to  be  entered  for  the  plaintiff. 

The  defendant  appealed. 

1.S92.  Dec.  10.  Finlaij,  Q.  C,  and  T.  W.  Chittij,  for  the  defendant. 
The  expression  "  warranted  "  in  the  policy  subscribed  bj'  the  defendant 
had  the  effect  of  making  the  clause  in  which  it  occurred  a  condition 
precedent  to  the  existence  of  any  obligation  on  the  defendant's  part; 
and  there  was  a  breach  of  such  condition  which  avoided  the  polic}'. 
[Tliey  cited  Behn  v.  Burness,  3  B.  &  8.  751  ;  Thomson  v.  Weems,  ^ 
App.  Cas.  671  ;SilIem  v.  Thornton,  3  E.  &  B.  868  ;  Anderson  v.  Fitz- 
gerald, 4  H.  L.  C.  484 ;  Newcastle,  Sac.  Co.  v.  Macmorran,  3  Dow. 
255,  at  p.  262.] 

Cohen,  Q.  C,  and  Wood  HIU,  for  the  plaintiff.  The  expi-ession 
"warranted"  had  no  greater  effect  than  that  of  making  the  clause  a 
collateral  stipulation,  the  non-performance  of  which  did  not  avoid  the 
policy,  but  onl}-  added  something  not  necessarilj-  involved  in  the  con- 
tract itself,  and  gave  rise  to  a  right  of  action,  counter-claim,  set-off,  or 
reduction  in  the  amount  payable. 

LiNDLKY,  L.  J.  I  cannot  agree  with  the  view  taken  b}-  the  learned 
judge  of  the  construction  of  this  document.  The  real  question  is, 
what  is  the  object  of  the  insertion  of  this  clause  of  warranty?  The 
policy  is  a  fire  policy  on  certain  property  at  25.§.  per  cent.  It  is  sub- 
scribed by  the  defendant  and  other  underwriters,  and  we  find  this  clause 
in  it :-  "  Warranted  to  be  on  same  rate,  terms,  and  identical  interest 
as  Union  Insurance  Company  £800,  and  Glasgow  and  London  £700, 
and  to  follow  their  settlements."  Then  two  other  companies  have  in- 
sured the  buildings  and  fixtures.  This  is  not  a  policy  on  buildings  and 
fixtures,  as  I  understand  it. 

It  appears  to  me  that  the  clause  can  have  only  one  object,  and  that 
\s  this:  "We  will  insure  provided  we  are  satisfied  that  the  Union  and 
the  Glasgow  have  insured  at  the  same  rate,  the  same  terms,  and  the 
same  interest."  I  do  not  profess  to  understand  what  the  word 
"terms"  means:  I  suppose  it  means  terms  as  to  risk;  it  cannot 
mean  terms  which  are  immaterial  for  the  purpose  of  the  contract.  It 
seems  to  me  that  what  was  contemplated  was  the  risk.  What,  I  appre- 
hend, the  underwriters  mean  is  this  :  "  Satisfy  us  that  these  two  offices 
have  insured  the  same  risk,  the  same  interest,  at  the  same  rate,  and 
we  will  effect  this  insurance."  I  cannot  myself  think  that  the  term 
"warranted"  is  important;  for  I  should  construe  this  policy  in  pre- 
cisely the  same  way  whether  the  word  was  in  or  not.  I  do  not  think 
the  policy  is  made  plainer  by  the  introduction  of  that  word.  I  look 
upon  part  of  the  clause  as  a  condition  precedent.  The  insurance^ is 
"to  be  on  the  same  vntp,  tpvms^  anrl_JjQigxast'',as_the_two^ompanie8^ 
which  are  named.  I  regard  that^art  aa_a^conditiQiL.  precedent--to-_the 
inciirring  of  any  liability  at  all.  The  remainder  of  the  clause  is  a  con- 
dition  subsequent. 

25 


3S6  BARNArvD   V.    FABER.  [cHAP.  V. 

Now,  unless  the  clause  is  so  read,  in  what  position  would  the  under- 
writers find  themselves?  They  would  then  find  that  they  had  come 
under  an  obligation,  and  that  they  were  thrown  back  upon  a  cross- 
action  against  the  insured.  Did  either  the  plaintiff  or  the  underwriters 
mean  that?  ^Yas  that  the  object  of  inserting  such  a  clause?  When 
you  have  a  clause  which  is  consistent  with  the  ordinary  habits  of  men 
if  vou  interpret  it  one  way,  and  which  is  utterly  inconsistent  witli  their 
ordinary  habits  if  you  interpret  it  another,  I  prefer  the  former  inter- 
pretation, that  is,  supposing  the  language  admits  of  a  double  inter- 
pretation. I  cannot  help  thinking  that  the  more  one  looks  at  this 
document,  the  more  plainly  it  appears  that  the  bargain  entered  into  by 
the  underwriters  was  this  :  "  We  will  not  insure  except  upon  the  terms 
that  these  two  companies  have  done — upon  tlie  same  rate,  upon  the 
same  terms,  whatever  they  may  be,  and  on  the  same  interest."  I 
think,  therefore,  that  the  learned  judge  has  an-ived  at  a  wrong  decision, 
and  tliat  the  defendant's  contention  is  riglit.  Judgment  must,  there- 
fore, be  entered  for  the  defendant,  with  costs  both  here  and  below. 

BowEN,  L.  J.  I  am  entirely  of  the  same  opinion,  and  I  confess  that 
the  matter  appears  to  me  to  be  quite  clear.  I  do  not  mean  to  say  that 
the  words  of  this  clause  of  warranty  are  happily  chosen,  but  I  think 
the  true  meaning  of  the  clause  is  really  transparent.  Tlie  object  of 
this  clause  is  to  have  other  companies  or  underwriters  in  the  same  boat 
as  regards  the  particular  interest  and  the  risk  to  be  covered  ;  and  the 
clause  is  one  which  is  intended  unquestionably  for  the  protection  of  the 
underwriters.  When  you  have  arrived  at  that,  it  seems  to  me  you  have 
arrived  at  half  the  journey's  end,  because  there  can  be  no  adequate 
protection  to  underwriters  if  you  relegate  them  to  a  cross-action.  The 
clause  is  intended  to  protect  them  against  having  to  pay,  not  to  give 
them  a  right  to  bring  an  action  against  the  man  insuring  with  them. 
But  the  way  in  which  the  clause  is  inserted  seems  to  me  to  lead  to 
precisely  the  same  conclusion,  and  to  guide  one  to  the  same  end.  The 
policy  is  one  which,  of  course,  is  signed  by  the  underwriters  ;  it  is  not 
signed  by  the  person  who  is  insuring  with  them  ;  and  it  is  expressed 
in  this  way:  "Warranted  to  be  on  same  rate,  terms,  and  identical 
interest  as  "  the  two  other  companies.  Now,  the  words  "  warranted  to 
be  "  must  mean  "  guaranteed  to  be,"  or  "  promised  to  be  ;  "  and  this 
document,  signed  as  it  is  by  the  underwriters,  must  mean:  "  It  is  a 
term  of  our  promise  that  there  shall  be  a  guarantee  or  promise  of  the 
other  side  "  ;  and  tlie  guarantee  or  promise  of  the  other  side  is  then 
expressed.  There  are  to  be  the  same  rate,  the  same  terms,  the  identi- 
cal interest,  as  in  the  case  of  the  two  otlier  companies.  It  is,  therefore, 
a  terra  of  this  policy  that  there  should  be  this  promise ;  and  if  this 
promise  is  one  which  goes  to  the  root  of  the  whole  engagement  and 
transaction,  then  it  becomes,  according  to  the  ordinary  principles  of 
ordinary  law,  a  condition,  —  cither  a  condition  precedent,  or,  if  the 
condition  is  one  which  cannot  be  construed  as  a  condition  precedent 
and  must  be  a  condition  subsequent,  then  it  becomes  a  condition  sub- 


SECT.  II.]  BARNARD    V.    FABER.  387 

sequent.  That  arises  from  the  materialit}-  of  the  promise  which  is  as- 
sumed to  be  made,  and  the  making  of  which  is  to  be  a  term  of  the 
eno-agement  or  transaction  into  wliich  the  underwriter  has  entered. 
"NVlien  you  have  got  as  far  as  that,  it  is  clear  that  it  is  the  term  as  re- 
gards the  risk  which  is  material.  A  term  as  regards  the  risk  must  be 
a  condition.  Then  let  us  look  at  what  the  particular  words  are  —  the 
"  same  rate  and  identical  interest."  The  ^'  same  rate  and  identical 
interest"  are,  obviously,  words  so  material  to  the  transaction  that  we 
can  only  construe  them  as  creating  a  condition  precedent.  With  regard 
to  the  word  "  terms,'"  it  is  not  necessary  for  us  to  decide,  or  to  explain 
exactly  what  it  means.  I  do  not  myself  doubt  that  there  is  a  limitation 
which  can  be  put  upon  it  —  a  limitation  to  be  derived  from  the  char- 
acter of  the  document,  from  the  nature  of  the  transaction,  and  from  tlie 
nature  of  the  stipulation  itself,  which  reduces  within  defined  and  reason- 
able limits  that  which  otherwise  might  be  vague,  impracticable,  and 
illimitable.  But  when  you  regard  the  words  which  alone  we  have  to 
look  at  for  the  purposes  of  this  appeal,  the  "  same  rate  and  identical 
interest"  as  the  insurance  companies,  I  do  not  doubt. for  a  moment 
that  it  is  a  condition  without  which  the  contract  is  not  to  be  binding. 

With  regard  to  the  words  "  to  follow  their  settlements,"  that  is  a 
condition  subsequent,  as  my  brother  has  said. 

The  true  construction  of  the  document  is,  in  my  opinion,  that  which 
I  have  stated ;  and  the  opposite  view  is  one  which,  to  my  mind,  never 
could  be  adopted  in  business,  for  this  reason,  that  I  do  not  believe 
that  there  is  an  underwriter  in  the  world  of  any  substantial  position 
who  would  put  his  hand  to  a  policy  in  which  a  terra  directly  affecting 
the  risk  was  to  be  enforced  only  by  a  cross-action  brought  on  the  part 
of  the  underwriter  against  the  insured  after  the  loss.  The  point  turns 
on  the  materiality  of  this  promise.  It  is  because  the  promise  is  so 
material  to  the  consideration  of  the  risk  that  it  seems  to  me  to  become 
a  condition. 

A.  L.  Smith,  L.  J.  I  am  of  the  same  opinion,  and  have  but  little 
to  add.  My  brother  Wright  evidently  had  considerable  difficulties  and 
doubts  upon  the  point,  and  I  think  the  decision  at  which  he  eventually 
arrived  was  wrong. 

The  question  is  —  whether  this  clause  contains  a  promise  which 
goes  to  the  root  of  the  transaction,  or  whether  it  is  merely  a  collateral 
stipulation  the  non-performance  of  which  did  not  avoid  the  defendant's 
obligation,  but  only  gave  him  a  cause  of  action.  We  must  look  to  the 
business  of  the  matter  in  construing  this  clause,  and  I  quite  agree  with 
what  has  fallen  from  Lindley,  L.  J.,  that  it  is  immaterial  wliether  the 
word  "  warranted  "  is  in  the  clause  or  not.  For  the  purposes  of  my 
judgment  I  strike  that  word  out.  The  question  is,  what  is  the  promise? 
Now,  to  state  it  as  shortly  as  I  can,  in  my  judgment  there  is  an  agree- 
ment in  this  policy  between  the  underwriter  and  the  assured  that  the 
underwriter  shall  insure  provided  that  only  the  same  risk  which  the 
other  two  offices  have  undertaken  is  placed  upon  him  —  the  reason  be- 


388  BARNARD  V.   FABER.  [CHAP.  V. 

ing  that  he  knows  those  offices,  and  the  risk  they  have  undertaken  he 
is  content  to  abide  b}'.  If,  however,  the  other  two  offices  have  not 
undertaken  the  same  risk  as  that  underwritten  by  the  defendant,  then, 
it  being  a  condition  of  this  poUcy  that  those  two  offices  should  have 
undertaken  the  same  risk,  there  is  no  Uability  on  the  part  of  the  under- 
writer if  this  is  not  so. 

I  am  of  opinion  that  this  clause  constitutes  a  condition  and  not  a 
collateral  agreement,  and  that  the  defence  is  a  good  one. 

Appeal  allowed.^ 

1  On  the  topic  of  this  section,  see  also :  — 
Mayall  v.  Mitford,  6  Ad.  &  E.  670  (1837) ; 
Gates  V.  Madison  County  Mutual  Ins.  Co.,  2  N.  Y.  43  (1848)  ;  8.  c.  at  a  later 

stage,  5  N.  Y.  469  (1851); 
Wilson  V.  Herkimer  County  Mutual  Ins.  Co.,  6  N.  Y.  53  (1851)  ; 
Daniels  v.  Hudson  River  F.  Ins.  Co.,  12  Cush.  416  (1853)  ; 
Washington  Mutual  Ins.  Co.  v.  Merchants  and  Manufacturers'  Mutual  Ins.  Co., 

5  Ohio  St.  450  (1856); 
Ripley  v.  JEtna  Ins.  Co.,  30  N.  Y.  136  (1864)  ; 
Carter  v.  Humboldt  F.  Ins.  Co.,  17  Iowa,  456  (1864)  ; 
Poor  V.  Humboldt  Ins.  Co.,  125  Mass.  274  (1878)  ; 
Wheeler  v.  Watertown  F.  Ins.  Co.,  131  Mass.  1  (1881) ; 
Martin  i'.  State  Ins.  Co.,  44  N.  J.  L.  485,  490-495  (1882) ; 
Bennett  v.  Agricultural  Ins.  Co.,  51  Conn.  504  (1884) ; 
Rankin  v.  Amazon  Ins.  Co.,  89  Cal.  203  (1891); 
Virginia  F.  &  M.  Ins.  Co.  v.  Morgan,  90  Va.  290  (1893)  ; 
King  Brick  Mfg.  Co.  v.  Phoenix  Ins.  Co.,  164  Mass.  291  (1895)  ; 
Southern  Ins.  Co.  v.  Parker,  61  Ark.  207  (1895). 
Goldman  v.  North  British  Mercantile  Ins.  Co.,  48  La.  Ann.  223  (1896).  — Ed. 


SECT.  III.]  KOSS   V.   BRADSIIAW.  389 


SECTION    III. 

Life  Insurance.^ 

ROSS   V.   BRADSHAW. 

Nisi  Prius,  1761.     2  Park  lus.  (8th  ed.)  933. ^ 

In  an  action  on  a  policy  made  on  the  life  of  Sir  James  Ross  for  one 
year  from  October,  1759,  to  October,  1760,  loarrantediii  good  health 
at  the  time  of  making  the  policy  ;  the  fact  was,  that  Sir  James  had 
received  a  wound  at  the  battle  of  La  Feldt,  in  the  year  1747,  in  his 
loins,  which  had  occasioned  a  partial  relaxation  or  palsy,  so  that  he  could 
not  retain  his  urine  orfceces,  and  which  was  not  mentioned  to  the  in- 
surer. Sir  James  died  of  a  malignant  fever  within  the  time  of  the 
insurance.  All  the  physicians  and  surgeons,  who  were  examined  for 
the  plaintiff,  swore  that  the  wound  had  no  sort  of  connection  with  the 
fever ;  and  that  the  want  of  retention  was  not  a  disorder,  which  short- 
ened life,  but  he  might,  notwithstanding  that,  have  lived  to  the  common 
age  of  man ;  and  the  surgeons  who  opened  him  said  that  his  intestines 
were  all  sound.  There  was  one  physician  examined  for  the  defendant, 
who  said  the  want  of  retention  was  paralytic ;  but  being  asked  to  ex- 
plain, he  said  it  was  only  a  local  palsy,  arising  from  the  wound,  but 
did  not  affect  life ;  but  on  the  whole  he  did  not  look  upon  him  as  a 
good  life. 

Lord  Mansfield.  The  question  of  fraud  cannot  exist  in  this  case. 
When  a  man  makes  insurance  upon  a  life  generall}',  without  any  rep- 
resentation of  the  state  of  the  life  insured,  the  insurer  takes  all  the  risk, 
unless  there  was  some  fraud  in  the  person  insuring,  either  by  his  sup- 
pressing some  circumstances,  which  he  knew,  or  by  alleging  what  was 
false.  But  if  the  person  insuring  knew  no  more  than  the  insurer,  the 
latter  lakes  the  risk.  In  this  case  there  is  a  warranty,  and  wherever 
that  is  the  case  it  must  at  all  events  be  proved,  that  the  party  was  a 
good  life,  which  makes  the  question  on  a  warranty  much  larger  than 
that  on  fraud.  Here  it  is  proved  that  there  was  no  representation  at 
all  as  to  the  state  of  life,  nor  any  question  asked  about  it,  nor  was  it 
necessary.  Where  an  insurance  is  upon  a  representation,  every  mate- 
rial circumstance  should  be  mentioned,  such  as  age,  way  of  life,  &c. 
But  where  there  is  a  warranty,  then  nothing  need  be  told  ;  but  it  must 
in  genera]  be  proved,  if  litigated,  that  the  life  was,  in  fact,  a  good  one, 

1  In  addition  to  warranties  properly  so  called,  here  have  been  placed  conditions 
expressly  avoiding  the  contract  because  of  misstatements  in  the  application.  —  Ed. 

2  8.  c.  1  W.  Bl.  312.— Ed. 


390  WILLIS  V.  POOLE.  [chap.  V. 

and  so  it  may  be,  though  loe  have  a  particular  iyiHrmity.  The  only 
question  is,  "  Whether  he  teas  in  a  reasonable  good  state  of  health,  and 
such  a  life  as  ought  to  be  insured  on  common  terms? ''^ 

The  jury,  upon  this  direction,  without  going  out  of  court,  found 
a  verdict  for  the  plaintiff . 


WILLIS   V.   POOLE. 
Nisi  Prius,  1780.     2  Park  Ins.  (8th  ed.)  934. 

It  was  an  action  on  a  policy  on  the  life  of  Sir  Simeon  Stuart,  Bart., 
from  the  1st  of  April,  1779,  to  the  1st  of  April,  1780,  and  during  the 
life  of  P]liza  Edgly  Ewer.  This  policy  contained  a  warranty  that  Sir 
Simeon  was  about  fifty-seven  years  of  age,  and  in  good  health  on  the 
11th  of  May,  1779,  and  tliat  Mrs.  Ewer  was  about  seventy-eight  years 
of  age.  The  defendant  at  the  trial  admitted,  that  Sir  Simeon  and  Mrs. 
Ewer  were  of  the  respective  ages  mentioned  in  the  warranty  ;  that  he 
died  before  the  1st  of  April,  1780,  and  that  she  was  living.  Two 
questions  were  intended  to  have  been  made :  1st,  As  to  the  plaintiff's 
interest ;  2nd,  On  the  warranty  of  health.  The  former  was  disposed  of 
by  the  plaintiff  having  proved  a  judgment  debt.  As  to  the  latter  it 
appeared  in  evidence,  that  although  Sir  Simeon  was  troubled  with 
spasms  and  cramps  from  violent  fits  of  the  gout,  he  was  in  as  good 
health,  when  the  policy  was  underwritten,  as  he  had  been  for  a  long 
time  before.  It  was  also  proved  by  the  broker,  who  effected  the  policy, 
that  the  underwriters  were  told  that  Sir  Simeon  was  subject  to  the 
gout.  Dr.  Heberden  and  other  gentlemen  of  the  faculty  were  ex- 
amined, who  proved  that  spasms  and  convulsions  were  symptoms 
incident  to  the  gout. 

Lord  Mansfield.  The  imperfection  of  language  is  such  that  we 
have  not  words  for  every  different  idea ;  and  the  real  intention  of  par- 
ties must  be  found  out  by  the  subject-matter.  By  the  present  policy, 
the  life  is  warranted,  to  some  of  the  underwriters  in  health,  to  others 
in  good  health ;  and  yet  there  was  no  difference  intended  in  point  of 
fact.  Such  a  xoarranty  can  never  mean  that  a  man  has  not  the  seeds 
of  disorder.  We  are  all  born  with  the  seeds  of  mortality  in  us.  A 
man,  subject  to  the  gout,  is  a  life  capable  of  being  insured,  if  he  has  no 
sickness  at  the  time  to  make  it  an  unequal  contract. 

There  was  a  verdict  for  the  plaintiff ?■ 

1  Other  cases  on  good  health  are :  Grattan  v.  Metropolitan  L.  Ins.  Co.,  92  N.  Y. 
274  (188.3);  Brown  v.  Metropolitan  L.  Ins.  Co.,  65  Mich.  306  (1887);  Maine  Benefit 
Assn.  V.  Parks,  81  Me.  79  (1888).  —Ed. 


SECT.  III.]  ANDERSON    V.    FITZGERALD.  391 


^ 


ANDERSON,  Plaintiff  in  Error,  v.  FITZGERALD, 
Defendant  in  Error. 

House  of  Lords,  1853.     4  H.  L.  C.  484.^ 

This  was  a  writ  of  error  on  a  judgment  of  the  Court  of  Exclieqner 
Chamber  in  Ireland.  The  original  aetiun.  brongtit  bj-  Anne  Fitzgerald, 
administratrix  of  Pati'ick  Fitzgerald,  against  Samuel  Anilerson,  as  one 
of  the  directors  of  the  United  Kingdom  Life  Assurance  Company,  was 
assumpsit  upon  a  life  insurance  policy,  of  which  the  following  are  the 
only  passages  bearing  on  the  questions  taken  to  the  higher  courts  :  — 

"Whereas  Patrick  Fitzgerald,  of  Kilrush,  in  the  county  of  Clare, 
Ireland,  nurseryman,  is  desirous  of  making  an  assurance  with  the 
United  Kingdom  Life  Assurance  Company-  in  the  sum  of  £450  upon 
his  own  life,  and  hath  warranted,  and  doth  warrant,  that  his  name, 
residence,  and  profession,  business  or  occupation,  is  as  above  stated, 
and  that  his  age  will  not  exceed  fifty-two  j-ears  on  his  next  birthday, 
.  .  .  and  that  he  has  a  sound  and  good  constitution,  and  is  now  in  a 
good  state  of  health.   .   .  . 

"  Know  all  men  by  these  presents,  that  if  the  said  Patrick  Fitzgerald 
shall  die  ,  .  .  the  funds  and  property  of  the  said  company  shall  be 
subject  and  liable  to  pay  .  .  .  unto  his  executors,  administrators,  or 
assigns  the  sum  of  £450  hereb}-  assured. 

"Provided  always  that  in  case  the  said  Patrick  Fitzgerald  shall  die 
upon  the  high  seas,  ...  or  shall  kill  or  destroy  himself,  or  cause  his 
own  death,  whether /e^o  de  se  or  otherwise,  or  die  by  duelling  or  by 
the  hand  of  justice,  or  if  anything  so  warranted  as  aforesaid  shall  not 
be  true,  or  if  any  circumstance  material  to  this  insurance  shall  not  have 
been  truly  stated,  or  shall  have  been  misrepresented  or  concealed,  or 
shall  not  have  been  fully  and  fairly  disclosed  and  communicated  to  the 
said  company,  or  if  any  fraud  shall  have  been  practised  upon  said  com- 
pany, or  any  false  statements  made  to  them  in  or  about  the  obtaining 
or  effecting  of  this  insurance,  this  policy  shall  be  null  and  void." 

The  defendant  pleaded  non  assu77ipsif  and  certain  special  pleas. 

At  the  trial  it  appeared  that  before  obtaining  the  insurance  Patrick 
Fitzgerald  had  signed  a  proposal  containing  twenty-seven  questions 
and  answers.  The  only  passages  bearing  on  the  questions  taken  to 
the  higher  courts  are  these  :  — 

"  21st.  —  Did  any  of  the  party's  near  relations  die  of  consumption  or 
an}'  other  pulmonary  complaint?  —  No. 

"  22nd.  —  Has  the  party's  life  been  accepted  or  refused  at  any  office  ; 

1  The  statement  has  been  rewritten,  largely  upon  the  basis  of  the  report  in  the 
Irish  Exchequer  Chamber,  1  Irish  Common  Law,  251  (1851).  —  Ed. 


302;  ANDERSON   V.    FITZGERALD.  [CHAP.  V. 

and  if  accepted,  was  it  at  the  usual  premium  or  with  what  addition?  — 
Kg.  .  .  . 

"  I  hereby  agree  that  the  particulars  mentioned  in  the  above  pro- 
posal .  .  .  shall  form  the  basis  of  the  contract  between  the  assured 
and  the  companj- ;  and  if  there  be  any  fraudulent  concealment  or  un- 
true allegation  contained  therein,  or  an}-  circumstance  material  to  this 
insurance  shall  not  have  been  fully  communicated  to  the  said  company, 
or  there  shall  be  any  fraud  or  misstatement,  all  money  which  shall  have 
been  paid  on  account  of  this  insurance  shall  become  forfeited,  and  the 
policy  be  void." 

There  was  evidence  tending  to  show  that  several  of  the  statements  in 
the  proposal  were  false  ;  amongst  others  the  statement  that  the  appli- 
cant had  not  been  insured  at  an}-  other  office,  and  the  statement  as  to 
the  health  of  the  members  of  the  family,  it  being  proved  that  two  of 
the  applicant's  sisters  had  died  of  consumption  at  the  ages  of  sixt}'- 
five  and  sixt3--seven  respectivel}-. 

The  defendant's  counsel  called  on  the  judge  to  direct  the  jurors  that 
if,  previous  to  the  making  of  the  policy,  any  false  statement  was  made 
to  the  company  in  or  about  the  obtaining  or  effecting  of  the  said  insur- 
ance, though  the  jur}-  should  believe  that  the  same  was  not  material  to 
the  insurance,  the}-  should  find  a  verdict  for  the  defendant.  The  de- 
fendant's counsel  also  called  on  the  judge  to  direct  the  jurors  to  similar 
effect  specifically  with  reference  to  the  answers  numbered  21  and  22 
respectively.  The  judge  refused  to  give  any  of  these  instructions  ;  and 
lie  directed  the  jurymen  that  they  "  must  not  only  be  satisfied  that  the 
various  false  statements  relied  on  b}-  the  defendants  were  false  in  fact, 
and  were  made  in  and  about  effecting  the  policj-,  but  also  that  such 
false  statements  were  material  to  the  insurance,  before  the}-  could  find 
their  verdict  for  the  defendant ; "  and  he  gave  similar  instructions 
specifically  as  to  answers  21  and  22  respectively.  Exceptions  were 
taken  to  these  charges  and  refusals  to  charge.  These  exceptions  re- 
lated to  the  first  issue ;  and  there  were  also  exceptions  relating  to  the 
other  issues.  The  verdict  was  for  the  plaintiff.  The  exceptions  were 
argued  in  the  Court  of  Exchequer,  when  the  Lord  Chief  Baron  ex- 
pressed an  opinion  that  they  ought  to  be  allowed,  but  Mr.  Baron 
Richards  and  Mr.  Baron  Lefroy  being  of  a  different  opinion,  judgment 
was  ordered  to  be  entered  for  the  plaintiff.  A  writ  of  error  was  brought 
in  the  Court  of  Exchequer  Chamber,  where,  by  a  majority  of  seven  to 
three,  the  judgment  of  the  court  below  was  affirmed.  The  present  writ 
of  error  was  then  brought. 

The  judges  were  summoned,  and  Mr.  Baron  Parke,  Mr.  Baron 
Alderson,  Mr.  Justice  Coleridge,  Mr.  Justice  Wightman,  Mr.  Justice 
Erie,  Mr.  Justice  Cresswell,  Mr.  Baron  Piatt,  Mr.  Justice  Talfourd, 
I^Ir.  Justice  Williams,  Mr.  Baron  Martin,  and  Mr.  Justice  Crompton 
attended. 

Sir  F.  Kelly  and  Mr.  Sovill^  for  the  plaintiff  in  error. 

Mr.  Napier  and  Mr.  Fitzgerald,  for  the  defendant  in  error. 


SECT.  III.]  ANDERSON   V.    FITZGERALD.  893 

The  Lord  Chancellor,^  having  stated  the  pleadings  and  evidence, 
said  :  2  .  .  .  Now  in  order  to  get  that  information  which  shall  enable 
the  House  satisfactorily  to  decide  the  whole  of  this  ease,  I  propose  to 
put  to  the  learned  judges  these  two  questions  :  — 

1.  Was  it  necessary  for  the  plaintiff  in  error  to  prove  on  the  trial 
that  the  answers  given  by  Fitzgerald  to  questions  21  and  22,  contained 
ill  tlie  particulars,  dated  Kilrush,  17th  June,  1846,  or  either  of  them, 
were  or  was  material  as  well  as  false?     And  secondly, 

2.  If  it  was  necessar}'  for  the  plaintiff  in  error  to  prove  the  mate- 
rialit}-  as  well  as  the  falsehood  of  the  answers,  or  either  of  them,  are 
the  exceptions,  so  far  as  the}'  relate  to  the  ruling  of  the  learned  judge 
on  the  issues  joined  on  the  second  and  third  pleas,  or  is  either  of  them, 
sustainable? 

The  judges  asked  time  to  consider  the  questions. 

Ordered. 

Mr.  Baron  Parke.  Your  Lordships  have  proposed  two  questions  for 
the  consideration  of  those  of  her  Majesty's  judges  who  heard  the  argu- 
ment of  this  case  at  your  Lordships'  bar.^  .  .  . 

The  answers  referred  to  by  your  Lordships  were  given  to  two  ques- 
tions put  to  the  assured,  Fitzgerald  :  the  first,  whether  any  of  the  party's 
near  relatives  died  of  consumption  or  other  pulmonary  complaint?  and, 
secondly,  whether  the  party's  life  had  been  accepted  or  refused  at  any 
other  office,  and  if  accepted,  whether  at  the  usual  premium,  or  with 
what  addition?  To  both,  the  assured  answered  in  the  negative.  At 
the  end  of  the  list  of  questions  the  assured  subscribed  a  declaration  to 
the  effect  that  the  particulars  should  form  the  basis  of  the  contract  be- 
tween the  assured  and  the  company,  and  that  if  there  should  be  any 
fraudulent  concealment  or  untrue  allegation  contained  therein,  or  any 
circumstance  material  to  the  insurance  should  not  have  been  fully  com- 
municated to  the  company,  or  if  there  should  be  any  fraud  or  misstate- 
ment, all  the  money  paid  on  account  of  the  insurance  should  be  forfeited, 
and  the  policy  should  be  void. 

The  first  question  then  submitted  to  us  is.  Whether  it  was  necessary 
for  the  plaintiff  in  error  to  prove  on  the  trial  that  the  above  answers,  or 
either  of  them,  were  or  was  material,  as  well  as  false?  We  are  all  of 
opinion  that  it  was  not. 

This  question  does  not  appear  to  us  to  turn  upon  the  well-known 
distinction  between  warranties  and  representations  laid  down  by  Lord 
Mansfield,  nor  upon  the  point  whether  the  declaration  above  mentioned 
was  either  a  part  of  the  contract  binding  between  the  parties  independ- 
ent of  the  policy,  or  meant  to  be  referred  to  by  it.  The  proviso  is 
clearly  a  part  of  the  express  contract  between  the  parties,  and  on  the 
non-compliance  with  the  condition  stated  in  tlie  proviso,  the  policy  is 
unquestionabW  void. 

1  Lord  Cranworth.  —  Ed. 

2  The  omitted  passage  stated  the  exceptions  taken.  —  Ed. 

^  Here,  and  throughout  the  remainder  of  the  case,  the  report  has  been  abbreviated 
by  omitting  passages  not  essential  to  an  understanding  of  the  decision.  —  Ed. 


394  ANDERSON    V.    FITZGERALD.  [CHAP.  V. 

The  case  therefore  resolves  itself,  in  our  view  of  it,  as  it  does  in  that 
of  most  of  the  Irish  judges,  simply  into  a  question  of  the  construction 
of  the  proviso  itself ;  and  it  is  upon  questions  of  that  nature  that  differ- 
ent minds  are  apt  to  differ  in  their  conclusions,  however  disposed  to 
adopt  the  established  rules  for  the  construction  of  written  instruments. 

By  that  proviso  it  is  stipulated,  first,  that  if  the  assured  should  die  on 
the  high  seas  (with  certain  exceptions),  or  should  kill  himself,  or  die  b}' 
duelling,  &c.,  or  if  anything  warranted  as  before  mentioned  (and  there 
were  several  express  warranties  before  stated)  should  not  be  true,  or  if 
an}'  circumstance  material  to  that  insurance  should  not  have  been  truly 
stated  or  should  have  been  misrepresented  or  concealed,  or  should  not 
have  been  fully  and  fairly  disclosed  and  communicated  to  the  compan}-, 
the  polic}'  should  be  void.  Thus  far  the  condition  applies  onl}'  to  ma- 
terial matters  ;  but  it  proceeds  to  declare,  obviously'  with  a  view  of  ex- 
tending the  protection  to  the  office  still  further,  that  if  any  fraud  shall 
have  been  practised  on  the  company*,  or  any  false  statements  made  to 
the  company  in  or  about  the  obtaining  or  effecting  of  that  insurance, 
the  policy  shall  be  null  and  void.  The  latter  words  probably  override  the 
former,  and  the  fraud,  as  well  as  the  false  statement,  in  order  to  avoid  the 
policy,  must  be  made  in  or  about  the  obtaining  or  effecting  of  that  insur- 
ance. These  words,  no  doubt,  must  be  understood  not  to  include  a  false 
statement  of  matters  to  the  disparagement  of  the  applicant  for  insurance, 
and  tending  to  render  his  life  less  insurable  ;  such  a  construction  would  be 
clearly  absurd,  and  in  no  way  reconcilable  with  the  manifest  object  of 
the  proviso.  The  words,  however,  will  clearly  include  all  frauds  or  false 
statements  made  in  order  to  obtain  the  polic}',  whether  in  matters  ma- 
terial or  not ;  a  consistent  construction  will  thus  be  given  to  the  whole. 
The  proviso,  in  the  first  place,  provides  for  the  violation  of  the  special 
matters  mentioned  in  the  commencement  of  it.  Next,  it  requires  every 
material  fact  not  to  be  misrepresented  or  concealed,  but  to  be  fully 
and  fairly  declared.  But  it  goes  further.  In  the  anxiety  of  the  com- 
pany to  protect  itself  b}-  every  precaution,  it  prohibits  an}'  fraud  or 
falsehood  whatever  to  be  used  in  obtaining  the  insurance.  It  includes 
all  frauds  for  that  purpose,  though  not  made  by  concealment  or  mis- 
representation, by  word  or  writing,  of  material  facts,  such  as  fraud  in 
false  personation,  or  in  the  disguise  of  the  diseases  of  the  applicant ; 
and,  lastl}-,  it  prohibits  every  false  statement  whatever,  whether  in 
matters  actually  material  or  immaterial,  and  leaves  no  room  for  dis- 
pute whether  the  particular  matter  to  which  it  related  was  material  or 
not  (which  in  the  case  of  a  dispute  a  jury  would  have  to  decide),  leaving 
the  company  to  determine  entirely  for  itself  what  matters  it  deems  mate- 
rial and  what  not. 

This  seems  to  us  to  be  the  obvious  ordinary  sense  of  the  words  used, 
and  there  is  no  reason  from  the  context  to  give  any  other  than  the 
ordinary  sense  to  them,  though  they  are  to  be  construed  as  the  words 
of  the  assurers,  and  most  strongly  against  them  if  there  is  any  am- 
biguity in  them.     There  is  no  ambiguity  in  them  in  this  respect.     A 


SECT.  III.]  ANDERSON   V.   FITZGERALD.  395 

doubt  possibly  may  exist  whether  the  word  "  false  "  is  to  be  under- 
stood in  the  sense  of  false  in  point  of  fact,  or  morall}'  false,  though,  I 
believe,  most  of  us  think  that  it  is  not  to  be  limited  to  moral  falsehood  ; 
but  there  seems  to  us  to  be  no  doubt  that  if  the  statements  are  false,  in 
whatever  sense  we  understand  that  word,  being  used  in  effecting  the  in- 
surance, this  proviso  operates.  There  then  appear  to  us  to  be  only  two 
questions  for  the  jur}'  on  this  part  of  the  policy  :  Were  the  statements 
false?  "Were  they  made  in  obtaining  or  effecting  the  policy'?  Whether 
they  are  material  or  not  is  not  a  necessar}-  part  of  the  inquiry-.  It  has 
seemed  to  two  eminent  members  of  the  Irish  Bench,  Mr.  Justice  Moore 
and  the  then  Lord  Chief  Justice  Blackburne,  that  the  materiality  of  the 
question  was  involved  in  the  inquirj-  whether  it  was  used  by  the  assured 
to  induce  the  company  to  effect  the  policy.  We  do  not  agree  with  that 
reasoning.  It  is  true  that  the  materiality  of  these  statements  may  be' 
sometimes  evidence  of  the  purpose  with  which  they  were  made,  and 
ma}'  tend  to  show  that  tliey  were  made  with  the  object  of  obtaining  the 
polic}',  because  if  immaterial  they  would  not  be  likely  to  effect  it ;  but 
the  materialit}'  is  not  a  necessary  condition  to  bring  them  within  the 
scope  of  the  proviso,  if  it  can  be  shown  that  the  statements  were  made 
in  obtaining  the  policy  and  for  the  purpose  of  effecting  it ;  and  here 
the  terms  of  the  particulars  and  the  subjoined  declaration  preclude  all 
doubt  upon  that  question  ;  for  the  truth  of  the  answers  is,  in  the  strong- 
est terms,  made  essential  to  the  validity  of  the  polic}". 

We  therefore  answer  j'our  Lordships'  first'question  in  the  negative, 
notwithstanding  the  abilitv  shown  b}'  the  judges  who  have  expressed 
their  opinion,  that  the  materiality'  of  the  answers  was  a  necessary  part 
of  the  proof. 

With  respect  to  the  second  question  proposed  by  3'our  Lordships,  we 
answer,  that  the  exceptions,  on  the  issue  joined  on  the  second  and  third 
pleas,  are  not  sustained,  and  that  on  a  formal  ground.  .   .   . 

The  Lord  Chaxcellor.  .  .  .  The  plea  upon  which  the  question 
arises  is  the  old  plea  of  non  assumpsit,  for  I  need  hardly  remind  3'our 
Lordships  that  the  "  new  rules"  of  pleading  adopted  in  this  country  do 
not  extend  to  Ireland. 

Now,  among  the  particulars  constituting  that  paper  which  Fitzgerald 
signed,  and  which  he  agreed  should  be  the  basis  of  the  contract  between 
him  and  the  compan}',  there  were  two  questions  to  which  he  was  called 
upon  to  make  an  answer,  and  which  he  did  answer.  .  .  .  Striking  out 
all  the  other  articles  from  those  particulars,  the  result  therefore  is,  tliat 
Fitzgerald  agrees  that  the  basis  of  the  contract  between  him  and  the 
company  shall  be  that  he  truly  represents  to  the  company  that  none  of 
his  near  relations  died  of  consumption,  or  any  other  pulmonarj*  com-' 
plaint,  and  that  his  life  had  never  been  accepted  or  refused  at  any 
other  office.  .   .   . 

Although  the  learned  Chief  Justice  Blackburne  came  to  a  conclusion 
different  from  that  at  which  the  learned  judges  now  advising  your  Lord- 
ships have  arrived,  and  in  which  I  concur,  and  in  which  I  am  about  to 


396  ANDERSON    V.   FITZGEEALD.  [CHAP.  V. 

propose  to  your  Lordships  to  concur,  yet  T  think  he  very  distinctlj-  states 
(and  the  other  learned  judges  forming  the  majority  concurred  with  him) 
the  point  on  which  the  question  turned.  He  says  :  "  The  plaintiff  in 
error  contends  that  it  is  sufficient  to  ascertain,  sirapl}-  in  the  terms  of 
the  polic}',  that  the  false  statement  was  made  in  or  about  obtaining  it ; 
and  that  when  this  is  done,  the  words  of  the  condition  are  so  compre- 
hensive and  stringent,  that  the  question  is  solved  and  the  policy  avoided, 
whether  the  statement  was  material  or  immaterial ;  in  other  words,  that 
we  are  to  read  the  clause  as  if  it  had  contained  those  verj-  words.  I  ad- 
mit if  this  be  the  meaning  of  the  words,  —  if  this  be  so  clearly  expressed 
as  not  to  admit  of  any  other  rational  construction,  —  we  must  give 
them  the  operation  contended  for.  But  is  this  so?  It  is  obvious,  that 
to  maintain  a  defence  founded  upon  this  provision  of  the  policy,  proof 
must  be  made,  —  first,  of  the  false  statement  of  some  matter  of  fact ; 
and,  secondly,  that  it  occurred  on  the  occasion  of  effecting  the  polic}-. 
The  judge  and  jury  must  inquire  into  both,  and  decide  both."  Up 
to  this  point  I  entirely  concur  with  the  learned  judge  ;  he  puts  the  case 
very  distinctly  and  clearly.  He  then  goes  on  thus  :  "  What  could  an- 
swer this  inquiry,  or  be  said,  with  any  propriety  of  language,  to  come 
within  such  terms,  but  a  misstatement  used  by  the  assured  to  induce 
the  company  to  contract,  and  how  could  it  have  done  so  if  it  had 
been  utterly  immaterial?"  Now  there,  my  Lords,  I  differ  from  the 
learned  judge.  The  company  stipulates  this,  that  the  assured  shall  con- 
tract with  the  company  that  he  warrants  certain  things  to  be  correct, 
and  further  stipulates  that  if  he  should  make  to  the  company  any 
unti'ue  statement  in  and  about  effecting  the  policy,  such  untrue  state- 
ment shall  avoid  the  policy ;  and  then  the  company  says  that  it  will 
not  contract  with  him  till  he  shall  answer  certain  questions  which  are 
made  the  basis  of  the  contract.  Among  those  questions  are  these  two : 
"  Have  any  of  your  relations  died  of  pulmonary-  complaints?  Has  an 
insurance  on  your  life  been  accepted  or  refused  at  any  other  office?" 
The  stipulation  is,  that  if  he  shall  not  answer  these  questions  accuratel}', 
the  policy  shall  be  void.  That  is  the  interpretation  of  the  contract, 
which,  taking  together  the  policy  and  the  particulars  required  to  be 
subscribed,  appears  to  me  irresistible.  The  requirement  is  extremely 
reasonable.  That  we  need  not  speculate  on ;  but  the  reason  for  mak- 
ing such  a  stipulation  is  obvious,  and  is  explained  by  this  ver}*  case. 
"Whether  certain  statements  are  or  are  not  material,  where  parties  are 
entering  into  a  contract  of  life  assurance,  is  a  matter  upon  which  there 
must  be  a  divided  opinion.  Nothing,  therefore,  can  be  more  reason- 
able than  that  the  parties  entering  into  that  contract  should  determine 
for  themselves  what  the}'  think  to  be  material,  and  if  they  choose  to  do 
so,  and  to  stipulate  that  unless  the  assured  shall  answer  a  certain  ques- 
tion accurately,  the  policy  or  contract  which  they  are  entering  into  shall 
be  void,  it  is  perfectly  open  to  them  to  do  so,  and  his  false  answer  will 
then  avoid  the  polic}'. 

Now  it  appears  to  me,  my  Lords,  that  that  is  precise]}'  what  has  been 


SECT.  III.]  ANDERSON    V.   FITZGERALD.  397 

done  here.  The  parties  entering  into  the  insurance  have  so  stipulated. 
"  Tlie  basis  of  our  contract  shall  be  3'our  answering  truly  these  two 
questions."  There  were  a  great  many  others ;  but,  putting  those 
aside,  the}'  say  the  basis  of  the  contract  between  us  shall  be  that  3-ou 
shall  answer  truh^  those  two  questions,  and  if  you  do  not  answer  them 
trul}-,  the  policy  shall  be  void.  But  then,  when  the  trial  comes  as  to 
whether  the  plaintiff  has  made  out  his  right  under  that  polic}',  the  ques- 
tion is,  whether  the  direction  to  the  jurj-  ought  not  to  have  been,  "  You 
are  to  ascertain  whether  what  was  then  stated  was  untrue,  was  false ; 
whatever  interpretation  may  be  given  to  the  word  '  false,'  if  it  was  false, 
there  is  no  question  as  to  whether  it  was  material  or  not,  the  parties 
having  stipulated  that  if  it  was  false  the  policy  shall  be  void."  The 
question  for  the  jury  to  decide  was  simply  whether  it  was  false  or  not. 
In  that  narrow  compass  the  whole  case  Hes. 

The  learned  judges  who  decided  that  the  direction  actually  given  was 
good,  proceeded  upon  the  well-known  rule  of  law,  that  there  is  a  great 
distinction  between  that  which  amounts  to  what  is  called  a  warranty 
and  that  which  is  merely  a  representation  inducing  a  party  to  enter  into 
a  contract.  Thus,  if  a  person  effecting  a  policy  of  insurance  sa3-s,  "  I 
warrant  such  and  such  things  which  are  here  stated,"  and  that  is  part 
of  the  contract,  then,  whether  thej'  are  material  or  not  is  quite  unim- 
portant, —  the  party  must  adhere  to  his  warranty,  whether  material  or 
immaterial.  But  if  the  part}'  makes  no  warranty  at  all,  but  sirapW 
makes  a  certain  statement,  if  that  statement  has  been  made  bo7id  Jide, 
unless  it  is  material,  it  does  not  signifj*  whether  it  is  false  or  not  false. 
Indeed,  whether  made  bona  fide  or  not,  if  it  is  not  material,  the  untruth 
is  quite  unimportant.  If  the  man  on  entering  into  the  policy  had  said 
that  he  arrived  at  Dublin  three  days  previousl}',  whereas  he  had  only 
arrived  that  morning,  and  such  statement  did  not  form  part  of  the  con- 
tract, then,  though  false,  it  would  be  quite  immaterial.  If  there  is  no 
fraud  in  a  representation  of  that  sort,  it  is  perfectly  clear  that  it  cannot 
affect  the  contract ;  and  even  if  material,  but  there  is  no  fraud  in  it, 
and  it  forms  no  part  of  the  contract,  it  cannot  vitiate  the  right  of  the 
party  to  recover. 

There  are  several  cases,  which  are  collected  together  in  the  1st  Vol. 
of  Douglas,^  in  which  this  principle  is  well  illustrated.  But,  my  Lords, 
it  appears  to  me  that  that  principle  has  no  application  to  a  case  where 
it  is  part  of  the  contract,  as  it  is  here,  that  if  a  particular  statement 
is  untrue,  then  the  contract  shall  be  at  an  end.  That  distinction  ap- 
pears to  me  to  have  been  overlooked  by  the  learned  judges,  and  that 
oversight  has  been  the  ground  of  that  which  I  must  consider  to  be  the 
erroneous  conclusion  at  which  they  arrived. 

My  Lords,  it  is  within  this  narrow  compass  that  the  case  lies.  We 
had  the  advantage  of  the  assistance  of  eleven  of  the  learned  judges  of 
this  country.     They  all  took  the  same  view  of  the  case,  and  they  were 

1  Bean  v.  Stupart,  Dougl.  11,  and  the  cases  there  collected  in  the  notes;  see  also 
Dougl.  284.  —  Rep. 


398  WILKINSON  V.  CONNECTICUT  MUTUAL  LIFE  INS.  CO.       [CHAP.  V. 

all  of  opinion  that  the  learned  judges  in  Ireland  committed  an  erroi-  in 
supposing  that  the  doctrine  of  representation,  as  distinguished  from 
warranty,  was  applicable  to  the  present  case  where  the  representation 
is  itself  included  in  the  contract.  They  thought  that  the  conclusion  at 
which  the  learned  judges  in  Ireland  arrived  was  erroneous.  My  Lords, 
in  that  view  of  the  case  I  entirely  concur.  I  shall  therefore  think  it  my 
duty  to  move  your  Lordships  that  judgment  be  given  for  the  plaintiff  in 

error. 

Lord  Brougham.  My  Lords,  I  entirely  agree  with  my  noble  and 
learned  friend,  that  this  case  really  lies  in  a  very  narrow  compass.  It 
depends  entirely  upon  the  construction  which  we  are  to  put  upon  these 
words  in  the  policy,  "  or  any  false  statement  made  to  them,"  the  insur- 
ers, "  in  or  about  the  obtaining  or  effecting  of  this  insurance."  .  .   . 

The  truth  of  the  statement,  it  being  part  of  the  contract,  not  its  ma- 
teriality, was  in  issue.  I  am  therefore  of  opinion,  with  my  noble  and 
learned  friend,  that  in  this  case  we  ought  to  give  judgment  for  the 
plaintiff  in  error. 

Lord  St.  Leonards.  ...  In  some  cases,  and  it  is  so  in  the  present, 
the  companies  take  care  to  go  beyond  the  law,  and  to  protect  them- 
selves by  a  stipulation  that  a  statement,  which  is  not  a  warranty  but  a 
representation,  if  made  contrary  to  the  fact,  shall  avoid  the  policy.  .  .  . 
I  think  that  ...  the  learned  judge  ought  nut  to  have  told  the  jurors 
that  their  verdict  ought  to  be  for  the  plaintiff  .  .  .  unless  they  were  of 
opinion  that  the  statements  were  both  false  and  material.  .  .  . 

I  entirely  agree  with  the  motion  of  my  noble  and  learned  friend  as  to 
what  should  be  done  in  this  case.  ^ 

Ordered  and  adjudged  that  the  judgment  given  in  the  Court  of 
Exchequer  Chamber  in  Ireland  .  .  .  he  .  .  .  reversed;  and 
that  the  judgment  given  in  the  .  .  .  Court  of  Exchequer  in 
Ireland  he  .  .  .  reversed;  and  that  the  verdict  .  .  .  be  .  .  . 
vacated  /  .  .  .  ayid  .  .  .  that  the  said  Court  of  Exchequer  in 
Ireland  do  award  a  venire  facias  de  novo.  .  .  .^ 


WILKINSON  V.  CONNECTICUT  MUTUAL  LIFE  INS.  CO. 

Supreme  Court  of  Iowa,  1870.     30  Iowa,  119.^ 

Appeal  from  Lee  District  Court.  The  action  was  upon  a  policy 
insuring  the  life  of  Malinda  Jane  Wilkinson,  the  wife  of  the  plaintiff. 

1  Ace  •  Miles  V.  Connecticut  Mutual  L.  Ins.  Co.,  3  Gray,  580  (1854)  ;  Campbell  i'. 
New  England  Mutual  L.  Ins.  Co.,  98  Mass.  381,  401-406  (1869)  ;  Day  t;.  Mutual  Bene- 
fit L.  Ins.  Co.,  1  McArthur,  41  (1873) ;  Foot  r.  .^tna  L.  Ins.  Co.,  61  N.  Y.  571  (1875). 

See  Conover  v.  Massachusetts  Mutual  L.  Ins.  Co.,  3  Dillon,  217  (1874).  —  Ed. 

2  The  statement  has  been  rewritten  on  the  basis  of  facts  contained  in  the  opinion. 
In  reprinting  the  opinion,  the  facts  have  been  omitted,  and  so  have  passages  bearing 
on  some  points  as  to  evidence.  —  Ed. 


SECT.  III.]       WILKINSON  V.  CONNECTICUT  MUTUAL  LIFE  INS.  CO.         399 

The  defendants  pleaded  the  falsiU*  of  certain  answers  in  the  application, 
and  fraud  in  obtaining  the  polic}'.  The  polic}'  stated  that  it  was  issued 
"  upon  the  faith  of  the  statements  in  the  application,"  with  a  stipulation 
that  if  the}'  "  shall  be  found  in  an}'  respect  untrue  "  the  policy  shall  be 
void.  Tlie  main  contest  was  upon  the  answer  to  the  following  question 
in  the  application  signed  b}-  the  plaintiff  and  his  wife  on  Sept.  14,  1866. 
"14.  Has  the  part}'  ever  met  with  any  accidental  or  serious  personal 
injury;  if  so,  what  was  it?  —  No."  The  defendant  asked  an  instruc- 
tion that  this  answer  was  a  warranty,  and  that  if  it  was  untrue,  whether 
intentionally  so  or  not,  the  jury  must  find  for  the  defendant.  The 
court  refused,  and  gave  instructions  substantially  that  "  it  was  the  duty 
of  plaintiff  and  wife  to  answer  each  and  every  question  truthfully,  and 
if  they  did  not  do  so  on  every  material  matter  or  question^  then  plaintiff 
cannot  recover ; "  and  again,  "  the  answers  to  each  and  every  ques- 
tion in  the  application  must  he  substantially  true,  and  any  misstate- 
ment of  facts  in  the  application  upon  any  material  matter  inquired 
of  whether  intentional  or  not,  would  avoid  the  policy."  The  jury  were 
not  required  by  the  court  or  parties  to  return  a  general  verdict.  They 
were  required  to  find  specifically  as  to  eight  questions,  the  first  five 
being  asked  at  the  request  of  the  defendant,  and  the  last  three  being 
asked  on  the  court's  own  motion.  Among  the  questions  and  findings 
Avere  these  :  — 

"  3.  Did  Malinda  Jane  Wilkinson,  prior  to  September  14,  1866,  meet 
with  any  accidental  personal  injury?   Ans.    Yes. 

"  4.  Did  Malinda  Jane  Wilkinson,  prior  to  September  14,  1866,  meet 
with  any  serious  personal  injury?    Ans.    No. 

"  5.  Did  Malinda  Jane  Wilkinson,  on  or  about  the  year  186*2,  fall  at 
a  considerable  height  from  a  tree,  and  was  she  sick  for  a  time  in  conse- 
quence?   Ans.   Yes. 

"  6.  If  the  jury  find  that  Malinda  Jane  Wilkinson  did  at  any  time 
meet  witli  an  accidental  personal  injury  by  falling  from  a  tree  or  other- 
wise, as  inquired  of  in  questions  Nos.  3,  4,  and  5,  they  will  answer  fur- 
ther the  following  questions  :  — 

"Was  that  injury  only  temporary,  and  did  it  pass  off  soon? 
Ans.    Yes. 

"  7.  Was  said  injury  (if  any)  to  such  an  extent  as  to  exert  or  cause 
any  permanent  disease  or  influence  upon  the  subsequent  health  of  the 
said  Malinda  Jane  Wilkinson?    Ans.    No. 

"  8.  Was  the  injury  the  said  Malinda  Jane  Wilkinson  received  from 
the  fall  from  the  tree  (if  she  did  so  fall)  simply  temporary,  and  did  it 
pass  off  entirely  in  a  few  days,  without  in  any  manner  injuring  her  sub- 
sequent health  or  longevity  ?    Ans.    Yes." 

The  defendant  moved  for  judgment  in  its  favor  on  the  answers 
returned  by  the  jury,  claiming  it  on  the  answers  8  and  5,  and  insisting 
that  the  answers  6,  7,  and  8  were  immaterial.  This  motion  was  over- 
ruled, and  judgment  was  rendered  for  the  plaintiff.  The  defendant 
appealed. 


400  WILKINSON  V.  CONNECTICUT  MUTUAL  LIFE  INS.  CO.      [CHAP.  V. 

CoLK,  C.  J.  ...  If  the  cause  had  been  submitted  to  the  jury  for  a 
general  verdict  upon  these  instructions,  without  more,  and  the}-  had 
found  for  plaintiff,  it  would  be  our  clear  duty  to  reverse.  Under  the 
terms  of  the  policy  in  this  case,  the  answers  to  the  questions  contained 
in  the  application  became  warranties,  not  that  they  were  substantially 
true  as  to  the  material  matters,  but  that  they  were  true  in  every  par- 
ticular, although,  in  the  opinion  of  the  jury,  such  particular,  wherein 
the}'  were  untrue,  ma}'  not  have  been  material  to  the  risk.  See  Angell 
on  Fire  and  Life  Insurance,  §  140,  et  seq.,  and  §  307  et  seq. ;  Everett 
V.  Desborough,  5  Bing.  503  ;  3  Kent's  Com.  288  ;  Miles  et  al.  v.  Conn. 
Mut.  Life  Ins.  Co.,  3  Gray,  580;  Stout -u.  The  Fire  Ins.  Co.  of  New 
Haven,  12  Iowa,  383  ;  and  cases  cited  by  appellant's  counsel.  .  .  . 

It  will  be  observed  that  the  jury  found  specific  and  independent  facts, 
having  no  connection  or  relation  whatever  to  an}'  proposition  of  law, 
and  hence  no  prejudice  could  have  resulted  to  defenda«it  by  reason  of 
the  refusal  to  give  proper,  or  the  giving  of  improper,  general  instruc- 
tions to  the  jury,  as  before  referred  to.  The  single  question  presented 
is,  whether  the  answers  to  the  last  three  questions  so  neutralize  and 
override  the  answers  3  and  5  as  to  entitle  the  plaintiff  to  a  judgment? 
Without  such  last  three  answers,  it  is  reasonably  clear  that  the  defend- 
ant would  be  entitled  to  judgment  upon  answers  3  and  5.  In  other 
words,  the  real  question  is  upon  the  construction  of  question  14  in  the 
application,  to  wit:  Has  the  party  ever  met  with  any  accidental  or 
serious  personal  injury,  and  if  so,  what  was  it? 

The  defendant  claims  that  if  the  insured  "  ever  met  with  any  acci- 
dental .  .  .  injury,''^  that  will  bar  a  recovery,  because  the  application  is 
a  warranty  that  she  never  did.  In  this  construction  we  do  not  concur. 
The  language  of  the  question  is  to  have  a  reasonable  construction,  in 
view  of  the  purposes  for  which  the  question  was  asked.  It  must  have 
reference  to  such  an  accidental  injury  as  probably  would  or  might  pos- 
sibly have  influenced  the  subsequent  health  or  longevity  of  the  insured. 
It  could  not  refer,  and  could  not  be  understood,  by  any  person  reading 
the  question  for  a  personal  answer  to  refer,  to  a  simple  burn  upon  the 
hand  or  arm,  in  infancy  ;  to  a  cut  upon  the  thumb  or  finger,  in  youth  ; 
to  a  stumble  and  falling,  or  the  sprain  of  a  joint,  in  a  more  advanced 
age.  The  idea  is,  that  such  a  construction  is  to  be  put  by  the  courts 
upon  the  language  as  an  ordinary  person  of  common  understanding 
would  put  upon  it  when  addressed  to  him  for  answer.  The  strict  con- 
struction of  hypcrcriticism  of  the  langunge,  which  would  make  the  word 
"  any"  an  indefinite  term,  so  as  to  include  all  injuries,  even  the  most 
trifling,  would  bring  a  just  reproach  upon  the  courts,  the  law,  the 
defendant  itself  and  its  business.  The  language  of  the  question  must 
have  a  fair  construction,  and  in  the  words  of  our  statute  (Rev.  §  3994) 
"  that  sense  is  to  prevail  against  either  party  in  which  he  had  reason  to 
suppose  the  other  understood  it." 

This  construction  is  not  only  in  accord  with  reason  and  justice,  but 
it  has  the  support  of  the  authorities  in  like  cases.     Thus,  in  Cbattuck 


SECT.  III.]  JEFFRIES   V.   LIFE    INSURANCE   CO.  401 

V.  Shaw,  1  Moody  &  Rob.  498,  where  the  insured  declared  that  "  he 
had  not  been  afflicted  with  nor  subject  to  fits,"  Lord  Abinger,  C.  B., 
held  this  to  mean,  not  that  he  never  accidentally  had  had  a  fit,  but  that 
he  vvas  not  a  person  habituall}'  or  constitutionally-  afflicted  with  fits  ;  a 
person  liable  to  fits  from  some  peculiarit}-  of  temperament,  either 
natural  or  contracted  from  some  cause  during  life.  And  the  policy  was 
held  not  to  be  vitiated  by  the  circumstance  that,  in  consequence  of  a 
fall,  the  person  whose  life  was  insured  had,  several  years  before  the 
date  of  the  policy,  two  epileptic  fits  within  a  short  interval,  which  the 
jury  were  satisfied  had  never  recurred.^  .  .  .  See  also  Watson  v.  Main- 
wairing,  4  Taunt.  763  ;  Angell  on  Fire  and  Life  Ins.,  §  310,  et  s^q.  In 
this  case  the  defendant  having  admitted  the  polic3^  death,  and  proof  of 
loss,  it  was  not  error  to  render  judgment  for  plaintiff  on  the  special 
verdict.  .  .  .  Affirmed.^ 


JEFFRIES   V.   LIFE  INSURANCE  CO. 
Supreme  Court  of  the  United  States,  1874.     22  Wall.  47.' 

Error  to  the  Circuit  Court  for  the  Eastern  District  of  Missouri. 

The  action  was  brought  by  Jeffries,  as  administrator  of  Kennedy, 
upon  a  policy  of  insurance  issued  in  pursuance  of  an  application  signed 
by  Kenned}'. 

The  policy  said  :  — 

"•  This  policy  is  issued  b}-  the  compau}',  and  accepted  by  the  insured 
and  the  holder  thereof,  on  the  following  express  conditions  and  agree- 
ments^ lohich  are  part  of  this  contract  of  insurance:  1st,  That  the 
statements  and  declarations  made  in  the  application  for  this  policy, 
and  on  the  faith  of  which  it  is  issued,  are  in  all  respects  true,  and 
without  the  suppression  of  any  fact  relating  to  the  health  or  circum- 
stances of  the  assured,  affecti?ig  the  interests  of  said  company.  .  .  . 
6th,  That  in  case  of  the  violation  of  the  foregoing  conditions,  or  any 
of  them,   .  .   .  this  policy  shall  become  null  and  void." 

The  declaration  contained  the  polic}-  at  large,  and  the  plea  recited 
the  foregoing  conditions  and  set  forth  the  breaches  of  the  first  condition 
which  are  summarized  in  the  opinion.  A  demurrer  to  the  plea  was 
overruled,  and  judgment  was  entered  for  the  company.  Thereupon 
this  writ  of  error  was  taken. 

Messrs.  T.  W.  JS.  Creics  and  tZ.  S.  Laurie,  for  the  administrator, 
plaintiff  in  error. 

Messrs.  A.  31.  Thayer  and  J.  La  Due,  co)itra. 

1  Here  was  stated  Ross  v.  Bradshaw,  ante,  p.  231  (1761).  — Ed. 

-  See  Insurance  Co.  v.  Wilkinson,  13  Wall.  222  (1871) ;  Home  Mutual  L.  Assn.  v. 
Gillespie,  110  Pa.  84  (1885);  Bancroft  v.  Home  Benefit  Assn.,  120  N.  Y.  14  (1890); 
Standard  L.  &  A.  Ins.  Co.  v.  Martin,  133  Ind.  376,  384-386  (1892).  — Ed. 

3  The  statement  has  been  rewritten.  —  Ed. 

25 


402  JEFFRIES    V.    LIFE   INSURANCE   CO.  [CHAP.  V. 

Mr.  Justice  Hunt  delivered  the  opinion  of  the  court. 

Tiie  contention  in  opposition  to  tlie  judgment  is  tliis :  that  the  plea 
does  not  aver  that  the  false  statements  made  by  the  assured  were  ma- 
terial to  the  risk  assumed.  Is  that  averment  necessary  to  make  the 
plea  a  good  one? 

It  is  contended,  also,  that  the  false  answers  in  the  present  case  were 
not  to  the  injury  of  the  company,  that  they  presented  the  applicant's 
case  in  a  less  favorable  light  to  himself  than  if  he  had  answered  truly. 
Thus,  to  the  inquiry  are  you  married  or  single,  when  he  falsely  an- 
swered that  he  was  single,  he  made  himself  a  less  eligible  candidate  for 
insurances  than  if  he  had  truly  stated  that  he  was  a  married  man  :  that 
although  he  deceived  the  company,  and  caused  it  to  enter  into  a  con- 
tract that  it  did  not  intend  to  make,  it  was  deceived  to  its  advantage, 
and  made  a  more  favorable  bargain  than  was  supposed. 

This  is  bad  morality  and  bad  law.  No  one  may  do  evil  that  good 
may  come.  No  man  is  justified  in  the  utterance  of  a  falsehood.  It  is 
an  equal  offence  in  morals,  whether  committed  for  his  own  benefit  or 
that  of  another.  The  fallacy  of  this  position  as  a  legal  proposition 
will  appear  in  what  we  shall  presently-  say  of  the  contract  made  between 
the  parties. 

We  are  to  observe,  first,  the  averment  of  the  plea :  That  Kennedy, 
in  and  by  his  application  for  the  policy  of  insurance,  in  answer  to  a 
question  asked  of  him  b}'  the  company,  whether  he  was  "  married  or 
si)igle^' f  made  the  false  statement  that  he  was  '■'■single,"  knowing  it 
to  be  untrue  ;  that  in  reply  to  a  further  question  therein  asked  of  him 
by  the  compan}',  whether  "  any  a^^pUcatioyi  had  been  made  to  any 
other  company  ?  If  so,  ichen?^'  answered,  "iVb/"  whereas,  in  fact, 
at  the  time  of  making  such  false  statement,  he  loell  knew  that  he  Jiad 
previously  made  application  for  such  insurance,  and  been  insured  in 
the  sum  q/"  $10,000  by  another  company. 

We  are  to  observe,  secondly,  the  averment  that  the  statements  and 
declarations  made  in  the  application  for  said  polic\',  and  on  the  faith  of 
which  it  is  issued,  are  i?i  all  respects  true,  and  without  the  suppression 
of  an}-  fact  relating  to  the  health  or  circumstances  of  the  insured  affect- 
ing the  interests  of  the  compan}-. 

We  are  to  observe,  also,  that  other  clause  of  the  polic}',  in  which  it  is 
declared  that  this  policy  is  made  b}'  the  company  and  accepted  by  the 
insured,  upon  the  express  condition  and  agreement  that  such  state- 
ments and  declarations  are  in  all  respects  true.  This  applies  to  all 
and  to  each  one  of  such  statements.  In  other  words,  if  the  statements 
are  not  true,  it  is  agreed  that  no  policy  is  made  by  the  company,  and 
no  policy  is  accei)ted  by  the  insured. 

The  proposition  at  the  foundation  of  this  point  is  this,  that  the  state- 
ments and  declarations  made  in  the  policy  shall  be  true. 

This  stipulation  is  not  expressed  to  be  made  as  to  important  or 
material  statements  only,  or  to  those  supposed  to  be  material,  l)nt  as  to 
all  statements.     The  statements  need  not  come  up  to  the  degree  of 


SF.CT.  III.]  JEFFRIES    V.    LIFE    INSURANCE    CO.  403 

-svarranties.  They  need  not  be  representations  even,  if  this  term  con- 
veys an  idea  of  an  affirmation  having  any  technical  character.  State- 
ments and  declarations  is  the  expression  ;  what  the  applicant  states 
and  what  the  applicant  declares.  Nothing  can  be  more  simple.  If  he 
makes  any  statement  in  the  application,  it  must  be  true.  If  he  makes 
any  declaration  in  the  application,  it  must  be  true.  A  faitliful  per- 
formance of  this  agreement  is  made  an  express  condition  to  the  exist- 
ence of  a  liability  on  the  part  of  the  company-. 

There  is  no  place  for  the  argument  either  that  the  false  statement 
was  not  material  to  the  risk,  or  that  it  was  a  positive  advantage  to  the 
company  to  be  deceived  by  it. 

It  is  the  distinct  agreement  of  the  parties,  that  the  company  shall 
not  be  deceived  to  its  injury  or  to  its  benefit.  The  right  of  an  indi- 
vidual or  a  corporation  to  make  an  unwise  bargain  is  as  complete  as 
that  to  make  a  wise  bargain.  The  right  to  make  contracts  carries  with 
it  the  right  to  determine  what  is  prudent  and  wise,  what  is  unwise  and 
imprudent,  and  upon  that  point  the  judgment  of  the  individual  is  sub- 
ject to  that  of  no  other  tribunal. 

The  case  in  hand  affords  a  good  illustration  of  this  principle.  .  The 
company  deems  it  wise  and  prudent  that  the  applicant  should  inform 
them  tn\\y  whether  he  has  made  any  other  application  to  have  his  life 
insured.  So  material  does  it  deem  this  information,  that  it  stipulates 
that  its  liability  shall  depend  upon  the  truth  of  the  answer.  The  same 
is  true  of  its  inquiry  whether  the  party  is  married  or  single.  The  com- 
pany fixes  this  estimate  of  its  importance.  The  applicant  agrees  that 
it  is  thus  important  by  accepting  this  test.  It  would  be  a  violation  of 
the  legal  rights  of  the  company  to  take  from  it  its  acknowledged  power, 
thus  to  make  its  opinion  the  standard  of  what  is  material,  and  to  leave 
that  point  to  the  determination  of  a  jury.  The  jury  may  say,  as  the 
counsel  here  argues,  that  it  is  immaterial  whether  the  applicant  answers 
truly,  if  he  answers  one  way,  viz.,  that  he  is  single,  or  that  he  has  not 
made  an  application  for  insurance.  Whether  a  question  is  material 
depends  upon  the  question  Itself.  The  information  received  may  be 
immaterial.  But  if  under  any  circumstances  it  can  produce  a  reply 
which  will  influence  the  action  of  the  company,  the  question  cannot  be 
deemed  immaterial.  Insurance  companies  sometimes  insist  that  indi- 
viduals largel}'  insured  upon  their  lives,  who  are  embarrassed  in  their 
affairs,  resort  to  self-destruction,  being  willing  to  end  a  wretched  ex- 
istence if  they  can  thereby  bestow  comfort  upon  their  families.  The 
juror  would  be  likely  to  repudiate  sucli  a  theory,  on  the  ground  that 
nothing  can  compensate  a  man  for  the  loss  of  his  life.  The  juror  may 
be  right  and  the  company  ma}-  be  wrong.  But  the  company  has  ex- 
pressly provided  that  their  judgment,  and  not  the  judgment  of  the 
juror,  shall  govern.  Their  right  thus  to  contract,  and  the  duty  of  the 
court  to  give  eflfect  to  such  contracts,  cannot  be  denied.^  .  .   . 

1  Here  the  opinion  stated  Anderson  v.  Fitzgerald,  ante,  p.  391  (1853),  and  cited 
Cazenove  i-.  British  Equitable  Ass.  Co,  6  C.  B.  x.  s.  437  (1859),  s.  c.  affirmed  in  the 
Exchequer  Chamber,  6  Jur.  n.  s.  826  (1860). — Ed. 


404  BUELL   V.   CONNECTICUT   MUTUAL   L.    INS.   CO.        [CHAP.  V. 

IMany  cases  may  be  found  which  hold,  that  where  false  answers 
are  made  to  inquiries  which  do  not  relate  to  the  risk,  the  policy  is  not 
necessarily  avoided  unless  they  influenced  the  mind  of  the  company, 
and  that  whether  they  are  material  is  for  the  determination  of  the  jurj'. 
But  we  know  of  no  respectable  authority  which  so  holds,  where  it  is  ex- 
pressly covenanted  as  a  condition  of  liability  that  the  statements  and 
declarations  made  in  the  application  are  true,  and  when  the  truth  of 
such  statements  forms  the  basis  of  the  contract. 

The  counsel  for  the  insured  insists  that  policies  of  insurance  are 
hedged  about  with  so  many  qualifications  and  conditions,  that  ques- 
tions are  propounded  with  so  much  ingenuit}'  and  in  such  detail,  that 
the}-  operate  as  a  snare,  and  that  justice  is  sacrificed  to  forms.  We 
are  not  called  upon  to  den}'  this  statement.  The  present,  however,  is 
not  such  a  case.  The  want  of  honesty  was  on  the  part  of  the  appli- 
cant. The  attempt  was  to  deceive  the  compan}*.  It  is  a  case,  so  far 
as  we  can  discover,  in  which  law  and  justice  point  to  the  same  result, 
to  wit,  the  exemption  of  the  company. 

Judgment  affirmed. 

Justices  Clifford  and  Miller  dissenting. 


BUELL  V.  CONNECTICUT  MUTUAL  L.  INS.  CO. 

Circuit  Court  of  the  Uxited  States  for  the  Northern  District 
OF  Ohio,  1876.     2  Flippin,  9.^ 

Heard  on  demurrer  to  second  defence. 

The  facts  appear  fully  in  the  opinion. 

R.  P.  &  IL  C  Ranney^  for  demurrer. 

Bishop  &  Adams,  contra. 

"Walker,  J.  This  suit  is  founded  upon  a  policy  of  insurance  upon 
the  life  of  Jeptha  C  Buell,  for  the  benefit  of  his  wife,  the  plaintiff. 

The  defendant,  as  a  second  defence  to  the  action,  sets  up  in  its 
answer  that  in  the  declaration  made  at  the  time  of  the  application  for 
insurance,  among  other  things,  the  plaintiff  says:  "  And  I  do  hereby 
agree  that  the  answers  given  to  the  following  questions  and  the  accom- 
panying statements,  and  this  declaration  shall  be  the  basis  and  form 
part  of  the  contract  or  policy  between  me  and  said  compan}' ;  and  if 
the  same  be  not  in  all  respects  true  and  correctly  stated,  the  said  policy 
shall  be  void." 

That  among  the  questions  in  said  declaration  above  referred  to,  was 
the  following  question  :  "  Has  father,  mother,  brother,  or  sister  of  the 
party  died,  or  been  afflicted  with  consumption,  or  any  disease  of  the 
lungs,  or  insanity?     If  so,  state  full  particulars  of  each  case."     That 

^  9.  c.  5  Ins.  L.  J.  274,  and  5  Bigelow's  L.  &  A.  Ins.  Rep.  473.  —  Ed 


SECT.  III.]       BUELL   r.    CONNECTICUT   MUTUAL   L.    INS.    CO.  405 

the  answer  to  the  above  question  given  b}*  the  plaintiff  was  as  follows  : 
'•No.  Father  died  from  exposure  in  water ;  age  58.  Mother  living; 
af^e  about  50."  That  the  polic}'  issued  upon  said  declaration  and 
questions  and  answers,  and  sued  upon,  contains  the  following  condi- 
tions, to  wit:  "And  it  is  also  understood  and  agreed  to  be  the  true 
inte'nt  and  meaning  hereof,  that  if  the  proposals,  answers,  and  declara- 
tion made  by  the  said  Anna  M.  Buell,  and  bearing  date  the  19th  day 
of  March,  1866,  and  which  are  hereby  made  part  and  parcel  of  this 
policy  as  fully  as  if  herein  recited,  and  upon  the  faith  of  which  this 
agreement  is  made,  shall  be  found  in  any  respect  untrue,  then,  in  such 
case,  this  policy  shall  be  null  and  void."  The  defendant  avers  that  the 
said  answer  above  stated  was  not  in  all  respects  true  and  correctly 
stated,  but  was  incorrect  and  untrue  in  this,  the  father  of  said  Jeptha  C. 
did  not  die  at  the  age  of  58,  but  he  died  before  he  was  of  the  age  of 
30  years.  Wherefore  the  defendant  says  said  policy  was  and  is  void 
and  of  no  effect,  and  said  plaintiff  is  not  entitled  to  recover  any  amount 
against  the  defendant. 

To  this  answer  the  plaintiff  files  her  demurrer,  alleging  as  reason 
therefor  that  all  of  said  statements  and  allegations  are  redundant  and 
irrelevant,  and  constitute  no  defence  to  the  plaintiff's  action.  The 
demurrer  admits  that  the  answer  to  the  question  as  stated  in  respect  to 
the  age  of  the  father  at  the  time  of  his  death  was  untrue  and  incorrect. 
That  being  the  fact,  does  it  constitute  a  defence  to  this  action? 

Statements  in  the  application  for  insurance  in  the  declaration,  or 
answers  to  the  questions  are  either  imrrcmties  or  reiyresentations.  If 
warranties,  then  materiality,  or  want  of  materiality,  as  to  the  risk  has 
nothing  to  do  with  the  contract.  The  only  question  is,  were  they  untrue, 
and  if  so  the  policy  is  void.  But  if  representations,  then  to  avoid  the 
policy  they  must  be  substa7itially  and  materially  untrue,  or  made  for 
ihc  purpose  of  fraud. ^  .  .   . 

But  I  am  referred  to  the  case  Jeffries,  Administrator  of  Kenned}-, 
deceased,  v.  Pxonomical  Life  Ins.  Co.,  22  Wall.  47,  recently  decided  by 
the  Supreme  Court  of  the  United  States  as  decisive  of  the  question 
made  upon  this  demurrer.  In  that  case  there  were  two  questions  asked 
the  insured:  1.  Whether  he  was  married  or  single?  The  answer  to 
which  was  tliat  he  was  single. '  2.  Had  any  application  been  made  to 
any  other  company,  and  if  so,  when?  Tlie  answer  to  which  was  '-'No." 
The  answers  to  both  questions  were  alleged  to  be  untrue.  The  court 
held  that  the  answers  to  these  questions  constituted  a  part  of  the  con- 
tract, and  if  untrue,  whether  they  were  material  to  the  risk  or  not, 
would  avoid  tlie  policy.  The  court  did  not  seem  to  put  this  upon  the 
ground  alone  that  the  answers  constituted  warranties,  but  that  they 
formed  a  part  of  the  contract  and  were  expressly  made  so  by  tlie  parties, 
and  the  court  would  not  inquire  as  to  the  materiality,  because  the 
parties  had  themselves  deemed  them  material.     How  did  they  become 

1  Here  were  quoted  Hartford  Protection  Ins.  Co.  v.  Harmer,  2  Ohio  St.  452,  464 
(IS.iS) ;  and  Campbell  v.  New  England  Mutual  L.  Ins.  Co.,  98  Mass.  381  (1867).  —  Ed. 


406  BUELL   V.   CONNECTICUT   MUTUAL   L.   INS.   CO.        [CHAP.  V. 

material?  It  will  be  observed  that  both  of  these  answers  were  direct 
responses  to  the  questions,  and  that  b}-  the  direct  form  of  the  questions 
the  answers  necessarily  became  a  part  of  the  contract.  How  is  it  in 
that  respect  in  the  case  before  us? 

■  The  falsity  complained  of  in  the  answer  consists  only  in  reference 
to  the  age  at  which  the  father  died.  This  certainly  was  not  inquired  of 
in  the  question,  unless  we  are  to  find  it  in  that  part  of  it  which  reads  : 
"  If  so,  state  full  particulars  of  each  case."  This  part  of  the  question 
was  evidently  intended  to  reach  simply  the  particulars  of  the  death,  or 
attliction  of  the  near  relatives,  to  ascertain  the  character  and  nature  of 
the  disease  —  its  extent,  whether  produced  from  recent  causes  or  he- 
reditary in  the  family,  in  order  to  determine  whether  Buell  was  a  proper 
subject  to  insure.  It  is  exceedingly  doubtful  whether  the  question  is 
really  definite  enough  to  require  the  answer  to  state  whether  the  father 
was  dead  at  all,  if  he  did  not  die  of  consumption,  or  disease  of  the 
lungs,  or  insanity.  I  think  the  question  fairly  means,  not  whether  the 
father,  etc.,  had  died  of  any  disease,  or  from  any  cause,  but  whether 
he  had  died  of,  or  been  afflicted  with  consumption,  or  any  disease  of 
the  lungs,  or  insanit}'.  This  being  the  fair  import  of  the  question, 
"  No"  was  a  complete  answer  to  it,  and  the  remainder  of  the  answer 
was  uncalled  for  and  not  responsive  to  the  question.  But  suppose  that 
be  so,  defendant  claims  that  it  is  nevertheless  an  answer  of  some  sort 
and  therefore  an  important  part  of  the  contract.  The  reply  to  that  is, 
that  the  declaration  which  relates  to  the  answers  to  questions  to  be 
made  by  plaintiff,  and  which  it  was  agreed  should  be  made  part  of  ihe 
contract,  must  be  construed  to,  and  does  mean,  such  answers  as  are 
responsive  to  the  questions  and  such  as  may  be  called  for  by  the  defend- 
ant ;  and  that  it  does  not  cover  such  answers  as  may  be  volunteered 
and  irrelevant,  and  that  amount  to  mere  representations. 

In  the  light  of  the  cases  in  98  Mass.,  and  2  0.  S.  R.,  I  may  be  allowed 
to  sa}'  that  not  all  the  statements  in  the  application  or  writing  are  to 
be  regarded  as  warranties,  but  some  may  be  regarded  as  mere  repre- 
sentations. I  do  not  think  the  case  of  Jeffries  v.  Economical  Insurance 
Company  is  at  all  at  variance  with  this  construction.  In  that  case  the 
questions  directly  called  for  the  answers,  and  the  asking  and  the 
answers  constituted  the  mutual  agreement  of  the  parties.  In  this  case 
the  age  of  the  fatlicr  was  not  called  for,  and  is  only  voluntarily  given 
by  the  plaintiff,  and  the  mutual  agreement  cannot  arise  as  it  did  in  that 
case,  so  as  to  say  the  parties  themselves  settled  the  question  of 
materiality. 

I  believe  the  true  rule  in  relation  to  the  question  of  what  amounts  to 
a  irarranty,  or  what  amounts  only  to  representation,  in  the  answers  to 
questions  in  this  class  of  applications,  is :  Where  the  answers  are 
responsive  to  direct  questions  asked  by  the  insurance  company,  the}' 
arc  to  be  regarded  as  warranties,  and  where  they  are  not  so  responsive, 
but  volunteered  witliout  being  called  for,  they  should  be  construed  to 
be  mere  representations.     The  part  of  the  answer  in  question  in  this 


SECT.  III.]         AMERICAN    POPULAR    LIFE    INS.    CO.    V.    DAY.  407 

case  in  reference  to  the  age  of  the  father  at  death,  being  a  mere  repre- 
sentation, does  not  constitute  a  defence  unless  it  appears  to  have  been 
material  as  well  as  false. 

Tlie  demurrer  is  therefore  sustained.^ 


AMERICAN  POPULAR  LIFE  INSURANCE  COMPANY,  Plaix- 
TiFFS  IN  Error,  v.  DAY,  Executor,  Defendant  in  Error. 

Court  of  Errors  and  Appeals  of  New  Jersey,  1876. 
39  N.  J.  L.  89. 

I.v  error  to  the  Supreme  Court.^ 

For  the  plaintiffs  in  error,  George  E.  Sibley,  of  New  York,  and 
T.  m  Mc  Carter. 

For  the  defendant  in  error,  W.  J.  Magie  and  Cortlandt  Parker. 

Tlie  opinion  of  the  court  was  delivered  by 

The  Chancellor.*  The  defendant  in  error  brought  an  action  of 
assumjjsit  in  the  Supreme  Court,  ou  a  policy  of  insurance  issued  by 
the  plaintiffs  in  error  to  the  testator,  Frederick  Day,  upon  his  own  life. 
The  compan}"  pleaded  the  general  issue  and  five  special  pleas,  which 
latter  were,  on  motion,  stricken  out.  The  trial  of  the  issue  resulted  in  a 
verdict  against  the  company  and  judgment  thereon.  The  company  insist 
that  the  form  of  the  action  was  erroneous  ;  that  the  order  striking  out 
the  pleas  was  illegal,  and  that  there  was  error  in  the  exclusion,  on  the 
trial,  of  evidence  offered  in  their  behalf,  and  in  the  admission  of  evi- 
dence on  behalf  of  the  executor,  and  in  the  refusal  of  the  judge  to 
charge  as  requested  b\'  their  counsel.*  .   .   . 

The  errors  assigned  upon  the  striking  out  of  the  special  jDleas,  and 
that  assigned  upon  the  refusal  of  the  judge  at  the  circuit  to  charge  as 
requested  by  the  company's  counsel,  may  be  considered  together.  The 
l)leas  were  stricken  out  on  the  ground  that  the  alleged  misrepresenta- 
tions therein  set  up  in  avoidance  of  the  liabilitj-  of  the  company  under 
tlie  policy  were  not  therein  stated  to  have  been  material  and  intention- 
ally or  fraudulently  made,  and  the  refusal  to  charge,  just  referred  to, 
was  on  a  request  to  charge  that,  under  the  terms  of  the  policy  and  the 
application  for  insurance,  the  statements  and  representations  made  by 
the  insured  became  part  of  the  contract,  and  that  their  falsity  was  a 
defence  to  the  action,  whether  the  untruth  was  intentional  or  not. 
When  application  was  first  made  by  the  testator  for  the  insurance,  the 

1  Arc. :  Commercial  Mutual  Accident  Co.  v.  Bates,  176  111.  194  (1898).  —Ed. 

2  The  reporter's  statement  has  been  omitted.  —  Ed. 

*  Hon.  Theodork  Hunyon.  —  Ed. 

*  The  omitt'  d  passage  dealt  with  the  form  of  action.  —  Ed. 


408  AMERICAN    POPULAR   LIFE    INS.    CO.   V.   DAY.  [CHAP.  V. 

atrent  of  the  company  through  whom  it  was  made  wrote  down  in  pencil, 
on  a  paper  intended  as  a  proposal  for  insurance,  the  testator's  answers 
to  certain  printed  questions  thereon,  relative  to  subjects  on  which  the 
company  deemed  it  proper,  according  to  their  regulations,  to  have  an- 
swers in  that  connection.  This  paper  was  not  signed  by  the  testator. 
Afterwards,  another  like  paper,  containing  like  questions,  with  answers 
by  the  testator,  and  signed  by  bin),  was  delivered  to  the  company  as 
an  application  for  the  insurance.  Both  these  papers  contained  these 
words  :  -  And  I  hereby  further  agree  that  the  preceding  answers  given 
to  the  annexed  questions,  and  the  accompanying  statements,  together 
with  the  statements  made  to  the  examining  pliysician,  shall  be  the 
basis  and  form  part  of  the  contract  or  policy  between  me  and  the  said 
company,  and  if  the  same  be  not  in  all  respects  true  and  correctly  stated, 
the  said  policy  shall  be  void,  according  to  the  terms  thereof." 

The  policy  declared  that  the  insurance  was  "  in  consideration  of  the 
representations  made  "  to  the  company,  and  of  the  premiums  paid  and 
to  be  paid.  It  further  stated  that  it  was  issued  and  accepted  by  the  in- 
sured upon  certain  express  conditions  therein  stated,  among  which  was 
the  following:  "Fraud  or  intentional  misrepresentation  vitiates  the 
policy."  No  reference,  except  as  above  stated,  was  made  to  the  pro- 
posal or  application,  or  either  of  them,  or  the  matters  therein  contained, 
or  to  any  statements  or  representations  by  the  insured.  The  counsel 
of  the  company  insist  that  the  statements  contained  in  the  proposal  and 
application  were,  by  virtue  of  the  agreement  above  quoted,  therein  con- 
tained made  part  of  the  policy,  and  that  they  were  therefore  in  fact 
warranties  or  conditions,  on  the  truth  of  which  the  liability  of  the  com- 
pany was  based,  and  that  therefore  the  question  of  their  materiality,  or 
of  the  knowledge  of  the  testator  that  they  were  untrue,  or  of  his  inten- 
tion in  making  them,  was  not  involved. 

Whether  the  statements  in  question  are  warranties,  or  conditions,  or 
representations  merely,  will  depend  on  whether  they  in  fact  are  incor- 
porated into  the  policy.  "  It  is,"  said  Lord  EUenborough,  in  Robertson 
V.  French,  4  East,  130,  135,  "a  question  of  construction  in  every  case, 
whether  a  policy  is  so  worded  as  to  make  the  accuracy  of  a  bo7ia  fide 
statement  a  condition  precedent,  and  the  rules  of  construction  are  the 
same  in  policies  as  in  other  written  contracts."  "  In  order  to  make 
any  statements  binding  as  warranties,"  says  Bunyon,  "  they  must  ap- 
pear upon  the  face  of  the  instrument  itself  by  which  the  contract  of 
insurance  is  effected  ;  they  must  either  be  expressly  set  out  or  by  in- 
ference incorporated  in  the  policy.  If  they  are  not  so,  they  are  not 
warranties,  but  representations."  Bunyon  on  Life  Assur.,  34.  See 
also  May  on  Ins.,  §  159.^  .  .  . 

When,  in  Pawson  v.  Watson,  Cowp.  785,  Lord  Mansfield  was  asked, 
in  behalf  of  the  underwriters,  "whether  it  was  the  opinion  of  the  court 
that,  to  make  written  instructions  valid  and  binding  as  a  warranty, 

>  Here  were  state.l  Wheelton  v.  Hardisty,  8  E.  &  B.  232  (Ex.  Ch.  1858),  and  An- 
derson V.  iMtzgerald,  ante,  p.  391  (1853).—  Ed. 


SECT.  III.]         AMERICAN    POPULAR    LIFE    INS.    CO.    V.    DAY.  409 

they  must  be  inserted  in  the  polic}*,"  he  answered  that  that  was  "  most 
undoubtedl}'  "  the  opinion  of  the  court. 

To  hold  that  the  statements  of  the  proposal  and  the  application,  not- 
withstanding the  agreement  therein  above  quoted,  are  not  incorporated 
into  the  policy,  and  therefore  are  not  wari-anties  or  conditions  of  in- 
surance, is  but  to  apply  the  rule  that  where  the  parties  to  an  agreement 
have  reduced  their  contract  to  writing,  that  writing,  at  law,  determines 
what  the  contract  is,  and  evidence  cannot  be  received  to  contradict, 
add  to,  subtract  from,  or  vary  the  terms  of  the  writing.  The  policy  in 
this  case  is  the  agreement  for  insurance,  and  it  must  be  held  to  contain 
the  agreement,  and  all  the  agreement,  of  the  parties  to  it.  Though  the 
proposal  and  application  contain  an  agreement  on  the  part  of  the  in- 
sured that  the  answers  to  the  questions  annexed  to  them  and  the 
accompanying  statements,  together  with  the  statements  made  to  the 
examining  physician,  shall  be  the  basis  and  form  part  of  the  contract 
or  policy  between  the  insured  and  the  company,  yet  the  policy  does 
not  directly  or  indirectly  so  declare,  and  it  will  be  assumed  that  all 
previous  negotiations  have  been  superseded,  and  that  the  policy  alone 
expresses  the  contract  of  the  parties. 

But  it  is  urged  on  the  part  of  the  company  that,  inasmuch  as  the 
policy  declares  that  the  insurance  is  in  consideration  of  the  represen- 
tations made  to  the  company  in  the  application  for  the  policy,  this  is 
sufficient  to  give  the  representations  the  character  of  conditions  or  war- 
ranties. It  is  to  be  observed  that  the  policy  refers  to  the  representa- 
tions as  representations  only,  giving  them  no  higher  or  more  important 
character.  Almost  all  contracts  of  insurance  are  based  on  confidence 
in  representations,  in  respect  to  the  subject  of  the  insurance,  and  the 
consequences  of  falsehood  in  those  representations  are  well  understood. 
The  expression  under  consideration,  therefore,  has  no  particular  sig- 
nificance. It  cannot  have  the  effect  of  changing  the  character  of  the 
representations  in  the  application  and  elevating  them  to  the  importance 
of  warranties  or  conditions  of  insurance.  Campbell  v.  N.  E.  Mutual 
Ins.  Co.,  98  Mass.  381  ;  Price  v.  Phoenix  Mutual  Life  Ins.  Co.,  17  Minn. 
497.  There  was  no  error  in  striking  out  the  special  pleas.  They  were 
based  on  the  erroneous  assumption  that  the  representations  in  the  pro- 
posal and  application  were  warranties  or  conditions  of  insurance.  For 
the  same  reason,  there  was  no  error  in  the  refusal  to  chaj-ge.'  .  .  . 

There  is  no  error  in  the  record.  The  judgment  of  the  Supreme  Court 
should  be  affirmed.^ 

^  Here  followed  pas.sages  foreign  to  warranty.  —  Ed. 

2  In  Glutting  v.  Metropolitan  L.  Ins.  Co.,  50  N.  J.  L.  287  (1888),  Dixov,  J.,  for  the 

court,  said  :  — 

"  The  policy  declared  that  the  company  became  bound,  in  consideration  of  the  rep- 
resentations and  agreement  in  the  application  for  the  policy,  that  the  application  was 
a  part  of  the  contract,  .and  that  if  the  representations  in  the  application  were  not  true 
the  policy  should  be  void. 

"  In  the  application  Jacob  Glutting,  the  applicant,  declared  and  warranted  that 
the  representations  and  answers  made  therein  were  strictly  and  wholly  true,  that 


410  ^TNA  LIFE    INS.    CO.    V.   FRANCE.  [CHAP.  V. 


^TNA    LIFE   INS.    CO.,  Plaintiff  in  Error,  v.  FRANCE. 
Supreme  Court  of  the  United  States,  1876.     94  U.  S.  561. 
Error  to  the  Circuit  Court  of  the  United  States  for  the  Eastern  Dis- 
trict of  Pennsylvania. 

The  facts  are  stated  in  the  opinion  of  the  court. 
Mr.  Samuel  C.  Perkins,  for  the  plaintiff  in  error. 
Mr.  Nathan  H.  Sharjyless,  contra. 

they  should  form  the  basis  and  become  part  of  the  contract  of  insurance  (if  one  were 
issiied),  and  that  any  untrue  answers  should  render  the  policy  null  and  void.  .  .  . 

"  The  le"-al  effect  of  the  foregoing  stipulations  was  to  render  the  statements  in  the 
applicationrwith  regard  to  the  subject  of  insurance,  warranties,  and  to  annul  the  con- 
tract of  insurance  if  any  of  those  statements  was  shown  to  be  untrue." 

In  Vivar  v.  Supreme  Lodge  of  Knights  of  Pythias,  52  N.J.  L.  45.5,  465-466  (1890), 
8.  c.  ante,  p.  300,  Dixon,  J.,  for  the  court  (at  the  point  wliere,  ante,  p.  302,  line  4,  an 
omission  is  indicated),  said:  — 

"  The  defendant,  while  admitting  that  the  plaintiff  is  the  person  intended  by  the 
contract,  yet  insists'that  her  being  Vivar's  lawful  wife  was  made  a  condition  of  the 
obligation,  that  as  a  part  of  the  contract  Vivar  warranted  the  existence  of  such 
relationship. 

"  By  the  terms  of  the  certificates  the  application  forms  part  of  the  contract ;  never- 
theless, tlie  statements  contained  in  it  are  not  necessarily,  for  that  reason,  warranties. 
In  order  to  have  the  force  of  a  warranty,  the  statement  must  indeed  constitute  part 
of  the  contract ;  but,  whether  even  such  a  statement  should  be  deemed  a  warranty, 
depends  upon  the  just  construction  of  the  entire  agreement.  Courts  do  not  favor 
warranties  by  construction,  and  hence  parties  will  not  be  held  to  have  entered  into  the 
contract  of  warranty,  unless  they  clearly  appear  to  have  intended  it.  If  the  contract 
refers  to  statements  contained  in  another  pa])er  for  some  other  purpose  than  to  give 
them  the  force  and  effect  of  warranties,  -  for  instance,  if  it  refers  to  them  as  '  rep- 
resentations '  —  or  if  the  purpose  be  doubtful,  such  reference  will  not  convert  the 
statements  into  warranties.  Of  themselves,  statements  in  the  application  are  mere 
representations  and  they  will  not  become  conditions  or  warranties,  unless  the  parties 
plainly  evince  an  intention  to  make  them  such,  either  by  so  denominating  them  or  by 
declaring  the  validitv  of  the  contract  to  depend  upon  their  literal  truth.  May,  Ins., 
§§  158-165-  American  Pop.  Life  Ins.  Co.  v.  Day,  10  Vroom,  89.  Even  calling  the 
statements  warranties  will  not  make  them  such,  when  other  terms  in  the  contract  in- 
dicate a  different  understanding.  Fitch  v.  American  Pop.  Life  Ins.  Co.,  59  N.  Y.  557  ; 
Anders  v.  Knights  of  Honor,  22  Vroom,  175. 

"  Under  these  rules,  the  statements  in  the  application  now  before  us  are  not  war- 
ranties The  certificates  do  not  so  designate  them,  but,  on  the  contrary,  style  them 
'  representations  '.  and,  in  making  them  part  of  the  contract,  must  be  deemed  to  incor- 
porate them  as  representations.  Nor  is  there  in  the  contract  any  provision  to  the 
effect  that,  if  they  be  false  or  untrue  or  in.accurate,  the  insurance  will  be  void.  The 
clause  at  the  end'of  the  certificates,  'that  any  violation  of  the  within  mentioned  con- 
ditions .  .  .  shall  render  the  certificate,  and  all  claims,  null  and  void,'  must  be  un- 
derstood as  referring  to  matters  which,  by  other  parts  of  the  contract,  are  made 
conditions,  and  cannot  of  itself  create  a  condition  out  of  what  had  been  before  meu- 
tioned  as  a  representation  only.  The  trial  court,  therefore,  properly  held  that  the 
statement  concerning  the  relationship  between  Vivar  and  the  plaintiff  was  not  a 

warrantv.  i  ^      .. 

"  It  remains,  however,  to  determine  what  effect  it  should  have  upon  the  contract 
if  considered  as  a  representation,  untrue  to  the  knowledge  of  the  insured,  for  to  that 
extent  was  the  defendant's  offer  M  proof."  —  Ed. 


SECT.  III.]  ^TNA    LIFE   INS.    CO.   V.   FRANCE.  411 

Mr.  Justice  Bradley  delivered  the  opinion  of  the  court. 

This  action  was  brought  bj-  David  France  and  Lucetta  P.,  his  wife, 
to  recover  the  amount  of  a  policy  of  insurance  for  $10,000,  issued 
bv  the  ^tna  Life  Insurance  Company  on  the  life  of  Andrew  J.  Ciiew, 
of  Philadelphia,  dated  September  13,  1865,  and  payable  to  the  said 
Lucetta,  who  was  Chew's  sister.^  .   .   . 

The  policy,  amongst  other  things,  contained  the  following  stipulation  : 

"And  it  is  also  understood  and  agreed  to  be  the  true  intent  and 
meaning  hereof,  that  if  the  proposal,  answers,  and  declaration  made 
by  the  said  Andrew  J.  Chew,  and  bearing  date  the  thirteenth  day  of 
September,  1865,  and  which  are  hereby  made  part  and  parcel  of  this 
policy  as  fully  as  if  herein  recited,  and  upon  the  faith  of  which  this 
agreement  is  made,  shall  be  found  in  an}'  respect  false  or  fraudulent, 
then  and  in  such  case  this  policy  shall  be  null  and  void." 

The  trial  resulted  in  a  verdict  and  judgment  for  the  plaintiffs.  The 
defendant  sued  out  this  writ  of  error. 

Numerous  exceptions  were  taken,  on  which  errors  are  assigned  here  ; 
but  they  are  all  reducible  to  two  heads,  or  grounds  of  defence,  viz. : 
1.  AVant  of  insurable  interest  in  Lucetta  P.  France;  2.  Misrepresen- 
tation and  breach  of  warrant}"  as  to  the  age  and  health  of  said  Chew. 
It  is  insisted  that  the  rulings  and  charge  of  the  court  below  on  these 
points  were  erroneous.   .  .  . 

The  other  exceptions  relate  to  alleged  misrepresentations  b}'  Chew 
in  the  proposal  for  insurance.  The  polic}'  makes  the  proposal  and  the 
answers  to  the  questions  therein  a  part  of  the  contract,  and  declares 
that  if  they  shall  be  found  in  any  respect  false  or  fraudulent,  the  policy 
itself  shall  be  void.  Among  the  questions  are  the  following,  with  the 
answers  given  to  each  respectivel}' :  — 

"  '  4.  Place  and  date  of  birth  of  the  party  whose  life  is  to  be  insured  ? ' 
Ans.  'Born  in  New  Jersey,  in  1835.' 

"'5.  Age  and  next  birthday?'  Ans.  'Thirty  years,  October  28, 
as  near  as  I  can  recollect.' 

"  '  11.  Has  the  party  ever  had  any  of  the  following  diseases  ;  if  so, 
how  long  and  to  what  extent :  pais}',  spitting  of  blood,  consumption, 
asthma,  bronchitis,  diseases  of  the  lungs,  .  .  .  rupture,  convulsions, 
etc.  ? '    Ans.    '  None.' 

"'12.  Is  the  party  subject  to  habitual  cough,  dyspepsia,  etc.?' 
A))s.  '  No.' 

"  '  13.  Has  the  party  had,  during  the  last  seven  years,  any  severe 
disease?  If  so,  state  the  particulars  and  the  name  of  the  attending 
physician.'     A?is.   'No.'" 

The  answers  were  followed  by  this  qualification:  "The  above  is  as 
near  correct  as  I  remember." 

The  defendant  offered  evidence  tending  to  show  that  Chew,  at  the 
time  of  the  application, would  have  been  thirty-five  or  thirty-seven  years 
old  at  his  next  birthday,  instead  of  thirty,  and  that  he  was  born  October 

1  In  repriutiug  the  opiiiiou,  passages  foreign  to  warranty  liave  been  oniitteiJ.  —  Eu 


412  jETNA  life  ins.  co.  v.  fuance,  [chap.  v. 

28  1828  ;  and  that  he  had  been  ruptured  from  infancy,  and  so  contin- 
ued up  to  the  date  of  the  application,  and  wore  a  truss  ;  and  that  he  had 
had  consumption  or  some  disease  of  the  lungs  ;  and  that  he  was  subject 
to  habitual  cough  and  dyspepsia  ;  and  had  been  attended  by  physicians 
for  severe  disease  within  seven  years ;  and  that  he  knew  all  of  these 
matters  at  the  time  of  the  application.  Counter  evidence  was  given  on 
the  part  of  the  plaintiffs.  Among  the  proofs  of  death  was  an  affidavit 
of  the  widow  of  Chew,  stating  that  he  was  born  October  28,  1828, 
which  defendant  relied  on  as  to  the  point  of  age.  Mrs.  France  denied  all 
knowledge  of  the  papers  received  by  defendant  as  proof  of  loss,  except 
her  own  affidavit ;  and  as  to  the  alleged  rupture,  called,  amongst  others, 
Dr.  Lewis,  as  an  expert,  and  proposed  to  him  the  question,  whether  the 
existence  of  a  reducible  rupture  in  a  subject  of  life  assurance,  in  his 
opinion,  appreciably  increased  the  risk  of  the  underwriters?  The  ques- 
tion was  objected  to,  but  allowed. 

The  defendant  asked  the  court  to  charge,  that  if  any  of  the  answers 
were  untrue,  in  whole  or  in  part,  the  verdict  must  be  for  the  defendant. 
The  court  charged  that  the  truth  or  falsehood  of  the  answers  materially 
affected  the  risk,  but  added  :  — 

"  But  the  answers  here  are  qualified  by  the  words  appended  at  the 
foot  of  the  application,  '  The  above  is  as  near  correct  as  I  remember,' 
which  are  applicable  to  all  the  statements  made  by  the  assured.  He 
must  be  understood,  therefore,  as  stipulating  only  for  the  integrity  and 
approximate  accuracy  of  his  answers,  and  not  for  their  absolute  verity. 
Without  this  qualification,  substantial  error  in  any  of  his  answers  would 
avoid  the  policy,  irrespective  of  his  motive,  because  he  warranted  their 
truth  ;  with  it,  the  plaintiffs'  right  to  recover  will  not  be  defeated,  unless 
it  appears  that  some  one  of  the  answers  was  consciously  incorrect. 

"  To  avoid  the  policy,  then,  the  jury  must  be  satisfied  that  the  an- 
swers, or  some  of  them,  were  untrue  in  any  respect  materially  affecting 
the  risk,  and  that  the  assured  knew  of  their  incorrectness." 

And,  in  particular,  as  to  Chew's  representation  of  his  age,  the  court 
charged,  "  that  if  he  knew,  or  had  reason  to  believe,  that  the  year  of 
liis  birth,  as  stated  in  the  answer,  did  not  correctly  indicate  his  age,  the 
policy  is  void,  and  the  plaintiffs  are  not  entitled  to  recover." 

We  think  the  qualification  made  by  the  court  was  entirely  justified 
by  the  form  in  wiiich  the  answers  were  given.  If  the  company  was  not 
satisfied  with  the  qualified  answer  of  the  applicant,  they  should  have 
rejected  his  application.     Having  accepted  it,  they  were  bound  by  it. 

As  to  the  diseases  inquired  about,  the  court  charged  substantially  to 
the  same  effect;  namely,  that  the  answers  called  for  were  material,  and 
if  untrue,  and  Chew  knew. or  had  reason  to  believe  them  so,  the  policy 
was  void.     As  to  the  alleged  rupture,  in  particular,  the  court  said  :  — 

"  If,  however,  it  appears  that  the  rupture  had  been  completely  re- 
duced, so  tliat  its  effects  had  entirely  passed  away,  and  it  had  ceased 
to  affect  his  health  or  impair  his  capacity  to  take  fatiguing  and  pro- 
longed exercise,  the  jury  will  determine  whether  the  answer  is  untrue 


SECT.  III.]       KNECHT   V.    MUTUAL    LIFE    INS.    CO.    OF   NEW   YORK.       413 

as  nearly  as  he  could  remember.  Ou  the  other  hand,  if  the  rupture  had 
not  been  cured,  it  is  hardh'  presumable  that  he  could  have  forgotten  it 
at  the  time  of  the  application  ;  and  if  the  jurj"  so  find,  it  was  his  duty 
to  disclose  the  fact  that  he  had  been  afflicted  with  this  disease,  and  his 
negative  answer  will  avoid  the  policy." 

And  so  of  the  rest.  We  think  the  charge  was  a  fair  one,  and  gave 
the*  defendant  the  full  benefit  of  any  falsity  contained  in  the  answers 
given  by  the  applicant.  Under  the  charge  as  given,  we  do  not  see 
how  the  evidence  of  the  physician,  even  if  irrelevant,  could  injure  the 
defendant- 
Other  points  were  raised,  but  it  is  unnecessary  to  discuss  them.  From 
a  careful  examination  of  the  whole  case,  as  presented,  we  are  satisfied 
that  there  is  no  error  in  the  record.  Judgment  affirmed.^ 


KNECHT  V.   MUTUAL  LIFE  INSURANCE  CO.  OF  NEW 

YORK. 

Supreme  Court  of  Pennsylvania,  1879.     90  Pa.  118. 

I:rror  to  the  Court  of  Common  Pleas  of  Northampton  County. ^ 

An  amicable  action  of  assumpsit  was  brought  by  the  administrator 
of  A.  S.  Knecht,  upon  a  policy  of  life  insurance  written  by  the  Mutual 
Life  Insurance  Company,  in  1868.  A  case  was  stated  for  the  opinion 
of  the  court;  and  the  court,  Meyers,  P.  J.,  having  entered  judgment 
for  the  defendant,  the  plaintiff  took  this  writ. 

Edward  J.  Fox,  for  plaintiff  in  error. 

H.  Green,  for  defendant  in  error. 

Paxson,  J.  It  is  not  alleged  that  in  his  application  for  insurance 
the  insured  made  any  false  representation  of  an  existing  fact.  What 
he  did  declare  was,  "  that  he  is  not  now  afflicted  with  any  disease  or 
disorder,  and  that  he  does  not  now,  nor  will  he,  practise  any  pernicious 
habit  that  obviously  tends  to  the  shortening  of  life."  The  case  stated 
sets  forth,  "  That  at  the  times  of  making  the  aforesaid  application  for 
insurance,  the  said  Abram  F.  Fangboner  was  of  correct  and  temperate 
habits ;  that  some  years  after  the  issuing  of  said  policy  he  became  ad- 
dicted to  the  use  of  intoxicating  drinks,  from  the  immoderate  use  of 
which  he  was  attacked  with  delirium  tremens,  from  which  he  died." 
The  policy  issued  in  pursuance  of  said  application  contained  this  pro- 
vision :  "  If  any  of  the  statements  or  declarations  made  in  the  appli- 
cation for  this  polic}',  upon  the  faith  of  which  this  policy  is  issued, 

1  Compare  ^tna  Life  Ins.  Co.  v.  France,  91  U.  S.  510  (1875). 

See  Fowkes  v.  Manchester  and  London  L.  Assurance  and  Loan  Assn.,  3  B.  &  S. 
917  (1863);  Washington  L.  Insurance  Co.  v.  Hanej,  10  Kan.  525  (1873);  Fitch  v. 
American  Popular  L.  Ins.  Co.,  59  N.  Y.  557  (1875).  —Ed. 

2  The  reporter's  statement  has  been  omitted.  —  Ed. 


414        KNECHT   V.   MUTUAL   LIFE   INS.    CO.    OF   NEW   YOKK.       [CHAP.  V. 

shall  be  found  in  any  respect  untrue,  then  and  in  every  such  case  this 
policy  shall  be  null  and  void."     It  is  unnecessary  to  discuss  the  ques- 
tion as  to  whether  the  declarations  of  the  insured  as  to  existing  facts 
in  his  application  constitute  a  warranty.      Tlie  authorities  are  by  no 
means  uniform  upon  this  point.     Our  own  recent  case  of  the  Washing- 
ton Life  Insurance  Co.  v.  Schaible,  1  W.  N.  C.  3G9,  holds  that  they  do 
not  constitute  such  warranty.     Where,  however,  the  policy  has  been 
issued  upon  the  faith  of  such  representations,  and  they  are  false  in 
point  of  fact,  the  better  opinion  seems  to  be  that  the  policy  is  avoided. 
And  this  is  so  even  where  the  false  statement  is  to  a  matter  not  material 
to  the  risk :  Jeffries  v.  The  Life  Insurance  Co.,  22  Wallace,  47.     In 
such  case  the  agreement  is  that  if  the  statements  are  false,  there  is  no 
insurance  ;  no  policy  is  made  by  the  company,  and  no  policy  is  accepted 
by  the  insured.     In  the  case  in  hand  the  policy  attached.      There  was 
nothing  to  avoid  it  ab  initio.     Were  the  mere  declarations  by  the  in- 
sured in  his  application,  as  to  his  future  intentions,  and  his  failure  to 
carry  out  his  declarations,  or  to  comply  with  liis  intentions  as  to  his 
future  conduct,  sufficient  to  work  subsequent  forfeiture  of  the  policy? 
In  no  part  of  the  application  did  the  assured  covenant  that  he  would 
not  practise  any  pernicious  habit.     Nor  did  he  promise,  agree,  or  war- 
rant, not  to  do  so.     He  declared  that  he  would  not.     To  declare  is  to 
state,  to  assert,  to  publish,  to  utter,  to  announce,  to  announce  clearly 
some  opinion  or  resolution  ;  while  to  promise  is  to  agree,  "  to  pledge 
one's  self,  to  engage,  to  assure  or  make  sure,  to  pledge  by  contract." 
—  Worcester.     There  is  no  clause  in  the  policy  which  provides  that  if 
the  assured  shall  practise  any  pernicious  habit  tending  to  shorten  life, 
the  policy  shall  ipso  facto  become  void.     There  is  only  the  stipulation 
that,  "  if  any  of  the  statements  or  declarations  made  in  the  application 
.  .   .  shall  be  found  in  any  respect  untrue,  this  policy  shall  be  null  and 
void."     This  evidently  referred  to  a  state  of  things  existing  at  the  time 
the  policy  was  issued.     As  to  such  matters,  as  I  have  already  said, 
there  was  no  untrue  statement.     But  the  assured  declared,  as  a  matter 
of  intention,  that  he  woidd  not  practise  any  pernicious  habit.    Was  this 
declaration  of  future  intention  false?     There  is  no  allegation,  much  less 
proof,  that  it  was  so.     The  assured  might  well  have  intended  to  adhere 
to  his  declaration  in  the  most  perfect  good  faith,  yet  in  a  moment  of 
temptation  have  been  overcome  by  this  insidious  enemy.     In  the  ab- 
sence of  any  clause  in  the  policy  avoiding  it  in  case  the  assured  should 
practise  any  such  habit,  and  of  any  covenant  or  warranty  on  his  part 
that  he  would  not  do  so,  we  do  not  think  his  mere  declaration  to  that 
effect  in  the  application  sufficient  to  avoid  the  policy. 

The  judgment  is  reversed,  and  Judgment  is  note  entered  in  favor 

of  the  j^l^intif  and  against  the   defendant  for   the   sum    of 

$1500,  with  interest  from  June  26«/i,  1876.^ 
Tkunket,  J.,  dissented. 

1  C'oH/ra ;   Ilolterhoff  i-.  Mutual  Benefit  L.  Ins.  Co.,  3  American  Law  Kecord,  272 
(Ciuciuuati  Superior  Court,  Geueral  Term,  1874),  s.c.  3  Ins.  L.  J.  854,  aud  4  Bigelow's 


SECT.  III.]       KNIGHT   V.   MUTUAL   LIFE    INS.    CO.    OF   NEW   YORK.        415 

0 

KNIGHT  V.  MUTUAL   LIFE  INSURANCE  COMPANY  OF 
NEW  YORK. 

Supreme  Court  of  Pennsylvania,  1881 .    9  Weekly  Notes  of  Cases,  501. 

Error  to  the  Common  Pleas  No.  4,  of  Philadelphia  Count}-. 

Assumpsit  by  W.  A.  Knight  against  the  above-named  company,  upon 
a  paid  up  policy  for  $3500  issued  upon  the  life  of  W.  P.  Beatty. 

The  material  facts  of  this  case  were  as  follows  :  In  1866  W.  P.  Beatty 
insured  his  life  in  the  defendant  company  for  810,000.  Before  the 
policy  was  issued,  the  applicant  filed  an  application  with  the  company, 
which  contained,  i7it€r  alia,  the  following  questions :  Are  your  habits 
of  life  correct  and  temperate?  Have  they  always  been  so?  Both  these 
questions  were  answered  in  the  affirmative.  The  following  declaration, 
signed  by  the  insured,  was  appended  to  the  declaration  as  a  part 
thereof : — 

''And  it  is  hereby  expressly  stipulated  and  agreed  that  the  above 
application  and  this  declaration  shall  form  the  basis  of  the  contract 
between  the  above-named  persons  and  the  said  The  Mutual  Life  In- 
surance Company  of  New  York,  and  that  if  any  misrepresentations 
or  fraudident  and  untrue  answers  have  been  made,  or  if  any  facts 
which  should  have  been  stated  to  the  company  have  been  suppressed 
therein,  or  if  any  violation  of  the  covenants,  conditions,  or  restrictions 
of  the  policy  (should  one  be  issued),  shall  occur,  or  any  omission  or 
neglect  to  pay  any  of  the  premiums  on  or  before  the  days  on  which 
they  shall  fall  due  shall  take  place,  that  then  in  either  event  the  said 
policy  shall  become  and  be  null  and  void,  and  all  moneys  which  shall 
have  been  paid,  and  also  all  dividends  which  may  have  accrued  thereon, 
shall  be  forfeited  to  the  said  company  for  its  sole  use  and  benefit.  And 
the  said  William  Penn  Beatty  further  declares  that  he  is  not  now  afflicted 
with  any  disease  or  disorder,  and  that  he  does  not  now  nor  will  he 
practise  any  pernicious  habit  that  obviously  tends  to  the  shortening  of 
life." 

In  1871  Beatty  allowed  his  policy  to  lapse,  and  on  May  19,  1871, 
took  from  the  company  a  new  paid-up  policy  (the  one  in  suit)  for  83500. 
Before  this  policy  issued,  he  signed  a  declaration,  whereby  he  agreed 
that  the  said  declaration  and  his  application  for  the  original  policy 
should  be  part  of  his  contract  with  the  company.  This  declaration 
contained,  inter  alia,  the  following  terms  :  — 

"  And  I  do  hereby  declare  that  the  several  answers  given  by  me,  or 
in  my  behalf,  to  the  questions  on  pages  1,  2,  and  3,  of  the  original  ap- 

L.  &  A.  Ins  Reports,  395  ;  Schultz  v.  Mutual  L.  Ins.  Co.,  6  Fed.  R.  672  (U.  S.  C.  C, 
S.  D.  N.  Y.  1881). 

See  Supreme  Council  of  Royal  Templars  v.  Curd,  111  111.  284  (18S4).-  and  Com- 
mercial  Mutual  .\ccideut  Co.  v.  Bates,  176  111.  194  (1898).  — Ed. 


416        KNIGHT   V.    MUTUAL   LIFE   INS.    CO.    OF   NEW   YORK.       [cHAP.  V. 

plication  for  a.  policy  of  life  insurance,  which  was  dated  Feb.  21,  18G6, 
and  signed  bj'  the  above-named,  and  which  this  is  intended  to  replace, 
were  true  and  correct  when  made  ;  and  I  guarantee  that  he  does  not 
and  will  not  practise  any  bad  or  vicious  habit  that  tends  to  the  shorten- 
ing of  life."  '  .  .  . 

Beatty  subsequently  failed  and  made  an  assignment,  owing  the 
plaintiff  Knight  a  large  sum.  The  policy  in  suit  was  sold  at  public 
sale  after  due  notice  by  the  assignee,  and  bought  by  the  plaintiff 
for  $1510.  On  Feb.  9,  1878,  Beatty  died ;  and,  the  company  declining 
to  pay  the  policy,  tliis  suit  was  brought. 

The  defendant  pleaded  specially  (1)  that  the  insured  had  given  false 
answers  to  the  questions  in  his  original  application,  and  (2  and  3)  that 
he  had  violated  his  declaration  and  guaranty  that  he  did  not  and  would 
not  practise  any  pernicious  habit  obviously  tending  to  shorten  life, 
wherefore,  by  the  terms  of  the  policy,  it  was  null  and  void.  The  plain- 
tiff filed  two  replications  to  each  plea,  one  traversing  the  fact  of 
intemperance.   .  .  . 

On  the  trial,  before  Elcock,  J.,  .  .  .  the  court  charged  the  jury, 
inter  alia,  as  follows :  The  insured  warranted  that  he  would  not  con- 
tract any  pernicious  habit  obviously  tending  to  shorten  life ;  the  guar- 
anty is  the  same  as  a  warranty  ;  and  if  the  jury  believe  that  afterwards 
the  insured  practised  the  pernicious  habit  of  intemperance,  the  policy 
became  null  and  void. 

Verdict  and  judgment  for  defendant,  whereupon  the  plaintiff  took 
this  writ,  assigning  for  error,  inter  alia,  ...  the  charge  of  the  court  as 
above  set  forth. 

K  D.  McLoughlin  (with  him  W.  K.  Shryock),  for  plaintiff  in  error. 

W.  W.  Porter  (with  him  W.  A.  Porter),  for  defendants  in  error. 

The  Court.  .  .  .  We  agree  in  opinion  with  the  learned  judge  below, 
that  the  word  "guaranty  "  means  "warrant,"  and  in  this  respect  the 
case  is  distinguishable  from  Knecht  v.  Ins.  Co.,  7  W.  N.  C.  297. 

Judgment  affirmed.'^ 

1  In  reprinting  the  statement  and  the  opinion,  passages  dealing  with  estoppel  have 

been  omitted.  —  Ed.  .      ^    -r.   ^^^  l^cc^^\       -v^ 

2  See  Ballantyne  v.  Mutual  L.  Ins.  Co.,  17  Victonau  L.  R.  520  (1891).  -Ed. 


SECT.  III.]  THOMSON   V.   WEEMS.  417 

THOMSON,  Appellant,  v.  WEEMS  and  Others, 
Respondents. 

House  of  Lords,  1884.     9  A  pp.  Cas.  671.^ 

Appeal  from  the  Second  Division  of  the  Court  of  Session,  Scotland.'^ 

The  question  was  whether  the  appellant,  as  manager  of  and  as 
representing  the  Standard  Life  Assurance  Company,  was  bound  to 
pay  to  the  respondents  £1,500,  the  amount  of  a  policy  of  insurance  on 
the  life  of  William  Weems.  The  policy  was  executed  on  Nov.  25,  1881. 
After  reciting  that  William  Weems,  "  having  subscribed  or  caused  to  be 
subscribed  and  deposited  at  the  office  of  the  said  company  in  Edin- 
burgh a  declaration,  bearing  date  the  9th  of  November,  1881,  which  is 
hereb}' declared  to  be  the  basis  of  this  assurance,"  the  policy  proceeded 
to  promise  the  amount  in  question,  with  this  proviso,  among  others: 
"Provided  also,  that  if  anything  averred  in  the  declaration  hereinbe- 
fore referred  to  shall  be  untrue,  this  policy  shall  be  void,  and  all 
moneys  received  by  the  said  company  in  respect  thereof  shall  belong  to 
the  said  company  for  their  own  benefit."  The  declaration  referred  to 
was  on  a  printed  form,  beginning  thus:  "The  person  whose  life  is 
proposed  for  assurance  will  also  answer  the  following  questions,"  and 
containing  numerous  printed  questions  and  manuscript  answers,  among 
others  these:  "7.  (1)  Are  you  temperate  in  your  habits?  (2)  and 
have  you  always  been  strictly  temperate? —  (1)  Temperate.    (2)  Yes." 

The  declaration  closed  thus  :  "I.  .  .  do  hereby  declare  that  I  am 
at  present  in  good  health,  not  being  afflicted  with  any  disease  or  dis- 
order tending  to  shorten  life ;  that  the  foregoing  statements  of  my  age, 
health,  and  other  particulars  are  true ;  .  .  .  and  that  I  have  not  with- 
held any  circumstance  tending  to  render  an  assurance  of  my  life  more 
than  usually  hazardous.  And  I  ...  do  hereby  agree  that  this  declara- 
tion shall  be  the  basis  of  the  contract  between  me  and  the  Standard 
Life  Assurance  Company ;  and  that  if  any  untrue  averment  has  been 
made,  or  any  information  necessar}-  to  be  made  known  to  the  company 
has  been  withheld,  all  sums  which  shall  have  been  paid  to  the  said 
company  .  .  .  shall  be  forfeited,  and  the  assurance  be  absolutely  null 
and  void,"  signed,  "  William  Weems." 

Weems  died  on  July  29,  1882.  The  company  declined  to  pay. 
Thereupon  the  firm  of  J.  &  W.  Weems,  for  whose  behoof  the  policy 
had  been  entered  into,  and  Alexander  Wylie,  the  sole  surviving  partner, 

1  8.  c,  sub  nom.  Standard  Life  Assurance  Co.  v.  Weem.s,  11  Court  of  Session 
Cases,  Fourth  Series,  48  (House  of  Lords).  —  Ed. 

2  The  statement  has  been  rewritten,  chiefly  with  the  aid  of  Lord  Blackburn's 
opinion. 

In  the  Second  Division  of  the  Court  of  Session,  the  case  is  reported,  sub  nom. 
Weems  v.  Standard  Life  Assurance  Co.,  11  Court  of  Session  Cases,  Fourth  Series, 
658  (1884).  — Ed 

27 


418  THOMSON   V.   WEEMS.  [CHAP.  V. 

and  Robert  Reid,  to  whom  the  policy  had  been  assigned  as  security, 
brought  an  action. 

The  defender  stated,  among  other  defences:  "3.  The  statements 
made,  as  above  recited,  by  the  said  William  Weems,  were,  at  the  time 
of  their  being  made,  and  to  his  knowledge,  false.  In  point  of  fact 
the  said  William  Weems  was  at  that  time  a  person  of  intemperate 
habits,  and  he  had  been  so  for  some  time.  His  health  was  affected  by 
said  habits.  His  death,  which  occurred  shortly  after,  was  the  result  of 
tliera.  ...  4.  The  false  answers  above  set  forth  were  made  know- 
ingly and  fraudulently  by  the  said  William  Weems,  in  order  to  conceal 
the  risks  attaching  to  an  insurance  on  his  life  from  the  company,  and 
induce  them  to  grant  him  a  policy,  which  the}'  would  not  have  done 
had  they  been  aware  of  the  true  state  of  the  facts." 

The  pursuers  made  the  following  answer:  "It  is  denied  that  the 
answers  made  b}'  Mr.  Weems  .  .  .  were  false,  or  at  least  that  the}'  were 
made  by  him  in  the  knowledge  that  they  were  false,  and  with  a  fraudu- 
lent intention." 

The  Lord  Ordinar}',  Lord  Fraser,  pronounced  an  interlocutor, 
finding,  inte)'  alia,  "  that  the  said  William  Weems  did  not  make  any 
untrue  statements  in  the  said  declaration,  and  that  therefore  the  policy 
is  not  void.     Therefore  decerns  against  the  defender." 

The  defender  reclaimed,  whereupon  the  Second  Division  of  the 
Court  of  Session  (Lord  Rutherfurd  Clark  dissenting)  pronounced 
an  interlocutor  adhering  to  the  Lord  Ordinary's  decision. 

Against  these  interlocutors,  an  appeal  was  taken  to  the  House  of 
Lords. 

T/te  Solicitor-  General  for  Scotland  (Asher,  Q.  C),  and  Webster, 
Q.  C,  contended  that  the  decision  of  the  court  below  was  erroneous. 

The  Tjord  Advocate  (Balfour,  Q.  C),  and  James  Reid,  for  the 
respondents. 

Lord  Blackburn.^  ...  I  take  it  that  what  your  Lordships  have  to 
do  is  to  determine  on  the  whole  evidence  whether  the  statement  was 
or  w:is  not  "  untrue,"  within  the  meaning  of  that  word,  as  used  in  the 
policy,  and  declaration  incorporated  in  it.  I  think  that  to  a  great 
degree  depends  on  the  construction  of  the  whole  contract. 

Those  whose  business  it  is  to  insure  lives  calculate  on  the  average 
rate  of  mortalit}',  and  charge  a  premium  which  on  that  ordinary  aver- 
age will  prevent  their  being  losers.  There  are  some  expressions  used 
by  tlie  judges  in  the  Court  of  Session  in  the  case  of  Hutchison,  Feb.  21, 
1845;  7  Court  Sess.  Cas.  2nd  Series,  at  p.  473,  which  would  seem  to 
lay  it  down,  at  least  when  it  is  tlie  party's  own  life  that  is  assured, 
tliat  it  is  illegal,  or  at  least  so  absurd  tliat  no  one  would  make  such  a 
contract,  to  engage  that  if  the  life  is  such  that  the  risk  is  of  the 
ordinary  kind,  the  insurer  shall  be  bound,  but  that  if  there  is  a  disease 
tending  to  shorten  life,  such  as  to  make  it  not  the  ordinary  risk,  the 
insurer  shall  not  be  bound,  whether  the   assured  knew  it  or  not.     I 

1  After  stating  the  case.  —  Ed. 


SECT.  III.]  THOMSON   V.   WEEMS.  419 

cannot  agree  to  this ;  it  seems  to  me  a  very  reasonable  stipulation  on 
the  part  of  the  insurer,  and  that  it  is  not  at  all  absurd  or  improper 
on  the  part  of  the  assured  to  assent  to  such  being  a  term  of  the  con- 
tract. It  is  seldom  that  a  derangement  of  one  important  function  can 
have  gone  so  far  as  to  amount  to  disease  without  some  symptoms 
having  developed  themselves,  but  the  insurers  have  a  right  if  they 
please  to  take  a  warranty  against  such  disease,  whether  latent  or  not, 
and  it  has  very  long  been  the  course  of  business  to  insert  a  warranty  to 
that  effect. 

If  there  was  no  more  than  a  warranty  to  that  effect,  if  it  was  dis- 
proved, the  risk  would  never  have  attached,  the  premiums  therefore 
would  never  have  become  due,  and  might,  if  paid,  be  recovered  back 
as  money  paid  without  consideration.  But  it  became  usual,  I  do  not 
know  when,  but  at  least  for  the  last  fifty  3-ears,  to  insert  a  term  in  the 
contract,  that  if  the  statements  were  untrue  the  premiums  should  be 
forfeited. 

That,  no  doubt,  is  a  hard  bargain  for  the  assured  if  he  has  innocently 
warranted  what  was  not  accurate,  but  if  he  has  warranted  it,  "un- 
truth," without  any  moral  guilt,  avoids  the  insurance ;  and  in  Duckett 
V.  Williams,  2  C.  &  M.  348,  in  1834,  it  was  held,  on  reasoning  to  my 
mind  irresistible,  that  in  a  declaration  substantially  as  far  as  regards 
this  point  the  same  as  this,  what  was  untrue  so  as  to  have  the  effect  of 
avoiding  the  insurance  was  also  untrue  so  as  to  cause  the  forfeiture  of 
the  premium.^  .   .   . 

It  is  competent  to  the  contracting  parties,  if  both  agree  to  it  and 
sufKciently  express  their  intention  so  to  agree,  to  make  the  actual 
existence  of  anything  a  condition  precedent  to  the  inception  of  any 
contract ;  and  if  they  do  so  the  non-existence  of  that  thing  is  a  good 
defence.  And  it  is  not  of  any  importance  whether  the  existence  of 
that  thing  was  or  was  not  material  ;  the  parties  would  not  have  made 
it  a  part  of  the  contract  if  they  had  nofr  thought  it  material,  and 
they  have  a  right  to  determine  for  themselves  what  they  shall  deem 
material. 

In  policies  of  marine  insurance  I  think  it  is  settled  b)'  authority  that 
any  statement  of  a  fact  bearing  upon  the  risk  introduced  into  the 
written  policy  is,  by  whatever  words  and  in  whatever  place,  to  be 
construed  as  a  warranty,  and,  prima  facie,  at  least  that  the  compliance 
with  that  warranty  is  a  condition  precedent  to  the  attaching  of  the 
risk.  I  think  that  on  the  balance  of  authorit}-  the  general  principles  of 
insurance  law  appl}'  to  all  insurances,  whether  marine,  life,  or  fire  ;  see 
per  Lord  Eldon,  C,  in  a  Scotch  appeal  on  a  fire  insurance.  New- 
castle Fire  Insurance  Co.  v.  Macmorran  &  Co.,  July  10,  1815,  3  Dow. 
at  p.  262.  No  question  arises  on  that  in  the  present  case,  but  I  do 
not  think  that  this  rule  as  to  the  construction  of  marine  policies  is  also 

1  Here  followed  comments  on  Anderson  v.  FitzGerald,  an/e,  p.  391  (1853);  Life 
Association  v.  Foster,  II  Court  of  Session  Cases,  Third  Series,  351  (1873)  ;  and  Scottish 
Life  Assurance  Co.  v.  Buist,  4  Court  of  Session  Cases,  Fourth  Series,  1076  (1877). —  Ed. 


420  THOMSON    v.    WEEMS.  [CHAP.  V, 

applicable  to  the  construction  of  life  policies.  But  I  think  when  we 
look  at  the  terras  of  this  contract,  and  see  that  it  is  expressly  said  in 
the  policy,  as  well  as  in  the  declaration  itself,  that  the  declaration  shall 
be  the  basis  of  the  policy,  that  it  is  hardly  possible  to  avoid  the  con- 
clusion that  the  truth  of  the  particulars  (which,  I  think,  include  his 
statement  that  he  was  of  temperate  habits)  is  warranted. 

The  Lord  Advocate  argued  very  powerfully  that  the  truth  of  that 
statement  involved  questions  of  degree  and  of  opinion,  and  therefore 
could  not,  he  argued,  be  warranted.  But  the  most  familiar  instance 
of  a  warranty  (implied  in  every  voyage  policy)  is  that  of  seaworthiness, 
involving  in  it  questions  of  degree  and  opinion  to  quite  as  great  an 
extent  as  a  warranty  of  temperate  habits.  I  think,  therefore,  whilst  I 
agree  that  the  burthen  is  on  the  insurers,  and  that  they  must  prove 
drinking  carried  on  before  the  date  of  the  declaration,  9th  of  Novem- 
ber, 1881,  to  such  an  extent  as  to  amount  to  intemperance,  and  so  often 
and  continuously  as  to  amonnt  to  habits  of  intemperance,  they  are  not 
obliged  to  prove  anything  more. 

The  object  of  tlie  insurance  company  was  to  know  that  the  life  to  be 
insured  was  not  merel}'  not  rendered  already  diseased  by  drinking,  but 
that  his  habits  were  so  temperate  that  there  was  no  unusual  risk  that  he 
should  become  a  drunkard,  and  they  took  the  warranty  that  they  might 
safely  dispense  with  an}'  further  inquiry  on  that  point.  I  think,  there- 
fore, that,  such  being  the  object  of  warrant}',  we  must  take  into 
account  the  normal  habits  of  people  in  the  class  and  in  the  locality 
■where  the  person  assured  lives.  I  think  gentlemen  in  the  last  century 
drank  habitually  a  great  deal  more  than  they  do  now,  and  I  do  not 
think  a  gentleman  then  would  properly  have  been  held  to  be  of  intem- 
perate habits  (within  tlie  meaning  of  such  a  policy)  though  he  drank 
so  much  habitually  that,  if  a  gentleman  now  did  so,  the  insurers 
would  reasonably  dread  that  he  would  drink  more  ;  and  then  he  would 
not  be  held  of  temperate  habits  within  the  meaning  of  such  a  policy. 
And  I  think  it  is  fair,  so  far  as  the  evidence  enables  us,  to  take  into 
account  the  normal  habits  of  the  town  councillors  of  Johnstone ;  the 
evidence  does  not  satisfy  me  that  they,  as  a  general  rule,  drank  as 
freely  as  the  assured  did.  He,  some  months  after  the  policy  was  made, 
was  elected  provost,  and  then  he  seems  to  have  pulled  up.  That,  as 
it  was  after  the  declaration,  is  only  material  as  far  as  it  throws  light  on 
what  had  been  the  case  before.  And,  on  the  29th  of  July,  1882,  eight 
months  after  the  policy  was  granted,  he  died.  Now  the  cause  of 
death  was,  in  one  sense,  immaterial.  If  the  policy  was  avoided,  the 
insurance  compan}'  would  not  have  been  liable  though  he  had  been 
killed  in  a  railway  accident,  but  that  would  have  afforded  no  evidence 
as  to  the  state  of  his  habits.  But  the  doctor  who  attended  him  in  his 
last  illness  certified  that  the  cause  of  his  death  was  hepatitis,  chronic, 
four  months,  congestion  of  the  brain,  four  days.  Dr.  Colligan,  who 
certified  this,  is  himself  dead  ;  that,  according  to  the  Scotch  law  of 
evidence,  takes  his  statements  out  of  the  rule  as  to  hearsay  evidence, 


SECT.  III.]  THOMSON   V.   WEEMS.  421 

though,  in  weighing  them,  we  must  remember  that  he  is  not  subject  to 
cross-examination. 

Now  chronic  hepatitis  is  a  disease  of  the  liver,  which  is  generally,  in 
this  climate,  produced  b}'  excessive  drinking  over  a  considerable 
period  ;  and  if  it  is  established  that  the  assured  had,  as  early  as  March, 
1882,  really  begun  to  suffer  from  such  a  disease,  it  adds  greatly  to  the 
force  of  that  evidence  which  tends  to  show  he  had  been  in  the  habit  of 
drinking  too  much  for  some  time  before  November,  1881.  I  do  not 
know  that  either  class  of  evidence  by  itself  would  have  in  my  mind 
satisfied  the  burthen,  which  was  on  the  appellant;  taken  together, 
they  do.  I  must  therefore  advise  your  Lordships  to  reverse  the  inter- 
locutors complained  of,  with  costs. 

Lord  Watson.^  ...  I  entertain  no  doubt  that,  according  to  the  law 
of  Scotland,  the  declaration  of  the  assured  taken  in  connection  with 
the  policy  itself,  in  his  proposal  to  the  company,  constitutes  an  express 
warranty  that  the  answer  made  by  him  to  the  seventh  question  was 
true.  In  other  words,  it  is  an  express  and  essential  condition  of  the 
contract,  that  the  policy  shall  be  null  and  void  in  the  event  of  the 
averment  by  the  assured  as  to  his  habits,  implied  in  his  answer  to  that 
question,  proving  to  be  false.  The  doctrine  of  warranty,  as  applied  to 
such  stipulations  in  a  contract  of  assurance,  is  the  same  in  the  law  of 
Scotland  as  in  that  of  England.  I  am  aware  that  some  Scotch  judges 
have  in  times  past  objected  to  the  use  of  the  word  "  warranty  "  as 
having  no  definite  significance  in  the  law  of  Scotland  ;  but  in  order  to 
show  that  such  a  remark  is  no  longer  well  founded,  I  need  only  refer  to 
the  observations  made  by  the  Lord  President  (Inglis)  and  Lord  Mure  in 
Scottish  Life  Assurance  Society  v.  Buist,  13  July,  1877  ;  4  Court  Sess. 
Cas.  4th  Series,  at  p.  1078,  and  to  the  opinion  of  the  judges  of  the 
First  Division  in  Life  Association  v.  Foster,  31  Jan.  1873;  11  Court 
Sess.  Cas.  3rd  Series,  p.  351. 

Notwithstanding  that  the  warranty  is  express,  there  still  remains  for 
consideration  what  must  be  held  to  be  the  subject-matter  of  the  war- 
ranty. That,  is  a  point  to  be  determined  in  each  case,  according  to  the 
just  construction  of  the  question  and  answer  taken  pe?*  se  and  with- 
out reference  to  the  warranty  given.  In  the  present  case,  the  seventh 
question  proceeds  from  the  company,  being  printed  on  a  form  of 
proposal  issued  by  them  for  the  use  of  persons  who  may  be  desirous 
of  effecting  an  assurance.  The  question  must,  in  my  opinion,  be  in- 
terpreted according  to  the  ordinary  and  natural  meaning  of  the  words 
used,  if  that  meaning  be  plain  and  unequivocal,  and  there  be  nothing 
in  the  context  to  quahfy  it.  On  the  other  hand,  if  the  words  used  are 
ambiguous,  they  must  be  construed  contra  x>roferentes,  and  in  favor 
of  the  assured.  For  my  own  part,  I  can  discern  no  ambiguity  in  the 
language  of  question  seven.  I  agree  with  Lord  Rutherfurd  Clark, 
that  the  import  of  the  answer  is  precisely  the  same  as  if  the  deceased 
had  aflarmed:  "first,  that  he  was  temperate  in  his  habits;  and 
1  After  stating  the  case.  —  Ed. 


422  THOMSON   V.   WEEMS.  [CHAP.  V. 

secondly,  that  he  had  always  been  strictly  so."  In  its  plain  and  ordi- 
naiy  sense,  that  statement  is  an  averment  of  fact  and  not  a  mere 
assertion  of  the  opinion  or  belief  entertained  by  the  assured  with 
regard  to  that  fact.  It  then  appears  to  me  that  whatever  may  be  tlie 
import  of  the  word  "temperate"  (which  is  a  separate  matter),  the 
assured  must  be  held  to  have  warranted,  not  that  the  assertion  was 
true  according  to  his  sincere  conviction,  but  true  in  point  of  fact ;  and 
consequently,  that  in  order  to  establish  a  breach  of  warranty  it  is  not 
necessary  for  the  appellant  to  prove  that  the  assertion  was  morally 
false. ^  .  .  . 

An  ingenious  argument  was  addressed  to  your  Lordships  by  the 
respondents'  counsel,  for  the  purpose  of  showing  that  the  seventh 
question,  from  its  very  nature,  involved  only  matter  of  opinion  and 
not  of  fact,  and  consequent!}'  that  any  reply  to  it  must  be  treated  as  an 
expression  of  opinion,  and  not  as  an  assertion  of  fact.  It  appeared 
to  me  that  their  argument,  which  turned  upon  a  very  fine-drawn  dis- 
tinction between  what  were  termed  matters  of  pure  fact  and  ujatters  of 
opinion,  had  reall}'  no  practical  bearing  upon  the  case  before  us. 
There  are  facts  innumerable  which  can  only  be  ascertained  by  the  test 
of  opinion,  but  they  are  not  the  less  facts  in  a  legal,  whatever  they 
ma}'  be  in  a  metaphysical,  sense.  It  appears  to  me  to  be  in  vain  to 
contend  that  the  character  of  a  man's  habits,  temperate  or  intemper- 
ate, is  matter  of  opinion  and  not  of  fact.  The  second  branch  of  the 
fourth  question  in  the  proposal  submitted  b}-  the  deceased,  furnishes  an 
apt  illustration  of  that  which  in  the  ordinary'  sense  is  matter  of  mere 
opinion  as  distinguished  from  matter  of  fact.  It  runs  thus  :  "  Do  you 
consider  yourself  of  a  sound  constitution?"  That  is  a  quer}'  which 
obviously  relates,  not  to  the  soundness  of  the  assured's  constitution, 
but  to  his  own  opinion  on  the  subject ;  and  in  that  respect  it  presents 
a  marked  contrast  to  the  terms  of  the  seventh  question.^  .   .  . 

I  believe  it  to  be  useless  to  attempt  a  precise  definition  of  what  con- 
stitutes "  temperate  habits,"  or  "  temperance,"  in  the  sense  in  which 
these  expressions  are  ordinaril}-  employed.  Men  differ  so  much  in 
their  capacity  for  imbibing  strong  drinks  that  quantity-  affords  no  test ; 
■what  one  man  might  take  without  exceeding  the  bounds  of  moderation, 
another  could  not  take  without  committing  excess.  In  judging  of  a 
man's  sobrietv,  his  position  in  life,  and  the  habits  of  the  class  to  which 
he  belongs  must,  in  my  opinion,  always  be  taken  into  account ;  because 
it  is  the  custom  of  men,  engaged  in  certain  lines  of  business,  to  take 
what  is  called  refreshment,  without  an}-  imputation  of  excess,  at  times 
when  a  similar  indulgence  on  the  part  of  men  not  so  engaged  would 

1  Here  were  discussed  Scottish  Life  Assurance  Co.  v.  Buist,  4  Court  of  Session 
Cases,  Fourth  Series,  1076,  1078(1877);  and  Anderson  f.  FitzGerald,  ante,  p.  391, 
(185.3).  — P:d. 

2  Here  were  discus-sed  Hutchison  v.  National  Loan  Fund,  7  Court  of  Session 
Cases.  Second  Series,  467  (184.'));  Life  Association  v.  Foster,  11  Court  of  Session 
Cases,  Third  Series,  351  (1873);  and  Insurance  Company  v.  Folej,  105  U.S.  330 
(1881).  — Ed. 


SECT.  III.]  THOMSON   V.    WEEMS.  423 

be,  to  say  the  least,  suspicious.  But  1  do  not  think  that  the  iiabits  of 
a  particular  localit}-  ought  to  be  taken  into  account,  or  that  a  man, 
who  would  be  generall}-  regarded  as  of  intemperate  habits,  ought  to 
escape  from  that  imputation  because  he  is  no  worse  than  his  neigh- 
bours. In  the  present  case  the  evidence  clearly-  establishes  that  the 
assured  was  a  most  able  and  estimable  man  ;  but  that  circumstance  is 
not  of  much  weight,  because  able  and  estimable  men  are  not  neces- 
saril}'  exempt  from  social  failings.  I  shall  not  dwell  upon  the  details 
of  the  proof  of  the  import  of  which  I  take  very  much  the  same  view 
which  is  clearly  and  succinctly  expressed  in  the  opinion  of  Lord  Ruther- 
furd  Clark.  It  seems  to  me  to  be  the  fair  result  of  the  evidence,  that 
the  assured  was  in  the  habit  of  taking  more  drink  than  was  good  for 
him  :  that  he  was  frequently  affected  with  drink  on  occasions  when  all 
except  himself  were  sober ;  that  his  indulgence  to  excess  had  become 
so  apparent  that  several  of  his  friends  remonstrated  with  him  on  the 
subject,  and  that  instead  of  repudiating  the  charge,  he  admitted  it 
and  promised  amendment.  These  facts  appear  to  me  to  be  fully 
proved,  and  they  are,  in  my  opinion,  altogether  inconsistent  with  the 
truth  of  the  assertion  that  he  was,  on  tlie  9th  of  November,  1881,  of 
temperate  habits,  and  had  alwa3's  been  so.^  .   •  . 

Lord  FitzGerald.  I  also  am  of  opinion  that  the  answers  of  the 
assured  to  the  questions:  "  (1)  Are  you  temperate  in  3-our  habits, 
and  (2)  Have  you  always  been  strictly  so?  Answer  —  (1)  Temper- 
ate; (2)  Yes"  —  formed  parts  of  the  basis  of  the  contract  of  assur- 
ance, and  that  the  assured  warranted  those  answers  to  be  true.  By 
"true"  I  mean  true  in  fact  without  any  qualification  of  judgment, 
opinion,  or  belief.  I  confine  m}'  observations  to  the  very  answers  now 
before  us.  If  untrue  in  fact,  the  policy  is  void,  and  the  persons  cannot 
recover.  The  law  of  Scotland  is  on  this  subject  identical  with  that  of 
England.  The  inquir}'  for  your  Lordships  is  whether  the  evidence  is 
sufficient  to  satisfy  3-ou  that  the  assured  had  been  prior  to  the  effecting 
this  i)olicy  intemperate  in  his  habits. 

"Temperate  in  habits"  is  a  sentence  to  be  interpreted,  and  though 
not  to  be  taken  in  the  Pythagorean  sense  of  "total  abstinence,"  yet 
seems  to  import  abstemiousness,  or  at  least  moderation  — 

"  The  rule  of  '  not  too  much,' 
By  temperance  taught." 

I  am,  my  Lords,  inclined  to  adopt  a  fair  and  liberal  interpretation, 
having  regard  to  the  position  of  the  individual,  the  habits  of  the 
locality,  and  even  the  peculiarities  of  the  local  municipal  authorities  in 
adjourning  to  neigliboring  public-houses  *•'  to  continue  the  debate," 
but  notwithstanding  all  these  allowances  I  am  coerced  to  come  to  the 
conclusion  tliat  the  evidence  is  sufficient  to  establish  that  the  assured 
was  not  a  person  of  temperate  habits  ;  on  the  contrar}^  his  habits  of 
intemperance  had  been  repeatedl}'  observed  at  the  town  council  and  on 

1  Comments  on  the  evidence  have  been  omitted.  — Ed. 


424  MUTUAL   LIFE    INS.    CO.    V.    SIMPSON.  [CHAP.  V. 

other  public  occasions.  He  has  been  shown  at  times  to  have  been 
incapable  of  transacting  business  or  taking  care  of  himself.  He  was 
remonstrated  with  by  friends,  and  does  not  seem  to  have  denied  the 
impeachment,  and  finally  there  is  evidence  that  he  was  elected  provost 
in  the  hope  that  the  responsibilities  of  ottlce  might  produce  reformation 
of  habit.  The  evidence  for  the  defenders  is  not  in  my  judgment  dis- 
placed by  the  negative  evidence  led  for  the  pursuers.  The  cause  of 
death,  too,  is  confirmation  strongly  of  the  assured  having  fallen  into 
that  fatal  habit  which  produces 

"...  all  the  kinds 
Of  maladies  that  lead  to  death's  grim  cave 
Wrought  by  iutemperauce." 

It  was  against  this  danger  the  insurers  sought  protection. 

My  Lords,  I  entirely  concur  with   the   noble  Lord  opposite  (Lord 
Watson)  in  his  reasons  and  in  his  criticisms  on  the  Scotch  decisions. 
Interlocutors    appealed  from    reversed ;    cause    remitted    with 
instructions.  ^ 


MUTUAL   LIFE  INS.  CO.  v.  SIMPSON. 
Supreme  Court  of  Texas,   1895.     88  Tex.  333. 

Error  to  Court  of  Civil  Appeals  for  First  District,  in  an  appeal  from 
Harris  County.     The  opinion  contains  a  sufficient  statement. 

Eicing  cfe  Ring^  for  plaintiff  in  error. 

Baker,  Bolts,  Baker  <b  Zovett,  for  defendant  in  error. 

Alexander,  Special  Associate  Justice.  This  was  a  suit  by  Elizabeth 
K.  Simpson  against  the  plaintift"  in  error  to  recover  on  a  life  insurance 
policy,  insuring  the  life  of  her  husband  William  Simpson,  in  the  District 
Court  of  Harris  County,  in  which  she  recovered  judgment  on  a  trial 
before  a  jury,  which  was,  on  appeal,  affirmed  by  the  Court  of  Civil 
Appeals  ;  and  on  application  of  the  insurance  company  a  writ  of  error 
has  been  granted. 

The  insurance  company  defended  on  the  ground,  among  others,  that 
there  was  a  breach  of  the  warranties  made  by  the  assured,  on  the  faith 
of  which  the  policy  was  issued,  and  that  it  was  thereby  avoided.  The 
record  discloses,  that  preliminary  to  the  insurance,  and  as  a  basis 
thereof,  inquiry  was  made  of  the  ai)plicant  for  insurance,  as  follows : 
''Have  you  ever  had  any  of  the  following  diseases?"  Then  follow 
inquiries  as  to  a  variety  of  ailments,  some  of  which  are  universally 

1  Other  cases  on  temperate  hahits  are  :  Hartwell  v.  Alabama  Gold  L.  Ins.  Co.,  33 
La.  Ann.  1353  (1881);  Northwestern  L.  Ins.  Co.  v.  Muskegon  Hank,  122  U.  S.  501 
(1837)  ;  ^:tna  L.  Ins.  Co.  i-.  Davcy,  123  U.  S.  739  (1887) ;  Chambers  v.  Northwestern 
Mutual  L.  Ins.  Co.,  64  Minn.  495  (1896).  —  Ed. 


SECT.  III.]  MUTUAL    LIFE    INS.    CO.    V.    SIMPSON.  425 

known  to  be  fatal,  or  likel}-  to  affect  the  duration  of  life,  such  as  "  con- 
sumption," "  spitting  or  coughing  of  blood,"  "  paralysis,"  '•  apoplexy," 
and  "  disease  of  the  heart."  There  are  also  inquiries  made  as  to  certain 
other  physical  disabilities,  not  necessarily  or  probably  coming  within 
the  category  above  mentioned,  such  as  "  frequent  or  difficult  urination," 
"  dizziness,"  "  palpitation  of  the  heart,"  "  shortness  of  breath,"  "  head- 
aches—  severe,  protracted,  or  frequent." 

To  the  inquiry  as  to  the  last  mentioned  the  assured  answered,  "  No." 
It  is  conceded  that  the  answers  were  warranties,  and  if  untrue,  that  the 
policy  was  avoided,  without  reference  to  their  materiality  as  to  the 
risk. 

The  evidence  shows,  that  for  many  months  prior  to  the  contract,  at 
irregular  intervals,  but  frequently,  the  assured  had  what  is  designated 
in  the  evidence  as  sick  headache  ;  that  it  was  severe,  accompanied  by 
vomitings  and  a  pain  in  the  region  of  the  chest,  which  disability  con- 
tinued from  six  to  eighteen  hours,  but  after  sleep,  which  followed  the 
vomitings,  a  normal  condition  existed.  It  also  appears,  that  all  of 
these  spells  were  preceded  by  excessive  work  and  fatigue  and  loss  of 
sleep,  which  are  assigned  by  the  witness,  plaintiff  below,  as  the  cause 
thereof.  And  it  sufficiently  appears  that  the  assured  was  otherwise  a 
man  of  robust  health. 

The  District  Court  charged  the  jury  to  find  for  plaintiff,  "unless/^' 
...  the  assured  in  his  application  and  examination,  upon  which  the 
policy  was  issued,  touching  his  drinking  wine,  spirituous  and  malt 
liquors,  and  to  what  extent,  and  his  former  habit  of  drinking  wine, 
spirituous  and  malt  liquors,  answered  falsely  ;  or  unless  they  believed 
that  in  such  application,  touching  whether  assured  ever  had  diseases, 
such  as  headaches,  severe,  protracted,  or  frequent,  and  the  particulars 
and  duration  of  same ;  and  as  to  his  being  in  perfect  health,  the  said 
assured  answered  falsely,  in  which  case  you  will  find  for  defendant. 
But  you  are  charged,  that  temporary  illness  of  assured  in  the  course  of 
every-day  life,  brought  on  by  excessive  exercise  or  overwork,  is  not 
embraced  in  said  application,  nor  is  an  occasional  drink  of  spirituous, 
vinous,  or  malt  liquor  embraced  in  the  said  application,  but  the  answers 
in  said  application  have  reference  to  such  diseases  or  ailments  as  indi- 
cate a  vice  in  the  constitution,  or  are  so  serious  as  to  have  some 
bearing  on  the  general  health,  coid  such  as,  according  to  general  under- 
standing, would  be  called  a  disease. 

"  And  you  are  charged,  that  the  questions  and  answers  respecting 
the  drinking  of  spirituous,  vinous,  or  malt  liquors  by  assured,  and 
former  habits  mentioned  in  said  application,  have  no  reference  to  an 
occasional  drink  taken,  nor  to  occasional  indulgences,  unless  such 
drinking  was  habitual." 

This  charge  is  approved  by  the  Court  of  Civil  Appeals  as  a  correct 
exposition  of  the  law  of  the  case.  There  is  no  complaint  in  the  appli- 
cation for  writ  of  error,  that  this  charge  is  on  the  weight  of  the 
evidence. 


426  MUTUAL  LIFE   INS.   CO,    V.    SIMPSON.  [CHAP.  V. 

It  is  not  deemed  necessar}'  to  set  out  the  charges  requested  and 
refused,  or  the  assignments  of  error  complaining  of  the  charge  and  the 
refusal  of  charges.  They  are  sufficient  to  require  a  determination  as 
to  whether  there  was  material  error  in  the  instructions  of  the  court. 
Justice  Ramsey  and  the  writer  agree,  that  the  part  of  the  charge  which 
instructs  the  jury  that  the  answers  of  the  assured  have  reference  to 
such  diseases  or  ailments  as  indicate  a  vice  in  the  constitution,  or  are 
so  serious  as  to  have  some  bearing  on  the  general  health  and  in  the 
continuance  of  life,  was  a  material  error,  prejudicial  to  defendant,  for 
which  the  judgment  of  the  Court  of  Civil  Appeals  should  be  reversed. 

We  are  not  unmindful  of  the  well-recognized  rules  as  to  the  construc- 
tion of  contracts  of  insurance  —  that  forfeitures  are  not  favored,  that 
generally  in  cases  where  there  is  doubt  or  ambiguity,  that  construction 
should  be  adopted  most  favorable  to  the  assured,  the  reasons  for  which 
are  obvious,  and  need  not  be  recounted.  On  the  other  hand,  when 
the  language  of  contracting  parties  is  plain  and  unambiguous,  and  there 
is  no  reason  for  misunderstanding  the  purport  thereof,  effect  must  be 
given  to  it,  enlarged  or  limited  only  by  the  nature  of  the  subject  to 
which  it  is  applied. 

Said  the  United  States  Supreme  Court,  speaking  by  Justice  Jackson, 
in  the  case  of  Insurance  Company  v.  Coos,  151  United  States  (Co-op- 
erative Edition,  book  38,  page  235)  :  "  It  is  settled  by  this  court,  that 
when  an  insurance  contract  is  so  drawn  as  to  be  ambiguous,  as  to 
require  interpretation,  or  to  be  fairly  susceptible  of  two  different  con- 
structions, that  construction  will  be  adopted  which  is  most  favorable  to 
the  assured.  But  the  rule  is  equally  well  settled,  that  contracts  of 
insurance,  like  other  contracts,  are  to  be  construed  according  to  the 
sense  and  meaning  of  the  terms  which  the  parties  have  used  ;  and  if 
they  are  clear  and  unambiguous,  their  terms  are  to  be  taken  and  under- 
stood in  their  plain,  ordinary,  and  popular  sense."  As  said  by  the 
Court  of  Appeals  of  New  York  (Mack  v.  Insurance  Compan}',  106  New 
York),  as  quoted  by  Judge  Jackson  :  "  It  tends  to  bring  the  law  itself 
into  disrepute  when,  by  astute  and  subtile  distinctions,  a  plain  case  is 
attempted  to  be  taken  without  the  operation  of  a  clear,  reasonable,  and 
material  obligation  of  the  contract." 

The  charge  of  the  court  and  the  opinion  of  the  Court  of  Civil  Appeals 
virtually  assume,  that  because  the  inquiry  is  about  diseases,  it  is  nec- 
cssarilv  and  always  about  diseases  which  either  indicate  a  vice  in  the 
constitution  or  are  so  serious  as  to  have  some  bearing  on  the  general 
health  a7id  on  the  continuance  of  life;  and  this,  notwithstanding  the 
specific  inquiries  may  be  as  to  physical  disabilities  or  ailments  which, 
according  to  common  understanding,  are  diseases,  but  which  neverthe- 
less are  not  understood  to  indicate  the  conditions  enumerated  in  tlie 
charge.  This  seems  to  reverse  a  common  rule  of  the  construction  of 
language.  If  it  be  true,  that  when  an  inquiry  about  diseases  is  made, 
it  means  only  such  as  are  mentioned  in  the  charge,  notwithstanding  the 
specific  inquiries  are  about  ailments  not  usually  indicating  such  condi- 


SECT.  III.]  MUTUAL   LIFE   INS.    CO.    V.    SIMPSON.  427 

tions,  the  well-established  distinction  between  warranties  and  repre- 
sentations would  be  useless,  for  then  there  would  be  a  breach  of  war- 
rantj-  onl}'  when  the  matter  warranted  was  both  false  and  material  to 
the  risk. 

The  word  "disease"  may  include,  and  is  often  used  to  designate,  ail- 
ments more  or  less  trivial.  Medical  science,  as  expounded  by  its  ex- 
perts, has  not  definitely  determined  all  of  the  physical  ailments  which 
indicate  a  vice  in  the  constitution,  or  have  a  dii'ect  tendency  to  shorten 
life.  Through  abundant  caution  the  insurance  company  -may,  if  it 
elects,  inquire  about  any  ailment,  and  take  a  warranty  concerning  it, 
lest  it  might  affect  the  risk,  although  it  cannot  be  known  that  it  will. 

The  length  of  this  opinion  precludes  more  than  a  brief  reference  to 
some  of  the  cases  cited  by  defendant  in  error,  and  discussed  by  the 
court  below. 

In  the  Cushman  case,  70  New  York,  73,  from  the  opinion  in  which 
the  language  of  the  charge  under  discussion  seems  to  have  been  copied, 
it  is  noticeable  that  the  court  says,  that  "  it  must  be  generally  true, 
that  before  an  ailment  can  be  called  a  disease  it  must  be  "  such  as  is 
indicated  in  the  language  of  the  charge.  The  case  was  one  upon  con- 
flicting evidence  as  to  whether  assured  had  ever  had  disease  of  the 
liver,  or  any  serious  disease,  and  it  was  decided  that  the  defendant  was 
not  entitled  to  have  a  nonsuit  entered,  and  that  whether  there  were  such 
diseases  was  properlj'  submitted  to  the  jury  ;  and  this  is  all  that  the 
case  decides. 

In  the  case  of  Trefz,  104  United  States,  197,  the  assured,  to  ques- 
tions about  various  diseases,  answered,  "Never  sick  ;  "  and  it  distinctly 
appears  that  he  was  never  sick  of  an}'  of  the  diseases  inquired  about. 
And  notwithstanding  an  apparent  disclaimer  b}-  the  court,  the  case 
obviously  was  in  part  determined  upon  the  fact  that  the  assured  was  a 
foreigner,  unfamiliar  with  the  English  language. 

In  the  case  of  Insurance  Company  v.  Trust  Company,  112  United 
States,  250,  the  inquir}'  was  about  an  affection  of  the  liver ;  and  we 
think  it  is  distinguishable  from  an  inquirj'  about  "  headaches,  severe, 
frequent,  or  protracted." 

To  avoid  misconstruction,  we  state  that  we  do  not  think,  if  the  dis- 
ability inquired  about  was  not  inherent,  but  was  produced  by  extraor- 
dinary conditions,  such  as  those  described  in  the  record,  that  the  answer 
to  the  question  should  be  held  untrue. 

For  the  purpose  which  will  appear,  we  state  that  the  following  further 
inquiries  were  made  of  the  assured,  to  which  his  answers  follow  :  "  Do 
you  ever  drink  wines,  spirits,  or  malt  liquors?"  "No."  "  To  what 
extent?  "  "  Not  at  all."  "  Former  habit  of  drinking  wines,  spirits,  or 
malt  liquors  ?  "     "  Not  at  all." 

Justice  Ramsey  desires  it  stated,  that  in  his  opinion  that  part  of  the 
charge  which  instructs  the  jur}'  that  an  occasional  drink  of  liquor  is 
not  embraced  in  the  application,  and  the  questions  and  answers  have 
no  reference  to  an  occasional  indulgence,   unless  such  drinking  was 


428  MUTUAL   LIFE   INS.   CO.   V.   SIMPSON.  [CHAP.  V. 

habitual,  was  material  error,  for  which  the  judgment  should  be  reversed. 
He  holds,  that  the  questions  must  be  considered  together,  and  that  the 
obvious  purpose  of  the  questions  was  to  ascertain  whether  the  assured, 
at  the  time  or  in  the  past,  had  been  addicted  to  the  use  of  intoxicating 
liquors,  and  the  extent  thereof;  and  that  the  charge  precluded  the  jury 
from  giving  proper  consideration  of  the  evidence  about  the  drinking  of 
the  assured  ;  and  that  the  meaning  of  these  questions  and  answers 
should  have  been  submitted  to  the  jury,  unrestrained  by  these  limita- 
tions in  the  charge. 

The  writer  is  of  the  opinion,  that  since  the  question  of  former  habit 
was  properly  submitted,  and  since  there  was  no  evidence  of  the  falsity 
of  the  answers  to  the  first  two  questions,  if  there  was  error  in  this  part 
of  the  charge,  it  was  harmless. 

It  is  not  believed  that  the  other  complaints  of  error  are  well  founded, 
nor  is  it  considered  necessary  to  discuss  them.  For  the  error  first 
indicated,  the  judgment  of  the  Court  of  Civil  Appeals  is  reversed  and 
the  cause  is  remanded.  Reversed  and  remanded. 

DISSENTING    OPINION. 

Hume,  Special  Chief  Justice.  I  am  of  opinion  that  this  case  was 
properly  determined  by  the  Court  of  Civil  Appeals. 

Conceding  all  that  is  claimed  as  to  the  distinctive  force  of  a  warranty, 
it  is  still  true,  that  the  situation  and  purposes  of  parties  to  it  must  be 
considered,  just  as  they  are  in  cases  of  contracts  in  other  forms. 

The  purpose  of  a  life  insurance  company  is  to  secure  risks  on  sound 
lives.  It  is  interested  in  knowing  that  the  applicant  for  insurance  is 
not  affected  with  infirmities  that  will  hasten  the  event  against  which  it 
insures.  It  inquires  about  his  "  diseases."  I  think,  that  according  to 
common  understanding  a  disease  is  an  affliction  that  takes  hold  of  its 
victim;  abideswith  him;  impairs  or  menaces  his  functional  vitality; 
and  lessens  the  probabilities  of  the  average  duration  of  his  life. 

The  charge  upon  which  the  case  is  reversed  seems  to  me  to  be  war- 
ranted by  the  evidence  upon  both  points  named  in  the  opinion.^ 

1  Other  cases  on  disease  are:  Life  Ins  Co.  v.  Francisco,  17  Wall.  672  (1873); 
World  Mutual  L.  Ins.  Co.  v.  Schultz,  73  111  586  (1874)  ;  Moulor  ;;.  American  L.  Ins. 
Co.,  Ill  U.  S.  335,  343-346  (1883)  ;  Connecticut  Mutual  L.  Ins.  Co.  r.  Union  Trust 
Coi  112  U.  S.  250,  257  (1884)  ;  Home  Mutual  L.  Assn.  v.  Gillespie,  110  Pa.  84  (1885)  ; 
Metropolitan  L.  Ins.  Co.  v.  McTague,  49  N.J.  L.  587  (1887)  ;  Manufacturers'  Accident 
Indemnity  Co.  v.  Dorgan,  16  U.  S.  App.  290,  308-309  (1893). 

Cases  on  consulting  a  physician  are  :  Everett  v.  Desborough,  5  Bing.  503  (1829) ; 
Metropolitan  L.  Ins.  Co  i;.' McTague,  49  N.  J.  L.  587  (1887)  ;  Cobb  o.  Covenant 
Mutual  Benefit  As.sn  153  Mass.  176  (1891)  ;  Brady  v.  United  L.  Ins.  Assn.,  20  U.  8. 
Apj).  337  (1894) ;  Providence  L.  Ass.  Society  v.  Keutlinger,  58  Ark.  528  (1894)  ;  White 
V.  Provident  Savings  L.  Ass.  Co.,  163  Mass.  108  (1895)  ;  Plumb  v.  Peun  Mutual  L.  Ins. 
Co.,  108  Mich.  94  (1895). 

On  the  topic  of  thi.s  section,  see  also :  — 
Vose  V.  Kagle  Life  and  Health  Ins.  Co.,  6  Cush.  42  (1850); 
Wheelton  v.  Ilardisty,  8  E.  &  B.  232  (Ex.  Ch.  1858); 


SECT.  III.]  MUTUAL    LIFE    INS.    CO.    V.    SIMPSON.  429 

Miller  v.  Mutual  Benefit  L.  Ins.  Co.,  31  Iowa,  216  (1871) ; 

Macdonald  v.  Law  Union  F.  &  L.  Ins.  Co.,  L.  R.  9  Q.  B.  328  (1874) ; 

Dwight  V.  Germania  L.  In.s.  Co.,  103  N.  Y.  341  (1886)  ; 

Fidelity  Mutual  L.  Assn.  v.  Ficklin,  74  Md.  172  (1891); 

White  V.  Provident  Savings  L.  Ass.  Society,  163  Mass.  108  (1895) ; 

Smith  V.  Baltimore  and  Ohio  Railroad  Co.,  81  Md.  412  (1895)  ; 

Connecticut  Mutual  L.  Ins.  Co.  v.  McWhirter,  44  U.  S.  App.  492,  502,  503  (1896), 

s.  c.  73  Fed.  R.  444,  and  19  C.  C.  A.  519  ; 
Reynolds  v.  Atlas  Accident  Ins.  Co.,  69  Minn.  93  (1897).  —  Ed. 


430  GREEN  V.   YOUNG.  [cHAP.  VI. 


CHAPTER   VI. 
OTHER   CAUSES   OF   INVALIDITY. 


SECTION   I. 

Marine  Insurance. 
(A)  Deviation. 


Quod  (amen  periculum  intelligitur  solum  currere  assecurator,  pro  illo  iiinere 
convento,  et  nan  pro  alio,  .  .  .  nam  si  nauis  mulaverit  iter,  vel  a  via  recta  illius 
itineris  deverterit,  non  tenetur  amplius  assecurator.  .  .  .  Si  iter  mutaverit  ex 
aliqua  justa,  et  necessaria  causa,  puta,  ex  causa  refectionis  illius  navlf,  vel  ad 
evitandam  maris  tempestatem,  vel  ne  incideret  in  hostes ;  siquidem  in  istis  casibus, 
mutato  itinere,  tenetur  assecurator. 

Roccus  de  Assecurationibus,^  notab.  LII.  (1655). 


GREEN  V.  YOUNG. 

King's  Bench,  1702-3.     2  Salk.  444. ^ 

If  after  a  policy  of  insurance  a  damage  happens,  and  afterwards,  in 
the  same  voyage,  a  deviation  ;  yet  the  assured  shall  recover  for  wliat 
happened  before  the  deviation ;  for  the  policy  is  discharged  from  the 
time  of  the  deviation  only.^ 

1  Roccus  has  been  edited  by  Westerween  (Amsterdam,  1708),  and  translated  by 
Joseph  Keed  IngersoU  (Philadelphia,  1809).  — En. 

2  3.  c.  2  Lord  Raym.  840,  according  to  which  report  Holt,  C.  J.,  "  said,  that  if  a 
policy  of  assurance  be  made  to  begin  from  the  departure  of  tlie  ship  from  England 
until,  etc.,  and  after  the  departure  damage  happens,  etc.,  and  then  the  ship  deviates  ; 
though  the  policy  is  discharged  from  the  time  of  the  deviation,  yet  for  the  damages 
sustained  before  the  deviation,  the  insurers  shall  make  satisfaction  to  the  insured." 
—  Ed. 

8  Ace. :  Hare  v.  Travis,  7  B.  &  C.  14  (1827).  — Ed, 


SECT.  I.  "J  ELTON  V.    BROGDEN.  431 

FOSTER  V.  WILMER. 

King's  Bench,  1745-6.     2  Str.  1249. 

The  insurance  was  from  Carolina  to  Lisbon  and  at  and  from  thence 
to  Bristol :  it  appeared,  the  captain  had  taken  in  salt,  which  he  was  to 
deliver  at  Fahnouth,  before  he  went  to  Bristol ;  but  the  ship  was  taken 
in  the  direct  road  to  both,  and  before  she  came  to  the  point  where  she 
wonld  turn  off  to  Falmouth.  And  it  was  held,  the  insurer  was  liable  ; 
for  it  is  but  an  intention  to  deviate,  and  that  was  held  not  sufficient  to 
discharge  the  underwriter.^  In  the  case  of  Carter  v.  The  Royal  Ex- 
change Assurance  Company,  where  the  insurance  was  fi'om  Honduras 
to  London,  and  a  consignment  to  Amsterdam,  a  loss  happened  before 
she  came  to  the  dividing  point  between  the  two  voyages,  which  the 
insurer  was  held  to  pay  for. 


ELTON  V.  BR0GDEN.2 

Xisi  Prius,  King's  Bench,  1746-7.     2  Str.  1264. 

The  ship  ''Mediterranean"  went  out  in  the  merchants'  service  with 
a  letter  of  marque,  and  bound  from  Bristol  to  Newfoundland,  insured 
l)v  the  defendant.  In  her  voj'age  she  took  a  prize,  and  returned  with 
it  to  Bristol,  and  received  back  a  proportionable  part  of  the  premium. 
Then  another  policy  was  made,  and  the  ship  set  out,  with  express 
orders  from  the  owners,  that  if  they  took  another  prize,  they  should 
put  some  hands  on  board  such  prize,  and  send  her  to  Bristol,  but  the 
ship  in  question  should  proceed  with  the  merchants'  goods.  Another 
prize  was  taken  in  the  due  course  of  the  voyage,  and  the  captain  gave 
orders  to  some  of  the  crew  to  carry  the  prize  to  Bristol,  and  designed 
to  go  on  to  Newfoundland  ;  but  the  crew  opposed  him,  and  insisted  he 
should  go  back,  though  he  acquainted  them  with   the  orders :  upon 

^  Ace:  Henshaw  v.  Marine  Ins.  Co.,  2  Caines,  274  (1805);  Marine  Ins.  Co.  v. 
Tucker,  .3  Cranch,  .357  (1806) ;  Hare  v.  Travis,  7  B.  &  C.  14  (1827). 

See  Hobart  v.  Norton,  8  Pick.  139  (1829),  a  shipping  case. 

Compare  Middlewood  v.  Blakes,  7  T.  R.  162  (1797). 

In  Marine  Ins.  Co.  v.  Tucker,  supra,  Johnsov,  J.,  said :  "  An  intent  to  do  an  act 
can  never  amount  to  the  commission  of  the  act  itself.  That  an  intended  deviation 
will  not  vitiate  a  pjlicy,  and  that  the  vessel  remains  covered  by  her  insurance  until 
she  reaches  the  point  of  divergency  and  actually  turns  off  from  the  due  course  of  the 
voyage  insured,  is  a  doctrine  well  under.<tood  among  mercantile  men,  and  has  uni- 
formly governed  the  decisions  of  the  British  courts  from  the  case  of  Foster  r.  Wilmer 
to  the  present  time."  And  Paterson,  J.,  said  :  "  Where  the  termini  of  a  voyage  are 
the  same,  an  intention  to  touch  at  an  intermediate  port,  though  out  of  the  direct 
course,  ajid  not  mentioned  in  the  policy,  does  not  constitute  a  different  voyage."  —  Ed. 

■''  s.  c.  1  Beawes'  Lex  Mercatoria  (6th  ed.),  329.  —  Ed. 


432  WOOLDRIDGE    V.    BOYDELL.    .  [CHAP.  VI. 

which  he  was  forced  to  submit,  and  in  his  return  his  own  ship  was 
taken,  but  the  prize  got  in  safe. 

And  now  in  an  action  against  the  insurers,  it  was  insisted,  that  this 
was  such  a  deviation  as  discharged  them.  But  the  court  and  jury 
held,  that  this  was  excused  b}-  the  force  upon  the  master,  which  he 
could  not  resist;  and  therefore  fell  within  the  excuse  of  necessit}', 
which  had  always  been  allowed.  The  plaintiff's  counsel  would  have 
made  barratry  of  it ;  but  the  Chief  Justice  ^  thought  it  did  not  amount 
to  that,  as  the  ship  was  not  run  away  with  in  order  to  defraud  the 
owners.     So  the  plaintiff  had  a  verdict  for  the  sum  insured.'^ 


FOX  V.   BLACK. 

Nisi  Prius,  before  Yates,  J.,  1767.     Weskett  on  Insurance,  171.' 

The  plaintiff  was  a  shipper  of  goods  in  a  vessel  bound  from  Dart- 
mouth to  Liverpool ;  the  ship  sailed  from  Dartmouth,  and  put  into  Loo  ; 
a  place  she  of  necessity  must  pass  by  in  the  course  of  her  insured  voj"- 
age ;  but  as  she  had  no  liberty'  given  her  b\'  the  policy  to  go  into  Loo, 
and  notwithstanding  no  accident  befell  her  by  going  into  or  coming  out 
of  Loo  (for  she  was  lost  after  she  got  out  to  sea  again),  3-et  her  going 
into  Loo  was  a  deviation,  and  a  verdict  was  found  for  the  underwriter. 


WOOLDRIDGE  v.  BOYDELL. 

King's  Bench,  1778.     1  Doug.  16. 

The  ship  "  Moll}',"  being  insured  "  At  and  from  Maryland  to  Cadiz," 
was  taken  in  Chesapeake  Ba}*,  in  the  way  to  Europe.  Upon  this,  the 
insured  brought  this  action  against  the  defendant,  one  of  the  under- 
writers on  the  policy.  The  trial  came  on  at  Guildliall,  before  Lord 
Mansfield,  when  a  verdict  was  found  for  the  defendant,  and,  a  new 
trial  being  moved  for,  the  material  facts  of  the  case  appeared  to  be  as 

^  Sir  William  Lee.  —  Ed. 

2  See  Lawrence  v.  Sydebotham,  6  East,  45  (1805);  Haven  v.  Holland,  2  Mason, 
230  (1820). 

Compare  Phelps  v.  Auldjo,  2  Camp.  1810 ;  Wiggin  v.  Amory,  13  Mass.  118  (1816). 

In  Levabre  i;.  Wilson,  1  Doug.  284,  291  (1779),  Lord  Mansfield,  C.  J.,  for  the 
court,  said:  "A  deviation  from  necessity  must  be  justified,  both  as  to  substance  and 
manner.  Nothing  more  must  be  done  tlian  what  the  necessity  recjuires.  The  true 
objection  to  a  deviation  is  not  the  increase  of  risk.  ...  It  is  that  the  party  contract- 
ing has  voluntarily  substituted  another  voyage  for  that  which  has  been  insured."  —  Ed. 

8  8.  c.  2  Park  Ins.  8th  ed.  620.—  Ed. 


SECT.  I.]  WOOLDRIDGE    V.    BOYDELL.  433 

follows  :  The  ship  was  cleared  from  Maryland  to  Falmouth,  and  a  bond 
given  that  all  the  enumerated  goods  were  to  be  landed  in  Britain ;  and 
all  the  other  goods  in  the  British  dominions.  An  affidavit  of  the  owner 
stated  that  the  vessel  was  bound  for  Falmouth.  The  bills  of  lading 
were  "  to  Falmouth  and  a  Jlarl-et."  And  there  was  no  evidence 
whatever  that  she  was  destined  for  Cadiz.  The  place  where  she  was 
taken,  was  in  the  course  from  Maryland  both  to  Cadiz  and  Falmouth, 
before  the  dividing  point.  Many  circumstances  led  to  a  suspicion  that 
she  was,  in  truth,  neither  designed  for  Falmouth  nor  Cadiz,  but  for  the 
port  of  Boston,  to  supply  the  American  army  ;  but  there  was  not  suffi- 
cient direct  evidence  of  that  fact.  At  the  trial,  Lord  Mansfield  told 
the  jury  that  if  they  thought  the  voyage  intended  was  to  Cadiz,  they 
must  find  for  the  plaintiff.  If,  on  the  contrary,  they  should  think  there 
was  no  design  of  going  to  Cadiz,  they  must  find  for  the  defendant. 

The  Solicitor- Gentral^  Dunning,  and  Davenport,  ai-gued  for  the 
new  trial.  They  contended  that  this  was  like  the  cases  of  an  intention 
to  deviate  where  the  capture  had  taken  place  before  the  deviation  was 
carried  into  execution  ;  and  they  cited  Foster  v.  Wilmer,  2  Str.  1249, 
Carter  v.  The  Royal  Exchange  Assurance  Company,  cited  in  Foster  v. 
Wilmer,  and  Rogers  v.  Rogers,  a  very  late  case  in  this  court.  They, 
besides,  urged  that  by  "  a  Market "  in  the  bills  of  lading  and  in  the  in- 
structions to  the  broker  (where  that  expression  was  used,  but  which  I 
believe  had  not  been  read  at  the  trial),  was  meant  Cadiz.  And  that 
''  to  Falmouth  and  a  Market "  might  be  considered  as  meaning  to  the 
market  at  Cadiz,  first  touching  at  Falmouth.  (It  appeared  in  evidence 
at  the  trial  that  the  premium  to  insure  a  voyage  from  Maryland  to  Fal- 
mouth, and  from  thence  to  Cadiz,  would  have  exceeded  greatly  what 
was  paid  in  this  case.) 

Lee  and  BaldiHn  showed  cause.  They  argued  that  here  there  bad 
been  no  inception  of  the  voyage  insured,  and  therefore  the  case  was  very 
different  from  those  cited  by  the  counsel  for  the  plaintiff. 

Lord  Mansfield.  The  policy,  on  the  face  of  it,  is  from  Maryland 
to  Cadiz,  and  therefore  purports  to  be  direct  a  voyage  to  Cadiz. 
All  contracts  of  insurance  must  be  founded  in  truth,  and  the  policies 
framed  accoi-dingly.  \Yhen  the  insured  intends  a  deviation  from 
the  direct  voyage  it  is  always  provided  for,  and  the  indemnification 
adapted  to  it.  There  never  was  a  man  so  foolish  as  to  intend  a  devia- 
tion from  the  voyage  described,  when  the  insurance  is  made,  because 
that  would  be  paying  without  an  indemnification.  Deviations  from  the 
vovage  insured  arise  from  after-thoughts,  after-interest,  after-tempta- 
tion ;  and  the  party  who  actually  deviates  from  the  voyage  described, 
means  to  give  up  his  policy.  But  a  deviation  merely  intended,  but 
never  carried  into  efifect,  is  as  no  deviation.  In  all  the  cases  of  that 
sort,  the  terminus  a  quo,  and  ad  quern,  were  certain  and  tlie  same. 
Here,  was  the  voyage  ever  intended  for  Cadiz?  There  is  not  sufficient 
evidence  of  the  design  to  go  to  Boston  for  the  court  to  go  upon.  But 
some  of  the  papers  say  to  Falmouth  and  a  Market,  some  to  Falmouth 

28 


434  HARTLEY   V.    BUGGIN.  [CHAP.  VI. 

onl}'.  None  mention  Cadiz,  nor  was  there  any  person  in  the  ship  who 
ever  heard  of  any  intention  to  go  to  that  port.  ' '  A  market "  is  not 
synonymous  to  "  Cadiz  ;  "  that  expression  might  have  meant  Leghorn, 
Naples,  England,  &c.  No  man,  upon  the  instructions,  would  have 
thought  of  getting  the  policy  filled  up  to  Cadiz.  In  short,  that  was 
never  the  voyage  intended,  and  consequently  is  not  what  the  under- 
writers meant  to  insure. 

WiLLES  and  Ashhurst,  Justices,  of  the  same  opinion. 

BuLLER,  Justice.  I  am  of  the  same  opinion.  I  believe  the  law  to  be 
according  to  the  authorities  mentioned  on  the  part  of  the  plaintiff,  but 
it  does  not  apply  here.  This  is  a  question  of  fact.  There  cannot  be  a 
deviation  from  what  never  existed.  The  weight  of  evidence  is  that  the 
voyage  was  never  designed  for  Cadiz.  The  rule  discharged.^ 


HARTLEY   v.   BUGGIN. 
King's  Bench,  1781,  and  Nisi  Prius,  1782.     3  Doug.  39.' 

This  was  an  action  on  a  policy  of  insurance  upon  the  ship  ''  Blossom," 
at  and  from  the  coast  of  Africa  to  the  West  Indies,  with  liberty  to 
exchange  goods  and  slaves.  The  cause  was  tried  at  the  last  assizes  at 
Lancaster,  before  Heath,  J.,  and  a  verdict  was  found  for  the  plaintiff, 
with  which  the  learned  judge  reported  himself  satisfied. 

On  a  rule  obtained  to  show  cause  why  there  should  not  be  a  new 
trial,  it  appeared  that  there  had  been  a  great  deal  of  contradictory  evi- 
dence, and  many  points  started  at  the  trial ;  but  the  question  now  raised 
was,  whether  the  plaintiff,  by  the  use  he  made  of  the  ship  on  the  coast  of 
Africa,  and  the  delay  he  there  occasioned,  was  not  the  cause  of  the  loss  ; 
that  is,  whetlier  he  did  not  make  such  use  of  her,  during  her  stay  on  the 
coast,  as  amounted  to  a  deviation.  It  appeared  in  evidence  that  this 
ship  stayed  on  the  coast  from  August  to  March  ;  that  she  was  employed 
in  receiving  slaves  on  board,  tlie  produce  of  the  cargoes  of  other  ships, 
which  were  afterwards  put  on  board  other  ships  and  sent  to  the  West 
Indies  ;  that  this  is  the  employment  of  what  they  call  a  factory  ship, 
but  that  a  regular  factory  ship  is  tliatched  and  covered,  and  receives 
the  slaves  till  a  sufficient  number  is  collected  to  send  away  in  other 
vessels  ;  but  it  did  not  appear  that  any  slaves,  the  produce  of  the 
"  Blossom's  "  own  cargo,  were  sent  away  in  other  vessels.  It  appeared, 
however,  that  her  sta}'  there  was  seven  months  beyond  the  usual  stay 
of  ships  in  that  trade. 

1  See  Tasker  v.  Cunninglinme,  1  Rlish,  87  (1819). 

Compare  Ileselton  i'.  Allnutt,  1  M.  &  S.  45  (1813)  ;  Snow  v.  Columbiau  lus.  Co ,  48 
N.  Y.  624  (1872). —  Ed. 

2  8.  c.  2  Tark  Ins.  8th  ed.  652.  —  Ed. 


SECT.  I.]  HARTLEY   V.    BUGGIN.  435 

Wallace,  A.  G.,  J^ee,  Davenport,  and  Wood,  showed  cause  against 
the  rule  for  a  new  trial.  They  contended  that  this  use  of  the  ship  as  a 
factor}-  ship  was  not  inconsistent  with  the  object  of  the  voyage.  If  the 
ship  does  nothing  which  increases  her  risk  and  prolongs  her  stay,  or  is 
inconsistent  with  tlie  object  of  her  voyage,  it  is  not  a  deviation.  Here 
she  parted  with  no  slave,  the  produce  of  her  own  cargo,  which  ever  was 
on  board  of  her.  Ships  can  only  be  supplied  in  turn,  and  whilst  she  is 
forced  to  wait  there,  she  may  as  well  receive  the  slaves  of  the  other 
ships  as  not.  It  is  the  course  of  the  trade  so  to  do.  The  definition  of 
a  factory  ship  is  a  floating  warehouse,  not  her  merely  being  thatched 
and  covered. 

Arden  and  Dunning^  contra,  in  support  of  the  rule,  were  stopped  by 
the  court. 

Lord  Mansfield.  When  different  points  are  agitated  at  a  trial,  and 
a  great  deal  of  evidence  is  applied  to  each,  and  the  counsel  go  out  of  a 
cause,  it  is  not  surprising  that  juries  should  have  their  attention  dis- 
tracted from  the  principal  point.  The  great  advantage  of  a  motion  for 
a  new  trial  is  that  after  argument  on  the  motion  the  cause  goes  down 
again  winnowed  from  the  chaff  of  the  first  trial.  The  single  question 
in  this  case  is  whether  there  has  not  been  what  is  equivalent  to  a  devia- 
tion. It  is  not  material,  to  constitute  a  deviation,  that  the  risk  should 
be  increased.  The  voyage  is  to  the  coast  of  Africa,  and  thence  to  the 
West  Indies,  which  includes  an  insurance  on  the  ship  while  she  stays 
and  trades  at  Africa,  and  it  is  with  liberty  to  exchange  goods  and 
slaves  ;  but  that  exchange  is  for  the  benefit  of  the  ship,  one  slave  for 
another.  If  a  ship  insured  for  a  trade  is  turned  into  a  factory  ship,  or 
a  floating  warehouse,  the  risk  is  different ;  it  varies  the  stay,  for  while 
she  is  used  as  a  warehouse  no  cargo  is  bought  for  her. 

The  law  being  clear,  how  is  the  fact  ?  The  captain  says  the  vessel 
was  not  used  as  a  factory  ship ;  but  his  evidence  is  much  impeached. 
Indeed,  he  says  that  he  was  young  in  \he  trade,  that  he  never  saw  a 
factory  ship  but  once,  and  was  not  in  her.  He  might  have  a  salvo, 
because  this  vessel  was  not  thatched,  as  factory  ships  usually  are ;  but 
the  question  is,  was  she  used  as  a  factory  ship?  Without  being 
thatched  and  roofed,  she  may  have  been  put  to  that  use.  The  fact 
is  clear:  the  risk  is  diff"erent,  and  there  must  be  a  new  trial. 

Hide  absolute. 

This  cause  was  again  tried  at  the  Lancaster  Summer  Assizes,  1782, 
before  Eyre,  B.,  and  evidence  was  given  that,  since  the  establishment 
of  agencies  on  the  coast,  it  had  been  a  custom  with  the  plaintiff's  ships 
to  stay  till  others  came,  and  that  it  was  intended  to  go  to  the  West 
Indies  just  before  the  accident  happened ;  that  the  putting  the  vessel 
ashore  was  to  prepare  her  for  the  voyage  ;  that  by  agencies  the  sailing 
of  ships  was  much  expedited  ;  and  that  she  had  not  stayed  an  extraor- 
dinary time.  Eyre,  B.,  told  the  jury  that  there  was  no  question  of 
fact ;  that  it  was  clear  the  ship  was  employed  as  a  factor}-.  What  the 
effect  of  that  was  aff'orded  great  room  for  argument.     One  side  coa- 


436  BEATSON   V.   HAWOKTH.  [CHAP.  VI. 

tended  that  it  was  usual  and  allowable  in  the  course  of  trade  ;  the  other 
side,  that  it  varied  the  risk  materially.  New  modes  of  trade  were  ad- 
vantageous, and  it  was  not  for  the  interests  of  commerce  to  be  cramped 
by  underwriters.  An  assured  was  to  conduct  his  trade  his  own  way, 
with  this  exception,  tliat  it  does  not  materially  vary  the  risk  insured. 
Barter,  for  the  facilitation  of  the  voyage,  was  allowable  without  express 
stipulation.  The  question  was,  if  the  use  made  of  the  ship  had  the 
voyage  for  its  object.     The  jury  found  a  verdict  for  the  defendant. 


BEATSON  V.  HA  WORTH. 

King's  Bench,  1796.     6  T.  R.  531. 

This  was  an  action  on  a  policy  on  the  ship  "  Bazil,"  "  at  and  from 
Fisherrow  to  Gothenburgh,  and  back  to  Leith  and  Cockenzie,"  valued 
at  £500,  without  further  account  to  be  given.  At  the  trial  before  Lord 
Kenyon,  at  Guildhall,  it  appeared  that  the  ship  performed  her  voyage 
outward  to  Gothenburgh,  and  having  taken  in  goods  both  for  Leith 
and  Cockenzie  in  her  return  home  in  the  spring  of  1787,  without  going 
to  Leith,  first  put  into  Cockenzie,  where  she  was  stranded  and  lost.  It 
was  given  in  evidence  that  Leith  was  a  very  safe  and  commodious  har- 
bor, and  Cockenzie  a  very  small  and  insecure  one,  especially  in  the 
winter  season.  That  the  two  places  are  about  ten  miles  apart  from 
each  other ;  but  Cockenzie  lies  nearer  to  Gothenburgh  than  Leith,  and 
it  is  about  a  mile  and  a  half  out  of  the  way  to  put  into  Cockenzie  in 
going  from  Gothenburgh  to  Leith.  There  did  not  appear  to  be  an}' 
settled  course  of  trade  to  regulate  the  track  of  the  voyage  in  this  re- 
spect, though  the  weight  of  the  evidence  was  in  favor  of  going  first  to 
Leith  in  point  of  prudence,  owing  to  the  insecurity  of  the  harbor  of 
Cockenzie  in  general ;  for,  by  discharging  the  lading  for  Leith  there  in 
the  first  instance,  the  risk  of  going  into  tlie  harbor  of  Cockenzie  was 
thereby  much  lessened.  Two  objections  were  made  at  the  trial  on  the 
part  of  the  defendant,  first,  that  as  the  ship  went  into  Cockenzie  be- 
fore she  went  to  Leith,  it  was  a  deviation  from  the  voyage  described 
in  the  polic}',  which  was  to  Leith  and  Cockenzie  ;  secondly,  that  this 
was  a  gaming  policy  within  the  statute  19  Geo.  IL  c.  37,  being  without 
proof  of  interest.  Both  points  were  reserved  ;  but  the  decision  went 
wholly  on  the  first.  A  verdict  was  agreed  to  be  taken  for  the  plaintiff, 
without  prejudice  to  tlie  defendant,  subject  to  the  opinion  of  the  court 
upon  the  points  of  law,  with  liberty'  to  the  defendant  to  move  to  enter 
a  nonsuit,  —  a  rule  to  that  effect  having  been  obtained. 

Gibbs  now  showed  cause  against  it,  saying  that  it  had  never  been 
held  necessary,  where  two  ports  of  discharge  are  named  in  a  policy,  for 
the  ship  to  go  first  to  that  which  happens  to  be  named  first  in  the  pol- 


SECT.  I.]  HOGG   V.    HORNER.  437 

icy.  Ever}'  underwriter  must  be  taken  to  be  cognizant  of  tlie  nature  of 
the  voyage  wliich  he  insures,  and  of  the  course  of  trade  which  prevails 
in  it.  He  must  be  taken  to  know  the  relative  situations  of  the  several 
pUices  from  and  to  which  the  vessel  is  insured  ;  therefore  here  the  de- 
fendant must  have  known  that  Cockenzie  lay  between  Gotlienburgh 
and  Leith,  and  that  the  vessel  would  naturally  touch  at  Cockenzie 
first,  there  being  no  course  of  trade  to  regulate  her  voyage  otherwise, 
that  being  the  sliortest  and  most  convenient  track.  Where  a  particular 
track  is  intended  to  be  chalked  out  by  the  underwriter,  the  usual  form 
of  describing  it  is  from  A.  to  B.,  and  from  B.  to  C.  The  general  mode 
of  expression  therefore  adopted  in  this  case,  from  A.  to  B.  and  C, 
shows  that  it  was  intended  to  leave  it  to  the  discretion  of  the  captain  ; 
and  this  is  confirmed  by  the  circumstance  of  there  being  no  particular 
usage,  but  sometimes  the  one  and  sometimes  the  other  is  the  first  port 
of  delivery,  according  to  the  convenience  of  the  traders. 

The  court  were  of  opinion  that,  as  the  intended  voyage  was  de- 
scribed in  the  polic}',  and  as  there  was  no  regular  and  settled  course 
known  to  all  the  traders,  different  from  that  so  described,  the  ship  de- 
viated by  putting  into  Cockenzie  first,  and  consequently  that  the  plain- 
tiff" could  not  recover.^  .  .  . 

Per  curia?}}.  Hide  absolute.^ 


HOGG  V.  HORNER. 

Nisi  Prtus,  1797.     2  Park  Ins.  (8th  ed.)  626. 

Where  a  ship  was  insured  "  at  and  from  Lisbon  to  a  port  in  Eng- 
land, with  liberty  to  call  at  any  one  port  in  Portugal  for  any  purpose 
whatever ; "  and  where  the  ship  had  sailed  from  Lisbon  to  Faro  to 
complete  her  loading,  Faro  being  a  port  to  the  southward  of  Lisbon, 
consequently  lying  directly  out  of  the  course  of  the  voyage  to  England, 
Lord  Kenton  was  of  opinion  that  the  liberty  given  by  this  policy  must 
be  restrained  to  a  permission  to  call  at  some  port  to  the  northward  of 
Lisbon,  in  the  course  of  the  voyage  to  England  ;  and  that  by  going  to 
the  southward  the  assured  had  been  guilty  of  a  deviation.^ 

1  Here  Lawrexce,  J.,  read  a  manuscript  note  of  Clason  v.  Simmonds,  tried  at 
Guildhall,  before  Lee,  C.J.  (1741).— Ed. 

2  See  Kane  v.  Columbian  Ins.  Co.,  2  Johns.  264  (1807);  Gairdner  v.  Senhouse,  3 
Taunt..l6  (1810). 

Compare  Bragg  v.  Anderson,  4  Taunt.  229  (1812).  —  Ed. 

3  See  Levabre  v.  Wilson,  1  Doug.  284  (1779). 

Compare  Lambert  v.  Liddard,  5  Taunt.  480  (1814) ;  s.  c.  1  Marsh.  149;  Metcalfe 
V.  Parrv,  4  Camp.  123  (1814).— Ed. 


438  SCOTT   V.    THOMPSON.  [CHAr.  VI. 

SCOTT  ET  AL.  V.  THOMPSON. 

Common  Pleas,  1805.     1  B.  &  P.  N.  R.  181. 

This  was  an  action  on  a  polic}'  of  insurance,  dated  1 6th  September, 
1801,  at  and  from  Liverpool  to  Amsterdam,  against  sea-risk  and  fire 
onl}',  upon  goods  on  board  the  ship  or  vessel,  called  the  "  Sophia 
Frederica,"  at  three  guineas  and  an  half  per  cent.  The  defendant  un- 
derwrote for  £200,  and  tlie  interest  was  averred  to  be  in  the  plaintiffs. 
The  action  was  brought  to  recover  an  average  loss  sustained  by  sea- 
damage.  The  cause  came  on  to  be  tried  the  21st  day  of  December, 
1804,  before  Chambre,  J.,  and  a  special  jur}',  when  a  verdict  was  found 
for  the  plaintiffs,  by  consent,  for  £200,  to  be  reduced  by  a  reference  in 
respect  to  the  amount,  in  case  the  court  should  be  of  opinion  that  the 
plaintiff  was  entitled  to  recover  upon  the  following  case.  The  defend- 
ant underwrote  the  policy  in  question  for  £200,  and  received  the  pre- 
mium. The  ship  was  a  neutral  vessel,  belonging  to  Dantzic;  154 
cases  of  Havana  sugar,  at  the  value  of  £1,469  Is.  11(7.,  the  propert}* 
of  the  plaintiffs,  were  shipped  at  Liverpool  for  Amsterdam  previous  to 
the  voyage,  which  were  loaded  under  his  Majesty's  license  for  the 
vo^'age,  and  were  the  subject  of  the  insurance.  On  the  22d  Septem- 
ber, 1801,  the  said  vessel  and  cargo  sailed  from  Liverpool  upon  the 
said  voyage,  stanch,  strong,  in  good  order  and  condition,  and  well 
and  sufficiently  provided  in  all  respects.  About  10  a.  m.  on  the  1st 
October,  in  the  course  of  the  said  voyage,  the  said  vessel  was  boarded 
by  his  Majesty's  brig  "•  Raven,"  commanded  b}-  Captain  James  Saun- 
ders, who  took  possession  of  the  "  Sophia  Frederica,"  and  carried  her, 
against  the  will  of  the  captain  and  crew,  out  of  the  course  of  her 
voyage  to  Amsterdam,  into  Falmouth,  where  she  arrived  about  12  at 
night,  the  same  day,  in  possession  of  and  under  the  direction  of  the 
officers  of  his  Majesty's  said  ship  the  "  Raven,"  who  moored  and 
detained  her  there  until  the  I2th  November,  1801.  On  the  12t]i  No- 
vember she  was  released,  and  immediatelv  proceeded  from  Falmouth 
for  Amsterdam.  On  the  20th  November,  being  off  the  coast  of  Hol- 
land, slie  was  there  detained  b}-  tempestuous  weather  until  the  24th, 
during  which  time  she  sprimg  a  leak,  and  on  the  24th  November  she 
arrived  at  Amsterdam,  and  unloaded  her  cargo,  which  was  found  to 
have  sustained  sea-damage ;  but  it  was  admitted  on  the  part  of  the 
plaintiff  that  no  part  of  such  sea-damage  happened  before  her  detention 
by  the  brig  "  Raven."  When  the  said  vessel  sailed  from  Liverpool 
she  was  furnished  with  all  tlie  proper  documents  for  the  said  voyage, 
which  were  on  board  her  at  the  time  of  the  said  detention.  On  the 
part  of  the  defendant  it  was  contended  that  the  said  ship,  being  so 
taken  out  of  the  course  of  lier  voyage  to  Amsterdam  into  Falmouth, 
was  a  deviation,  and  put  an  end  to  the  insurance.  The  question  for 
the  opinion  of  the  court  was.  Whether  under  the  circimistances  of  this 


SECT.  I.]  SCOTT    V.    THOMPSON.  439 

case  the  plaintiffs  wore  entitled  to  recover?  If  the  court  should  be  of 
opinion  that  the  said  goods  were  covered  by  the  insurance  after  the 
ship  was  so  taken  out  of  the  course  of  her  voyage,  a  verdict  was  to  be 
entered  for  tlie  plaintiffs  for  such  damages  as  the  arbitrator  should  find 
due.  If  the  court  should  be  of  opinion  that  the  insurance  was  deter- 
mined b}-  the  above  circumstance,  then  the  verdict  to  be  entered  for 
defendant. 

It  was  agreed  at  the  trial  that,  at  the  desire  of  either  part}-,  this 
case  might  be  turned  into  a  special  verdict. 

Bayley,  Serjt.,  for  the  plaintiff's.^ 

Bei<t,  Serjt.,  for  the  defendant. 

The  opinion  of  the  court  was  delivered  b}' 

Sir  James  Mansfield,  C.  J.,  who,  after  stating  the  case,  proceeded 
thus.  For  a  short  time  I  entertained  a  doubt  whether  on  this  limited 
policy  the  plaintiff"  was  entitled  to  recover.  That  doubt  arose  from  not 
having  sufficiently  attended  to  the  circumstances  of  the  case  ;  and  the 
argument  and  authority  cited  have  satisfied  me  that  the  plaintiff  is 
entitled  to  recover.  The  only  question  is,  Whether,  as  the  ship  was 
taken  out  of  her  course  by  the  captain  of  the  king's  ship  and  detained 
at  Falmouth,  and  the  voyage  was  thereb\-  made  longer  than  it  would 
otherwise  have  been,  the  underwriter  is  relieved  from  his  obligation  to 
indemnify  the  assured  during  the  remainder  of  the  voyage?  Nothing 
is  nK)i;e^clcar  than  the  general  principle  that  a  deviation  never  ^urts  ITn 
end  to  the  insurance,  unless  it  be  the  voluntai^y  act  of  those  whtThave 
the^  management  of  the  ship.  HefeThe"  statr^f  the  case  excUides  the 
idea  of  the  deviation  (as  the  going  to  Falmouth  has  been  called)  having 
been  voluntary.  The  ship  was  carried  there  by  force,  and  without  any 
consent  of  those  who  had  the  management  of  the  ship.  Deviation 
occasioned  by  force,  and  deviation  occasioned  by  necessity,  are  the 
same  ;  for  necessity  is  force.  It  is  no  matter  whether  it  be  the  want 
of  repair,  or  any  other  immediate  danger,  which  renders  the  deviation 
necessary.  When  the  deviation  is  necessary  and  unavoidable,  it  has 
no  eflject  on  the  obligation  of  the  insurer.  Three  or  four  cases  have 
been  cited.  The  last  of  them,  namely,  Driscol  v.  Passmore,  proceeded 
upon  the  same  principles  as  that  of  Elton  v.  Brogden,  in  Strange,  and 
both  cases  are  distinguishable  from  this.  In  one  of  those  cases  there 
was  a  deviation,  the  ship  having  been  carried  back  to  Bristol;  and  in 
the  other,  the  ship  was  forced  to  return  b}-  the  crew.  Though  at  first 
it  struck  me  that  there  was  something  like  a  diff"erence  between  a  lim- 
ited and  a  general  policy,  yet,  on  further  consideration,  I  do  not  think 
that  there  is  any  diflTerence.  In  the  case  of  Elton  r.  Brogden,  the  court 
do  not  seem  to  have  considered  the  act  of  the  crew  as  amounting  to 
barratry  ;  and  indeed  it  would  be  difficult  to  make  it  appear  that  it  was 
barratr}-.     Assuming,  then,  that  there  was  no  barratry  in  that  case, 

1  The  cases  cited  for  the  plaintiffs  were  Elton  v.  Brogden,  ante,  p.  431  (1746-47); 
Driscol  v.  Passmore,  1  B.  &  P.  200  (1798) ;  and  Driscol  v.  Bovil,  1  B.  &  P.  313  (1798). 
—  Ed. 


440  RAINE    V.    BELL.  [CHAP.  VL 

there  is  no  ground  for  making  a  distinction  between  the  present  case 
and  that  of  a  general  policy.  Indeed,  if  the  act  of  the  crew  in  Elton  r. 
Biogdeu  had  amounted  to  barratry,  it  could  have  made  no  difference. 
It  seemed  to  me  at  first  that  if  a  defendant  in  an  action  on  a  general 
policy  of  insurance  should  insist  upon  a  deviation,  it  might  be  answered 
that  such  deviation  was  occasioned  by  barratrj',  which  was  another  risk 
for  which  the  underwriter  would  be  liable  on  the  policy.  But  that 
would  be  no  answer,  since  it  would  amount  to  chaiging  the  under- 
writer under  a  declaration  upon  a  sea-risk  for  barratry  to  which  he 
could  not  be  prepared  to  answer  ;  and  he  never  could  be  liable,  directly 
or  indirectl}',  on  a  declaration  which  had  only  led  him  to  defend  him- 
self against  a  sea-risk.  Considering  this  case,  therefore,  and  the  other 
cases  which  have  been  decided,  I  do  not  find  anything  like  a  real  dis- 
tinction between  the  present  insurance  and  the  ordinary  insurance, 
including  all  the  risks  which  are  inserted  in  the  policies  in  general.  We 
are,  therefore,  of  opinion  that  the  plaintiff  is  entitled  to  recover. 

Per  curiam^  Judgment  for  the  plaintiff } 

The  court  gave  leave  to  the  defendant  to  turn  the  case  into  a  special 
verdict. 


RAINE  V.  BELL. 

King's  Bench,   1808.     9  East,  195. 

This  was  an  action  on  a  policy  of  insurance  "  on  the  ship  '  Rio  Nova,' 
and  freight,  from  her  loading  port  or  ports  on  the  coast  of  S[)ain  to 
London,  with  liberty  to  touch  and  stay  at  any  port  or  place  whatever, 
without  being  deemed  a  deviation."  The  plaintiff  declared  on  a  loss  by 
the  perils  of  the  sea.  It  appeared  in  evidence  at  the  trial  at  Guildhall, 
that  by  the  long  continuance  of  the  voyage  from  port  to  port  in  Spain, 
and  the  difficulty  of  obtaining  provisions  on  the  coast  at  that  time,  the 
ship's  provisions  had  run  very  short,  and  she  was  obliged  to  put  into 
Gibraltar  to  lay  in  a  sufficient  stock  before  her  departure  for  London. 

1  Compare  Lee  v.  Gray,  7  Mass.  349  (1811). 

On  deviation  for  the  purpose  of  repairing  the  ship,  see  Levabre  v.  Wilson,  1  Dong. 
284(1779). 

On  deviation  to  escape  capture,  see  Robinson  i\  Marine  Ins.  Co.,  2  Johns.  89  (1806)  ; 
Suydam  r.  Marine  Ins.  Co.,  2  Johns.  1.38  (1807);  Haven  r.  Holland,  2  Mason,  230 
(1820) ;  Riggin  i-.  Patapsco  Ins.  Co.,  7  H.  &  J.  Md.  279  (1826)  ;  Bradlev  v.  Nashville 
Ins.  Co.,  3  La.  Ann.  708  (1848). 

On  deviation  because  of  sickness  of  crew  or  passengers,  see  Woolf  !•.  Claggett,  3 
Esp.  2.57  (1800) ;  Perkins  v.  Augusta  Ins.  &  Banking  Co.,  10  Gray,  312,  318  (1855). 

On  deviation  to  succor  a  vessel  in  distress,  and  the  distinction  between  saving  life 
and  saving  property,  see  Settle  i'.  St.  Lonis  Perpetual  Ins.  Co.,  7  Mo.  379  (1842)^  and 
the.-^e  shipping  ca.ses:  Bond  v.  The  Brig  Cora,  2  Wash.  C  C.  80  (1807)  ;  A  Box  of 
lUillion,  1  Sprague.  57  (1843) ;  Walsh  c.  Homer,  10  Mo.  6  (1846) ;  Crocker  v.  Jackson, 
1  Sprague,  141  (1847);  Sturtevant  v.  The  Bark  George  Nicholaus.  Newberry's  Adm. 
449  (1853) ;  Scaramanga  v.  Stomp,  5  C.  P.  I).  295  (C.  A.,  1880).  — Ed. 


SECT.  I.]  KAINE    V.    BELL.  441 

But  it  also  appeared,  that  while  the  ship  lay  at  Gibraltar  for  that  pur- 
pose, the  captain  received  on  board  some  chests  of  dollars  on  freight: 
and  some  question  was  at  first  attempted  to  be  made  whether  the  true 
object  of  going  there  was  not  to  take  on  board  these  dollars ;  but  the 
weight  of  the  evidence  was  against  this  supposition  :  and  finally  Lord 
Ellexborough,  C.  J.,  left  it  to  the  jury  to  say,  whether  the  going  into 
Gibraltar  were  of  necessity  in  order  to  obtain  a  proper  stock  of  provi- 
sions ;  and  if  so,  whether  the  stay  there  were  longer  than  was  necessary 
for  that  purpose  ;  telling  them  that  if  there  were  no  necessity  for  going 
there  or  staying  there  so  long  for  provisions  the  policy  would  be«avoided. 
The  jury  however  affirmed  the  necessity  of  the  ship's  touching  and  stay 
at  Gibraltar  in  order  to  lay  in  her  provisions  :  and  the  loss  of  the  ship 
being  proved  to  have  happened  by  the  perils  of  the  sea  off  the  coast  of 
Cornwall  in  her  homeward-bound  voyage,  they  found  a  verdict  for  the 
plaintiff  for  the  amount  of  the  defendant's  insurance.  But  a  question 
of  law  was  raised,  whether  the  taking  in  the  additional  cargo  of  dollars 
at  Gibraltar,  which  was  said  to  be  a  breaking  bulk  in  the  course  of  the 
voyage  at  a  place  where  there  was  no  libert}'  to  trade,  did  not  avoid  the 
policy,  as  increasing  or  having  a  tendency  to  increase  the  risk  of  the  un- 
derwriters beyond  the  terms  of  the  polic}'  :  and  this  it  was  contended 
by  the  defendant  to  do,  on  the  authority  of  Lord  Kenton  in  Stitt  v. 
Wardell,^  and  of  Lord  Ellenborough  in  Sheriff  v.  Potts.^  And  in 
order  to  discuss  this  point,  a  rule  nisi  was  obtained  in  the  last  term  for  ^- 
setting  aside  the  verdict,  and  for  a  new  trial ;  against  which 

The  Attorney- General,  Park,  and  Damjner,  now  showed  cause. 

Garroto  and  Marryatt^  contra. 

Lord  Ellenborough,  C.  J.  If  the  taking  in  the  dollars  at  Gibraltar 
materially  varied  tiie  risk  of  the  underwriters,  they  would  be  discharged 
by  it ;  but  that  it  did  not  vary  the  risk  by  occasioning  any  delay  of  the 
voyage  was  expressly  found  by  the  jury  to  whom  the  question  was  left, 
and  who  were  of  opinion  that  the  whole  period  of  the  ship's  stay  there 
was  covered  by  the  necessity  which  originally  induced  the  captain  to  go 
into  Gibraltar.  I  have  turned  it  in  my  mind  whether  the  risk  might  not 
have  been  increased  by  the  particular  kind  of  cargo,  uarael}',  treasure, 
taken  in  there  :  if  that  were  known  at  the  time  to  an  enemy,  it  might 
hold  out  an  additional  temptation  to  him  to  seek  for  and  attack  the  ship. 
But  I  do  not  know  that  a  mere  temptation  of  this  sort  has  ever  been 
held  a  sufficient  ground  to  avoid  a  policy  if  the  original  act  itself  were 
lawful.  This,  it  must  be  remembered,  is  the  case  of  a  policy  on  ship 
and  freight :  I  reserve  giving  any  opinion  as  to  the  operation  of  a 
change  in  the  state  of  the  cargo  in  the  case  of  a  policy  on  goods  ;  be- 
cause the  taking  in  of  other  goods  in  the  course  of  one  entire  voyage, 
where  it  is  not  provided  for,  may  be  contended  to  constitute  a  different 
adventure  from  that  on  which  the  ship  started  with  her  original  cargo. 

1  Tried  at  the  sittings  after  Michaelmas  terra,  38  Geo.  III.,  at  Guildhall,  2  Esp.  Ki. 
Pri.  Cas.  609,  and  Park  on  Ins.  —  Rep. 

2  Sittings  after  Michaelmas  term,  44  Geo.  III.  5  Esp.  Ni.  Pri.  Cas.  96.  —  Rep 


442        BLACKENHAGEN  V.    LONDON  ASSURANCE  CO.   [CHAP.  YI. 

But  here  no  part  of  the  original  cargo  was  taken  out,  as  in  Stitt  v.  War- 
ddl ;  nor  any  narrower  liberty  reserved,  as  in  Sheriff  v.  Potts,  which 
might  operate  as  a  virtual  exclusion  of  taking  in  other  goods.  But  this 
ca°e  stands  on  its  own  ground :  where  something  has  been  superadded 
to  the  original  cargo  while  the  ship  was  delayed  from  necessity  in  a  port 
into  which  she  was  obliged  to  go ;  and  the  jury  having  negatived  that 
any  delay  was  occasioned  by  the  taking  in  of  the  additional  goods. 

His  Lordship,  after  the  other  judges  had  delivered  their  opinions, 
added,  that  nothing  said  by  the  court  would  justify  the  taking  in  any 
carcro'in-the  course  of  the  voyage  which  would  in  any  manner  enhance 
the°risk  of  the  underwriters.^  i2"^e  discharged.' 


BLACKENHAGEN   v.   LONDON  ASSURANCE  COMPANY. 
Nisi  Prics,  King's  Bench,  1808.     1  Camp.  454. 

This  was  an  action  of  covenant  on  a  policy  of  insurance  on  goods  in 
the  ship  "  William,"  at  and  from  London  to  Reval.  The  loss  was  laid 
in  one  count  to  be,  by  the  perils  of  the  sea ;  in  another,  by  capture. 
Plea,  no7i  infregit  conventionem.^ 

The  ship  sailed  from  the  Nore  on  the  15th  of  October,  1807,  under 
convoy  of  the  "Forrester"  sloop  of  war,  for  the  Sound,  and  arrived 
there  on  the  27th  of  the  same  month.  On  the  15th  of  November,  she 
proceeded  from  tlience  towards  Reval,  under  convoy  of  the  "  Garnet" 
sloop  of  war.  Two  days  after,  while  they  were  proceeding  on  the  voy- 
age, the  captain  of  the  "Garnet"  received  information  that  an  embargo 
yv&s  laid  on  all  British  ships  in  the  ports  of  Russia.  In  consequence, 
he  ordered  the  "  William"  to  put  back,  and  on  the  18th  she  returned 
to  Copenhagen  roads.  She  afterwards  lay  off  Gottenburgh  six  days, 
and  might  have  entered  that  friendly  port  if  the  master  had  thought  fit. 
But  on" the  30th  of  November  she  sailed  with  the  fleet  for  England, 
under  convoy  of  the  "Garnet"  and  the  "  Spitfire"  sloops  of  war. 

The  last  time  she  was  seen  was  on  the  3d  of  December,  in  a  heavy 
trale  of  wind ;  and  not  having  been  heard  of  since,  it  was  allowed  that 
she  had  certainly  perished  on  her  voyage  home. 

Lord  Ellekborough.  This  case  will  hardly  bear  to  be  stated.  The 
underwriters  were  bound  to  indemnify  the  plaintiff  for  any  loss  that 

1  Concurring  opinions  by  Grose,  Lam-rexce,  and  Le  Blanc,  JJ.,  have  been 

omitted.  —  Kt>. 

2  Acr..:  Urquhart  v.  Barnard,  1  Taunt.  450  (1809),  where  the  insurance  was  on 
coods;  Laroche  v.  Oswin.  12  East,  131  (1810),  where  the  insurance  was  on  goods; 
Hughes  V.  Union  Ins.  Co.  3  Wheat.  159  (1818),  where  the  insurance  was  on  ship  and 
freight,  and  the  cargo  was  unloaded  while  the  ship  was  stopping  at  a  port  in  order  to 
avoid  being  captured.  —  Er). 

3  11  G.  l,c.  30,  §43.  — Rep. 


SECT.  I.]  WILLIAMS    V.    SHEE.  443 

should  happen  on  the  voyage  from  London  to  Reval.  If,  being  unable 
to  get  to  Reval,  the  ship  had  lingered  in  that  quarter,  or  had  necessarily- 
returned  with  an  intention  of  ultimately  completing  the  original  voyao-e, 
a  question  of  some  nicety  might  have  arisen.  But  l)y  saiHiig  back  for 
England  in  the  manner  she  did,  the  original  voyage  was  abandoned, 
and  tlie  underwriters  were  discharged.  The  master  niigiit  deem  this 
the  most  advisable  course  he  could  pursue  for  the  benefit  of  those  he 
represented  ;  but  were  the  underwriters  still  to  be  liable  on  the  policy, 
if  it  had  been  convenient  for  him  to  carry  the  ship  to  the  Straits  of 
Magellan?  The  case  which  I  remember  coming  nearest  this,  was 
where  a  ship,  being  prevented  by  the  ice  from  reaching  lier  port  of  des- 
tination, took  shelter  for  the  winter  in  a  place  as  near  to  it  as  she  could 
safely  go,  and  prosecuted  her  voyage  the  ensuing  season  Here,  had 
the  ship  been  coming  home,  as  the  best  means  of  getting  finally  to 
Reval,  and  there  had  been  a  possibility  of  her  being  able  to  accomplish 
that  object  when  the  loss  happened,  she  might  still  have  been  consid- 
ered in  the  course  of  the  voyage  insured  ;  but  all  thought  of  completing 
the  original  voyage  seems  to  have  been  abandoned  on  the  30th  of  No- 
vember, and  there  is  no  color  for  charging  the  underwriters  with  a  loss 
which  happened  subsequently  to  her  setting  sail  for  England. 

Plaintiff  no7isuited,^ 

Garrow  and  Puller^  for  the  plaintiflT. 

The  Attorney- General^  Carr,  and  Moore^  for  the  defendant. 


Kx 


WILLIAMS  V.  SHEE. 
Nisi  Prius,  Kin'g's  Bench,  1813.     3  Camp.  469. 

This  was  an  action  on  a  policy  of  insurance  on  goods  by  the  ship 
"  Sir  Sidney  Smith,"  "  at  and  from  London  to  Berl)ice,  with"^  liberty  to 
touch  and  stay  at  any  ports  and  places  whatsoever  and  wheresoever, 
and  for  all  purposes  whatsoever,  particularly  to  land,  load,  and  exchange 
goods,  without  being  deemed  a  deviation." 

The  vessel  sailed  from  Portsmouth  on  the  2oth  of  September,  1812, 
with  a  fleet  for  the  West  Indies,  under  convoy  of  his  Majesty's  ship 
"Narcissus."  They  arrived  off  Madeira  on  Saturday,  the  1 7th  of  Octo- 
ber.  The  "  Sir  Sidney  Smith  "  had  taken  in  a  quantity  of  goods  for 
that  Island,  which  the  captain  had  been  ordered  to  land  there,  and  for 

1  The  plaintiff  afterwards  brought  an  action  against  the  defendant  on  this  policv, 
in  the  Court  of  Common  Pleas,  which  was  tried  at  the  sittings  after  last  Michaelmas 
Term.  Sir  James  Mansfield,  as  well  as  Lord  Ellenbokocgh,  clearly  thought  that 
the  voyage  was  abandoned,  by  the  ship  sailing  for  England  instead  of  putting  into 
Gottenburgh.  The  jury,  nevertheless,  found  a  verdict  for  tlie  plaintiff;  but  in  Hilary 
Term  following,  the  Court  of  Common  Pleas  set  it  aside  and  ordered  a  new  trial  — 
Rep. 

See  Parkin  v.  Tunno,  11  East  22  (1809)  j  8.  c.  2  Camp.  59,  62.— -Ed, 


444  WILLIAMS   V.    SHEE.  [CHAP.  VI. 

which  wines  were  to  be  sent  on  board.  He  began  to  land  the  goods  as 
sCi^n  as  he  arrived,  but  not  being  allowed  to  work  on  the  Sunda}',  he 
had  not  got  the  wines  on  board  till  the  Monday  at  noon.  The  "Nar- 
cissus," with  the  greatest  part  of  the  fleet,  had  sailed  away  the  preceding 
day,  and  was  then  too  far  off  to  be  overtaken.  Seven  or  eight  other 
ships  belonging  to  the  fleet,  however,  were  left  behind  at  Madeira  ;  and 
they  all  agreed  to  sail  together  for  mutual  protection.  With  this  view 
the  "Sir  Sidney  Smith"  remained  at  Madeira  till  the  24th  of  October. 
She  finally  parted  company  with  them  off  Barbadoes,  and  on  the  19th 
of  November  was  captured  by  an  American  privateer  on  her  way  to 
Berbice.  The  owner  of  the  goods  insured  was  on  board  during  the 
voyage. 

^Garroic,  A.  G.,  contended,  that  the  underwriters  were  discharged  on 
two  grounds :  1st,  The  ship,  by  putting  into  Madeira  and  staying  be- 
hind there  when  the  rest  of  the  fleet  had  sailed,  had  been  guilty  of  a 
deviation.  2dly,  The  captain  had  wilfully  deserted  the  convoy,  and  as 
this  was  done  with  the  privity  of  the  owner  of  the  goods,  who  was  on 
board,  the  policy  was  vacated. 

Park,  for  the  plaintiff,  insisted,  1st,  That  the  ship  had  a  right  to  put 
into  Madeira,  and  to  stop  there  in  the  manner  she  had  done,  under  the 
lil)erty  given  by  the  policy  to  touch  and  stay  at  all  ports  and  places  to 
land,  load,  and  exchange  goods.  2dly,  The  captain  could  not  be  said 
wilfully  to  have  deserted  the  convoy  ;  for  he  was  anxious,  if  possible, 
to  enjoy  its  protection  ;  and  the  convoy  had  rather  deserted  him. 

Lord  Ellenborough.  I  am  of  opinion  that  the  underwriters  are  dis- 
charged on  the  ground  of  deviation.  The  liberty  in  the  policy  must  be 
construed  with  reference  to  the  main  scope  of  the  voyage  insured.  I 
am  inclined  to  think  this  was  not  a  wilful  desertion  of  convoy  within 
the  meaning  of  the  act,  as  the  captain  appears  to  have  acted  bona  fide, 
and  not  to  have  been  aware  of  the  precise  time  when  the  convoy  sailed 
away  from  Madeira.  However,  it  is  unnecessary  to  determine  that 
point  now  ;  for  upon  well-established  principles  the  ship  was  guilty  of 
a  deviation  by  putting  into  Madeira  and  voluntarily  staying  behind 
there  for  the  purposes  of  trade,  when  the  rest  of  the  fleet  had  sailed 
away  in  the  prosecution  of  the  voyage. 

Plaintiff  nonsuited. 
Park  and  Barnewall,  for  the  plaintiff. 
Garrow,  A.  G.,  and  Nolan,  for  the  defendant. 


SECT.  I.]  REDMAN    V.   LONDON.  445 

REDMAN    V.    LONDON.  ^"^^ 

Nisi  Prius  and  Common  Pleas,   1813.     3  Camp.  503. 

This  was  an  action  on  a  policy  of  insurance,  dated  8th  January,  1813, 
on  the  ship  "  Sir  Sidney  Smith,"  at  and  from  London  to  Berbice. 

After  the  printed  words  in  the  poUcy,  "beginning  the  adventure 
upon  the  said  goods  and  merchandises,  from  the  loading  thereof  aboard 
the  said  ship,"  there  were  inserted,  in  wu'iting,  the  words  "  at  sea." 

The  only  extraordinary  liberty  given  by  the  policy  was,  "  to  join  and 
sail  with  convoy,  without  being  deemed  a  deviation." 

This  policy  was  on  the  same  ship  and  the  same  voyage  mentioned  in 
Williams  v.  Shee,  3  Camp.  469,  and  exactly  the  same  evidence  was  now 
given  respecting  the  transactions  at  Madeira  and  the  subsequent  loss  as 
upon  the  trial  of  that  cause  before  Lord  EUenborough.  The  broker, 
however,  swore  that  when  he  effected  the  polic}'  he  showed  the  under- 
writers a  letter,  written  by  the  captain  at  sea,  when  he  was  between 
Barbadoes  and  Berbice,  stating  that  he  had  parted  company  with  the 
convoy. 

JBest,  Serjt.,  for  the  defendant,  read  the  foregoing  note  of  Williams 
V.  Shee,  and  insisted  that  the  present  case  was  much  stronger  in  favor 
of  the  underwriters,  as  the  policy  here  did  not  contain  the  liberty  to 
land,  load,  and  exchange  goods,  which  was  there  relied  upon. 

Shepherd^  Serjt.,  for  the  plaintiflf,  allowed  that  the  ship  had  been 
guilt}-  of  a  deviation  at  Madeira,  but  contended  that  the  underwriters 
on  this  policy  could  not  take  advantage  of  it.  This  policy  was  only 
meant  to  take  the  ship  up  "at  sea"  from  the  date  of  the  last  letter 
from  the  captain,  and  to  protect  her  during  the  remainder  of  the  voyage 
to  Berbice.  For  this  purpose,  the  words  "at  sea"  were  introduced 
into  the  polic}-.  Their  meaning  might  be  a  little  equivocal  on  the  face 
of  the  instrument,  but  became  quite  apparent  when  coupled  with  the 
letter  shown  to  the  underwriters  ;  therefore  a  deviation  prior  to  that 
letter  was  equally  immaterial  as  a  deviation  upon  any  former  voyage. 

Best,  Serjt.,  in  reply.  It  is  impossible  to  make  "  at  sea"  one  of  the 
termini  of  the  adventure.  The  policy  is  "at  and  from  London  to  Ber- 
bice," and  the  declaration  accordingly  avers  that  the  ship  was  in  good 
safety  at  London,  and  sailed  from  thence  on  the  voyage  in  the  policy 
of  insurance  mentioned.  Had  the  ship  sustained  anj-  secret  damage  at 
Madeira,  the  underwriters  would  unquestionably  have  been  liable  for  an 
average  loss.  The  date  of  a  policy  is  wholly  immaterial,  if  it  be  effected 
before  the  event  is  known  to  either  party.  The  invariable  rule  is,  that 
it  attaches  at  the  place  where  the  risk  is  described  to  commence,  and  if 
not  discharged  by  a  deviation,  protects  the  ship  during  the  whole  of  the 
adventure.  The  captain's  letter  cannot  be  made  a  part  of  this  policy, 
which  does  not  refer  to  it,  and  the  words  "  at  sea,"  connected  as  they 
are  with  the  loading  of  goods  and  merchandises,  are  wholly  nonsensical. 


446  KETTELL  V.    WIGGIN,  [CHAP.  VI. 

Mansfield,  C.  J.  Whatever  the  intention  of  the  parties  might  be, 
I  see  nothing  in  this  policy  to  sliow  that  it  was  not  to  attach  at  London. 
I  must  tlierefore  liold,  that  the  underwriters  were  discharged  by  the 
deviation  at  Madeira. 

The  plaintiff  was  nonsuited,  and  the  nonsuit  was  afterwards  confirmed 
by  the  Court  of  Common  Pleas. 

Shepherd^  Serjt.,  and  Marry  at  ^  for  the  plaintiff. 

Best,  Vaughafi,  Serjts.,  and  Camjjbell,  for  the  defendant. 


KETTELL  v.  WIGGIN  and  Others. 
Supreme  Judicial  Court  of  Massachusetts,  1816.     13  Mass.  68. 

Assumpsit  on  a  policy'  of  insurance,  subscribed  by  the  defendants, 
u[)on  the  schooner  "Pocahontas,"  and  freight  from  Boston  to  Gibral- 
tar, and  from  thence  to  her  port  of  discharge  in  the  United  States,  with 
liberty  to  proceed  to  St.  Ubes  or  the  Cape  de  Verd  Islands  for  salt. 

The  vessel  arrived  in  safety  at  Gibraltar,  and  from  thence  sailed  for 
the  Isle  of  May,  one  of  the  Cape  de  V^erds,  for  a  cargo  of  salt,  where 
she  arrived  on  the  12th  of  May,  1810.  On  her  arrival  there,  there 
were  seventeen  vessels  in  the  port,  and  it  is  the  custom  of  the  place 
for  vessels  to  load  in  turn  as  they  arrive.  The  "  Pocahontas  "  could 
not  have  had  her  turn  in  less  than  four  or  five  weeks,  and  she  was 
short  of  provisions,  of  which  and  of  water  there  was  a  scarcity  at  that 
place.  The  governor  of  the  island  proposed  to  the  master  to  go  with 
his  vessel  to  St.  Jago  and  P^uego,  two  other  of  the  Cape  de  Verd 
Islands,  and  procure  a  cargo  of  provisions ;  and  engaged,  that,  if  he 
would,  he  should  be  loaded  with  salt  as  soon  as  he  should  return, 
although  his  turn  should  not  have  arrived.  The  master  agreed  to  this 
proposal,  went  to  those  islands,  brought  provisions  for  the  governor, 
and  was  immediately  permitted  to  take  his  cargo  of  salt ;  and  he  was 
thus  enabled  to  load  his  vessel  considerably  sooner  than  he  would  have 
been,  if  he  had  remained  at  the  Isle  of  May  for  his  turn. 

After  taking  in  tlie  cargo,  the  vessel  sailed  on  the  return  voyage, 
and,  being  short  of  water  and  provisions,  put  into  tlie  port  of  Praya,  in 
St.  Jago  (which  is  a  place  usually  stopped  at  for  provisions  and  water, 
on  a  voyage  from  the  Isle  of  May  to  the  United  States),  where  she 
arrived  on  the  4th  of  June,  and  in  the  night  of  the  oth  was  attacked 
by  banditti,  carried  off,  and  subsequently  totally  lost ;  having  been 
recovered  by  the  master  nineteen  days  after  she  was  so  piratically 
seized,  but  some  time  afterwards  captured  by  a  British  vessel  of  war, 
libelled  as  prize,  and  condemned. 

The  evidence  was  full  and  satisfactory,  that  provisions  and  water 
were  scarce  and  diiricnlt  to  be  procured  at  the  Isle  of  May  ;  and  that  it 
was  the  usage  to  touch  at  St.  Jago,  on  the  way  home,  for  supplies.     It 


SECT.  I.]  KETTELL   V.   WIGGIN.  447 

was  also  proved,  that  it  was  usual  for  vessels  to  go  from  island  to 
island,  among  the  Cape  de  Verds,  for  salt  or  to  complete  their  cargo. 

The  Chief  Justick,  before  whom  the  cause  was  tried,  November 
term,  181-t,  instructed  the  jury,  tliat,  if  they  believed  the  usage  with 
respect  to  touching  at  St.  Jago,  on  the  way  home  from  the  Isle  of 
May.  and  that  there  was  a  necessity  for  it,  without  any  fault  of  the 
master,  on  account  of  provisions  or  water,  the  act  would  not  be  a 
deviation  ;  and  further,  if  they  were  fully  satisfied  that  the  trip  taken 
to  St.  Jago  and  Fuego,  at  the  request  of  the  governor,  was  for  the  pur- 
pose of  expediting  the  loading  of  the  vessel  and  the  return  home, 
without  any  intention  on  the  part  of  the  master  to  deviate  from  Ms 
vovage  ;  and  that  the  voyage  home  was,  in  fact,  expedited  by  that  cir- 
cumstance ;  and  that  the  stay  at  the  Isle  of  May  for  her  turn  to  load 
would  have  been  hazardous,  on  account  of  the  scarcity  of  provisions 
and  water ;  they  might  consider  that  there  was  no  deviation  from  the 
vovage,  less  time  being  consumed  than  would  have  been,  had  the 
vessel  remained  at  the  Isle  of  May. 

A  verdict  was  returned  for  the  plaintiff,  and  the  defendants  moved 
for  a  new  trial,  for  misdirection  to  the  jury,  by  the  judge  who  sat  at  the 
trial. 

Selfridge,  for  the  defendants. 
Rockwood^  for  the  plaintitf. 

Parker,  C.  J.  The  touching  at  St.  Jago,  on  the  voyage  home,  was 
relied  upon  by  the  defendants  as  a  deviation  which  destroys  the  action. 
But,  it  being  in  evidence,  that  vessels  from  the  Isle  of  May  usually 
touch  at  St.  Jago  for  supplies,  which  are  not  always  to  be  obtained  at 
the  Isle  of  May,  the  touching  there  was  justifiable,  and  no  deviation. 

But  the  vessel  went  an  intermediate  voyage  after  her  arrival  at  the 
Isle  of  May,  under  a  contract  with  the  governor  of  that  island  ;  and 
the  question  is,  whether  that  act  is  justifiable.     The  vessel  is  insured 
from  Gibraltar  to  the  United  States,  with  liberty  to  touch  at  St.  Ubes 
or  the  Cape  de  Verd  Islands  for  salt.     Under  this  policy  she  might 
have  sailed  from  one  to  another  of  those  islands,  and  successively  to 
all  of  them,  for  salt;  but  her  arrival  at  any  one  of  them,  where  salt 
was  to  be  obtained,  and  where  the  cargo  was  intended  to  be  taken  on 
board,  determined  the  voyage  to  those  islands,  and  the  vessel  could 
not  proceed  from  thence  to  another  for  the  purpose  of  earning  a  freight, 
or  for  any  other  purpose,  under  the  policy.     Now  the  Isle  of  May  is 
one  of  the  Cape  de  Verd  Islands,  at  which  the  vessel  might  touch  ; 
she  did  touch  there,  and  it  was  determined  to  take  on  board  a  cargo 
there  ;  but  she  went  thence  to  St.  Jago  and  Fuego,  not  for  the  pur- 
pose of  procuring  salt,  but  on  a  contract  with  tlie  governor,   to  get 
provisions   for  the   island,   and  then  returned  to  the  Isle  of  ^Nlay,  to 
prosecute  her  homeward  voyage.     This  was  undoubtedly  a  deviation, 
unless  it  can  be  shown  to  have  been  necessary  for  the  safe  prosecution 
of  the  voyage.     Mere  purposes  of  convenience  will  not  excuse  a  devia- 
tion, nor  will  anything  but  actual  necessity. 


448  KETTELL   V.   WIGGIN.  [CHAP.  VI. 

It  was  contended,  that  this  voyage  was  necessary,  because  there  was 
a  scarcity  of  provisions  and  water,  and  the  crew  of  the  vessel  might 
have  suffered.  This,  perhaps,  would  be  a  sufficient  excuse,  if  the 
necessity,  on  which  it  is  founded,  did  not  arise  from  the  negligence  of 
the  master;  if  it  did,  the  owners  cannot  avail  themselves  of  it,  to 
excuse  a  deviation.  The  voyage  from  Gibraltar  was  to  the  United 
States,  with  liberty  to  touch  at  tlie  Cape  de  Verds.  The  vessel  should 
have  been  sufficiently  found  at  Gibraltar,  to  enable  her  to  stay  and 
load  at  the  Isle  of  May,  without  depending  upon  procuring  provisions 
there.  Indeed,  the  necessity,  which  is  alleged,  seems  to  prove  that 
the  ship  was  not  seaworthy  at  the  time  the  polic}'  was  to  take  effect. 

But  it  was  confidently  insisted,  that,  as  the  effect  of  this  expedition, 
at  the  request  of  the  governor,  was  to  shorten  the  duration  of  the  voy- 
age, by  enabling  the  master  to  obtain  his  cargo  much  sooner  than  he 
otherwise  could,  it  ought  to  be  considered  as  done  for  the  benefit  of  all 
concerned,  and  not  as  amounting  to  a  deviation. 

But  masters  have  not  a  right  to  speculate,  in  this  manner,  upon  the 
possible  advantages  of  pursuing  a  route  which  does  not  belong  to  the 
voyage.  They  are  to  pursue  the  usual  course,  and  let  the  consequences 
fall  where  the}-  ma^-.  In  this  case  the  master  prolmbl}-  thought  he  was 
advancing  the  interest  of  his  employers,  of  the  underwriters,  and  of  all 
concerned,  by  getting  his  vessel  loaded  several  weeks  sooner  than 
would  have  been  his  turn  ;  and  yet  it  is  almost  certain,  that  his  ver^' 
success,  in  being  able  to  commence  his  homeward  voyage  so  soon,  was 
the  cause  of  the  disaster  which  befell  his  vessel.  Certainly,  had  he 
arrived  at  St.  Jago  a  week  later,  he  would  have  avoided  the  immediate 
cause  of  the  loss. 

Notwithstanding  it  is  established  b}-  the  verdict,  that  the  voyage  was 
in  fact  expedited  b}'  the  intermediate  voyage  to  St.  Jago  and  Fuego, 
we  are  of  opinion  that  voyage  was,  under  the  circumstances,  an  un- 
justifiable deviation.  To  test  this,  let  us  inquire  whether  the  vessel 
was  at  the  risk  of  the  underwriters,  from  the  Isle  of  May  to  Fuego  and 
back._  It  was  not  within  the  terms  of  the  polic}' ;  it  was  not  necessar}', 
unless  it  had  become  so  b}'  the  culpable  neglect  of  the  master.  Had 
the  vessel  been  lost  upon  that  voyage,  the  underwriters  could  not  have 
been  held  answerable.  The  polic}',  then,  had  ceased  to  protect  the  ves- 
sel ;  and  it  is  not  possible  that  anything  subsequent  should  restore  the 
obligation  of  the  underwriters. 

We  are  all  of  opinion,  that  the  verdict  must  be  set  aside  and  a 

Hew  trial  ff ranted. 


SF.CT.  I.]  HAMMOND    V.   T.EID.  449 

HAMMOND  V.  REID. 

King's  Be\ch,  1820.     4  B.  &  Aid.  72. 

AcTiox  on  a  policy  of  insurance  on  the  ship  "  Arabella,"  on  a  vo}-- 
ao'e  at  and  from  Fara  to  New  York,  during  her  stay  there,  and  at  and 
from  thence  to  Para,  with  leave  to  call  at  all  or  any  of  the  Wiridirard 
and  Leeicard  Islands  and  colonies  on  her  passage  to  New  York,  with 
leave  to  discharge,  exchange,  and  take  on  board  the  whole  or  any  part 
of  any  cargo  or  cargoes  at  any  ports  or  [)laces  she  might  call  at  or  pro- 
ceed to,  particularly  at  all  or  any  of  the  Windward  and  Leeward  Islands, 
without  being  deemed  any  deviation  from  and  without  prejudice  to  the 
insurance      The  declaration  stated  the  sailing  of  the  vessel  on  the  voy- 
age insured,  and  a  loss  by  perils  of  the  seas.     Plea,  general  issue.     At 
the  trial,  at  the  Lancaster  Summer  Assizes,  1819,  before  Bayley,  J., 
a  verdict  was  found  for  the  plaintiff,  subject  to  the  opinion  of  the  court 
on  a  case,  which  stated  that  the  ship  sailed  from  Para  on  the  voyage 
insured  with  a  cargo  on  board,  bound  for  New  York;  but  with  orders 
from  the  plaintiff,  her  owner,  to  proceed  in  the  first  instance  to  Bar- 
badoes,  where  the  captain  was  directed  to  sell  the  cargo  and  receive 
other  goods  on  board  in  exchange  for  it,  and  proceed  from  thence  to 
New  York,  after  calling  at  the  islands  of  St.  Bartholomew  and  St. 
Thomas,  two  of  the  Leeward  Islands,  for  the  purposes  after  stated. 
When  the  vessel  sailed  from  Para  the  plaintiff  was  there,  and  intended 
to  proceed  from  thence  in  another  vessel  direct  to  New  York,  where  he 
expected  to  meet  a  vessel,  also  belonging  to  himself,  called  the  "Alice," 
from  Liverpool,  which  last-mentioned  vessel  he  then  proposed  to  load 
at  New  York  with  goods  for  the  said  islands  of  St.  Bartholomew  and 
St.  Thomas,  and  directed  the  captain  of  the  "  Arabella,"  after  finishing 
his  trading  at  Barbadoes,  to   proceed  to    St.   Bartholomew    and    St. 
Thomas,  for  the  purpose  of  obtaining  information  in  regard  to  the  state 
of  the  market,  and  on  other  subjects  at  those  islands,  with  the  view  of 
forming  his  opinion  upon  the  speculation  he  proposed  to  enter  into  by 
the  said  sliip  '•  Alice  "  from  New  York  to  those  islands.     The  '•  Ara- 
bella" arrived  at  Barbadoes  on  the  oth  March,  1817,  where  she  dis- 
eliarged  her  cargo,  and  received  on  board  a  quantity  of  sugar,  with 
which  she  sailed  for  New  York  on  the  4th  of  April  following,  intending 
to  call  at  St.  Bartholomew's  and  St.  Thomas's,  two  of  the  Leeward 
Islands,  in  her  way  to  New  York.     In  the  course  of  this  voyage,  after 
having  passed  the  islands  of  St.  Bartholomew  and  St.  Thomas,  she  was 
lost  off  Savannah.     When  the  ship  sailed  from  Barbadoes,  on  the  4th 
of  April,  her  objects  of  trade  were  at  an  end,  until  she  should  arrive  at 
New  York,  and  she  proceeded  to  the  island  of  St.  Bartholomew  and  St. 
Thomas  only  to  obtain  information  for  the  purpose  before  stated. 

LitAledai".,  for  the  plaintiff,  contended  that  the  going  to  the  islands 
of  St.  Bartholomew  and  St.  Thomas  was  no  deviation.      Here  is  an 

23 


450  PALMER   V.    MARSHALL.  [CHAP.  YL 

express  leave  given  to  touch  at  all  or  any  of  the  Windward  or  Leeward 
Islands.  Under  that  liberty  the  vessel  liad  a  right  to  go  to  the  islands 
in  question.  And,  besides,  the  intelligence  obtained  there  might  prob- 
ably have  some  effect  on  her  ultimate  destination. 

F.  Pollock,  contra,  after  citing  Rucker  v.  Allnutt,  15  East,  278,  and 
Langhorn  v.  Allnutt,  4  Taunt.  519,  was  stopped  by  the  court. 

Abbott,  C.  J.  This  calling  at  the  islands  of  St.  Bartholomew  and 
St.  Thomas  was  for  a  purpose  wholly  unconnected  with  the  voyage  in 
question.  If,  as  it  was  said,  the  intelligence  to  be  obtained  there  would 
be  likely  to  have  altered  the  destination  of  the  sliip,  the  question  would 
be  different.  But  the  contrary  is  expressly  stated  in  the  case  ;  for  it  is 
stated  that  it  had  reference  to  some  new  adventure  to  be  subsequently 
undertaken  in  another  vessel.  I  think,  therefore,  tliat  this  being  a 
calling  for  a  purpose  entirely  unconnected  with  the  voyage  was,  not- 
withsranding  the  words  in  the  policy,  a  deviation,  and  that  the  plaintiff 
is  not  entitled  to  recover. 

Fer  curiam,  Judgment  for  the  defendants 


PALMER   V.    MARSHALL. 
Common  Pleas,  1832.     8  Bing.  317. 

Policy  of  insurance  effected  January  28th,  1831,  on  the  "Ruby" 
yacht  of  thirty-seven  tons,  at  and  from  Bristol  to  London.  The  yacht, 
wliich  was  lying  in  the  float  at  Bristol  at  the  date  of  the  policy,  did  not 
sail  till  the  l7th  of  May,  and  was  lost  in  the  Cliannel  three  or  four  days 
after.  In  an  action  on  the  policy,  the  case  having  gone  down  to  a  new 
trial,-  Park,  J.,  at  the  Dorchester  Assizes,  nonsuited  tlie  plaintiff,  on 
the  ground  of  an  implied  deviation  or  variance  of  the  risk,  by  an  unrea- 
sonable delay  in  the  time  of  sailing.  It  having  been  agreed  that  the 
plaintiff  should  stand  in  the  same  position  as  if  the  question  had  gone 
to  the  jury  with  a  strong  direction  on  the  part  of  the  judge, 

JJompas,  Serjt.,  now  moved  for  a  new  trial,  on  the  ground  tliat  tlie 
judge  ought  not  to  have  nonsuited,  or  to  have  directed  a  jury  that  tliere 
had  been  a  variance  of  tlie  risk  by  unreasonable  delay.  There  had,  in 
fact,  been  no  variance  of  the  risk ;  unless,  indeed,  to  lessen  it.  The 
vessel  was  described  in  the  policy  as  a  yacht ;  the  underwriter  was 
bound  to  be  conversant  with  the  usage  as  to  different  classes  of  vessels  ; 
and  if  so,  with  usage  as  to  yachts,  which  is,  to  sail  only  in  the  summer. 
As  yachts  do  not  go  to  sea  in  the  winter,  the  delay  from  January  to  INIay 
was^  not  unreasonable.    And  it  is  clear  the  risk  was  not  varied,  —  which 

1  Ace. :  Solly  v.  Wliitmore,  5  B.  &  Aid.  4.5  (1821). 
See  Rucker  v.  Allnutt,  15  East,  278  (1812).  — Ed. 
«  At  earlier  stages  the  case  is  reported  in  8  Biug.  79  (1831)  and  155  (1832).  —  Ed. 


SECT.  I.]  PALMER   V.    MARSHALL.  451 

is  the  real  question,  Mount  v.  Larkins,  8  Bingh.  195,  —  for  the  defend- 
ant would  not  have  required  a  higlier  premium  if  May  had  been  named 
for  tlie  time  of  sailing  instead  of  January. 

TiNDAL,  C.  J.  Tliis  was  an  insurance  on  the  ''  Ruby"  yacht,  at  and 
from  Bristol  to  London.  The  policj'  bore  date  the  28th  of  January, 
1831,  and  the  vessel  remained  in  the  float  at  Bristol  from  the  date  of 
the  policy  till  the  17th  of  May,  when  she  sailed  on  her  voyage,  and  was 
shortly  afterwards  lost.  A  policy  effected  in  these  terms,  and  in  this 
shape,  implies  that  the  voyage  insured  shall  be  very  shortly  commenced, 
or  is,  at  all  events,  in  the  near  contemplation  of  the  parties ;  and  when 
we  see  that,  in  the  present  instance,  the  voyage  was  not  commenced 
till  the  middle  of  May,  we  arc  bound  to  say  that  the  delaj^  was  unrea- 
sonable unless  it  be  accounted  for.  No  doubt,  whether  there  has  been 
unreasonable  delay  or  not,  is  properly  a  question  for  a  jury  ;  and  I  take 
it  up,  therefore,  as  if  it  had  been  left  to  the  jur}',  with  a  strong  direction 
that  the  dela3-  here  was  unreasonable.  What  I  have  to  consider,  there- 
fore, is  whether  any  facts  have  been  stated  by  the  i)laintiff  to  account  for 
this  delay.  I  find  none  suggested,  be3-ond  the  circumstance  that  this 
vessel  was  described  as  a  yacht  upon  the  policy,  and  that  yachts  are 
usually  laid  up  in  the  winter.  But  if  the  plaintiff  meant  to  relj'  on  that, 
he  should  have  taken  a  policy  adapted  to  his  purpose.  He  might  have 
insured  his  vessel  in  port  for  a  definite  time  and  on  the  voyage  to  be 
commenced  afterwards  ;  instead  of  that,  he  adopts  a  form  of  policy 
from  which  the  underwriter  must  have  understood  that  the  vessel  would 
sail  within  a  reasonable  time.  Here  the  vessel  lies  by  for  more  than 
three  months,  during  which,  in  addition  to  the  risk  of  the  voyage,  the 
underwriter  is  exposed  to  the  risk  of  ever}'  accident  which  may  happen 
in  port.  Where  the  delay  is  unexplained  and  so  great  as  to  fix  it  with 
tlie  character  of  unreasonableness  in  the  mind  of  every  reasonable  per- 
son, the  strongest  direction  to  the  jury,  and  a  verdict  for  the  defendant, 
would  be  fully  justified. 

Park,  J.  I  am  astonished  at  the  argument  which  has  been  used  to- 
(la\\  There  never  was  so  clear  a  case.  The  risk  on  a  policy  at  and 
from  Bristol  attaches  at  Bristol,  and  the  language  of  the  policy  im- 
plies, that  if  the  vessel  be  ready  for  sea,  she  shall  sail  without  dela}', 
unless  the  delaj*  be  accounted  for.  Here  the  vessel  was  lying  in  the 
float ;  and  the  circumstance  of  her  being  a  yacht  does  not  constitute 
any  exception  to  the  general  rule.  If  the  owner  proposed  that  she 
should  sail  onl}'  in  the  summer,  he  should  have  insured  accordingly, 
"  in  port  and  at  sea."  After  the  risk  has  attached,  it  lies  on  the  as- 
sured to  show  why  he  did  not  sail ;  and  I  offered  to  leave  the  question  of 
delay  to  the  jury,  with  a  strong  direction,  when  it  was  agreed  that  the 
plaintiff  should  be  nonsuited,  standing  in  the  same  position  with  respect 
to  the  present  motion  as  if  the  point  had  been  so  left  to  the  jury.  How- 
ever, there  is  nothing  in  the  case.  The  risk  attached  at  Bristol ;  and 
the  plaintiff  not  having  insured  "  in  port  and  at  sea,"  as  he  might  have 
done,  has  given  no  reason  for  his  delaj'  in  proceeding  to  sea. 


452  PALMER   V.    MARSHALL.  [CHAP.  VL 

Gaselee,  J.  I  am  of  the  same  opinion.  The  3'acht  being  afloat  at 
Bristol  ought,  according  to  tlie  policy,  to  have  sailed  without  delay. 

Alderson,  J.  Upon  a  policy  like  this,  a  delay  in  sailing,  in  order 
to  be  justified,  must  be  a  delay  incurred  for  the  purpose  of  the  voyage  ; 
as  in  Langhorn  v.  Allnutt,  4  Taunt.  511,  where  it  was  necessary  to  wait 
for  the  purpose  of  procuring  simulated  papers,  without  which  the  voyage 
could  not  be  performed;  or  in  Raine  v.  Bell,  9  East,  195,  where  the 
vessel  waited  for  the  purpose  of  taking  in  provisions.  But  here  the 
vessel  was  afloat ;  no  reason  connected  with  the  voyage  is  assigned  for 
her  remaining  in  port ;  and  the  risk  of  the  underwriter  is  mateiially 
changed.  Instead  of  the  risk  of  a  voyage  performed  within  a  reason- 
able time  after  the  28th  of  Januar}',  the  plaintiff  has  substituted  the 
risk  of  lying  in'  the  port  of  Bristol  more  than  three  months,  and  a 
voj'age  at  a  different  time.  Mule  refused.^ 

1  See  Smith  v.  Surridge,  4  Esp.  25  (1801);  Grant  v.  King,  4  Esp.  175  (1802); 
Lawrence  i'.  Sydebotham,  6  East,  45  (1805) ;  Palmer  v.  Feuning,  9  Bing.  460  (1833) ; 
Phillips  f.  Irving,  7  M.  &  G.  125  (1844). 

In  Cliitty  i>.  Selwyn,  2  Atk.  359  (1742),  Lord  Hardwicke,  C,  said:  "When  a 
ship  is  insured  at  and  from  a  place,  and  it  arrives  at  that  place,  as  long  as  the  ship  is 
preparing  for  the  voyage,  upon  which  it  is  insured,  the  insurer  is  liable ;  but  if  all 
thoughts  of  the  voyage  are  laid  aside,  and  the  ship  lies  there  five,  six,  or  seven  years, 
with  the  owner's  privity,  it  shall  never  be  said  that  the  insurer  is  liable;  for  it  would 
be  very  absurd  to  make  him  suffer  for  the  whim  or  caprice  of  the  owner,  who  chooses 
to  let  the  ship  lie  and  rot  there." 

In  Coffin  V.  Newbnryport  M.  Ins.  Co.,  9  Mass.  436,  447-449  (1812),  Sedgwick,  J., 
for  the  court,  said  :  "A  deviation  is  a  voluntary  departure,  without  necessity  or  rea- 
sonable cause,  from  the  regular  and  usual  course  of  the  voyage  in.-^ured.  This  dis- 
charges the  underwriters  from  tlie  time  of  the  deviation.  And  any  unnecessary  delay 
during  the  course  of  the  voyage,  wliether  at  sea  or  in  port,  is  tantamount  to  a  deviation, 
and  followed  by  the  same  consequence.  And  the  reason,  on  wliich  these  principles  are 
founded,  is  that  it  is  understood,  as  a  part  of  the  contract  of  insurance,  that  tlie  voyage 
insured  is  to  be  prosecuted  in  the  usual  and  ordinary  route,  and  tiie  business  of  it  at- 
tendeil  to,  at  least,  with  ordinary  diligence.  But  an  intention  to  deviate,  however 
deliberately  formed,  is  not  a  deviation.  .  .  .  The  shortness  of  the  time,  or  the  distance 
of  a  deviation,  makes  no  difference,  as  to  its  effect  on  the  contract.  Wliether  for  one 
hour  or  one  month  or  for  one  mile  or  one  hundred  miles,  the  consequence  is  the  same. 
If  it  be  voluntary  and  without  necessity,  it  puts  an  end  to  the  contract." 

In  Columbian  Ins.  Co.  v.  Catlett,  12  Wheat.  383  (1827),  where  a  policy  insured 
goods  on  a  ship  at  and  from  Alexandria  to  St.  Thomas  and  two  other  ports  in  the 
West  Indies  and  back  to  her  port  of  discharge  in  the  United  States,  Story,  J.,  for  the 
court,  said :  "  The  next  question  is,  whether  the  delay  at  St.  Thomas  for  seventy  days 
was  not  so  unreasonable  as  to  constitute  a  deviation.  Without  question,  any  unrea- 
sonable delay  in  the  ordinary  progress  of  the  voyage  avoids  the  policy  on  this  account. 
But  what  delay  will  constitute  such  a  deviation  dei)en(ls  njion  the  nature  of  the  voyage 
and  the  usage  of  the  trade.  It  may  be  a  very  justifiable  delay,  to  wait  in  port  and 
sell  by  retail,  if  tiiat  be  the  course  of  business,  when  such  dela3'  would  be  inexcusable 
ia  ii  voyage  requiring  or  authorizing  no  such  delay.  The  parties,  in  entering  into  the 
contract  of  insurance,  are  always  supposed  to  be  governed  in  the  premium  by  tlie  ordi- 
i.iry  length  of  the  voyage  and  tiie  course  of  the  trade.  That  delay,  therefore,  which 
is  necessary  to  accomplish  the  objects  of  the  voyage  according  to  the  course  of  the 
trade,  if  tena/frfe  made,  cannot  be  admitted  to  avoid  the  insurance.  In  the  present 
case  it  is  proved,  that  the  stay  at  St.  Thomas  was  solely  for  the  purpose  of  selling 
the  cargo,  and  for  no  other  cause.  But,  it  is  said,  that  a  sale  might  have  taken  place 
at  St.  'Ihomas  of  the  whole  cargo,  if  the  orders  of  the  owner  had  not  contained  a 


SECT.  I.]  LAPHAM  V.   THE  ATLAS  INS.  CO.  453 


\x 


LAPHAM  ET  AL.  V.  THE  ATLAS   mSURANCE  COMPANY, 
Supreme  Judicial  .Couut  of  Massachusetts,  1833.     24  Pick.  1. 

Assumpsit  on  a  polic}'  of  insurance  on  the  schooner  "Edward"  at 
and  from  Boston  to  port  or  ports  in  the  West  Indies,  and  at  and 
thence  to  a  port  of  discharge  in  the  United  States.  Trial  before 
Shaw,  C.  J. 

The  vessel  sailed  from  Boston  to  the  port  of  Anx  Caves  in  St.  Do- 
mingo, thence  to  the  port  of  Savannah  in  Georgia,  and  thence  to  Boston, 
and  the  loss  alleged  was  occasioned  by  her  strilcing  the  rocks  and  going 
ashore  at  Scituate,  near  the  entrance  of  Boston  harbor,  on  the  passage 
from  Savannah  to  Boston. 

It  was  in  evidence,  that  when  the  vessel  arrived  at  Aux  Caves,  the 
master,  being  unable  to  sell  his  outward  and  procure  a  homeward  caigo 
in  convenient  time,  determined  to  take  in  a  cargo  of  logwood,  and  pro- 
ceed to  Savannah  for  the  purpose  of  disposing  of  it,  and  if  he  should  do 

direction  to  the  master  llmitiug  the  sale  at  St.  Thomas  to  the  price  of  eight  dollars, 
and  that  this  limitatiou  was  the  sole  cause  of  the  delay,  and  was  unreasonable ;  tliat 
the  master  ought,  under  the  circumstances,  to  have  sold  at  a  lower  price,  or  have 
immediately  elected  to  go  to  auotlier  port.  We  are  of  a  different  opinion.  In 
almost  every  voyage  undertaken  of  this  nature,  where  different  ports  are  to  be  visited 
for  the  purposes  of  trade,  and  to  seek  markets,  it  is  almost  universal  for  the  owner  to 
prescribe  limits  of  price  to  the  sales.  Such  limitations  have  never  hitherto  been  sup- 
posed to  vary  the  insurance,  or  tlie  riglits  of  the  party  under  it.  It  cannot  be,  that  the 
master,  if  entitled  to  go  to  a  single  port  only,  is  bound  to  sell  at  whatever  sacrifice,  as 
soon  as  he  arrives  at  that  port,  and  within  the  period  at  which  he  may  unload,  and 
sell,  and  reload  a  return  cargo.  He  must,  from  the  very  nature  of  the  case,  have  a 
discretion  on  this  subject.  If  he  arrives  at  a  bad  market,  he  must  have  a  right  to 
wait  a  reasonable  time  for  a  rise  of  the  market,  to  make  suitable  inquiries,  and  to  try 
the  effect  of  partial  and  limited  sales.  He  is  not  bound  to  sell  the  whole  cargo  at 
once,  whatever  be  the  sacrifice,  and  thus  frustrate  tlie  projected  adventure.  In  short, 
he  must  exercise  in  this,  as  in  all  other  cases,  a  sound  discretion  for  the  interest  of  all 
concerned ;  and  if  it  be  fairly  and  reasonably  exercised,  it  ought  not  to  be  deemed  in- 
jurious to  rights  secured  by  the  policy.  It  is  as  much  the  true  interest  of  the  owner 
to  sell  in  a  reasonable  time,  and  with  all  proper  despatch,  as  it  is  for  the  underwriters. 
To  be  sure,  if  the  owner  should  limit  the  price  to  an  extravagant  sum,  or  the  master 
should  delay  after  all  reasonable  expectations  of  a  cliange  of  market  were  extinguished, 
such  circumstances  might  properly  be  left  to  a  jury  to  infer  a  delay  amounting  to  a 
deviation.  And  here,  again,  as  on  the  former  point,  it  may  be  remarked,  that  every 
underwriter  is  presumed  to  know  the  ordinary  course  of  the  trade,  and  to  regulate  his 
proceedings  accordingly." 

In  Mount  v.  Larkins,  8  Bing.  108,  122  f  18.31),  Tindal,  C.  J.,  for  the  court,  said  : 
"  It  must  be  admitted  that,  if  the  policy  had  been  effected  upon  this  ship  at  and  from 
Singapore,  the  ship  then  being  at  Singapore,  unreasonable  and  unjustifiable  delay  at 
Singapore  would  have  avoided  the  policy.  Why,  but  because  the  voyage,  commenced 
after  an  unreasonable  interval  of  time,  would  have  become  a  voyage  at  a  different 
period  of  the  year,  at  a  more  advanced  age  of  the  ship,  and,  in  short,  a  different  voy- 
age than  if  it  had  been  prosecuted  with  proper  and  ordinary  diligence ;  that  is,  the 
risk  would  have  been  altered  from  that  which  was  intended  by  all  parties  when  the 
policy  was  effected?  "  —  Ed. 


454  LAPHAM   V.   THE   ATLAS   INS.   CO.  [CHAP.  VI. 

SO,  then  to  return  to  Aux  Ca3-es  and  take  on  board  the  proceeds  of  his 
ori"-inal  outward  cargo ;  that  the  vessel  sustained  some  damage  in  her 
sails,  on  her  passage  from  Aux  Cayes  to  Savannah  ;  that  on  her  arrival 
at  Savannah,  the  master,  after  inquiring  the  state  of  the  market,  and 
without  discharging  any  part  of  his  cargo  or  breaking  bulk,  determined 
to  proceed  to  Boston ;  and  that  after  procuring  some  repairs  and  sup- 
plies, he  sailed  accordingly. 

Upon  these  facts  it  was  contended  by  the  defendants,  that  by  the  true 
construction  of  the  policy,  the  risk  terminated  at  Savannah,  and  that 
for  any  loss  happening  afterwards  they  were  not  responsible. 

But  the  jury  were  instructed,  that  upon  this  policy  the  port  of  desti- 
nation was  not  necessarily  the  port  of  discharge  ;  and  that  in  case  no 
part  of  the  cargo  was  discharged  at  the  port  of  destination,  the  vessel 
was  protected  by  the  policy  in  going  from  one  port  of  the  United 
States  to  another,  if  done  in  good  faith,  as  a  port  of  discharge  ;  and 
that  if  such  was  the  case  with  the  "Edward,"  the  risk  continued  to 
the  time  when  the  loss  happened.  To  these  instructions  the  defendants 
excepted. 

It  was  further  in  evidence,  that  the  vessel  took  on  board,  at  Savan- 
nah, a  deck-load  of  forty  bales  of  cotton  for  Boston,  on  freight.  There- 
upon it  was  contended,  that  as  by  the  terms  of  the  policy  no  port  of  the 
United  States  was  contemplated  as  a  loading  port,  the  taking  of  this 
cotton  on  board  was,  1,  an  alteration  of  the  risk  ;  or  2,  an  increase  of 
the  risk  ;  or  3,  that  it  occasioned  a  delay  amounting  to  a  deviation  ;  and 
that  upon  one  or  all  of  these  grounds,  the  risk  terminated  at  Savannah 
b}-  taking  the  cotton. 

The  jur}-  were  instructed,  that  the  master  had  a  right,  witliout  affect- 
ing the  policy,  to  stop  a  reasonable  time  at  Savannah  to  obtain  neces- 
sary repairs  and  supplies  for  the  further  prosecution  of  his  voyage,  and 
also  to  make  full  and  extensive  inquiries  of  the  state  of  the  market 
there,  and  form  his  judgment  deliberately  whether  he  would  discharge 
his  cargo  there  or  proceed  to  Boston,  and  that  a  delay  for  these  pur- 
poses, pursued  in  good  faith  and  with  reasonable  diligence,  was  not  a 
deviation  ;  that  the  taking  on  board  the  deck-load  of  cotton  was  not 
such  an  alteration  in  the  risk  as  would  necessarily  discharge  the  under- 
writers, and  that  it  would  not  have  this  effect  unless  it  in  fact  increased 
the  risk,  to  the  injur}'  of  the  underwriters,  or  occasioned  a  delay  in  the 
voyage  ;  but  that  if  it  did  in  fact  increase  the  risk,  or  if  an}'  delay  was 
occasioned,  either  to  procure  the  freight  of  cotton  or  to  take  it  on  board 
and  secure  it,  the  underwriters  were  discharged. 

In  relation  to  the  question,  whether  there  was  an  increase  of  the  risk, 
by  taking  a  deck-load  of  cotton,  several  of  the  nautical  witnesses  had 
stated  what  in  their  opinion  would  be  the  advantages  and  disadvantages 
of  that  measure,  considering  the  season  of  the  year  and  other  circum- 
stances; in  relation  to  which  the  jury  were  instructed,  tiiat  the  question 
was,  whether  on  the  whole  the  risk  was  in  fact  increased  by  taking  the 
deck-load,  upon  a  balance  of  advantages  and  disadvantages  ;  and  that  it 


SECT.  I.]         LAPHAM  r.  THE  ATLAS  IXS.  CO.  455 

did  not  vacate  the  policy,  although  it  did  increase  the  risk  in  cue  partic- 
ular, if  it  diminished  it  in  another  in  an  equal  or  greater  deo-ree.  To 
this  instruction  the  defendants  excepted. 

In  the  course  of  the  examination  of  nautical  witnesses  upon  the  ques- 
tion, whether  taking  the  deck-load  of  cotton  increased  the  risk,  either 
b}-  rendering  the  vessel  less  stitf  and  less  secure  under  a  heavy  press  of 
sail,  or  by  preventing  her  from  holding  as  good  a  wind  and  making  as 
good  a  course  on  a  lee  shore,  or  by  embarrassing  the  operations  of  the 
vessel  and  exposing  the  men  to  greater  danger,  or  otherwise,  the  plain- 
tiffs proposed  to  ask  the  witnesses  whether  it  was  usual  for  certain  spe- 
cies of  vessels  to  carrj-  a  deck-load.  This  question  was  objected  to  by 
the  defendants,  on  the  ground  that  as  the  polic}'  did  not  cover  a  voyage 
from  Savannah  to  Boston,  they  were  not  bound  by  the  usage,  if  one  ex- 
isted. But  it  was  ruled  that  to  some  purposes  the  evidence  of  general 
usage  was  admissible  ;  and  upon  this  subject  the  jur}-  were  instructed, 
that  if  the  voyage  insured  had  been  from  Savannah  to  Boston,  the  usage 
to  take  a  deck-load,  if  proved,  would  have  been  conclusive  on  the 
underwriters,  because  they  would  be  presumed  to  have  made  their  con- 
tract in  reference  to  the  known  usage  of  the  voyage,  and  to  have  adjusted 
the  premium  accordingl}' ;  that  such  usage  therefore  would  of  itself  have 
little  tendency  to  show  that  it  did  not  increase  the  risk  ;  but  that  in  the 
present  case  the  risk  to  the  vessel,  of  carrying  a  deck-load  or  other 
freight  from  one  port  in  the  United  States  to  another,  was  not  contem- 
plated as  part  of  the  contract,  nor  covered  by  the  premium,  and  it  could 
be  excused  oal}'  on  the  ground  that  it  did  not  in  fact  increase  the  risk, 
and  therefore  the  evidence  of  usage  was  not  binding  or  conclusive;  but 
that  if  the  usage  of  carrying  a  deck-load  upon  this  species  of  vessels,  in 
various  kinds  of  navigation,  and  in  different  seasons  of  the  year,  was 
common  and  general,  it  might  lead  to  a  belief,  in  connection  with  the 
evidence  of  opinion,  that  it  is  considered  among  practical  persons  con- 
versant with  navigation  as  no  more  dangerous  to  the  vessel  to  carry 
goods  on  deck  than  under  deck,  and  to  this  extent  it  was  competent 
evidence,  but  no  further. 

The  questions  whether  the  risk  was  increased  bj'  taking  the  cotton  at 
Savannah,  and  whether  the  vessel  was  thereby  delaj^ed,  were  left  to  the 
jury  upon  the  evidence  produced  on  both  sides. 

The  jury  found  a  verdict  for  the  plaintiffs  ;  and  upon  inquirv  being 
made,  they  stated  that  the\'  were  fulh'  satisfied  that  tlie  risk  was 
not  increased  by  taking  the  deck-load  of  cotton  from  Savannah  to 
Boston. 

If,  in  the  opinion  of  the  whole  court,  the  foregoing  directions,  or  any 
one  of  them,  were  wrong,  a  new  trial  was  to  be  granted  ;  otherwise  judg- 
ment was  to  be  rendered  for  the  plaintiffs. 

Fletcher  and  CooJce,  for  the  defendants. 

C.  G.  Loring,  contra. 

Per  curiam.  The  defendants  contend  that  the  voyage  was  termi- 
nated at  Savannah ;  and  the  first  question  to  be  considered  is,  whether 


456  LAPHAM  V.    THE  ATLAS  INS.  CO.        [cHAP.  YI. 

that  port  was  "  a  port  of  discharge  in  the  United  States,"  according  to 
tlie  true  construction  of  the  policy.  And  in  determining  the  question 
we  are  aided  by  decisions  of  this  court  and  of  other  courts,  cited  by 
the  counsel  for  the  plaintiffs.  The  authority  upon  which  they  princi- 
pally rely  is  the  case  of  Coolidge  v.  Gray,  8  Mass.  527.  There,  goods 
on  board  a  vessel  were  insured  from  Boston  to  her  port  of  discharge  in 
Liuope.  The  policy  stated,  that  the  vessel,  thougli  cleared  for  Ton^ 
niugen,  was  intended  for  some  port  in  Holland,  or  wherever  else  the 
master  should  deem  proper,  in  case  he  could  not  get  into  Holland. 
The  master  entered  the  river  Maese,  but  being  informed  that  his  vessel 
and  cargo,  if  discovered  by  the  French  guards,  would  be  seized  and  con- 
fiscated, he  left  the  river  and  went  to  Gottenburg,  where  he  remained  a 
few  days,  in  order  to  ascertain  at  what  port  he  might  sell  his  cargo,  and 
he  then  proceeded  for  a  market  in  the  Baltic,  and  was  captured.  It  was 
made  a  question  whether  Gottenburg  was  not  the  port  of  discharge  ; 
but  it  was  held,  that  the  master  had  a  right  to  obtain  advice,  at  his  port 
of  arrival,  respecting  the  markets,  and  having  informed  himself,  to  pro- 
ceed elsewhere,  and  that  the  underwriters  were  answerable  for  the  loss. 
The  court  there  say,  that  if  the  master  had  broken  bulk  or  begun  to 
unlade  at  Gottenburg,  that  must  have  been  deemed  the  port  of  dis- 
charge. It  is  difficult  to  distinguish  between  the  case  referred  to  and 
the  one  now  before  us.  That  case  has  never  been  questioned,  we  be- 
lieve, but  it  has  been  frequentl}-  discussed,  and  its  principles  adopted 
in  other  States.  King  v.  Middletown  Ins.  Co.,  1  Conn.  184  ;  King  v. 
Hartford  Ins.  Co.,  1  Conn.  333  ;  Sage  v.  Middletown  Ins.  Co.  1  Conn. 
23'J.  We  think,  then,  upon  the  true  construction  of  tiie  policy  now  in 
question,  that  the  voyage  did  not  terminate  at  Savannah,  and  that  the 
master  had  a  right  to  proceed  to  another  port,  and  that  the  loss  is  within 
the  policy. 

It  appears  that  while  the  vessel  was  at  Savannah,  the  master  took  on 
board  forty  bales  of  cotton  on  freight ;  and  this,  it  is  urged,  released 
the  defendants  from  their  responsibility.  But  it  has  been  settled  by 
this  court,  that  the  mere  fact  of  putting  goods  on  board  a  vessel  at  a 
port  where  she  has  a  right  to  touch,  if  it  neither  increase  the  risk  nor 
occasion  delay,  does  not  discharge  the  underwriters.  Thorndike  v. 
Boardman.  4  Pick.  471  ;  Chase  v.  Eagle  Ins.  Co.,  5  Pick.  51.  The 
questions  whether  the  risk  was  increased,  and  whether  any  delay  was 
occasioned  by  [)rocuring  and  taking  on  board  the  cotton,  were  rightly 
left  to  the  jur\',  and  they  have  found  for  the  plaintiffs. 

The  circumstance  of  carrying  the  cotton  on  deck,  if  it  did  not  increase 
the  risk,  would  not  of  itself  avoid  the  policy.  Many  witnesses  were 
examined  in  regard  to  the  effect  of  a  deck-load,  upon  the  safety  of  the 
vessel,  and  evidence  was  introduced  that  it  was  customary  for  this  spe- 
cies of  vessels,  in  various  kinds  of  navigation  and  at  different  seasons 
of  the  year,  to  carrv  goods  on  deck.  This  evidence  was  objected  to  by 
the  defendants.  The  usage  was  not  admitted  in  evidence  for  the  pur- 
pose of  giving  a  construction  to  the  contract,     lu  that  view  it  would 


SECT.  I.]  BKOWN    V.   TAYLEUK.  457 

have  been  competent,  if  the  contract  had  been  made  in  reference  to  it. 
But  it  was  introduced  merely  as  to  the  question,  whether  in  point  of  fact 
the  risli  was  or  was  not  increased  by  talking  the  cotton  on  deck.  It  does 
not  seem  to  have  been  very  material,  but  we  cannot  perceive  that  it  was 
altogether  irrelevant.  We  are  of  opinion  that  it  was  not  incompetent 
evidence. 

The  defendants  further  objected,  that  the  jury  were  instructed  to  con- 
sider, vshether  on  the  whole  the  risk  was  increased  by  taking  the  deck- 
load,  upon  a  balance  of  advantages  and  disadvantages.  We  think  the 
language  of  the  instruction  was  incapable  of  being  misunderstood  by 
the  jury,  and  that  it  was  substantially  right.  The  counsel  for  the  de- 
fendants have  animadverted  upon  the  use  of  the  word  increased,  and 
have  argued  that  if  the  risk  is  changed,  the  underwriters  are  discharged. 
This  view  of  the  subject,  however,  is  too  limited,  for  any  alteration  in 
the  cargo  may  be  said  to  change  the  risk  in  some  degree.  But  the  real 
question  was,  whether  the  vessel  was  practically  exposed  to  greater 
danger  than  if  the  cotton  had  not  been  taken  on  deck. 

Judgment  on  the  verdict. 


^ 


BROWN  AND  Others  v.  TAYLEUR. 
King's  Bench,  1835.     4  Ad.  &  E.  241. 


Assumpsit  on  a  policy  of  insurance.  On  the  trial  before  Lord  Den- 
man,  C.  J.,  at  the  sittings  in  London  after  Trinity  term,  1834,  it 
appeared  that  the  insurance  was  upon  goods  and  merchandise,  and 
also  upon  the  body,  tackle,  &c.,  of  and  in  the  ship  "  Penrith,"  "  lost 
or  not  lost,  at  and  from  her  port  of  lading  in  North  America,  to  Liver- 
pool ; "  beginning  the  adventure  upon  the  goods  from  the  loading 
thereof  on  board,  &c.  A  total  loss  was  proved  ;  but,  upon  the  case  for 
the  plaintiffs.  Sir  James  /Scarlett,  for  the  defendant,  contended  that 
there  had  been  a  deviation.  The  evidence  on  this  point  was  as 
follows :  — 

The  "Penrith"  was  launched  at  Cocagne,  in  the  province  of  New- 
Brunswick,  at  the  end  of  June,  1828.  Her  burden  was  510  tons.  A 
few  days  after  she  was  afloat,  she  began  to  take  in  a  cargo  of  timber  at 
Cocagne,  and  she  continued  to  do  so  for  three  weeks.  The  lower  hold, 
which  would  contain  from  400  to  500  tons,  was  loaded  at  Cocagne. 
During  this  time  the  vessel  was  described,  in  evidence,  as  lying  "  in 
the  stream,  inside  of  the  Cocagne  bar."  On  the  1st  of  August,  she 
sailed  from  thence  to  Buktouche,  described  by  difl'erent  witnesses  as 
five,  and  seven,  miles  distant,  to  complete  her  loading.  She  arrived 
there  in  a  few  hours.  Cocagne  and  Buktouche  are  situate  on  different 
creeks  of  the  same  bay.  Buktouche  is  not  in  tho  line  of  voyage  from 
Cocagne  to  Liverpool.     The  "  Penrith"  lay  off  Buktouche  three  weeks 


458  BROWN   V.   TAYLEUR.  [CIIAP.  VI. 

to  take  in  the  residue  of  her  cargo,  and  returned  to  Cocagne  on  the 
22d  of  August  to  receive  provisions,  water,  and  wood,  and  to  get  the 
ship  ready  for  sea ;  but  she  took  no  additional  cargo,  unless  (wliich 
was  mentioned  as  doubtful)  a  few  pieces  of  timber  on  the  deck.  She 
sailed  for  England  on  the  31st  of  August,  and  was  lost  on  the  voyage. 
Cocagne  was  spoken  of  by  witnesses  as  a  "harbor"  and  a  "port," 
and  Buktouche  as  a  "port,"  but  neither  had  a  custom-house,  though 
•there  were  officers  of  customs  at  both  places,  and  it  appeared  that  both 
were  within  the  jurisdiction  of  the  custom-house  of  St.  John,  New 
Brunswick.  The  "  Penrith,"  though  built  at  Cocagne,  was  registered 
at  the  port  of  St.  John.^  The  letter  ordering  the  insurance  was  dated 
August  25th,  1828. 

The  Lord  Chief  Justice  gave  leave  to  move  to  enter  a  nonsuit  on 
the  objection  taken,  and  the  plaintiffs  had  a  verdict.  In  the  following 
term  a  rule  nisi  was  obtained  for  entering  a  nonsuit,  or  for  a  new  trial 
upon  grounds  which  it  is  unnecessary  to  notice,  as  the  decision  of  the 
court  did  not  turn  upon  them. 

Sir  J.  Campbell,  Attorney-General,  IVightman,  and  Crompton  now- 
showed  cause. 

Maule  and  Sir  W.  W.  Follett,  cofitra. 

Lord  Denman,  C.  J.  I  think  that  the  rule  for  a  nonsuit  must  be 
absolute.  It  was  clear,  on  the  close  of  the  evidence  for  the  plaintiffs, 
that  Cocagne  and  Buktouche  were  two  distinct  places,  and  two  places 
at  each  of  which  there  might  be  a  lading.  There  was  no  teclinical 
meaning  to  be  attached  to  the  words  "  port  of  lading."  If  it  could 
have  been  shown  that  the  two  places  were  in  reality  one,  the  plaintiffs 
should  have  produced  evidence  to  that  effect.  My  only  doubt  was, 
■whether  there  should  have  been  a  nonsuit,  or  whether  the  defendant 
should  have  been  called  upon  to  give  evidence  on  the  subject ;  but  as 
the  plaintiffs  themselves  have  made  out  a  ^mm«/acte  case  of  distinct- 
ness, I  think  the  defendant  is  entitled  to  a  nonsuit. 

Patteson,  J.  I  am  of  the  same  opinion.  "We  cannot  construe  the 
words  "  at  and  from  her  port  of  lading,"  as  if  they  were  "at  and  from 
her  ports  ;  "  the  expression  used  points  out  one  single  place.  Nor  can 
we  adopt  the  technical  meaning  which  may  be  ascribed  to  "  port,"  as 
signifying  all  that  is  subject  to  one  custom-house,  or  one  port  jurisdic- 
tion; the  result  of  which  would  be  that  a  ship,  under  such  a  policy 
as  this,  might  sail  to  every  part  of  a  district  so  situated.  The  cases 
which  explain  the  meaning  of  the  word  "  port,"  as  here  used,  are  not 
many.  There  is  one,'^  where  a  brigantine  was  insured  to  Barcelona, 
and  at  and  from  thence,  and  two  other  ports  in  Spain,  to  a  port  in 

1  It  appears,  on  reference  to  a  map,  that  St.  .John  is  on  one  side,  Cocagne  and  Buk- 
touche on  the  other,  of  the  neck  of  land  whieli  joins  New  Rruuswick  to  Nova  Scotia. 
St.  John  is  on  the  Bay  of  Fundy.  Cocagne  and  Buktouche  are  in  the  Oulf  of  St.  Law- 
rence, each  at  the  mouth  of  a  river.  The  distance  from  St.  .Tohn  to  Cocagne  by  land 
appears  to  be  about  one  hundred  miles,  in  a  direct  line.  —  Uv.v. 

2  Tlie  Sea  Insurance  Company  of  Scotland  v.  Gavin,  4  Bligh,  N.  s.  578 ;  s.  C.  2 
Dow  &  Clark,  123.  — Rei-. 


SECT.  I.]  BROWX    V.    TAYLEUR.  459 

Great  Britain ;  and  she  put  into  a  place  situate  in  the  recess  of  a  bay, 
having  a  custom-house  and  port  captain,  and  having  also  warehouses 
and  a  jetty,  with  accommodation  for  small  vessels  only,  there  being, 
however,  convenient  anchorage  for  large  ones  in  the  roadstead  ;  and 
the  ship  having  been  lost  in  the  roadstead,  this  was  held  to  be  a  port 
within  the  meaning  of  the  policy.  Here,  I  think  that  "port"  means 
the  same  as  place,  and  that  the  vessel's  place  of  loading  must  be  one 
place.  When  she  had  once  begun  to  take  her  cargo  at  Cocagne,  that  was 
her  place  of  lading,  and  her  removal  afterwards  to  Buktouche  was  a 
deviation.  The  cases  of  insurance  at  and  from  Jamaica,^  and  Grenada,^ 
do  not  apply.  There  the  words  used  would  comprehend  all  places  in 
the  island.  If  the  policies  in  those  cases  had  said  "at  and  from  her 
port  of  lading  in  Jamaica,"  or  Grenada,  the  commencement  of  the 
voj^age  would  have  been  restricted  to  one  particular  place.  That  the 
two  places  here  are  within  the  jurisdiction  of  a  single  custom-house, 
makes  no  difference.  If  that  entitled  the  ship  to  go  from  one  to  the 
other,  she  might  also  have  gone  to  St.  John.  In  construing  the  word 
"port"  as  the  place  of  lading,  I  do  not  mean  to  sa}-  that,  if  a  ship 
were  at  a  particular  qua}-  on  a  river,  as  at  Liverpool,  and  merely 
removed  to  another  quay  a  mile  or  two  off,  that  would  be  a  deviation, 
because  the  vessel  there  would  be  all  the  time  in  one  port  and  place  ; 
but  it  is  a  deviation  if  she  removes  to  a  different  town,  a  different  place 
of  habitation,  and  a  point  which  might  itself  be  her  place  of  lading. 
As  to  the  date  of  the  letter,  the  policy  would  attach  when  the  vessel 
began  to  load  ;  and  if  an  unknown  loss  had  happened  before  the  writ- 
ing of  the  letter,  it  would  be  covered  I13'  the  policy.  I  think  that  there 
ought  to  be  a  nonsuit,  because  further  evidence  could  not  have  altered 
the  state  of  facts,  or  if  it  could,  the  plaintiffs  should  have  offered  it 
when  a  nonsuit  was  applied  for. 

Williams,  J.  The  word  used  in  the  policy  is  "  port"  of  lading,  in 
the  singular  number :  we  cannot  construe  that  as  ports.  And  the 
moment  the  taking  in  of  the  cargo  was  begun  at  Cocagne,  that  was  to 
be  considered  as  the  port  of  lading  designated.  Had  evidence  been 
given  that,  for  purposes  of  this  kind,  Cocagne  and  Buktouche  formed 
in  fact  only  one  place,  the  case  would  have  been  different.  But  if,  b}' 
means  of  the  construction  attempted,  places  at  a  distance  from  each 
other  can  be  included  under  the  term  "  port  of  lading,"  what  rule  of 
restriction  can  be  laid  down?  May  the  places  be  fifty  or  a  hundred 
miles  apart?  "Jamaica"  and  "Grenada,"  in  the  cases  which  have 
been  referred  to,  signified  the  whole  of  those  islands.  It  would  have 
been  a  violence  there  to  limit  the  meaning  of  the  policy  to  a  single 
port.     Here,  nothing  warrants  the  extension  insisted  upon. 

Coleridge,  J.  There  must  be  a  nonsuit  in  this  case,  unless  we  are 
prepared  to  say  that  "  port  "  is  equivalent  to  "  ports,"  or  to  "  port  or 

1  Bond  V.  Nutt,  2  Cowp.  601  (1777)  ;  and  Cruickshauk  v,  Janson,  2  Taunt.  30 J 
(1810).  — Ed. 

2  Warre  c.  Miller,  4  B.  &  C  538  (1825) ;  s.  c.  7  D.  &  R.  1.  —Ed. 


460  GREENLEAF   V.   THE    ST.    LOUIS    INS.    CO.  [CHAP.  YL 

ports."  The  plaintiffs  must  contend  that  it  is  an  aggregate  term,  com- 
prehending every  member  of  a  port,  together  with  the  chief  port  itself. 
But  I  think  we  are  not  at  liberty  here  to  construe  the  word  with  refer- 
ence to  custom-house  regulations,  but  must  consider  it  merely  as  indi- 
cating a  place.  Looking  at  it  in  this  way,  can  we  regard  "port"  as 
an  aggregate  term,  comprehending  a  number  of  neighboring  places? 
I  think  not,  and  for  this  reason  among  others,  that  it  makes  a  difference 
in  the  risk  whether  a  ship  stays  at  one  place  to  load,  or  goes  on  a  rov- 
ing voyage  to  pick  up  a  cargo.  It  is  important  in  these  matters  that 
parties  should  come  to  a  plain  understanding :  and  if  it  is  meant  that  a 
vessel  should  have  the  liberty  of  going  to  a  number  of  places,  though 
near  each  other,  the  party  insuring  had  better  express  it  so,  than  run 
a  risk,  at  least,  of  deceiving  the  underwriters. 

Jiule  absolute  f 07'  a  nonsuit} 


GREENLEAF  and  Others,  Appellants,  v.  THE  ST.  LOUIS 
INSURANCE  COMPANY,  Respondent. 

Supreme  Court  of  Missouri,  1865.     37  Mo.  25. 

Appeal  from  the  St.  Louis  Circuit  Court. 

T.  T.  Gcmtt  and  J.  H.  RcmUn,  for  appellants. 

Glover  &  Shepley,  for  respondent. 

Wagner,  J.  This  was  an  action  on  a  policy  of  insurance  for  five 
thousand  dollars  effected  in  the  St.  Louis  Insurance  Company  on  the 
hull  of  the  steamer  "  A.  McDowell." 

The  insurance  was  for  one  year,  beginning  on  the  4th  day  of  April, 
1862,  and  ending  on  the  4th  day  of  April,  1863.  The  policy  contained 
the  following  clause:  "  Wjth  permission  to  navigate  the  Mississippi 
and  Ohiorivcrs  and  their  trihntnrifs,  nsnally  navigated  by  boats  of 
her  cia"ssr"the  Missouri,  Arkansas.  White,  Red,  and  Yazoo  rivers 
excepted." 

At  the  trial  tlie  following  facts  were  agreed  upon  by  both  parties  : 

1.  That  the  policy  described  in  the  petition  was  executed  by  the 
insurance  company. 

2.  That  on  the  24th  of  May,  1862,  the  "  McDowell  "  left  St.  Louis 
on  a  voyage  to  Leavenworth,  Kansas,  and  returned  to  St.  Louis  on  the 
1st  da}'  of  June,  1862. 

3.  That  said  voyage  was  undertaken  entirely  for  the  United  States 
Government,  the  vessel  having  no  freight  except  three  hundred  soldiers 
and  two  hundred  mules  and  horses. 

>  See  National  Traders  Bank  v.  Ocean  Ins.  Co.,  62  Me.  519  (1871) ;  FcrnnTidpz  v. 
Gre;it  Western  Ins.  Co.,  48  N.  Y  571  (1872) ;  Heame  v.  Marine  Ins.  Co.,  20  Wall.  4S8 
(1874). —  Ed. 


SECT.  I.]  GREENLEAF   V.    THE    ST.    LOUIS   INS.    CO.  461 

4.  That  full  notice  of  her  arrival  and  departure  on  this  trip  was 
given  by  advertisement  in  the  "Dail}-  Missouri  Republican,"  a  paper 
taken  daily  by  the  defendant. 

5.  That  no  damage_was  done  to  said  vessel  by  said  Yoyage,  and 
that  shej-eturned  in  a  good  and  seaworthy  condition  to  the  port  of 
^tTLouis. 

eT^That  no  other  act  of  the  plaintiffs,  except  said  voyage,  is  set  up 
by  the  defendant  to  defeat  this  action. 
^  7.  That  before  the  "  McDowell "  went  into  the  Missouri  River  on 
said  voyage,  the  owners  had  a  consultation  about  the  expediency  of 
obtaining  insurance  on  said  vessel  in  the  Missouri  River,  during  said 
voyage,  but  they  finally  concluded  to  take  the  risk  themselves  for  that 
voyage.  It  is  insisted,  in  support  of  the  judgment  of  the  court  below, 
that  the  policy  contained  a  warranty  that  the  vessel  should  navigate 
none  of  the  excepted  streams  ;  and  also  that  in  going  into  the  Missouri 
River  the  boat  had  been  guilty  of  a  deviation. 

If  either  of  these  positions  be  true,  it  is  fatal  to  the  appellants. 
Every- affirmation  of  a  fact  contained  in  a  policy,  in  whatever  terms 
expressed,  will  be  construed  as  a  warranty.  (2  Duer  on  Ins.,  644.) 
Designating  a  ship  as  of  a  certain  nationality,  describing  her  as  con- 
taining a  certain  armament,  or  as  being  fitted  out  in  a  particular  man- 
ner, will  amount  to  a  warranty  that  the  vessel  is  of  the  national 
character  ascribed  to  her,  and  that  she  has  the  armament  or  outfit 
described ;  and  whether  tliese  matters  are  material  or  immaterial,  as 
regards  the  risk,  will  make  no  difference.  The  first  question  to  be  de- 
termined in  interpreting  the  clause  in  the  policy  is  to  ascertain  the  true 
intention  of  the  parties  to  the  instrument ;  and  here  it  is  to  be  consid- 
ered that  the  provision  or  exception  being  in  writing,  and  being  the 
especial  words  of  the  insurers,  if  there  is  any  ambiguity  or  uncertainty, 
the  construction  must  be  most  strongly  against  or  unfavorable  to  them. 
(2  Par.  on  Marit.  Law,  55.)  From  a  careful  perusal  and  examination 
of  the  exception,  we  are  of  opinioiT  that  it  does  not  consurute  a 
warrant}'. 

This  was  a  time  policy,  and  a  policy  on  time  insures  no  specific 
vo\-age,  but  covTrs  any  voyage  within  the  [jrescnbed  time.  It  is  ot' 
the  nature  of  a  policy  on  time  that  it  limits  tlie  vessel  to  no"^eDgraphi- 
cal  ti-ack,  and  deviation  is  therefore  not  predicable  of  it.  (Bradlie  y. 
Md.  Ins.  Co.,  12  Pet.  378;  Union  Ins.  Co.  v.  Tyson,  3  Hill,  118; 
Keeler  v.  Fireman's  Ins.  Co.,  3  Hill,  250.) 

In  Yeaton  v.  Fry  (5  Craneh,  335),  the  policy  of  insurance  was  for  a 
specific  sum  on  the  brig  "  Richard,"  "at  and  from  Tobago  to  one  or 
more  ports  in  the  West  Indies,  and  at  and  from  thence  to  Norfolk," 
and  tlie  insurance  was  declared  to  be  made  against  all  risks,  blockaded 
ports  and  Ilispaniola  excepted."  The  vessel  sailed  from  Tobago  to  a 
blockiided  port,  but  without  a  knowledge  of  the  lilockade,  and  was 
turned  away,  and  afterwards,  on  her  voyage  back  to  Norfolk,  was  cap- 
tured by  a  French  privateer.     Chief  Justice  Marshall  delivered  the 


462  GKEENLEAF  V.    THE  ST.  LOUIS  INS.  CO.     [CHAP.  VI. 

oi)iiiion  of  the  court,  and  held  that  the  words,  "  all  blockaded  ports," 
&c.,  could  not  be  construed  as  a  warrant}-  on  the  part  of  the  insured, 
but  were  the  words  of  the  insurers,  and  must  be  considered  as  an  ex- 
ception from  the  general  risks  of  the  policy. 

In  a  policy  of  insurance  on  time  containing  the  following  clause, 
*' excluding,  during  the  term,  all  ports  and  places  in  Mexico  and 
Texas,  also  the  West  Indies,  from  July  15  to  October  15,  1839,  each 
at  noon,"  —  and  the  vessel  sailed  from  New  York  for  and  arrived  at 
St.  lago  de  Cuba  within  the  excluded  period,  and  was  lost  on  her  re- 
turn in  December  following,  —  it  was  decided  that  the  underwriters 
were  liable,  the  loss  not  happening  within  the  excepted  period,  and  the 
clause  in  the  policy  not  being  an  exception  or  exclusion  of  voyages, 
but  only  a  suspension  of  tlie  risk  during  such  time  as  the  vessel  should 
be  at  the  excepted  ports.     (Palmer  v.  Warren  Ins.  Co.,  1  Sto.  360.) 

Now,  the  "  McDowell "  made  her  trip  in  the  Missouri  River  in  the 
latter  part  of  May,  and  was  destroyed  by  fire  in  the  subsequent  Octo- 
ber. It  is  admitted  that  while  prosecuting  her  voyage  in  the  Missouri 
River  she  received  no  damage  or  injury  whatever  that  in  any  wise  con- 
duced to  her  destruction.  The  permission  in  the  clause  Is  to  navigate 
the  Mississippi  and  Ohio  rivers  and  their  tributaries,  excepting  the 
Missouri  and  others,  during  the  term  of  one  year. 

The  language  here  does  not  amount  to  a  prohibition,  or  a  condition, 
or  a  warranty.  The  words  without  the  exception  would  embrace  all 
the  tributaries  of  the  above-mentioned  rivers.  Theexception__has_tLLe 
effect  of  resti:aining_or  suspf^"ding  the  liability  oT  the  underwriters  in  a 
certain  exaiiL  If  the  intention  had  been  that  the  policy  should  be  de- 
feated by  making  voyages  on  an^-  of  the  excepted  rivers,  that  intention 
would  have  been  expressed.  But.  if  there  is  an}-  doubt  about  it,  that 
exception  being  made  b}'  the  parties  for  their  own  benefit  to  relieve 
themselves  from  a  risk  which  they  otherwise  would  have  incurred,  the 
doubt  is  to  be  resolved  against  them.  The  policy  did  not  amount  to  a 
prohibition  or  wai'ranty  against  navigating  the  excepted  rivers,  on  the 
part  of  the  assured,  but  to  a  suspension  of  the  risk  during  the  period 
the  boat  was  so  employed. 

This  is  not  like  the  case  of  Stevens  v.  Conn.  Mut.  Ins.  Co.,  6  Duer, 
594.  There  the  policy  of  insurance,  on  which  the  action  was  founded, 
contained  a  wai'ranty  that  the  vessel  insured  should  not  use  any  port 
or  ports  in  the  Gulf  of  INIexico,  and  there  was  a  plain  breach  of  the 
warrant}'  on  the  part  of  the  assured. 

The  judgment  is  reversed,  and,  as  there  is  no  disagreement  about  the 
facts,  judgment  will  be  entered  in  this  court  for  the  appellants.^ 
Hoi.MES.  J.,  concurs;  Lovelace,  J.,  absent. 

1  Ace  :  Wilkins  v.  Tobacco  Ins.  Co.,  30  Ohio  St.  317  (1876). 

See  Kllcry  v.  New  Knjrland  Ins.  Co.,  8  Pick.  14  (1829);  Hennessey  v.  Manhattan 
F.  Ins.  Co.,  28  Hnn,  98  (1882). 

Compare  Company  of  African  Merchants  v.  British  and  Foreign  M.  Ins.  Co.,  L.  R. 
8  Ex.  1.54  (Ex.  Ch.,  l"873)  —  Ed. 


SECT.  I.]  BURGESS   V.    EQUITABLE    MARINE    INS.   CO.  463 

BURGESS  V.  EQUITABLE  MARINE  IXS.   CO. 
ScPREiiE  Judicial  Court  of  Massachusetts,  1878.     126  Mass.  70. 

Contract  on  a  policy  of  insurance,  dated, June  20,  187-1,  against 
perils  of  the  seas,  whereby  the  defendant  company  insured,  "  lost  or 
not  lost,  B.  A.  Hathaway,  for  Sylvanus  W.  Burgess,  twenty-three 
hundred  dollars,  loss,  if  an}-,  payable  to  Sylvanus  ^Y.  Burgess,  on 
schooner  '  Christie  Johnstone ; '  eight  hundred  dollars  on  great  gen- 
erals ;  three  hundred  and  fifty  dollars  on  small  generals  ;  three  hun- 
dred and  fifty  dollars  on  advance  to  crew  on  board  said  schooner,  at 
and  from  Plymouth  to  Banks,  codfishing,  and  at  and  thence  back  to 
Plymouth  ;  risk  to  commence  June  13,  1874,  at  noon."  The  rate  of 
the  premium  was  3-4  per  cent  per  month,  the  premium  note  gi\en  was 
for  SI  14,  and  the  vessel  was  valued  at  82,500.  The  policy  was  in- 
dorsed "expires  with  voyage."     Answer,  a  deviation. 

Trial  in  this  court,  before  Gray,  C.  J.,  who  reported  the  case  for  the 
consideration  of  the  full  court,  m  substance  as  follows : 

The  plaintiff  introduced  evidence  tending  to  show  the  following  facts  : 
The  vessel  sailed  from  Plymouth  on  June  13,  1874,  on  a  cod-fishing 
voyage  to  the  Banks,  in  a  seaworthy  condition,  with  four  barrels  of 
clam-bait,  which  was  the  usual  quantity-  of  bait  taken  by  vessels  of  her 
class  on  such  a  voyage.  For  several  years  past  it  has  been  the  prac- 
tice of  such  vessels  not  to  take  enough  bait  to  last  for  the  entire  trip, 
but  to  rely  principall}-  on  catching  squid  on  the  Banks,  and  to  use  them 
for  bait ;  and  for  several  years  prior  to  1874  squid  have  been  plenty  on 
the  Banks,  but  in  1874  they  were  verv  scarce. 

After  fishing  on  the  Banks  for  three  weeks,  and  having  exhausted 
nearly  all  his  bait,  the  master  of  the  vessel,  solely  for  the  purpose  of 
procuring  bait,  went  to  St.  Peter's,  the  nearest  practicable  port  where 
bait  could  be  obtained,  there  procured  bait,  and  then  sailed  from  St. 
Peter's  to  the  Banks,  and  resumed  fishing.  To  reach  the  port  of  St. 
Peter's,  the  vessel  sailed  about  one  hundred  and  ten  miles  from  the 
fishing-ground.  She  left  the  fishing-ground  on  Thursday,  reached  St. 
Peter's  on  Saturday ;  and,  having  procured  bait  there,  left  St.  Peter's 
on  Tuesda\'  following,  and  then  sailed  for  another  Bank,  where  she 
arrived  and  resumed  her  fishing  on  the  next  Thursday.  On  August  6, 
1874,  while  so  fishing  on  tlie  Banks,  the  vessel  encountered  a  severe 
gale,  sprung  a  leak,  and  was  totally  lost,  with  all  the  property  on 
board. 

The  defendant  requested  the  judge  to  rule  that  these  facts  amounted 
in  law  to  a  deviation.  The  judge  declined  so  to  rule,  but  ruled  as 
follows:  "  If  the  vessel  left  Plymouth  with  the  usual  amount  of  bait 
for  the  kind  of  fishing  in  which  she  was  to  engage,  and,  by  an  unex- 
pected failure  of  bait  of  the  kind  ordinarily  taken  on  the  fishing-ground, 


464  BURGESS    V.    F.QUITABL':    .MARINE    INS.    CO.  [CITAP.  YI. 

it  became  necessary  for  her  to  go  into  port  to  procnre  bait,  and  she 
went  to  the  nearest  practicable  port  for  that  pnrpose,  such  going  into 
l)ort  was  not,  as  matter  of  law,  a  deviation." 

Tlie  defendant  consented  to  a  verdict  for  the  plaintiff,  subject  to  the 
opinion  of  the  full  court  upon  the  question  whether,  as  matter  of  law, 
tlicre  had  been  a  deviation.  If,  in  the  opinion  of  the  court,  the  going 
to  St.  Peter's  for  bait  was  a  deviation  which  discharged  the  insurer,  the 
verdict  was  to  be  set  aside,  and  judgment  entered  for  the  defendant; 
otherwise,  judgment  for  the  plaintiff  on  the  verdict. 

J.  C.  Dodge,  for  the  defendant. 

,/.  Lathrop  and  A.  Mason,  for  the  plaintiff. 

Endicott,  J.  By  the  terms  of  the  polic}'  the  vessel  was  insured  "  at 
and  from  Plymouth  to  the  Banks,  cod-fishing,  and  at  and  thence  back 
to  Plymouth."  This  is  a  definite  and  distinct  description  of  the  con- 
templated voyage  between  two  fixed  termini.  The  Banks  are  named 
as  the  outward  terminus,  and  while  tliere  engaged  in  cod-fishing,  and 
until  her  return  to  Plymouth,  the  vessel  was  covered  by  the  polic}". 
The  language  used  is  not  open  to  the  construction  that  it  was  the  in- 
tention of  the  parties  to  insure  her  while  prosecuting  the  adventure 
elsewhere,  or  doing  what  was  necessary'  to  make  it  successful  outside 
and  be3-ond  the  prescribed  limits.  A  V03'age  is  the  sailing  of  a  vessel 
from  one  port  or  place  to  another  port  or  place,  and  the  purpose  for 
which  it  is  to  be  conducted,  whether  as  a  trading,  freighting,  or  fishing 
voyage,  is  often  mentioned  in  policies  of  insurance.  But  this  designa- 
tion cannot  var}'  or  extend  the  description,  route,  or  termini  of  the 
voyage,  as  named  in  the  polic}',  unless  some  usage,  connected  with  the 
pai'ticular  trade  or  adventure,  is  shown  to  exist.  No  evidence  was 
offered  of  a  usage  in  such  voyages  to  leave  the  Banks  and  gO  into  port 
for  bait.  So  far  as  the  evidence  reported  discloses  any  usage  in  that 
regard,  it  appears  that  for  some  years  it  had  been  the  practice  to  carr^'^ 
out  a  limited  amount  of  bait,  and  to  rel}'  upon  obtaining  an  additional 
supply  on  the  Banks.  Such  being  the  practice  to  obtain  bait  on  the 
Banks,  when  the  supply  taken  out  was  exhausted,  a  departure  from 
the  Banks  for  that  purpose  could  not  have  been  contemplated  by  the 
parties  in  making  the  polic\'.  We  have,  therefore,  a  definite  descrip- 
tion of  the  voyage  in  the  policy,  and  a  usage  that  does  not  extend  its 
provisions.  The  question  decided  in  Friend  v.  Gloucester  Ins.  Co., 
113  Mass.  320,  arose  upon  a  clause  in  a  policy  prohibiting  a  fishing 
vessel  from  sailing  on  a  voyage  east  of  Cape  Sable  after  a  certain  date, 
and  throws  no  liglit  upon  the  construction  to  be  given  to  the  words  of 
this  polic}'.  The  decision  in  "The  Tarqnin,"  2  Lowell,  358,  turned 
upon  the  construction  of  the  shipping  articles  of  seamen,  and  not  of  a 
policy  of  insurance. 

We  are  therefore  of  opinion  that  the  vessel,  by  leaving  the  Banks 
and  going  to  St.  Peter's  for  bait,  departed  from  the  voyage  described 
in  the  policy,  and  the  only  question  to  be  determined  is  whether,  in  law, 
there  has  been  a  deviation  wliich  avoids  the  policy. 


SECT.  I.]  BUKGESS    V.    EQUITABLK    .MAIUNE    INS.    CO. 


465 


It  may  be  stated  in  general  terms  that  the  assured  is  protected  by 
his  policy  while  the  vessel  pursues  the  usual  and  customary  course  of 
the  vovao-e  ;  but  any  departure  from  the  course,  or  delay  in  prosecut- 
inc^  it,  without  necessity  or  just  cause,  is  a  deviation,  and  discharges 
the  insurer,  because  another  voyage  has  been  voluntarily  substituted 
for  that  which  was  insured.  Whether  the  degree  or  period  of  tl:e  ii=,k 
is  increased  is  unimportant,  as  the  assured  has  no  right  to  subslitute  a 
different  risk.  Whenever,  therefore,  there  is  a  manifest  departure  from 
the  course  of  the  voyage,  the  assured  must  show  that  it  was  justified 
by  the  necessity  of  the  case.  Stocker  v.  Harris,  3  Mass.  409,  418; 
Brazier  v.  Clap,  5  Mass.  1 ;  Coffin  v.  Newburyport  Ins.  Co.,  9  Mass. 
436,  449  ;  Kettell  v.  Wiggin,  13  Mass.  68. 

In  the  case  at  bar,  the  alleged  necessity  arose  from  scarcity  of  bait. 
The  plaintiff  did  not  put  on  board,  when  the  vessel  sailed  from  Ply- 
mouth, enough  for  the  entire  trip.  Squid  had  been  plenty  on  the  Banks 
during  several  years  prior  to  1874,  and  the  plaintiff  relied  upon  catch- 
ing them  there  and  using  them  for  that  purpose.  They  happened  this 
season  to  be  very  scarce,  and,  after  fishing  three  weeks  and  nearly  ex- 
hausting his  supply,  the  master  sailed  for  St.  Peter's,  over  one  hundred 
miles  distant,  procured  bait,  and  returned  to  the  Banks  after  a^  absence 
of  a  week.  It  is  to  be  observed  that  this  so-called  necessity  did  not 
arise  from  any  peril  insured  against  in  the  policy,  or  ordinarily  insured 
against  in  policies  of  insurance,  and  did  not  involve  the  safety  of  the 
vessel,  or  of  any  property  on  board ;  it  had  relation  solely  to  the  suc- 
cess of  the  fishing  adventure,  and  in  this  the  defendant  had  no  interest, 
and  had  assumed  no  responsibilit}'. 

We  are  of  opinion  that  the  claim  of  the  plaintitf  cannot  be  sustained  ; 
and  that  a  necessity  to  justify  the  departure  in  this  case  cannot  be  found 
in  the  fact  that,  without  going  to  St.  Peter's  for  bait,  the  voyage  would 
have  failed  to  be  successful  or  profitable  to  the  plaintiff. 

The  strictness  with  which  the  courts  have  held  the  insured  to  the 
route  named  in  the  policy  is  illustrated  by  the  cases  already  cited,  and 
by  many  others  cited  at  the  argument.  Dodge  v.  i:ssex  Ins.  Co.,  12 
Gray,  65;  Middlewood  v.  Blakes,  7  T.  R.  162;  Brown  v.  Tayleur,  4 
A.  &  E.  241 ;  Fernandez  v.  Great  Western  Ins.  Co.,  48  N.  Y.  571  ; 
Merchants'  Ins.  Co.  v.  Algeo,  32  Penn.  St.  330.  But  the  question  to 
be  determined  here  is,  what  is  the  nature  and  extent  of  the  necessity  or 
just  cause  which  will  warrant  a  departure  from  the  route. 

In  this  connection  it  may  be  well  to  refer  to  the  necessities  which 
clearly  justify  a  departure.  There  is  no  deviation  when  the  master  is 
compelled  by  force  either  to  depart  from  his  route,  or  delay  its  prose- 
cution by  the  acts  of  his  crew  (Elton  v.  Brogden,  2  Str.  1264  ;  Driscol 
V.  Passmore,  1  B.  &  P.  200  ;  Driscol  v.  Bovil,  1  B.  &  P.  313)  ;  or  where 
he  is  detained  by  those  in  authority,  or  taken  out  of  his  course  by  a 
ship  of  war.  Scott  v.  Thompson,  1  N.  R.  181.  In  Phelps  v.  Aul<1jo, 
2  Camp.  350,  a  master  was  ordered  to  sail  out  and  examine  a  vessel  in 
the  offing  by  a  captain  of  a  king's  ship,  and,  it  appearing  that  he  com- 

30 


466  BURGESS   V.    EQUITABLE   MARINE   INS.   CO.         [CHAP.  VI. 

l>lied  without  remonstrance  or  threat  of  force,  it  was  held  to  be  a 
deviation.  In  eases  of  this  description  there  must  be  a  vis  tnajor, 
luinpelling  a  departure  or  delay,  which  excuses  the  master.  So  where 
the  master  is  obliged  to  leave  his  course,  or  delay  by  stress  of  weather 
or  other  peril  of  the  sea,  or  to  go  into  port  to  repair  or  refit,  or  to  re- 
man or  recruit  his  crew  disabled  by  sickness  or  reduced  by  casualties, 
oi-  to  avoid  capture  or  to  join  convoy  in  time  of  war,  there  is  no  devi- 
ation. It  is  unnecessary  to  cite  all  the  cases  which  fall  within  these 
exceptions  ;  many  of  those  relied  on  by  the  plaintiff  are  clearly  within 
them.  Dunlop  v.  Allan,  Millar  on  Ins.,  414  ;  Green  v.  Elmslie,  Peake, 
212;  Clark  V.  United  Ins.  Co.,  7  Mass.  365.  The  case  last  cited  is 
put  upon  the  express  ground  that  the  ship  was  prevented  by  causes 
insured  against  from  proceeding  on  her  route,  and  the  departure  was 
from  necessity.  See  also  Folsom  v.  Merchants'  Ins.  Co.,  38  Maine, 
414. 

Nor  is  the  departure  from  the  route  for  the  purpose  of  saving  human 
life  a  deviation  ;  nor  is  a  policy  avoided  when  the  ship  goes  out  of  her 
course  to  obtain  necessar}'  medical  assistance  for  those  lawfully  on 
board.  Bond  v.  Brig  Cora,  2  Wash.  C.  C.  80  ;  Perkins  v.  Augusta  Ins. 
Co.,  10  Gray,  312.  In  this  class  of  cases  the  justification  does  not  rest 
on  the  same  ground  as  in  those  previously  noticed.  It  is  allowed  from 
motives  of  humanity,  and  cannot  be  extended  to  the  saving  or  protec- 
tion of  property.  In  all  other  cases  the  necessity  must  be  a  real  and 
imperative  necessity  affecting  the  vessel,  such  as  actual  force  prevent- 
ing the  master  from  exercising  his  will,  peril  of  the  sea,  danger  of 
capture,  want  of  repair,  disability  of  the  crew,  or  unseaworthiness, 
occurring  under  such  circumstances  that  the  master,  acting  upon  his 
best  judgment  for  the  interest  of  all  parties,  has  no  alternative,  and  is 
forced  to  leave  his  route,  or  delay  its  prosecution. 

When  the  departure  is  caused  by  such  a  necessity,  the  change  of 
route  in  no  respect  alters  the  insurance,  because  the  course  of  a  sea 
voyage  must  at  times  be  necessarily  subject  to  extraordinary  perils  of 
the  sea,  and  contingencies  beyond  the  control  of  the  master,  and  in 
the  presence  of  which  he  is  forced  to  succumb ;  and  when  they  occur, 
and  he  is  obliged  to  depart  from  the  usual  course  of  the  voyage,  there 
is  no  deviation  in  the  legal  sense  of  the  term,  for  the  departure  is  the 
necessary  incident  of  the  route  named  in  the  policy  as  prosecuted  at 
the  time  bj-  the  ship.  The  probability  of  such  occurrences  is  well  un- 
derstood ;  the}'  are  known  perils  of  the  voyage,  and  enter  into  the  ordi- 
nary contract  of  marine  insurance.  And  when  the  master,  compelled 
liy  the  necessity,  does  that  which  is  for  the  benefit  of  all  concerned, 
the  act  is  within  the  intention  of  the  policy  as  much  as  if  expressed  in 
terms.  It  would  be  practically  impossible  to  state  in  the  policy  all  the 
perils  which  might  arise  in  a  sea  voyage  and  excuse  departure  from 
the  route  ;  and  therefore,  by  the  rules  of  interpretation  applicable  to 
this  species  of  contract,  the  policy  is  held  by  implication  to  include 
them.     See  Greene  v.  Pacific  Ins.  Co.,  9  Allen,  217,  219.     In  such  a 


SECT.  I.]  BURGESS    V.    EQUITABLE    MARINE    INS.   CO.  467 

polic}'  as  this,  the  necessities  justifying  a  departure,  in  tlie  absence  of 
usaiJ-e,  from  tlie  route,  and  a  visit  to  a  port  not  named,  are  those  which 
are  caused  by  some  peril  occurring  in  the  prosecution  of  the  voyage 
witliin  the  limits  named  in  the  policy,  and  not  those  which  arise  in  the 
prosecution  of  the  business  for  which  the  voyage  was  undertaken. 

It  is  true  there  is  a  class  of  cases  much  relied  on  b^'  the  plaintitF, 
where  the  test  is  whether  the  ship  at  the  time  of  the  alleged  deviation 
was  pursuing  the  object  and  business  of  the  voyage.     But  those  are 
cases  of  delay,  where  the  ship  was  at  the  port  or  place  named  or  per- 
mitted in  the  polic}'.     The  permission  in  a  policy  to  go  to  certain  ports 
or  places  must  always  be  construed  in  reference  to  the  purpose  of  the 
voyage.     AVilliams  v.   Shee,  3  Camp.  469  ;  1  Arnould  on  Ins.,  §§  141, 
142.     Any  delay  for  the  prosecution  of  other  business,  or  any  unrea- 
sonable delay  in  prosecuting  the  business  of  the  voyage  at  such  port, 
is  a  deviation.    African  Merchants'  v.  British  Ins.  Co.,  L.  R.  8  Ex.  154. 
But  if  the  delay  was  necessary  in  order  to  accomplish  the  objects  of  the 
voyage,  and  was  reasonable  under  the  circumstances  of  the  case,  then 
there  is  no  deviation.     Columbian  Ins.  Co.  v.  Catlett,  12  Wheat.  383; 
Phillips  V.  Irving,  7  Man.  &  Gr.  325.     In  other  words,  if  the  ship  is  at 
a  place  permitted,  the  delay  shall  not  be  a  deviation,  if  it  is  necessary 
in  the  proper  prosecution  of  the  business  of  the  voyage.     But  this  test 
cannot  be  applied  to  a  departure  from  the  route  to  a  port  not  named  or 
permitted  for  the  purpose  of  the  adventure.     In  all  trading  voyages, 
for  example,  the  ship  is  confined  to  the  ports  or  coasts  named  in  the 
policy,  and  she  cannot  depart  to  other  places  simply  because  she  may 
better  prosecute  the  trade  elsewhere.     If  the  departure  from  the  route 
to  insure  the  success  of  the  adventure  can  be  justified  as  a  necessity,  it 
would  be  difficult  to  state  any  limit  to  the  privilege,  or  to  the  duration 
of  the  insurance,  and,  in  the  absence  of  permission  to  do  so  in  the  pol- 
icy, it  cannot  be  implied.    See  Kettell  v.  Wiggin,  13  Mass.  68  ;  Robert- 
son V.  Columbian  Ins.  Co.,  8  Johns.  491.     The  plaintiff's  vessel  might 
have  delayed  for  any  reasonable  time  upon  the  Banks  for  the  purpose 
of  fishing  or  getting  bait  without  being  guilty  of  deviation  ;  and  would 
have  been  protected  by  the  policy,  even  without  proof  of  usage,  because 
fishing  was  the  purpose  of  the  voyage,  and  she  could  properly  prosecute 
it  within  the  route  named  in  the  policy.     Noble  v.  Kennoway,  2  Doug. 
510,  513.     But  she  could  not  go  beyond  or  away  from  the  route  for 
that  purpose. 

The  illustration  put  by  the  defendant's  counsel  is  apposite  :  "  If  a 
vessel  insured  to  Havana  and  back  should  learn,  before  entering  the 
port,  that  there  was  no  cargo  there  with  which  she  could  be  loaded,  no 
one  would  say  that  her  policy  protected  her  in  going  to  the  nearest  port 
where  a  cargo  could  be  had."  Other  illustrations  may  be  given.  If  a 
vessel  insured  to  a  particular  port,  having  letters  of  credit,  should  find 
on  arrival  that  the  parties  on  whom  they  were  drawn  had  failed,  she 
could  not  go  to  another  port  for  funds,  and  return  for  her  cargo,  and 
be  protected  by  her  policy.     If  fish  had  been  scarce  on  the  Banks  in 


468  BURGESS   V.    EQUITABLE    MARINE    INS.    CO.  [CHAP.  VI. 

1874,  it  would  hardly  be  contended  that  the  vessel  could  have  gone  to 
other  fishing-grounds  to  fish,  although  not  more  distant  than  St.  Peter's, 
and  yet,  if  she  was  justified  by  necessity  in  leaving  to  obtain  bait  at 
St.  Peter's,  and  to  return  in  order  to  make  the  trip  successful,  it  would 
be  difficult  to  hold  that  the  same  necessit}'  would  not  allow  her  to  fish 
elsewhere. 

In  the  argument  of  the  plaintiff's  counsel  no  case  was  cited  which 
sustains  the  position  he  has  assumed,  and  we  are  not  aware  of  an}'  case 
which  goes  to  this  extent.^  ...  If  the  master  had  failed  to  find  bait  at 
St.  Peter's,  the  same  necessity  would  have  justified  him  in  visiting  port 
after  port  until  he  found  it. 

As  in  the  opinion  of  the  court  the  trip  to  St.  Peter's  was  a  deviation 
which  discharged  the  insurer,  by  the  terms  of  the  report  there  must  be 

Judgment  for  the  defendant? 

1  Here  were  discussed  Greene  v.  Pacific  Mutual  Ins.  Co.,  9  Allen,  217  (1864),  and 
Stocker  v.  Harris,  3  Mass.  409  (1807).  — Ed. 

2  See  tlie  authorities  cited  ante,  p.  440,  n.  1. 
On  deviation  in  general,  see  also :  — 

Bond  V.  Nutt,  2  Cowp.  60  (1777) ; 

Delany  v.  Stoddart,  1  T.  R.  22  (1785) : 

Way  f.  Modigliani,  2  T.  R.  30  (1787) 

Driscol  V.  Bovil,  1  B.  &  P.  313  (1798) 

Brazier  t'.  Clap,  5  Mass.  1  (1809); 

Clark  V.  United  F.  &  M.  Ins.  Co.,  7  Mass.  365  (1811) ; 

Oliver  V.  Maryland  Ins.  Co.,  7  Cranch,  487  (1813); 

Inglis  V.  Vaux,  3  Camp,  437  (1813) ; 

Graiiam  v.  Commercial  Ins.  Co.,  11  Johns.  352  (1814); 

Warre  v.  Miller,  4  B.  &  C.  538  (1825) ;  s.  c.  7  D.  &  R.  1 ; 

Bottomley  t-.  Bovill,  5  B.  &  C.  210  (1826) ; 

Samuel  y.  Royal  Exchange  Assurance  Co.,  8  B.  &  C.  119  (1828) ; 

Hamilton  v.  Sheddon,  3  M.  &  W.  49  (1837) ; 

Lockett  V.  Merchants'  Ins.  Co.,  10  Rob.  La.  339  (1845) ; 

Parsons  v.  Manufacturers'  Ins.  Co.,  16  Gray,  463  (1860); 

McCall  V.  Sun  Mutual  Ins.  Co.,  66  N.  Y.  505  (1876) ; 

Snyder  v.  Atlantic  Mutual  Ins.  Co.,  95  N.  Y.  196  (1884) ; 

Schroeder  v.  Schweizer,  L.  T.  V.  Gcsellschaft,  66  Cal.  295  (1885) ; 

Thebaud  v.  Great  Western  Ins.  Co.,  155  N.  Y.  516  (1898).  — Ed. 


SECT.  I.]  OLIVER  V.   COWLEY.  469 


SECTION   I.  (continued). 
(B)  Unseaworthiness. 

OLIVER  V.  COWLEY. 

Nisi  Prius,  17G5.     1  Park  Ins.  8th  ed.  470. 

An  action  was  brought  b}^  an  innocent  shipper  of  goods  (no  part 
owner  of  the  ship)  against  the  underwriter,  and  the  policy  was  effected 
on  goods  in  the  "  Amy  and  Laetitia"  at  and  from  Montserrat  to  London. 
It  appeared  that  the  ship  sailed  the  26th  of  July,  and  the  next  day 
without  any  bad  weather  she  was  very  leaky  and  obliged  to  run  for 
St.  Thomas',  one  of  the  Virgin  Islands,  where  she  was  unloaded,  and 
the  goods,  being  much  damaged,  were  sold.  It  could  not  but  be 
allowed  on  all  sides,  tliat  the  ship  was  not  seaworthy  to  undertake  the 
insured  vo^'age ;  and  it  was  agreed  and  admitted  by  defendant  that  the 
shipper  of  the  goods  was  a  stranger  to  it  when  the  goods  were  shipped. 
The  plaintiff  was  nonsuited,  Lord  Mansfield  saying,  that  the  implied 
warranty  could  not  be  dispensed  with  in  any  case  ;  that  it  was  a  point 
of  law,  and  if  the  plaintiffs  counsel  thought  there  was  any  ground  to  go 
upon  he  would  save  the  points :  but  the  plaintiff's  counsel  declined 
this,  being  satisfied  the  question  was  clear  against  them.^ 

1  Compare  Koebel  v.  Saunders,  17  C.  B.  n.  s.  71  (1864).  See  Daniels  v.  Harris, 
L.  R.  10  C.  P.  1  (1874). 

In  Christie  v.  Secretan,  8  T.  R.  192,  198  (1799),  Lawrence,  J.,  in  speaking  of  "an 
implied  warranty  of  seaworthiness,"  said :  "  The  latter  is  implied  from  the  nature  of  a 
contract  of  insurance.  The  consideration  of  an  insurance  is  paid  in  order  that  the 
owner  of  a  ship  which  is  capable  of  performing  her  voyage  may  be  indemnified  against 
certain  contingencies ;  and  it  supposes  the  possibility  of  the  underwriter  gaining  the 
premium  :  but  if  the  ship  be  incapable  of  performing  her  voyage,  there  is  no  possibil- 
ity of  the  underwriter's  gaining  the  premium  ;  and  if  the  consideration  fail,  the  obli- 
gation fails." 

In  Burges  v.  Wickham,  3  B.  &  S.  669,  690-691  (1863),  Blackburn,  J.,  comment- 
ing upon  the  foregoing  passage  from  Lawrence,  J.,  said  :  "  But  nothing  in  that  case 
depended  on  the  question  what  were  the  elements  to  be  taken  into  account  in  deter- 
mining what  amounts  to  seaworthiness;  and  the  language  of  Lawrence,  J.,  was  not 
chosen  with  a  view  to  express  auy  opinion  on  tliat  point.  And  it  seems  clear  that  a 
mere  capacity  of  performing  the  voyage,  and  earning  the  premium,  is  not  sufficient  to 
constitute  seaworthiness.  As  a  matter  of  fact  a  vessel,  though  far  from  seaworthy, 
may,  and  often  does,  successfully  perform  her  voyage,  and  so  proves  in  one  sense 
capable  of  performing  it,  whilst  a  seaworthy  vessel  may,  and  often  does,  perish 
without  any  extraordinary  accident.  We  must,  therefore,  look  for  some  other  crite- 
riou  to  determine  what  constitutes  seaworthiness."  —  Ed. 


470  FORBES  V.   WILSON.  [CHAP.  VL 


FORBES  AND  Another  v.  WILSON. 

Nisi  Prius,  1800.     1  Park  Ins.  8th  ed.  472. 

Where  a  policy  of  assurance  was  effected  on  the  ship  "  Henr}'," 
"  at  and  from  Liverpool  to  the  coast  of  Africa,"  it  appeared  that,  at 
the  time  the  policy  was  made,  the  ship  was  not  in  a  condition  to  go  to 
sea,  but  was,  in  fact,  at  the  time  undergoing  very  material  repairs  ; 
and  it  was  contended  by  the  underwriters  that  as  the  risk  described 
was  "at  "as  well  as  "  from,"  if  the  ship  was  not  seaworthy,  from 
whatever  cause,  when  the  policy  was  subscribed,  it  was  void ;  and  that 
any  repairs  done  afterwards,  so  as  to  make  her  completely  seaworthy 
at  the  time  of  sailing,  would  not  cure  that  defect.  But  Lord  Kenyon 
was  of  opinion  that  under  the  words  "  at  and  from  "  it  is  sufficient  if 
the  ship  be  seaworthy  at  the  time  of  sailing,  for,  from  tli€  nature  of  the 
thing,  the  ship,  while  at  the  place,  probably  must  be  undergoing  some 
repair.^  The  plaintiffs  had  a  verdict,  and  no  motion  was  made  to  set 
it  aside. 

1  In  Smith  v.  Surridge,  4  Esp.  25  (Nisi  Prius,  1801),  Lord  Kenyon,  C.  J.,  said : 
"  The  policy  was  at  and  from  Pilluw.  Such  a  polic\%  at  and  from  a  place,  attached  on 
the  ship  while  she  was  undergoing  repairs.  It  was  not  necessary  that  she  should  be 
seaworthy  at  the  time  of  the  insurance." 

In  Hibhert  v.  Martin,  1  Park  Ins.  8th  ed.  473  (Nisi  Prius,  1808),  Lord  Ellenbor- 
OUGH,  C.  J.,  said  as  to  Forbes  v.  Wilson  :  "  I  agree  with  the  doctrine  of  that  case :  it  is 
quite  sufficient  if  the  state  of  the  ship  be  commensurate  to  her  then  risk.  There  may 
be  a  seaworthiness  sufficient  while  in  harbor ;  and  there  is  a  state  of  seaworthiness  for 
the  voyage." 

In  Tidmarsh  W.Washington  F.  &  M.  Ins.  Co.,  4  Mason,  439  (1827),  Story,  J., 
charging  the  jury,  said :  "  The  standard  of  seaworthiness  has  been  gradually  raised 
vwithin  the  last  thirty  years,  from  a  more  perfect  knowledge  of  shipbuilding,  a  more 
enlarged  experience  of  maritime  risks,  and  an  increased  skill  in  navigation.  In  many 
ports,  sails  and  other  equipments  would  now  be  deemed  essential,  which  at  an  earlier 
period  were  not  customary  ou  the  same  voyages.  There  is  also,  as  the  testimony 
abundantly  shows,  a  considerable  diversity  of  opinion,  among  nautical  and  commer- 
cial men,  as  to  what  equipments  are,  or  are  not,  necessary.  Many  prudent  and  cau- 
tious owners  supply  their  vessels  with  spare  sails  and  a  proportionate  quantity  of  spare 
rigging;  others  do  not  do  so,  from  a  desire  to  economize,  or  from  a  different  estimate 
of  the  ch.ances  of  injury  or  loss  during  the  same  voyage.  Of  course,  different  men 
may  well  therefore  come  to  different  conclusions  from  the  same  premises,  on  a  point 
like  this,  from  their  own  habits  of  life,  and  the  general  custom  of  the  place  to  which 
they  belong." 

In  McLanahan  v.  Universal  Ins.  Co.,  1  Pet.  170,  183-184  (1828),  Story,  J.,  for  the 
court,  said  :  "There  is  no  doubt  that  every  ship  must,  at  the  commertcemcnt  of  the 
voyage  insured,  possess  all  the  qualities  of  seaworthiness,  and  be  navigated  by  a  com- 
petent master  and  crew.  .  .  .  The  argument  assumes  that  the  shiji  ought  not  to  have  got 
r.:ider  way,  or  proceeded  into  the  offing,  until  the  master  and  all  the  crew  necessary, 
not  for  that  act,  but  for  the  entire  voyage,  were  on  board.  If  the  law  were  so,  we  have 
no  means  of  ascertaining  what  crew  was  actually  on  board  at  the  time.  .  .  .  But  we 
are  far  from  being  satisfied  that  the  law  has  interposed  any  such  positive  rule  as  the 
argument  supposes.  Seawortliiness  in  port,  or  for  temporary  purposes,  such  as  mere 
change  of  position  i:i  harbor,  or  proceeding  out  of  port,  or  lying  in  the  offing,  may  be 


SECT.  I.]  PARMETER   V.   COUSINS.  "i"! 


PARMETER   v.   COUSINS. 

Nisi  Prics,  1809.     2  Camp.  235. 

This  was  an  action  on  a  polic}-  of  insurance  on  ship  and  freight,  val- 
ued at  £1,200,  at  and  from  St.  Michael's,  or  all  or  any  of  the  Western 
Islands,  to  England. 

The  ship  met  with  very  tempestuous  weather  on  her  outward  voyage  ; 
and  wlien  slie  arrived  at  St.  Michael's  she  was  so  leaky  that  the  crew 
were  obliged  to  work  at  the  pumps  spell  and  spell.  She  was  then  quite 
in  an  unfit  state  to  take  in  a  cargo,  aud  there  being  no  liarbor  in  the 
island,  she  was  in  great  danger  from  the  storm,  which  still  continued. 
In  fact,  after  lying  at  anchor  above  twenty-four  hours,  she  was  blown 
out  to  sea  and  was  wrecked. 

Par/c,  for  the  plaintiflT,  contended  that  the  underwriters  were  clearly 
answerable  for  a  loss  so  happening.  The  policy  being  at  as  well  as 
from,  attached  the  moment  the  ship  cast  anchor  at  St.  Michael's  ;  and 
at  a:iy  rate  she  had  lain  there  twenty-four  hours,  so  that  the  outward 
risk  had  completely  expired.  The  objection  of  want  of  seaworthiness 
when  properly  considered  was  without  any  foundation.  The  ship,  on 
her  arrival  at  St.  Michael's,  was  unfit  to  commence  the  homeward  voy- 
age ;  but  this  was  unnecessary.  It  was  enough  if  she  was  fit  for  the 
voyage,  when  the  voyage  commenced.  One  state  of  seaworthiness 
was  required  while  she  remained  at,  and  another  when  she  sailed  from, 
the  place.  This  distinction  had  been  settled  by  Lord  Kenyon,  Forbes 
V.  Wilson,  Park,  299  n.  Marsh,  155.  Smith  v.  Snrridge",  2  Esp.  25 
S.  P.,  and  recognized  by  Lord  EUenborough,  Hibbert  v.  Martin,  Sitt. 
after  M.  T.  1808.  If  it  were  not  allowed,  the  policies  on  the  homeward 
vovage  would  in  almost  every  instance  be  vitiated  ;  as  it  seldom  hap- 
pens that  a  ship  on  her  arrival  at  the  outward  port  wants  no  repairs, 
but  is  in  a  condition^ immediately  to  take  in  the  homeward  cargo.  If, 
in  this  case,  the  policy  on  the  outward  voyage  had  expired,  and  the 
policy  on  the  homeward  voyage  had  not  attached,  how  was  the  ship- 
owne'r  to  secure  himself  an  indemnity  during  the  whole  course  of  the 
adventure? 

Lord  Ellenborough.  W^hat  we  have  to  consider  here  is,  whether 
the  underwriters  on  this  ship,  at  and  from  St.  Michael's  to  England,  be 
liable  for  a  loss  happening  in  the  manner  that  has  been  described  ?    And 

one  thing ;  and  seaworthiness  for  a  whole  voyage,  quite  another.  A  policy  on  a  ship, 
at  an.l  from  a  port,  will  attach,  although  tlie  ship  be  at  the  time  undergoing  extensive, 
repairs  in  port,  so  as,  in  a  general  sense,  for  the  purposes  of  the  whole  voyage,  to  be 
utterlv  unseaworthy.  What  is  a  competent  crew  for  the  voyage ;  at  what  time  such 
crew  should  be  on  board  ;  what  is  proper  pilot  grouud ;  what  is  the  course  and  usage 
of  trade  in  relation  to  the  master  and  crew  being  on  board,  when  the  shi].  breaiis 
ground  for  the  voyage  ;  are  questions  of  fact,  dependent  upon  nautical  testimony  ;  and 
are  incapable  of  "being  solved  by  a  court,  without  assuming  to  itself  the  province  of  a 
jury,  aud  judicially  relying  on  its  own  skill  in  maritime  affairs."  —  Ed. 


472  FORSHAW   V.   CHABERT.  [CHAP.  VI. 

I  am  clearly  of  opinion  that  they  are  not.  To  be  sure,  while  the  ship 
remains  at  the  place,  a  state  of  repair  and  equipment  may  be  sufficient, 
which  would  constitute  unseawortliiness  after  the  commencement  of  the 
voyage.  But  while  in  port,  she  must  be  in  such  a  condition  as  to  en- 
able lier  to  lie  in  reasonable  security  till  she  is  properly  repaired  and 
equipped  for  the  voyage.  She  must  have  once  been  at  tlie  place  in  good 
safety.  If  she  arrives  at  the  outward  port  so  shattered  as  to  be  a  mere 
wreck,  a  policy  on  the  homeward  voyage  never  attaches.  Such  is  the 
present  case.  "  I  do  not  remember  any  one  like  it ;  but  the  principles  on 
which  it  must  be  decided  are  perfectly  well  established. 

Plaintiff  nonsuited. 

Park  and  Pichardson,  for  the  plaintiff. 

The  Attorney -General,  Garrow,  Scarlett,  Parroiv,  and  F.  Pollock, 
for  the  defendant. 


FORSHAW  V.    CHABERT. 
Common  Pleas,  1821.     3  B.  &  B.  158.^ 

Assumpsit  on  a  policy  of  insurance  on  the  ship  "  Hoiie"  and  goods, 
*'  at  and  from  her  port  or  ports  of  lading  in  Cuba,  to  Liverpool,"  with 
liberty  "  in  that  voyage  to  proceed  and  sail  to,  and  touch  and  stay  at, 
anv  ports  or  places  whatsoever ;  and  with  leave  to  discharge  and  take 
in  at  any  ports  or  places  she  might  touch  at,  without  prejudice  to  that 
insurance."  At  the  trial,  before  Dallas,  C  J.,  at  the  London  sittings 
after  last  Trinity  Term,  it  appeared  that,  subsequently  to  the  subscrip- 
tion of  the  policy  by  the  different  underwriters,  the  words  "with  leave 
to  call  off  Jamaica  "  had  been  inserted  in  the  body  of  it  after  the  word 
"Liverpool."  All  the  underwriters,  except  the  defendant,  on  being 
applied  to,  sanctioned  this  interpolation  by  writing  their  initials  in  the 
margin  of  the  policy  opposite  to  the  words  inserted,  and  required  no 
additional  premium.  The  defendant,  being  ill  and  absent  from  London, 
was  not  a[)plicd  to  for  this  purpose.  There  were  two  counts  in  the 
declaration,  on  the  policy  in  question,  the  first,  setting  out  the  policy, 
with  the  words  interpolated  ;  the  other,  setting  it  out  as  it  originally 
stood. 

The  captain,  having  lost  some  of  his  outward-bound  crew  b}'  sickness 
and  desertion  at  Cuba,  and  finding  it  impossible  there  to  engage  ten 
men  for  Liverpool,  sailed  from  Cuba  with  a  crew  com^joscd  of  eight 
men  engaged  for  Liverpool,  and  two  for  Montego  Bay  in  Jamaica.  He 
then  proceeded  to  and  touched  at  Montego  Bay,  for  the  sole  purpose  of 
landing  the  two  men  (who  refused  to  proceed  further),  and  of  procuring 
others  to  supply  their  place.  Having  effected  both  these  objects,  be 
sailed  from  Montego  Bay  ;  and  the  ship,  while  in  the  prosecution  of  her 

1  s.  c.  6  Moore,  369. —  Ed.    ' 


^  t  y 


SECT.  I.]  FORSHAW   V.    CHABERT.  473 

homeward  voyage,  was  lost.     It  was  proved  that  ten  men  were  a  suffi-  /vt^ 

cient  crew  to  navigate  such  a  vessel  as  the  "•  Hope"  to  England,  and  ^  V  ^ 

that  the  captain  had  no  fraudulent  purpose  in  touching  at  Montego  Ba}-.  , 

Some  of  the  witnesses  said  the  touching  at  Jamaica  increased  the  risk, 
and  otliers  denied  this.  It  was  objected,  on  the  part  of  the  defendant, 
that  the  alteration  in  the  policy  was  material,  and  rendered  it  void ;  '^  6^ 

that  the  touching  at  Montego  Bay  was  a  deviation  ;  and  that  the  ship,         i^   .3 
having  sailed  from  Cuba  with  an  insufficient  crew,  was  not  seaworthj- 
when  she  broke  ground  (eight  men  only  being  there  engaged  for  Eng-         ^  ^  f 
land).     But  the  jury  found  a  verdict  for  the  plaintiff,  and  that  the  cai>  W  /)  ^ 

tain  put  into  Montego  Bay  for  a  justifiable  cause,  even  though  there  ' 

had  been  no  alteration  in  the  policj'.  y  0  0 

Taddy,  Serjt.,  on  a  former  da}',  having  obtained  a  rule  nisi  to  set  ^^  f  I 

aside  this  verdict,  and  instead  thereof  to  enter  a  general  verdict  for  the  ,      , 

defendant,  or  to  have  a  new  trial,  on  the  grounds  of  objection  above 
stated.  v)"  /  0 

Jlidlock,  Serjt,  now  showed  cause  against  the  rule.  .^^3  ^ 

Taddy^  in  support  of  the  rule. 

Dallas,  C.  J.  This  is  an  objection  to  which  one  feels  disposed  very 
reluctantly  to  yield,  for  it  is  an  objection  against  the  justice  of  the  case. 
All  the  other  underwriters  were  applied  to  for  their  consent  to  the  alter 
ation  of  the  polic}',  and  gave  that  consent ;  thereby  saying  for  them- 
selves (of  all  persons  the  best  qualified  to  form  a  judgment  on  the 
subject)  that  this  alteration  occasioned  no  increase  of  risk  ;  but,  unfor- 
tunately- for  the  assured,  no  such  application  was  made,  as  far  as  this 
individual  underwriter  was  concerned ;  and  though,  undoubtedl}-,  he 
would  have  been  applied  to  if  he  had  been  in  the  waj',  and  probably 
would  have  added  his  initials  to  the  others,  yet,  as  he  has  not  done  so, 
he  contends  he  is  not  bound.  However,  we  must  decide  on  legal 
grounds,  and  the  question  then  will  be,  whether  the  ship  was  or  was 
not  seaworthy  at  the  time  of  sailing?  Here,  it  must  be  observed,  that 
the  voj'age  insured  was  not  a  voyage  from  London  to  Cuba  and  back 
again  from  Cuba  to  London,  in  other  words,  a  voyage  out  and  home, 
but  a  voyage  from  Cuba  to  Liverpool,  and  that  the  words  added  to  the 
policy  were,  "  with  leave  to  call  ofT  Jamaica,"  thereby  showing  that,  in 
the  opinion  of  the  party  who  added  them,  liberty  to  touch  at  Jamaica 
was  not  within  the  terms  of  the  original  contract.  Now  it  is  clear  that 
a^ship  must  be  seaworthy  at  the  time  when  she  sails  ;  the  assured  war- 
rants  that,  and  whatever  physical  necessities  may  interpose,  he  is  not 
allowed  to  deviate  from  _th£-&tiijct  terms  of  his  wnr|-n_iv|j'  It  is  clear, 
too,  that  what  was  done  b}-  the  captain  in  the  present  case  was  done 
without  fraud  and  for  the  best ;  he  went  from  Cuba  to  Montego  Bay  for 
the  sole  purpose  of  procuring  more  men  :  was  he  justified  in  doing  this 
or  not?  If  he  had  a  sufficient  crew  for  the  voyage  at  Cuba,  then  this 
was  an  increase  of  risk  ;  he  had  no  right  to  go  circuitously  ;  and  the 
touching  at  Montego  Bay  would  thus  be  a  deviation  without  necessity. 
Take  it  the  other  way,  that  he  had  ten  men,  a  sufficient  crew  for  the 


474  FORSHAW   V.   CHABERT.  [CHAP.  VI. 

voyage,  but  only  eight  of  them  engaged  for  Liverpool  and  two  for  Mon- 
tego  Bay,  and  that  he  went  to  Montego  Bay  to  procure  two  others  to 
supply  the  places  of  those  who  were  to  leave  him,  then  the  ship  was  not 
seaworthy  when  she  sailed  from  Cuba,  because  the  captain  ought  then 
to  have  had  ten  men  for  Liverpool,  and  not  eight  for  Liverpool  and  two 
for  Montego  Bay.  Either  the  shipwasjiot  seaworthy  at  tlie  time  of 
sailing,  or  there  has  been  a  deviation.  The  jury  found  that  the  captain 
put  in  to  ^Montego  Bay  for  a  justifiable  cause,  even  though  there  had 
been  no  alteration  in  the  policy  ;  but  1  go  on  the  circumstance  that  the 
sliip  had  not  a  sufficient  crew  at  the  time  she  sailed,  and  that  the  insur- 
ance had  no  inception,  because  the  ship  was  not  seaworthy  at  the  time 
of  sailing.  The  only  way  in  which  the  defendant  could  be  liable,  he 
having  subscribed  a  policy  without  the  words  "with  leave  to  call  off 
Jamaica"  (a  policy  by  which  the  assured  was  bound  to  go  direct  from 
Cuba  to  Liverpool),  would  have  been  by  a  loss  happening  in  that  direct 
course  ;  so  that  a  question  would  arise,  whether  the  defendant  could  be 
liable  in  this  case  on  his  original  contract,  even  though  nothing  had  been 
done  which  could  affect  that  contract :  but  here  there  is  an  alteration  in 
the  body  of  the  policy.^  .  .  . 

First,  then,  the  ship  was  not  seaworthy  at  the  time  of  sailing ;  and, 
secondly,  there  has  been  a  material  alteration  of  the  policy  ;  and  on 
these  grounds  the  defendant  is  entitled  to  have  his  rule  made  absolute. 

Park,  J.  It  is  with  extreme  reluctance  that  I  agree  in  both  points 
in  the  decision  which  has  been  pronounced,  because  the  resistance  in 
this  case  appears  to  be  most  unjust;  but  whatever  feelings  may  arise 
on  the  occasion,  we  must  keep  our  minds  free  from  prejudice,  and  de- 
cide according  to  law.  .  .  .  This,  therefore,  is  clearly  a  material  alter- 
ation. As  to  the  other  point,  I  am  now  of  opinion,  though  I  was  not 
so  when  I  came  into  court,  that  this  vessel  must  be  considered  to  have 
been  not  seaworthy.  Was  she  at  the  time  she  sailed  seaworthy  for  her 
whole  voyage?  She  had  ten  men,  a  crew  sufficient  in  number,  but  only 
eight  of  them  were  engaged  for  the  whole  voyage  ;  and  if  the  captain 
might  start  with  so  imperfect  a  crew,  and  might  supply  the  deficienc}', 
as  he  did  afterwards,  he  might  equally  be  entitled  to  make  a  voyage 
from  port  to  port,  instead  of  a  voyage  direct  from  Cuba  to  Liverpool. 

BuRROUGH,  J.  ...  I  am  clearly  of  opinion  that  there  has  been  a  ma- 
terial alteration  here.  .  .  . 

As  to  the  other  point,  the  ship  sailed,  it  is  true,  with  ten  men  from 
Cuba,  but  eight  of  them  only  were  engaged  for  Liverpool :  can  it  be 
said,  then,  that  she  sailed  with  a  proper  crew  for  the  whole  voyage? 
The  captain  was  bound  to  have  a  proper  complement  when  he  started  ; 
and,  as  he  failed  in  this,  I  am  clearly  of  oiiinion  that  the  ship  was  not 
seaworthy. 

Richardson,  J.  The  first  point  to  be  considered  is,  whether  there 
was  in  this  case  any  valid  contract  on  which  the  plaintiff  could  sue ; 

1  In  reprinting  the  opinions  passages  dealing  with  alteration  have  been  omitted. — 
Ed. 


SECT.  I.]  DIXON   V.   SADLER.  475 

and  I  am  bound  by  the  decisions  to  be  of  opinion  that  there  has  been 
here  a  material  alteration  which  has  avoided  the  policy  as  to  the  de- 
fendant. ...  I  give  no  opinion  on  the  point  whether,  in  this  instance, 
the  ship  was  seaworthy  at  the  time  of  her  sailing. 

Hule  absolute. 


DIXON   V.   SADLER. 
Exchequer,  1839.     5  M.  &  W.  405.^ 

Assumpsit  on  a  policy  of  insurance,  dated  Jan.  22,  1838,  on  the 
ship  "John  Cook,"  and  cargo,  at  and  from  Jan.  17,  1838,  until  July 
17,  1838,  at  noon,  in  port  and  at  sea,  at  all  times  and  in  all  places, 
being  for  the  space  of  six  calendar  months.  The  pleadings  and  the 
procedure  at  the  trial,  before  Parke,  B.,  are  sufficiently  stated  below. 
A  verdict  was  entered  for  the  defendants  on  the  second  issue,  the 
learned  judge  giving  the  plaintiff  liberty  to  move  to  enter  a  verdict  on 
that  issue. 

Alexander,  having  obtained  a  rule  to  enter  a  verdict  accordingl}-,  or 
for  judgment  7ion  obstante  veredicto. 

Cressicell  and  S.  Temple  showed  cause. 

Alexander  and  W.  II.  Watson,  contra.  Cur.  adv.  vidt. 

The  judgment  of  the  court  was  now  delivered  by 

Parke,  B.  In  this  case  the  defendant,  to  a  declaration  upon  a  time 
policy  for  six  months,  stating  a  loss  by  perils  of  the  seas,  pleaded  three 
pleas,  on  each  of  which  issue  was  joined.  On  the  first  and  third,  tlie 
verdict  was  found  for  the  plaintiff ;  on  the  second,  for  the  defendant. 
This  plea  stated,  "that,  though  the  vessel  was  lost  by  perils  of  the 
sea,  yet  that  such  loss  was  occasioned  wholly  by  the  wilful,  wrongful, 
negligent,  and  improper  conduct  of  the  master  and  mariners  of  the 
ship,  by  wilfully,  wrongfully,  negligently,  and  improperly  throwing 
overboard  so  much  of  the  ballast  that  the  vessel  became  unseaworthy, 
and  was  lost  by  perils  of  the  sea,  which  otherwise  she  would  have 
safely  encountered  and  overcome."  On  a  motion  for  judgment  non 
obstante  veredicto,  it  occurred  to  the  court  to  be  questionable  whether 
the  plea  was  not  at  all  events  bad,  inasmuch  as  the  terms  of  it  did  not 
exclude  the  case  of  a  loss  by  barratry,  for  which  the  underwriters  would 
be  clearly  liable,  and  that  on  this  declaration  ;  and,  as  the  fact  certainly 
was,  that  the  crew  were  not  guilty  of  barratry,  it  was  very  properly 
agreed  that  the  plea  should  be  amended  by  inserting  the  words,  "  but 
not  barratrously,"  after  the  words,  "negligently  and  improperly." 
And  the  plea,  therefore,  in  its  present  shape,  raises  tlie  question 
whether  the  underwriters  are  liable  for  the  wilful  but  not  barratrous 
act  of  the  master  and  crew,  in  rendering  the  vessel  unseaworthy  before 

1  The  statement  has  beeu  rewritten.—  Ed. 


476  DIXON  V.    SADLER.  [CHAP.  VI. 

the  end  of  the  voj-age,  b}-  casting  overboard  a  part  of  the  ballast.  The 
case  was  very  fully  and  ably  argued,  during  the  course  of  the  last  and 
present  term,  before  my  brothers  Alderson,  Gurne}',  Maule,  and  myself. 
We  have  considered  it,  and  are  of  opinion  that  the  plea  is  bad  in 
substance,  and  that  the  plaintiff  is  entitled  to  judgment,  notwithstand- 
ing the  verdict.  The  question  depends  altogether  upon  the  nature  of 
the  implied  warranty  as  to  seaworthiness,  or  mode  of  navigation,  be- 
tween the  assured  and  the  underwriter,  on  a  time  policy.  In  the  case 
of  an  insurance  for  a  certain  voyage,  it  is  clearly  established  that  there 
is  an  implied  warranty  that  the  vessel  shall  be  seaworthy,  by  which  it 
is  meant  that  she  shall  be  in  a  fit  state  as  to  repairs,  equipment,  and 
crew,  and  in  all  other  respects,  to  encounter  the  ordinary  perils  of  the 
voyage  insured,  at  the  time  of  sailing  upon  it.  If  the  assurance  at- 
taches before  the  voyage  commences,  it  is  enough  that  the  state  of  the 
ship  be  commensurate  to  the  then  risk,  Annen  v.  Woodman,  3  Taunt. 
30;  Hibbert  v.  Martin,  Park  on  Insurance,  Vol.  I.  p.  299,  n.,  6th  edition, 
and,  if  the  voyage  be  such  as  to  require  a  different  complement 
of  men,  or  state  of  equipment,  in  different  parts  of  it,  as,  if  it  were 
a  voyage  down  a  canal  or  river,  and  thence  across  to  the  open  sea,  it 
would  be  enough  if  the  vessel  were,  at  the  commencement  of  each 
stage  of  the  navigation,  properly  manned  and  equipped  for  it.  But  the 
assured  makes  no  warrant}'  to  the  underwriters  that  the  vessel  shall 
continue  seaworthy,  or  that  the  master  or  crew  shall  do  their  duty 
during  the  voj'age  ;  and  their  negligence  or  misconduct  is  no  defence 
to  an  action  on  the  polic}',  where  the  loss  has  been  immediatel}'  occa- 
sioned by  the  perils  insured  against.  This  principle  is  now  clearly 
established  by  the  cases  of  Busk  v.  Royal  Exchange  Company',  2  B.  & 
Aid.  72;  Walker  v.  Maitland,  5  B.  &  A\d.  171;  Holdsworth  v.  Wise, 
7  B.  &  Cr.  794;  Bishop  v.  Pentland,  id.  219;  and  Shore  v.  Bentall, 
id.  798,  note;  nor  can  an\-  distinction  be  made  between  the  omission 
b}'  the  master  and  crew  to  do  an  act  which  ought  to  be  done,  or  the 
doing  an  act  which  ought  not,  in  the  course  of  the  navigation.  It 
matters  not  whether  a  fire  which  causes  a  loss  be  lighted  improperly, 
or,  after  being  properly  lighted,  be  negligently  attended  ;  whether  the 
loss  of  an  anchor,  which  renders  the  vessel  unseaworth}*,  be  attribu- 
table to  the  omission  to  take  proper  care  of  it,  or  to  the  improper  act 
of  sliip[)ing  it,  or  cutting  it  away  ;  nor  could  it  make  any  difference 
whether  any  other  part  of  the  equipment  were  lost  by  mere  neglect,  or 
thrown  away  or  destroyed,  in  the  exercise  of  an  improper  discretion, 
b}'  those  on  board.  If  there  be  any  fault  in  the  crew,  whether  of 
omission  or  commission,  the  assured  is  not  to  be  responsible  for  its 
consequences.  The  only  case  which  appears  to  be  at  variance  with 
this  principle  is  that  of  Law  v.  Hollingsworth,^  in  which  the  fact  of  the 
pilot,  who  had  been  taken  on  board  for  the  navigation  of  the  river 
Thames,  having  quitted  the  vessel  before  he  ought  (under  what  circum- 
stances is  not  distinctly  stated),  appears  to  have  been  held  to  vitiate 

1  7  T.  R.  160  (1797). —Ed. 


SECT.  I.]  DIXON   V.    SADLER.  477 

the  insurance.  In  this  respect,  we  cannot  help  thinking  that  the  case, 
although  attempts  were  made  to  distinguish  it  in  some  of  the  decided 
cases,  must  be  considered  as  having  been  overruled  b}'  the  modern 
authorities  above  referred  to ;  and  that  the  absence,  from  any  cause 
to  which  the  owner  was  not  privy,  of  the  master  or  any  part  of  the 
crew,  or  of  the  pilot,  who  may  be  considered  as  a  temporary  master, 
after  they  had  been  on  board,  must  be  on  the  same  footing  as  the 
absence,  from  a  similar  cause,  of  any  part  of  the  necessary  stores  or 
equipments  originally  put  on  board.  The  great  principle  established 
by  the^more  recent  decisions  is,  that  if  the  vessel,  crew,  and  equipments 
be_orig1naUvjufficient,  the  assured  has  done  all  that  be  contracted_to 
do^_andJs  not  responsible  for  the  subsequent  deficiency  occasioned  by 
anj'jieglect  or  misconduct  of  the_master  or  crew ;  and  this  principle 
prevents  manyjiice  and  difficult  inquiries,  and  causes  a  more  complete 
indemnity  "tothe  assuredTwhich  is  the  object  of  the  contract  of  insur- 
ance. If  the  case,  then,  were  that  of  a  policy  for  a  particular  voyage, 
there  would  be  no  question  as  to  the  insufficiency  of  the  plea ;  and  the 
only  remaining  point  is,  whether  the  circumstance  of  this  being  a  time 
policy  makes  a  difference.  Tl>ere  are  not  any  cases  in  which  the  obli- 
gation of  the  assured  in  such  a  case,  as  to  the  seaworthiness  or  naviga- 
tion of  the  vessel,  is  settled ;  but  it  may  be  safely  laid  down  that  it  is 
not  more  extensive  than  in  the  case  of  an  ordinary  policy,  and  that, 
if  there  is  no  contract  as  to  the  conduct  of  the  crew  in  the  one  case, 
there  is  none  in  the  other.  Here  it  is  clear  that  no  objection  arises,  on 
the  ground  of  seaworthiness  of  the  vessel,  until  that  unseaworthiness 
■was  caused  by  the  throwing  overboard  a  part  of  the  ballast,  by  the 
improper  act  of  the  master  and  crew ;  and,  as  the  assured  is  not  re- 
sponsible for  such  improper  act,  we  are  of  opinion  that  the  plea  is  bad 
in  substance,  and  the  plaintiff  entitled  to  our  judgment. 

Bale  absolute  to  enter  Judgment  for  the  plaintiff 
non  obstante  veredicto.^ 

1  This  judgment  was  affirmed  in  the  Exchequer  Chamber,  suh  nom.  Sadler  v. 
Dixon,  8  M.  &  W.  895  (1841),  where  Tindal,  C.  J.,  for  the  court,  said:  "No  stress 
■was  laid,  in  the  course  of  tlie  argument  before  us,  upon  any  distinction  to  be  taken 
between  the  implied  warranty  on  the  part  of  the  assured  as  to  the  seaworthiness  of 
the  ship,  in  the  case  of  a  policy  on  a  particular  voyage,  and  of  a  time  policy  ;  nor  do 
we  think  any  such  distinction  can  be  held  to  exist ;  at  all  events,  no  distinction  by 
which  the  obligation,  on  the  part  of  the  assured,  in  the  case  of  a  time  policy,  can  be 
held  to  be  increased  or  extended.  .  .  .  We  think,  upon  the  later  authorities,  the  rule 
is  established,  that  there  is  no  implied  M-arranty  on  the  part  of  the  assured  for  the 
continuance  of  the  seaworthiness  of  the  vessel,  or  for  the  performance  of  their  duty 
by  the  master  and  crew  during  the  whole  course  of  the  voyage." 

See  Copeland  v.  New  England  M.  Ins.  Co.,  2  Met.  432  (1841). 

In  Thompson  v.  Hopper,  6  E.  &  B.  172,  181  (1856),  Erle,  J.,  in  speaking  of  "the 
warranty  of  seaworthiness  implied  in  a  voyage  policy,"  said :  "  When  once  fulfilled, 
so  that  the  policy  has  attached,  it  is  not  always  at  an  end.  The  case  of  a  policy  on 
ship  at  and  from  London  on  a  whaling  voyage  to  the  North  is  almost  too  trite  to  be 
quoted ;  the  warranty  is  for  four  gradations  :  fit  for  dock  in  London ;  fit  for  river  to 
Grave.eend  ;  fit  for  sea  to  Shetland  ;  then  fit  for  whaling.  The  policy  attaches  if  the 
ship  is  fit  for  dock;  but  the  warranty  is  broken  if  the  other  stages  of  fitness  are  not 
completed."  —  Ed. 


478  GIBSON   V.    SMALL.  [CHAP.  VL 

-^    GIBSON,  Plaintiff  in  Error,  v.   SMALL  and  Others,  Defend- 
ants IN  Error. 

House  of  Lords,  1853.     4  H.  L.  C.  353. 

In  this  case  an  action  had  been  brought  in  the  Court  of  Queen's 
Bench  by  Small  and  Others  v.  Gibson,  on  a  policy  of  insurance  effected 
on  the  27tli  of  November,  1843,  by  them,  as  agents,  for  Antonio  Hy- 
pohte  Gigual,  on  the  ship  "the  "  Susan,'  lost  or  not  lost,  in  port  or 
at  sea,  in  all  trades  and  services  whatsoever  and  wheresoever,  during 
the  space  of  twelve  calendar  months,  commencing  on  the  said  25th  day 
of  September,  1843,  and  ending  on  the  24th  day  of  September,  in  the 
year  1844,  both  days  included."  Gibson  pleaded  four  pleas,  of  which 
the  second  alone  is  material :  "  That  the  said  ship  or  vessel,  in  the  said 
declaration  mentioned,  was  not,  at  the  time  of  the  commencement  of 
the  said  risk  in  the  said  policy  of  assurance  mentioned,  nor  at  the  mak- 
ing of  the  said  insurance,  nor  on  the  said  25th  day  of  September,  in  the 
year  of  our  Lord  1843,  in  the  said  declaration  mentioned,  seaworthy, 
or  in  a  fit  and  proper  condition  safely  to  go  to  sea  ;  but,  on  the  contrary, 
was  wholly  unseawortliy ;  "  verification.  Replication  de  injuria,  and 
issue  thereon. 

At  the  trial  of  the  cause  at  the  London  Sittings  after  Trinity  Terra, 
1848,  it  appeared  that,  about  the  beginning  of  September,  1843,  the 
ship  sailed  from  Madras  for  the  Mauritius,  with  283  coolies  on  board  ; 
encountered  very  bad  weather,  and  put  into  Trincomalee,  which  place 
the  captain  was  ordered  to  quit  or  to  go  into  quarantine,  as  the  small- 
pox was  reported  to  be  on  board  his  vessel.  He  preferred  the  former 
alternative,  and  determined  to  try  to  return  to  Madras,  in»rder  to  get 
repaired.  He  encountered  bad  w^cather  on  the  voyage,  and  the  vessel 
became  still  more  damaged,  but  he  arrived  at  Madras  on  the  25th  of 
September ;  so  that  on  the  day  on  which  the  risk  was  to  attach,  the 
vessel  was  at  sea,  seriously  injured,  and  endeavoring  to  make  a  port  to 
get  repaired.  The  necessar}'  repairs  could  not  be  effected  at  Madras, 
and  the  captain  therefore  tried  to  reach  Coringa,  but  met  other  misfor- 
tunes of  a  similar  sort  to  those  before  experienced,  and  was  obliged  to 
put  into  Masulipatam.  The  coolies  refused  to  sta^'  on  board  any  longer, 
the  surveyors  reported  against  the  possibility  of  repairing  the  vessel, 
except  at  a  very  considerable  expense,  and  finally  it  was  sold,  and  the 
owners  gave  notice  of  abandonment. 

The  jury  returned  a  verdict  for  the  defendant,  finding  "  that  the  said 
ship  or  vessel  in  the  said  declaration  mentioned  was  not,  at  the  time  of 
the  commencement  of  the  said  risk  in  the  said  policy  of  insurance  men- 
tioned, nor  at  the  making  of  the  said  insurance,  nor  on  the  said  25th  day 
of  September,  1843,  in  the  declaration  mentioned,  seaworthy,  or  in  a  fit 
and  proper  condition  safely  to  go  to  sea,  but,  on  the  contrar}'  thereof, 
was  at  those  times,  and  each  of  them  respectively,  wholly  unseaworthy." 


SECT.  I.l  GIBSON   V.    SMALL.  479 

^  f 

A  motion  was  afterwards  made  to  enter  judgment  for  the  plaintiff,  non 
obstante  veredicto,  but  the  rule  was  discharged  and  judgment  given  for 
the  defendant.^  A  writ  of  error  was  then  brought  in  the  Exchequer 
Cliamber,  where  the  judgment  of  the  Court  of  Queen's  Bench  was  re- 
versed, and  judgment  was  given  for  the  plaintiff  no?i  obstante  veredicto.^ 
The  case  was  then  brought  by  writ  of  error  to  this  House. 

Tlie  judges  were  summoned,  and  Lord  Chief  Baron  Pollock,  Mr. 
Baron  Parke,  Mr.  Baron  Alderson,  Mr.  Justice  3Iaule,  Mr.  Justice 
Erie,  Mr.  Baron  Piatt,  Mr.  Justice  Williams,  Mr.  Justice  Talfourd, 
and  Mr.  Baron  Martin,  attended. 

The  Attorney-General  (Sir  F.  Thesiger)  and  Mr.  J.  P.  Wilde,  for 
the  plaintiff  in  error. 

Sir  F.  Kelly  and  Mr.  Serjt.  Shee  (Mr.  Unthank  was  with  them),  for 
the  defendants  in  error. 

The  Lord  Chancellor^  proposed  the  following  questions  to  the 
judges : — 

1.  Adverting  to  the  record  and  proceedings  in  this  case,  is  the  policy 
subject  to  an  implied  condition  or  warranty  that  the  ship  was  sea- 
worthy ? 

2.  If  3-ea,  then  did  the  condition  of  seaworthiness  mean  that  the  ship 
was  seaworthy  at  the  time  it  commenced  the  voyage,  or  at  the  making 
of  the  insurance,  or  when  the  liability  of  the  underwriters  commenced, 
that  is,  on  the  2oth  of  September,  1843? 

3.  Are  there  any,  and  if  any,  what  qualifications  in  regard  to  such 
seaworthiness  in  a  case  like  this  which  would  affect  the  rights  of  either 
party  under  the  policy? 

4.  And,  lastly,  whether  the  plea  is  a  valid  plea  in  law  in  answer  to 
the  action? 

Lord  Chief  Baron  Pollock,  on  behalf  of  the  judges,  requested  time  to 
answer  these  questions.     The  request  was  acceded  to.* 

1  Before  Coleridge,  Wightman,  and  Erle,  JJ.  Reported  sub  nom.  Small  v. 
Gibson,  16  Q.  B.  128  (1849).  The  opinion  of  the  court,  after  a  cur.  adv.  vult,  was  deliv- 
ered by  Coleridge,  J.     There  was  no  dissent.  —  Ed. 

2  Before  Maule,  Cresswell,  and  Talfourd,  JJ.,  and  Tarke,  Alderson,  and 
Platt,  BB.  Reported  sub  nom.  Small  v.  Gibson,  16  Q.  B.  141  (185U).  The  opinion 
of  the  court,  after  a  cur.  adv.  vult,  was  delivered  by  Parke,  B.  There  was  no  dissent. 
—  Ed. 

^  Lord  St.  Leonards.  —  Ed. 

*  The  questions  were  proposed  Dec.  10,  1852.  The  answers  were  delivered  April 
28,  185.3.     The  case  was  decided  June  3,  1853. 

The  answers  have  been  omitted  on  account  of  their  length. 

All  the  questions  were  answered  negatively  by  Martin,  B.,  Talfourd,  J.,  Platt, 
B.,  Maule,  J.,  Alderson,  B.,  Parke,  B.,  and  Pollock,  C.  B.  Two  of  these  judges 
indicated  what,  in  their  opinion,  would  be  the  condition  or  warranty  of  seaworthiness 
if  any  such  condition  or  warranty  were  to  be  implied  in  a  time  policy,  Platt,  B.,  say- 
ing that  it  would  be  "  a  condition  or  warranty  of  seaworthiness  at  the  inception  of  any 
voyage  concluded  or  be(;un  during  the  term,  and  in  which,  during  the  term,  the  loss 
assured  against  might  hai)pen,"  and  Alderson,  B.,  saying  that  it  would  be  "a  war- 
ranty that  in  whatever  situation  or  adventure  the  siiip  may  be  during  the  period 
insured,  it  shall,  whenever  it  is  in  the  owner's  power  by  himself  or  his  agents  abroad 


480  GIBSON   V.    SMALL.  [CHAP.  VL 

Lord  St.  Leonards  (having  stated  the  natnre  of  the  case  and  the 
difference  of  opinion  upon  it  among  the  judges  in  the  courts  below  and 
in  this  House)  said  :  — 

The  opinion  of  the  majorit}'  of  the  judges  is  that  which  I  entertained  at 
the  close  of  the  argument,  and  it  has  not  been  shaken  by  the  arguments 

to  make  it  so,  be  so  fitted  and  repaired  as  to  be  able  to  withstand  all  the  ordinary 
dangers  to  which  it  inay,  by  that  situation  or  in  that  adventure,  from  time  to  time  be 
exposed." 

Williams  and  Erle,  JJ.,  answered  the  first  and  fourth  questions  affirmatively 
and  the  third  question  negatively  ;  and  they  agreed  that  Sept.  2,5,  1843,  was  the  date 
upon  which  the  ship  must  be  seaworthy,  Williams,  J.,  saying,  "  I  am  of  opinion  that 
the  policy  is  subject  to  an  implied  condition  of  seaworthiness,  such  condition  meaning 
that  the  ship  was  seawortliy  when  the  liability  of  the  underwriters  commenced,"  and 
Erle,  J.,  saving,  "the  condition  of  seaworthiness  applied  to  the  25th  of  September," 
and  "  seaworthiness  at  any  other  time  appears  to  me  irrelevant." 

The  answers  contained  tliese  passages :  — 

Martin,  B.  "It  is  an  established  rule  of  law  that  a  written  contract  (subject  to 
certain  kuown  exceptions)  shall  be  taken  to  contain  and  express  the  entire  contract 
between  the  parties.  .  .  . 

"  The  terms  of  your  Lordships'  questions  import  that  no  such  condition  or  warranty 
is  expressed  in  the  policy  itself ;  and  there  are  not  any  words  in  it,  except  the  words 
'good  ship,'  from  which  such  a  warranty  could  possibly  be  implied.  I  am  aware  it  has 
been  said  that  these  words  authorize  such  an  implication  ;  but  the  learned  counsel  for 
the  plaintiff  in  error  did  not  so  contend ;  and  I  think  it  clear  that  the  word  '  good,'  as 
there  used,  is  merely  a  description  of  the  ship,  and  not  a  warrant  of  seaworthiness, 
which  includes  a  proper  supply  of  stores,  the  fitness  and  sufficiency  of  the  master  and 
crew,  and  several  other  matters  to  which  the  words  '  good  ship '  have  no  reference 
whatever ;  and  I  think  it  may  be  stated  with  certainty  that  if  such  a  warranty  arises 
by  implication,  it  must  be  by  an  implication  of  law,  or  one  of  that  character,  and  not 
from  any  words  in  the  policy.  This  was  the  argument  on  behalf  of  the  plaintiff  in 
error  at  your  Lordships'  bar,  and  it  was  contended  that  the  seaworthiness  of  the  ship 
was  by  legal  implication  a  condition  precedent  to  the  contract  attaching,  and  that  it 
must  be  taken  as  agreed  between  the  parties,  tliat  the  subject-matter  of  the  insurance 
was  a  seaworthy  ship.  There  can  be  no  doubt  that  such  a  case  might  fall  within  the 
exception  as  to  written  contracts  before  referred  to,  and  that  it  might  be  alleged  and 
proved  as  an  addition  to  the  written  contract  that  such  a  w.irranty  was  understood 
and  known  to  exist  by  all  persons  engaged  in  the  business  of  underwriting.  There  is 
no  such  allegation  or  proof  in  the  present  case,  wliich  arises  upon  the  <iuesti(m  of  a 
judgment  non  ohstunte  veredicto  (a  proceeding  substantially  the  same  as  a  demurrer), 
on  a  plea  in  which  no  warranty  is  averred.  I  think,  however,  that  if  such  an  under- 
standing or  custom  had  been  long  notoriously  j)revalent,  and  had  been  adoptod  and 
acted  upon  in  courts  of  law,  your  Lordships  would  take  judicial  notice  of  it  without 
requiring  any  averment  or  proof  in  the  particular  case,  and  act  upon  and  apply  it  in 
precisely  tlie  same  manner  as  a  rule  of  law." 

Erle,  J.  "  My  answer  to  tlie  first  question  of  your  Lordships  is  in  the  affirma- 
tive, that  the  policy  was  subject  to  a  condition  that  the  ship  was  seaworthy.  It 
appears  to  me  that  this  condition  is  involved  in  all  contracts  of  marine  insurance,  it 
being  necessarily  the  basis  of  the  calculation  on  which  the  insurer  relies  in  fixing  the 
amount  of  the  premium  he  is  to  receive.  Tliat  amount  depends  on  the  degree  of  risk  ; 
in  other  words,  on  the  chance  of  tlie  ship  encountering  the  perils  insured  against  with 
safety  ;  and  unless  it  is  given,  that  the  ship  is  in  some  degree  fit  to  meet  tliose  perils, 
the  loss  is  certain. 

"As  the  word  '.ship,'  in  common  use,  may  denote  either  a  mere  frame,  or  a  ship 
with  its  apparatus  ready  for  sea ;  so,  in  marine  policies,  it  may  be  construed  to  express 
either  the  mere  structure  of  timber,  or  all  that  must  lie  comliined  therewith  to  make  it 
fit  to  perform  service  as  a  ship ;  and  its  meaning  in  different  policies  may  be  made  to 


SECT.  I.]  GIBSON   V.    SMALL.  481 

of  the  two  learned  judges  who  supported  the  judgment  of  the  Court  of 
Queen's  Bench.    In  a  voyage  policy,  where  the  contract  shows  the  nature 

vary  according  to  the  different  nature  of  the  services  required  of  tlie  ships  insured 
therebv  ;  and  the  contract,  so  construed,  contains  the  condition  that  the  sliip  insured 
has  the  degree  of  fitness  for  the  service  it  is  engaged  in,  which  is  expressed  by  sea- 
worthiness ;  it  being  now  settled  that  tlie  term  '  seaworthy,'  wiien  used  in  reference  to 
marine  insurance,  does  not  descriite  absolutely  any  of  the  states  which  a  ship  may  pass 
through,  from  the  repairs  of  the  hull  in  a  dock  till  it  has  reached  the  end  of  its  voy- 
age, but  expresses  a  relation  between  the  state  of  tlie  ship  and  the  perils  it  has  to  meet 
in  the  situation  it  is  in  ;  so  that  a  ship,  before  setting  out  on  a  voyage,  is  seaworthy,  if 
it  is  fit  in  the  degree  which  a  prudent  owner  uninsured  would  require  to  meet  the 
perils  of  the  service  it  is  then  engaged  in,  and  would  continue  so  during  tiie  voyage, 
unless  it  met  with  extraordinary  damage.  I  iiave  not  found  a  definition  of  the  word, 
but  I  gather  its  meaning,  as  above  explained,  from  the  decisions  turning  upon  it. 
Accordin"-  to  this  view,  the  condition  is  derived  from  the  construction  of  the  words  of 
the  instrument.  But  whether  it  is  said  to  be  derived  from  this  source,  or  from  impli- 
cation of  law,  founded  on  the  nature  of  the  contract,  I  am  of  opinion  that  time  policies 
are  subject  to  it  as  well  as  voyage  policies.  If  the  question  turns  on  the  construction 
of  the  instrument,  time  policies  may  be  taken  to  be  identical  with  voyage  policies  in 
all  the  terms,  except  those  relating  to  the  measure  of  tlie  duration  of  the  insurance. 
This,  in  vovage  policies,  is  measured  by  the  motion  of  the  ship  :  in  time  policies,  by 
the  motion  of  the  earth.  Each  contract  is  for  an  indemnity,  and  each  for  a  limited 
time  ;  and  there  seems  no  reason  for  holding  that  an  alteration  in  the  terms  relating  to 
the  time  should  alter  the  effect  of  terms  relating  to  the  indemnity." 

Maule,  J. :  "  It  may  be,  perhaps,  contended  that  in  a  time  policy  the  assured  does 
v.arrant  that  the  ship  is  seaworthy  at  the  commencement  of  every  voyage  which  may 
be  undertaken  during  the  time  for  which  the  insurance  is  effected.  ...  I  am,  however, 
of  opinion,  though  with  some  hesitation,  that  there  is  no  such  warranty  in  such  a 
policy  as  this,  whatever  might  be  the  case  in  a  policy  differently  worded.  I  think  this 
policy  resembles,  in  this  respect,  a  policy  on  a  ship  on  a  voyage  with  leave  to  make 
intermediate  voyages  ;  in  which  case  there  is  no  warranty  of  seaworthiness  respecting 
the  state  of  the  ship  at  the  commencement  of  the  intermediate  voyages,  supposing  it 
to  iiave  been  seaworthy  at  the  beginning  of  the  whole  adventure." 

Parke,  B.  :  "The  policy  is  a  written  instrument,  which  contains  a  number  of 
express  stipulations,  but  none  on  the  subject  of  seaworthiness  ;  for  the  notion  that  it 
was  involved  in  the  term  '  good  ship  '  in  policies  is,  I  think,  put  an  end  to.  .  .  . 

"  If,  then,  there  is  anv  such  warranty  or  condition,  it  must  be  added  to  the  written 
policv,  as  an  incident  annexed  to  the  contract ;  and  that,  either  by  the  usage  of  trade 
or  bv  the  common  law  of  the  land  ;  from  the  nature  of  the  policy  itself,  there  is  no 
other  way  in  which  it  can  be  added. 

"  The  custom  of  trade,  which  ie  a  matter  of  evidence,  may  be  u.sed  to  annex  inci- 
dents to  all  written  contracts,  commercial  or  agricultural,  and  others,  which  do  not 
bv  their  terms  exclude  it,  upon  the  presumption  that  the  parties  have  contracted  with 
reference  to  such  usage,  if  it  is  applicable. 

"  This  is  explained  in  the  case  of  Hutton  v.  Warren,  1  M.  &  W.  475.  But  in  this 
case  there  is  no  evidence  stated  on  the  record  of  such  usage  ;  and  none  such  can  be 
supposed  to  e.Kist,  unless  there  is  evidence  of  it. 

"  Such  a  con<lition  may,  however,  be  annexed  as  a  necessary  incident  by  the  com- 
mon law.  .  =  . 

"  In  the  common  law  of  England  .  .  .  there  is  ample  authority  that  a  warranty  or 
condition  of  seaworthiness  at  the  commencement  of  the  risk  is  implied  in  all  voyage 
policies,  whether  it  has  been  adopted  originally  from  the  law  merchant,  or  implied 
from  the  very  nature  of  the  contract  itself.  So  other  conditions  are  implied  ;  as,  not 
to  deviate  from  the  usual  course  of  the  voyage  — to  commence  it  in  a  reasonable  time, 
—  to  disclose  all  material  circumstances;  and  the  non-performance  of  these  condi- 
tions avoids  the  policv,  whether  it  arises  from  fraudulent  motives  or  not.  .  .  . 

31 


482  GIBSON   V.   SMALL.  [CHAP.  VL 

of  the  adventure,  from  which  the  intent  of  the  parties  ma}-  be  collected, 
the  law  implies  a  consideration  of  seaworthiness  to  perform  the  vo3-age. 
This  has  long  been  a  settled  rule  ;  but  no  such  rule  has  ever  prevailed 
in  regard  to  time  policies.    There  being  no  such  rule,  I  thinU  j-ourLord- 

"  The  only  warranty,  then,  as  to  seaworthiness  in  a  voyage  policy,  recognized  by 
our  law,  is,  according  to  all  the  authorities,  that  the  vessel  was  seaworthy  at  the  com- 
mencement of  tlie  voyage.  But  it  is  equally  clear  that  there  is  no  satisfactory  deci- 
sion, dictum  of  a  judge,  or  authority  of  a  text-writer,  that  there  is  any  such  warranty 
of  seaworthiness  at  the  commencement  of  the  term  in  a  time  policy.  .  .  . 

"  If,  however,  precisely  the  same  principle  applied  to  both  the  case  of  a  voyage 
and  a  time  policy,  if  they  were  exactly  analogous  in  this  respect,  less  positive 
authority  might  be  required;  and  it  miglit  be  thought  that  these,  at  best,  slender 
authorities  would  be  sufficient.  Perhaps  even  without  them  such  a  condition  might 
be  implied,  if  the  cases  were  similar  ;  but  tliey  certainly  are  not.  In  a  voyage  policy, 
the  owner  of  a  ship  has,  generally  speaking,  the  power  to  make  the  ship  seaworthy  at 
the  commencement  of  the  voyage.  In  the  ordinary  course  of  navigation  he  always 
doe.s  so  for  his  own  sake ;  he  is  bound  to  do  so  for  the  safety  of  his  crew,  and  for  the 
safety  of  the  cargo  jtlaced  on  board  ;  he  contracts  with  every  shipper  of  goods  that  he 
will  do  .so.  The  sliipper  of  goods  has  a  right  to  expect  a  seaworthy  ship,  and  may 
sue  the  sliipowner  if  it  is  not.  Hence,  the  usual  course  being  that  the  assured  can 
and  may  secure  the  seaworthiness  of  the  ship,  —  either  directly,  if  he  is  the  owner,  or 
indirectly,  if  he  is  the  shipper,  —  it  is  by  no  means  unreasonable  to  imply  such  a  con- 
tract in  a  policy  on  a  sliip  on  a  voyage,  and  so  the  law  must  clearly  has  implied  it. 

"It  may  happen  indeed,  in  some  cases,  from  the  want  of  proper  materials,  of  skil- 
ful artisans,  of  proper  docks  in  the  port  of  outfit,  of  sufficient  funds  or  credit,  or  from 
the  liidden  nature  of  defects,  that  the  owner  may  not  be  able  to  fulfil  the  duty  of 
making  the  ship  seaworthy  at  the  commencement  of  the  voyage;  but  the  law  cannot 
regard  these  exceptional  cases.  Ad  ea  qnw  frequentius  accidunt  jura  adaptantur  ;  and  it 
wisely,  therefore,  lays  down  a  general  rule,  wliicli  is  a  most  reasonable  one  in  the  vast 
majority  of  voyage  policies,  that  the  assured  impliedly  contracts  to  do  that  which 
he  ought  to  do  on  and  before  the  commencement  of  the  voyage ;  that  is,  to  make  tlie 
ship  seaworthy  at  the  commencement  of  it,  and  in  part,  quoad  hoc,  in  the  preparation 
for  it.  The  contract  contained  in  the  policy  imposes  on  him  no  duties  which  were  not 
incumbent  on  him  before.  But  how  different  is  in  general  the  case  of  one  who  insures 
for  a  time  !  He  does  not  necessarily  knov,'  the  position  of  his  vessel  at  the  commence- 
ment of  the  term  ;  if  the  term  commences  whilst  tlie  vessel  is  absent  from  a  port,  he 
cannot  generally  .speaking,  cause  it  thus  to  be  repaired;  and  no  care  orexpen.se  of 
himself  or  agent  could  secure  that  object.  The  sliip  may  have  lost  anchor,  or  sails,  or 
rudder;  part  of  the  crew  may  have  deserted,  or  be  dead  of  malignant  fever.  All 
these  deficiencies,  generally  speaking,  are  such  tiiat  no  care  or  expense  could  have 
prevented  or  cured.  How  unreasonable,  then,  would  it  be  for  the  law  to  hold  that 
there  was  in  every  case  added  to  a  policy,  which  is  silent  on  the  subject,  a  condition 
which,  in  most  cases,  it  w.ould  be  impossible  for  the  assured  to  fulfil ! 

"  These  considerations  render  a  time  policy  essentially  different  from  one  on  a  ship. 
They  are  powerful  arguments  against  implying  a  condition  of  seaworthiness  by  a 
party  who  generally  has  it  not  in  his  power  to  fulfil  it ;  nor  is  it  satisfactory  to  say 
that  the  condition  ought  to  be  implied  in  all  cases  where  it  actually  is  in  the  power  of 
the  party  to  fulfil  it,  for  the  law  usually  acts  by  general  rules,  and  the  maxim  which  I 
have  quoteil  is  clearly  applicable.  .  .  . 

"I  therefore  come  to  the  conclusion,  from  tliese  premises,  that  there  is  not,  in  the 
case  of  a  time  policy,  an  implied  warranty  or  condition  that  the  vessel  must  be  sea- 
worthy at  the  commencement  of  the  term  insured.  ...  I  am  equally  clear  that  there 
is  no  implied  warranty  or  condition  that  the  ship  insured  shall  be  .seaworthy  at  the 
date  of  insurance.  .  .  .  And,  indeed,  tlie  expression  in  this  policy,  'lost  or  not  lost,' 
which  means  lost  or  not  lost  when  the  policy  was  effected,  totally  excludes  all  idea  of 
an  implied  warranty  or  condition  that  the  ship  was  then  seaworthy."  —  Ed. 


SECT.  I.]  GIBSON    V.    SMALL.  483 

ships  cannot  imply  a  condition  in  this  case,  where  there  is  nothing  on  the 
face  of  the  contract  to  warrant  it. 

Assuming  the  ship  to  be  on  a  voyage  when  the  time  insured  in  a  time 
policy  begins,  all  analogy  fails  between  the  case  of  a  voyage  policy 
and  a  time  policy ;  and  the  very  argument  in  this  case  proves  that  sea- 
worthiness is  not  an  implied  condition  in  a  time  policy,  warranted  by 
custom  and  allowed  by  law.  In  such  a  policy  neither  party  can  be 
supposed  to  know  the  state  of  the  ship  when  the  risk  commenced,  and 
therefore  it  will  be  unreasonable  to  imply  a  condition  of  seaworthiness 
at  that  period.  In  the  case  of  a  policy  for  a  voyage  the  condition  im- 
plied is,  that  the  vessel  is  seaworthy  at  the  commencement  of  the  vo}-- 
age,  not  that  it  shall  continue  so.  If,  therefore,  a  time  policy  effected 
upon  a  ship,  then  on  a  voyage,  should  be  held  to  be  subject  to  an  implied 
condition  in  analogy  to  the  other  case,  it  would  seem  to  follow  that  the 
underwriter  who  undertook  to  indemnify  the  assured  for  the  period 
named  must  take  the  risk  of  the  state  in  which  the  ship  is  from  the 
beginning  of  that  period,  if  the  ship  should  be  then  at  sea.  A  voyage 
policy  would  cover  the  voyage,  and  any  unseaworthiness  during  the 
voyage  could  not  affect  the  policy.  A  time  policy  effected  during  the 
voyage,  for  a  period  beginning  while  the  ship  is  on  the  voyage,  should,  I 
think,  at  all  events,  be  held  to  cast  the  risk  on  the  underwriter  just  as 
he  must  have  borne  it  at  the  period  in  question  under  a  voyage  policy. 
The  analogy  could  not  be  carried  further,  if  even  the  time  contract 
declared  that  the  ship  was  then  on  a  particular  vo3"age. 

If  the  assured  was  guilty  of  any  fraud  or  concealment,  that  would  of 
itself  avoid  the  polic}-,  and  therefore  the  condition  contended  for  in  time 
policies  is  not  necessary  to  guard  against  fraud  or  concealment. 

If  the  ship  had  been  lost  after  the  commencement  of  the  risk,  viz.  the 
25th  of  September,  1843,  though  that  was  before  the  date  of  the  con- 
tract, the  underwriter  would  have  been  liable  b}-  the  terms  of  his  eon- 
tract.  It  is  clear,  therefore,  that  no  condition  of  seaworthiness  at  the 
date  of  the  contract  can  be  implied.  Such  a  condition,  therefore,  if  to 
be  implied,  could,  in  this  case,  only  be  implied  at  the  commencement  of 
the  voyage  ;  but  there  was  no  allegation  as  to  any  unseaworthiness  at 
the  commencement  of  this  particular  vo3'age,  and  courts  of  justice  must 
act  upon  a  rule  general  in  its  application. 

If,  however,  a  ship  was  about  to  sail  upon  a  particular  voyage,  and  a 
time  policy  was  effected,  instead  of  a  policy  on  the  intended  voyage,  as 
at  present  advised,  I  think  that  a  condition  could  be  implied  that  the 
ship  was  seaworthy  at  the  commencement  of  the  voyage.  But  that  is 
not  this  case.  Any  supposed  difficulty  on  the  part  of  underwriters  ma}' 
readily  be  obviated  by  the  insertion  in  time  policies  of  an  express  war- 
ranty of  seaworthiness  at  the  commencement  of  the  risk.  I  do  not 
trouble  your  Lordships  with  the  state  of  the  pleadings,  because  it  is 
admitted  that  the  contention  of  the  plaintiff  in  error  cannot  be  main- 
tained unless  there  is  an  implied  condition  in  every  policy  for  time,  like 
that  in  this  case,  wherever  the  ship  may  be,  that  it  was  seaworthy  at  the 
commencement  of  the  risk  or  the  date  of  the  policy.    No  such  condition 


484  GIBSON   V.    SMALL.  [CHAP.  VL 

can,  I  think,  be  implied  ;  and  therefore  I  advise  your  Lordships  to  affirm 
the  judgment  of  the  Court  of  Exchequer  Chamber, 

Lord  Campbell.  My  Lords,  I  entirely  agree  in  the  opinion  of  my 
noble  and  learned  friend  who  presided  on  the  woolsack  when  this  ease 
was  argued  at  your  Lordships'  bar,  that  the  defendant  in  error  is  enti- 
tled to  our  judgment.  The  allegations  in  the  plea  of  want  of  seaworthi- 
ness, although  proved  to  the  satisfaction  of  the  jury,  do  not  appear  to 
me  to  constitute  a  defence  to  the  action.  I  do  not  proceed  upon  the 
literal  meaning  of  the  word  "seaworthy"  which  was  contended  for. 
Without  regard  to  its  litei-al  or  primary  meaning,  I  assume  it  to  be 
now  used  and  understood  to  state  that  the  ship  is  in  a  condition,  in 
all  respects,  to  render  it  reasonably  safe  where  it  happens  to  be  at  any 
particular  time  referred  to,  whether  in  a  dock,  in  a  harbor,  in  a  river,  or 
traversing  the  ocean. 

The  question  raised  by  this  record  is,  whether  upon  a  policy  of  insur- 
ance on  a  ship  for  time,  in  the  form  of  that  set  out  in  this  declaration, 
there  is  an  implied  condition  that  when  the  polic}"  ought  to  attach  and 
the  risk  to  commence  the  ship  shall  be  seaworthy,  that  is  to  sa}-,  in  a 
proper  state  of  repair  and  equipment  wnth  reference  to  the  situation  in 
which  it  ma}'  then  happen  to  be?  It  is  incumbent  on  the  underwriter, 
who  here  denies  his  liability,  to  show  that  in  every  time  polic}'  there  is 
such  a  condition ;  for  neither  the  declaration  nor  the  plea  discloses  anj' 
facts  from  which  the  condition  is  to  be  implied  in  this  case,  if  it  is  not 
to  be  implied  universall}-. 

There  is  no  custom  or  usage  of  trade  respecting  time  policies,  which 
we  can  take  notice  of,  which  affirms  the  existence  of  such  an  implied 
condition ;  and  after  an  examination  of  all  the  authorities  which  have 
been  cited  on  the  subject,  I  think  it  quite  clear  that  there  is  none  to 
guide  us  to  declare  that  such  an  implied  condition  does  exist.  The  two 
decisions  mainly  relied  upon,  of  Sadler  v.  Dixon,  5  M.  &  W.  405,  and 
8  id.  895,  and  Holliugworth  v.  Brodrick,  7  Ad.  &  E.  40,  have  no  appli- 
cation to  the  question  of  seaworthiness  under  a  time  policy  at  the  com- 
mencement of  the  risk  ;  and  some  casual  expressions  Avhich  may  have 
dropped  in  those  cases  from  learned  judges,  when  this  question  was  not 
at  all  under  their  consideration,  are  entitled  to  no  weight.  Nor  do  the 
American  or  Continental  Jurists,  on  the  present  occasion,  afford  us 
any  aid. 

The  underwriter  is  therefore  driven  to  contend,  that  because  in  poli- 
cies on  ship  "  from,"  or  "  at  and  from"  a  specified  port  to  another  spe- 
cified port,  or  back  to  the  port  of  outfit  (commonl}-  called  "  voyage 
policies"),  there  certainly  is  such  an  implied  condition,  tlie  same  condi- 
tion is  to  be  implied  in  policies  from  a  particular  da}'  to  a  particular 
day  (commonly  called  "  time  policies"),  without  reference  to  the  local 
situation  of  the  ship  when  the  risk  commences  or  terminates. 

With  regard  to  voyage  policies,  we  have  usage  and  authority  estab- 
lishing the  implied  condition  as  certainly  as  any  point  of  insurance  law. 
These  being  wanting  as  to  the  extension  of  the  doctrine  to  time  policies, 
the  reasoning  must  be,  that  as  far  as  this  condition  is  concerned,  the 


SECT.  I.]  GIBSON    V.   SMALL.  485 

contract  by  time  policies  rests  on  the  same  principles,  and  that  no 
distinction  can  be  made  between  them.  The  condition  may  have  been 
implied  in  voyage  policies  from  considering  tliat  probably  both  the  con- 
tracting parties  contemplated  the  state  of  the  ship  when  the  risk  is  to 
begin,  tliat  tliis  state  must  be  supposed  to  be  known  to  the  shipowner, 
that  he  lias  it  in  his  power  to  put  the  ship  into  good  repair  before  the 
voyage  begins  ;  that  to  prevent  fraud,  and  to  guard  the  safety  of  the  crew 
and  the  cargo,  this  obligation  ought  to  be  cast  upon  him  before  he  can 
be  entitled  to  any  indemnity  in  case  of  loss  ;  and,  above  all,  that  this 
implied  condition  in  voyage  policies  is  essentially  conducive  to  the  ob- 
ject of  marine  insurance,  by  enabling  the  shipowner,  on  payment  of  an 
adequate  premium,  and  acting  with  honesty  and  securing  reasonable 
diligence,  to  be  sure  of  full  indemnity  in  case  the  ship  should  be  lost  or 
damaged  during  the  voyage  insured  ;  but  time  policies  are  usually  ef- 
fected when  the  ship  is  at  a  distance,  the  risk  being  very  likely  to  com- 
mence when  it  is  actually  at  sea.  Under  those  circumstances,  is  it  at  all 
likel}-  that  either  party  would  contract  with  reference  to  the  actual  state 
of  the  ship  at  that  time  with  respect  to  repairs  and  equipments?  The 
shipowner  probably  knows  as  little  upon  this  subject  as  the  underwriter. 
Any  information  which  he  has  received  tending  to  show  that  the  ship  is 
in  extraordinary  peril  he  is  bound  to  disclose,  or  the  insurance  effected 
b}"  him  is  void ;  but  is  it  reasonable  to  suppose  that  he  enters  into  a 
warrant}-  or  submits  to  a  condition  which  ma}'  avoid  the  policy  with 
respect  to  a  state  of  facts  of  which  he  can  know  nothing?  We  must 
further  consider  that  this  condition,  in  many  cases,  he  may  have  no 
power  to  perform.  Above  all,  if  this  condition  was  implied  in  time 
policies,  their  object  might  often  be  defeated,  and  the  shipowner,  acting 
with  all  diligence,  and  with  the  most  perfect  good  faith,  might  altogether 
lose  the  indemnity  for  which  he  had  bargained. 

Take  as  an  example  this  policy,  which  is  on  the  ship  "  Susan,"  from 
the  25th  of  September,  1843,  to  the  24th  of  September,  1844. 

This  vessel  may  have  been  employed  on  the  South  Sea  fishery.  It 
may  have  sailed  from  an  island  in  the  beginning  of  September,  1843, 
in  all  respects  in  a  seaworthy  state  ;  but  before  the  25th  day  of  that 
month  may  have  encountered  a  gale  of  wind  in  which  the  sails  may 
have  been  carried  away,  and  other  damage  may  have  been  sustained, 
and  the  master  may  have  died  of  a  malignant  fever;  but  the  ship 
touches  at  another  island  on  the  26th  of  Septeml)er,  is  completely 
re-equipped,  takes  on  board  a  new  master  of  competent  skill,  and 
prosecutes  the  adventure.  Afterwards,  and  before  the  24th  of  Sep- 
tember, 1844,  the  ship  may  be  crushed  between  two  icebergs.  For  any- 
tliing  that  appears  on  tiie  record,  such  may  have  been  the  history  of  the 
"  Susan  ;  "  and  these  facts  are  consistent  with  all  the  allegations  in  the 
declaration  and  in  the  plea.  On  this  hypothesis  the  owner  could  not  be 
indemnified,  because  the  ship  was  not  seaworthy  when  the  risk  was  to 
commence;  namely,  on  the  25th  of  September,  1843.  If  there  is  a  con- 
dition —  an  implied  condition  —  that  the  ship  must  then  be  seaworthy, 
the  policy  neither  attached  then  nor  at  any  subsequent  time,  and  the 


486 


GIBSON   V.   SxMALL.  "        [CIIAP.  VL 


owner's  only  remedy  would  be  to  recover  back  the  premium  he  had 
paid  to  the  underwriters.  Thus  your  Lordships  are  called  upon  to  im- 
ply a  condition  which  the  parties  could  not  have  contemplated,  which 
the  assured  had  no  power  to  perform,  and  which  would  effectually 
defeat  the  object  of  tlie  contract.  If  the  loss  is  caused  by  any  cul- 
pable negligence  of  the  shipowner,  that  may  be  a  defence  to  the  un- 
derwriten  but  if  the  shipowner  acts  with  good  faith  and  reasonable 
diligence,  it  is  surely  much  more  according  to  the  principles  of  insur- 
ance laws,  and  of  common  sense,  that  the  risk  of  the  ship  not  being 
seaworthy  when  the  liability  of  the  underwriter  ought  to  begin,  should 
be  cast  upon  him,  who  can  easily  indemnify  himself  by  demanding  an 
adequate  premium  for  undertaking  it. 

The  only  consideration  pointed  out  for  extending  the  implied  condi- 
tion of  seaworthiness  to  time  policies,  which  made  any  impression  upon 
me,  is  that  it  does  extend  to  voyage  policies  on  goods,  although  the 
assured  can  have  no  control  over  the  repairs  or  equipment  of  the  ship. 
But  between  the  assured  on  goods  and  the  underwriter  there  is  the 
shipowner,  who  must  be  considered  the  agent  of  the  assured,  and  he 
does  undertake  that  the  ship  shall  be  tight,  stanch,  and  strong,  and 
every  way  fitted  for  the  voyage.  If  this  undertaking  is  broken,  the 
merchant  has  no  remedy  against  the  underwriter,  but  he  obtains  a  full 
indemnity  by  suing  the  shipowner,  and  thus,  either  with  the  shipowner 
or  the  underwriter,  the  merchant  is  secure  ;  so  that  the  implied  condi- 
tion in  his  policy  in  no  respect  interferes  with  the  object  of  insurance, 
or  with  the  interests  of  commerce. 

If  your  Lordships  shall  be  pleased,  on  the  motion  of  my  noble  and 
learned  friend,  to  affirm  the  judgment  of  the  Court  of  Exchequer 
Chamber  in  this  case,  it  will  be  definitively  established  that,  by  the 
law  of  England,  in  a  time  policy  such  as  this,  no  special  circumstances 
being  stated  in  the  declaration  or  the  plea  respecting  the  situation  or 
employment  of  the  ship,  there  is  not  an  implied  condition  that  the  ship 
should  be  seaworthy  on  the  day  when  the  policy  ought  to  attach. 

The  other  questions  which  were  debated  at  the  bai-,  and  which  were 
l)ropounded  to  her  Majesty's  judges,  must  be  open  for  judicial  consid- 
eration when  they  arise  ;  but  as  your  Lordsiiips  considered  it  expedient, 
for  general  information  and  for  the  advantage  of  the  commercial  world, 
that  opinions  should  be  given  upon  this  very  important  subject,  although 
they  would  not  be  binding,  I  think  it  right  to  say  that,  after  great  delib- 
eration, I  agree  with  those  judges  who  think  that  in  a  time  policy  there 
is  no  implied  condition  whatever  as  to  seaworthiness.  I  never  for  a 
moment  could  concur  in  the  notion  that  there  was  an  implied  warranty 
that  the  ship  was  seaworthy  when  it  sailed  on  the  voyage  during  which 
tlie  policy  attached.  To  lay  down  such  a  rule  would.  I  think,  lie  a 
very  arbitrary  and  capricious  proceeding,  and  being  wholly  unsanctioned 
by  usage  or  by  judicial  antiiority,  would  be  legislating  instead  of  declar- 
ing the  law.  I  likewise  think  that  it  would  be  very  inexpedient  legis- 
lation, as  constant  disputes  would  arise  in  construing  tlie  rule ;  for  in 
fishing  adventures,  and  where  ships  are  employed  for  years  in  trading 


SECT.  I.J  GIBSON   V.    SMALL.  487 

in  distant  regions  from  port  to  port,  the  instances  in  wliich  time  policies 
are  chiefly  resorted  to,  there  would  be  infinite  difficulty  in  determin- 
intr  what  was  the  commencement  of  the  voyage  during  which  the  policy 
attaches.  There  would  be  a  similar  difficulty  as  to  the  terminus  ad 
quem^  in  considering  what  the  voyage  truly  is  for  which  the  ship  must 
be  fit. 

I  have  hesitated  more  upon  the  question  whether,  when  a  time  policy 
is  effected  upon  an  outward-bound  ship  lying  in  a  Britisli  port  where 
the  owner  resides,  a  condition  of  seaworthiness  is  to  be  implied.     This 
might  be  an  exception  to  tlie  general  rule,  that  in  time  policies  there  is 
no  implied  warranty  of  seaworthiness,  and  it  is  free  from  some  strong 
objections  to  the  condition  of  seaworthiness  being  implied  where  the 
rislv  is  to  commence  abroad.     But  in  addition  to  the  objection  that  as 
yet  there  has  been  no  instance  of  an  implied  condition  of  seaworthiness 
in  any  time  policy,  and  that  the  general  rule  is  against  such  a  condition, 
this  would  be  a  gratuitous  and  judge-made  exception  to  the  rule.     I 
think  it  more  expedient  that  the  rule  should  remain  without  any  excep- 
tion, and,  as  at  present  advised,  I  should  decide  against  the  implied 
condition  in  all  cases  of  time  policies.     There  is  a  broad  distinction 
which  may  always  be  observed  between  time  policies  and  voyage  poli- 
cies ;  but  when  you  come  to  subdivide  time  policies  into  such  where  the 
ship  is  in  a  British  port  and  where  the  ship  is  abroad,  and  still  more  if 
the  residence  of  the  shipowner  is  to  be  inquired   into  and  regarded, 
there  would  be  a  great  danger  of  confusion  being  occasioned  by  the 
attempted  classification.    It  is  most  desirable  that  in  commercial  trans- 
actions there  should  be  plain  rules  to  go  by,  without  qualification  or 
exception.     ^larine  insurance  has  been  found  most  beneficial,  as  hith- 
erto regulated,  and  I  am  afraid  of  injuring  it  by  new  refinements.    .1 
should  be  glad,  therefore,  that  it  should  be  understood,  according  to 
my  present  impression  of  the  law,  that  there  is  in  all  voyage  policies, 
but  that  there  is  not  in  any  time  policies,  framed  in  the  usual  terms,  a 
condition  of  seaworthiness  implied.     This  rule,  I  believe,  is  adapted  to 
the  great  bulk  of  the  transactions  of  navigation  and  commerce,  and 
when  any  case  occurs  to  which  it  is  not  adapted,  this  may  be  easily 
provided  for  by  express  stipulation.     My  observations  upon  this  last 
point  I  offer  with  the  greatest  diffidence,  after  what  has  fallen  from  my 
noble  and  learned  friend,  for  whose  opinion,  on  all  subjects  within  the 
whole  range  of  the  law  of  England,  I  entertain  the  most  sincere  re- 
spect.    I  am  glad  to  think  that  one  important  question  of  insurance 
law  is  now  finally  settled. 

Judgment  of  the  Exchequer  Chamber  affirmed} 

1  Ace. :  Jones  v.  Insurance  Co.,  2  Wall.  Jr.  278  (1852) ;  Capen  v.  Washington  Ins. 
Co.,  12  Cush.  517  (18.53) :  Macy  '•.  Mutual  M.  Ins.  Co  ,  12  Gray,  497  (18.59). 

Contra:  Hoxie  v.  Home  Ins'  Co  ,  .32  Conn.  21  (1864). 

See  Thompson  v.  Hopper,  6  E.  &  B.  172  (1856) ;  Fawcns  v.  Sarsfield,  6  E.  &  B.  192 
(1856);  Dudgeon  v.  Pembroke,  2  App.  Cas.  284  (1877).  —  Ed. 


488  BICCARD   V.   SHEPHERD.  [CHAP.  VI, 


BICCARD  AND  Others,  Trustees  of  the  Commercial  Marine  and 
Fire  Assurance  Company,  Appellants,  v.  SHEPHERD  and 
Others,  Trustees  of  the  Namaqua  Mining  Company,  Respon- 
dents. 

Privy  Council,  1861.     14  Moo.  P.  C.  471.^ 

This  was  an  appeal  from  the  Supreme  Court  of  the  Cape  of  Good 
Hope,  which  had  entered  judgment  for  the  assured,  the  respondents. 
The  facts  are  sufficiently  stated  in  the  opinion. - 

Mr.  Bovill,  Q.  C,  and  Mr.  P/upson,  for  the  appellants. 

Mr.  Lush,  Q.  C,  and  Mr.  Hodgson^  for  the  respondents. 

Judgment  was  delivered  b}' 

The  Right  Hon.  Lord  Wensleydale.  The  respondents  in  this  case 
sought  to  recover  a  total  loss  upon  a  policy  for  £4,000  subscribed  on 
behalf  of  the  defendants,  an  insurance  company  at  the  Cape  of  Good 
Hope,  on  copper  ore,  on  a  ship,  the  "Admiral  Collingwood,"  at  and 
from  the  anchorages  off  Hondeklip  Bay  and  Port  NoUoth  to  Swansea, 
to  commence  upon  the  loading  on  board  the  ship  at  and  from  the  above 
ports. 

The  respondents,  under  this  policy,  might  have  shipped  what  pro- 
portion of  the  copper  ore  they  pleased  at  one  anchorage  or  the  other, 
probably  the  wiiole  at  one.  They  put  on  board  at  Hondeklip  154 
tons.  The  vessel  sailed  to  Port  Nolloth  with  that  quantity  on  board  ; 
arrived  at  Port  NoUoth,  there  took  on  board  the  further  quantity  of 
250  tons,  and  sailed  for  Swansea.  In  the  way  thither  she  sank,  and 
the  copper  ore  was  lost. 

On  the  trial  before  the  judges  of  the  Supreme  Court  of  the  colony  of 
the  Cape  of  Good  Hope,  who  are  judges  both  of  fact  and  law,  witnesses 
were  examined  on  both  sides,  and  the  judges  did  not  all  take  the  same 
view  of  the  evidence.  On  perusing  that  evidence,  the  probability,  tiieir 
Lordships  think,  is  that  the  ship  was  seaworth}'  at  Hondeklip,  and  when 
she  arrived  at  Port  NoUoth ;  but  that  she  became  unseaworth}^  when 
she  was  loaded  with  the  additional  copper  at  that  place,  and  sailed  with 
it  for  Swansea,  the  cargo  being  then  too  heavy  for  her.  We  think  we 
may  assume  this  to  be  the  true  state  of  the  facts  ;  and  then  follows  the 
question  of  novelty  and  some  nicety.  Are  the  assured  entitled  to  re- 
cover for  the  loss  of  the  wliole  cargo ;  or,  if  not,  are  the^-  entitled  to 
recover  for  the  loss  of  the  154  tons  shipped  at  Hondeklip? 

^  The  reporter's  statement  has  been  omitted.  It  included  parts  of  the  opinions 
delivered  in  the  Suj>reme  Court  of  the  Ca|)e  of  Good  Hojie.  —  Eu. 

2  Present  at  tlie  first  lieariiig  of  tiie  appeal:  Tlie  Ki^ht  Hon.  Lord  Kixgsdown, 
tlie  Kight  Hon.  tlie  Lord  .Justice  Knight  Bruck,  the  Right  Hon.  Sir  Edward  Ryan, 
and  tlie  Right  Hon.  the  Lord  Justice  Turner. 

Present  at  the  second  argument:  The  Riglit  Hon.  Lord  Wensleydale,  the  Riglit 
Hon.  Lord  Kixgsdown,  the  Right  Hon.  the  Lord  -Justice  Knight  Bruce,  the  liight 
Hon.  Sir  Edward  Ryan,  and  the  Right  Hon.  the  Lord  Justice  Turner.  —  Rep-. 


SECT.  I.]  BICCAED   V.   SHEPHERD.  489 

Their  Lordships  have  had  great  difficulty  iu  coming  to  a  conclusion 
upon  it,  but  after  much  consideration  agree  that  the  plaintiffs  are  enti- 
tled to  recover  for  the  latter,  but  for  the  latter  onlv. 

Some  propositions  in  the  doctrine  of  the  implied  warrant}-  of  sea- 
worthiness, which  forms  a  part  of  every  contract  of  marine  insurance 
on  voyages  (for  to  time  policies  it  does  not  apply),  are  perfectly 
settled.^  .  .  . 

There  is  a  warranty  of  a  similar  nature  iu  an  insurance  upon  goods 
with  respect  to  the  ship  upon  which  they  are  loaded.  Whether  this 
warranty  is  to  be  qualified  in  the  manner  pointed  out  by  Mr.  Lush  iu 
his  very  able  argument,  it  is  not  necessary  to  determine.  He  contended 
that  when  a  shipment  takes  place  in  an  intermediate  open  anchorao-e 
(not  a  port  where  there  are  means  of  repair),  and  in  the  course  of  a 
voyage  from  another  terminus,  all  that  the  shipowner  impliedl}'  war- 
rants to  the  shipper,  and  all  that  the  shipper  impliedly  warrants  to  the 
assurer,  as  to  the  state  of  the  ship,  is  that  the  ship  was  seaworthy  at 
the  commencement  of  the  original  voyage  to  the  place  of  shipment. 
"Whether  this,  which  is  a  highly  reasonable  proposition,  be  correct  or 
not,  we  need  not  inquire,  because,  upon  the  evidence,  there  appears 
no  doubt  that  the  ship  was  seaworthy  at  Hondeklip,  where  the  first 
parcel  of  ore  was  put  on  board,  as  at  the  Cape. 

What,  then,  is  the  commencement  of  the  sea  voyage  in  this  case, 
which  is  to  fix  the  time  when  the  warranty  is  to  attach,  and  when  the 
vessel  is  to  be  fit  in  all  respects  for  sea  navigation?  The  appellants 
contend  that  the  words  "at  and  from  the  anchorages  off  Hondeklip 
Bay  and  Port  Xolloth  to  Swansea,"  are  equivalent  to  "  at  and  from  the 
coast  of  Africa  to  Swansea,"  and  that  the  sea  voyage  began  at  Port 
NoUoth  ;  and  it  was  likened  to  an  insurance  at  and  from  the  island  of 
Jamaica  to  England,  in  wliich,  it  was  said,  the  sea  voyage  would  begin 
with  the  departure  from  the  island  ;  and  the  case  of  Bond  v.  Nutt, 
2  Cowp.  601,  was  referred  to  as  proof  of  that  proposition. 

Their  Lordships  think  that  such  a  construction  cannot  be  put  on 
these  words,  and  the  case  of  Bond  v.  Nutt  is  only  an  authority  to  show 
that  the  departure  from  the  island  was  within  the  meaning  of  a  warrant}- 
to  sail  on  or  before  a  certain  day,  and  not  the  commencement  of  a  sea 
voyage  within  the  meaning  of  a  warrant}-  of  seaworthiness.  The  first 
voyage  from  port  to  port  in  the  island,  through  the  open  sea,  would  an- 
swer that  description. 

The  true  construction  of  the  words  in  question  undoubtedly  is  -at 
and  from  Hondeklip  to  Swansea,  or  at  and  from  Hondeklip  to  Port 
Xolloth,  and  at  and  from  that  port  to  Swansea,"  as  the  power  to  ship 
at  one  or  more  of  these  places  might  be  exercised  (whether  the  places 
are  to  be  taken  in  their  order  is  immaterial  to  this  inquiry).  It 
seems  to  their  Lordships,  therefore,  as  there  were  undoubtedly  two 
risks  insured,  —  one  on  the  parcel  of  goods  shipped  at  Hondejvlip, 

1  The  omitted  passage  contained  a  quotation  from  Dixou  v.  Sadler,  ante,  p.  475 
(1839).  — Ed. 


490  BICCAKD   V.    SHEPHERD.  [CHAP.  VI. 

another  on  those  shipped  at  Port  Nolloth,  —  that  the  sea  voyage  • 
may  be  considered  as  beginning  at  different  times  ;  with  respect  to  the 
first  parcel  at  Ilondeklip,  with  respect  to  the  second,  at  Port  Nolloth. 
As  to  the  first  part,  the  implied  warranty  of  seaworthiness,  being 
that  the  ship  was  in  a  proper  state  of  repair  and  equipment,  and 
sufficient  for  the  carriage  of  the  cargo  then  put  on  board  to  Swansea, 
was  certainly  complied  with.  It  could  not  be  that  there  was  an  implied 
warranty  that  the  ship  then  was  in  a  fit  state  to  carry  all  tiiat  might  be 
put  on  board  at  Port  Nolloth,  so  that  if  the  ship  should  be  lost  before  it 
ari'ived  at  Port  Nolloth,  with  the  goods  then  shipped  on  board,  nothing 
would  be  recovered  on  the  policy  ;  for  before  the  second  shipment  the 
vessel  might  have  been  put  into  a  state  fully  sufficient  to  carry  the  whole 
caro-o.  The  warranty  being  complied  with  at  Hondeklip  as  to  the  154 
tons  there  put  on  boaVd,  the  subsequent  improper  conduct  of  the  master 
and  crew  in  rendering  the  vessel  unseaworthy  at  Port  Nolloth  cannot 
affect  the  right  to  recover  pro  tanto.  The  assured  or  their  agents, 
though  concerned  in  the  shipment,  probably  knew  nothing  of  the  ca- 
paciU-  of  the  ship  to  carr\-  the  goods  they  put  on  board  ;  and  the  fault 
\7as  that  of  tlie  master  and  crew,  which  would  not  avoid  the  policy,  nor 
would  it  if  the  shipping  agents  were  parties,  as  the  ship  was  immedi- 
ately lost  by  the  perils  insured  against.  Redman  v.  Wilson,  U  M.  & 
^Y.  476. 

Their  Lordships,  therefore,  have  come  to  the  conclusion  that  for  the 
first  shipment  the  assured  are  entitled  to  recover. 

But,  with  respect  to  the  second  parcel,  that  shipped  at  Port  Nolloth, 
the  implied  warranty,  that  the  ship  should  be  there  fit  to  carry  the  addi- 
tional as  well  as  the  original  cargo,  was  certainly,  upon  their  Lordships' 
view  of  the  evidence,  not  complied  with,  and  therefore  the  respondents 
cannot  recover. 

The  pleadings  do  not  appear  to  have  been  framed  very  accurately  to 
raise  this  defence ;  but  this  objection  has  not  been  pressed  upon  their 
Lordships. 

Therefore  their  Lordships,  after  much  consideration,  and  not  without 
some  doubt,  have  determined  to  advise  her  Majesty  to  affirm  the  judg- 
ment as  to  the  value  of  the  154  tons  shipped  at  Hondeklip  and  reverse 
it  as  to  the  residue. 


SECT.  I.]  HOXIE   V.   PACIFIC   MUTUAL   INS.    CO.  491 

HOXIE.  V.    PACIFIC   MUTUAL   INS.    CO. 
Supreme  Judicial  Court  of  Massachusetts,  18G3.     7  Allen,  211. 

Contract  on  a  policy  of  insurance  dated  September  14,  18G0,  by 
which  the  defendants  insured  the  plaintiff  in  the  sum  of  $6,000,  on  Ihe 
bark  "  Nimrod,"  at  and  from  the  12th  daj-  of  September,  1860,  at  noon 
to  the  12th  day  of  September,  1861,  at  noon. 

At  the  trial  in  this  court,  before  Metcalf,  J.,  it  appeared  that  the 
bark  sailed  from  Perth  Amboy  on  the  27th  of  May,  1860,  on  a  voyage 
to  Aspinwall,  laden  with  coal.  A  few  days  after  she  sailed  she  met 
with  a  severe  gale,  during  which  she  sprung  a  leak,  and  leaked  so 
badly  that  she  was  obliged  to  put  back  to  Bermuda,  which  she  had 
passed  in  the  course  of  her  voyage,  as  a  port  of  distress.  At  Bermuda, 
by  the  order  of  surveyors,  her  cargo  was  discharged,  and  extensive  re- 
pairs were  made,  continuing  for  more  than  three  months.  It  was  agreed 
that  on  the  1st  of  September,  1860,  she  was  undergoing  repairs  which 
were  not  completed  until  the  17th  of  the  same  month,  and  that  shortlj' 
afterwards  she  proceeded  to  Aspinwall,  delivered  her  cargo,  went  from 
there  in  ballast  to  Kingston,  Jamaica,  where  she  discharged  her  ballast 
and  took  in  some  logwood,  after  which  she  went  to  St.  Ann's  Bay  and 
took  in  some  sugar,  fustic,  rum,  and  other  articles,  and  sailed  for  London 
about  the  2oth  of  July,  1861.  Shortly  after  sailing  she  began  to  leak, 
the  sugar  in  her  hold  melted,  she  had  a  heavy  list,  and  ultimately  fell 
over  and  sunk. 

It  was  in  controversy  whether  injuries  sustained  on  her  passage  to 
Bermuda,  not  sufflcientl}'  repaired,  occasioned  her  loss,  or  whether  the 
loss  was  attributable  to  perils  occurring  after  the  12th  of  September, 
1860  ;  and  the  judge,  in  conformity  to  a  request  of  the  plaintiff*,  in- 
structed the  jur^'  that  "  if  the  vessel  was  seaworth}-  when  she  left  Perth 
Amboy,  and  if  she  was  injured  by  the  perils  of  the  seas  before  putting 
into  Bermuda,  and  if  the  master  used  all  care  and  attention  in  making 
repairs,  but  left  port  with  some  injury  not  repaired,  because  the  same 
was  not  after  such  care  and  diligence  discovered  either  by  him  or  the 
surveyors,  the  underwriters  are  not  discharged  by  reason  of  the  non- 
repair of  such  undiscovered  injury,  even  if  the  loss  was  occasioned 
thereby." 

The  jury  returned  a  verdict  for  the  plaintiff,  for  $5,741  damages,  and 
the  defendants  alleged  exceptions. 

J.  H.  Clifford  and  H.  Gray,  Jr.^  for  the  defendants. 

iS.  Bartlett,  for  the  plaintiff. 

BiGELOW,  C.  J.^  .  .  .  As  nothing  is  shown  to  the  contrar}',  it  must 
be  assumed  that,  at  the  date  of  the  polic}'  and  on  the  day  when  the  risk 
began,  the  vessel  was  in  such  condition,  undergoing  repairs,  that  she 
was  then  seaworthy  for  port,  so  that  the  policy  attached. 

1  The  length  of  the  opiniou  has  made  it  impracticable  to  reprint  the  whole.  —  Ed. 


492  HOXIE   V.    PACIFIC   MUTUAL   INS.    CO.  [CHAP.  VI. 

In  this  state  of  facts  the  question  to  be  determined  is,  whether  in  a 
policy  on  time  upon  a  vessel  so  situated  there  is  an  implied  warranty  of 
seaworthiness,  similar  to  that  which  the  law  implies  in  case  of  a  voyage 
polic3',  —  that  is,  that  the  vessel  is  not  only  seaworthy  for  port,  but 
also  in  a  suitable  condition  for  sea,  by  a  breach  of  which  the  insurers 
are  discharged  from  liability  for  loss,  happening  from  any  cause.  This 
is  an  interesting  and  impoi'tant  question  of  commercial  law,  which  has 
never  yet  been  adjudicated  in  tliis  commonwealth.-^  .  .   . 

It  cannot  be  denied  that  until  the  recent  discussions  arising  in  the 
cases  of  Capen  v.  Washington  Ins.  Co.  and  Small  v.  Gibson,  it  had 
always  been  assumed  as  a  settled  doctrine  of  the  law  of  insurance  that, 
in  policies  on  ships  and  vessels,  whether  for  a  voyage  or  for  time,  there 
was  an  implied  warrant}'  of  seaworthiness.  If  we  turn  to  foreign  jurists 
and  commentators  on  the  commercial  codes  of  continental  Europe, 
whence  we  derive  most  of  the  rules  and  principles  which  lie  at  the 
foundation  of  our  law  of  marine  insurance,  we  shall,  it  is  ])elieved,  find 
no  trace  that  any  distinction  was  recognized  in  the  application  of  the 
doctrine  of  seaworthiness  to  policies  for  a  vo3'age  or  on  time.  That 
policies  on  time  were  not  unknown  contracts  in  the  commercial  com- 
munities of  Europe  prior  to  the  year  1781,  when  Emerigon  wrote  his 
treatise,  is  manifest  from  his  statement  in  c.  13,  §  3,  that  he  had  seen 
insurances  made  for  one  3ear  in  which  "  the  entire  year  forms  the  voy- 
age insured." ^  .  .   . 

But  although  the  doctrine  of  warrant}'  of  seaworthiness  as  applied  to 
time  policies  was  not  doubted  or  called  in  question  until  the  recent  dis- 
cussions already  alluded  to,  it  was  nevertheless  suggested  long  since 
that  some  modification  of  it,  as  it  was  usually  understood  in  respect  to 
vo3'age  policies,  might  become  necessar}'  in  certain  cases  where  insurance 
was  effected  on  a  ship  or  vessel  while  at  sea,  for  a  limited  time.  Such 
seems  to  have  been  the  intimation  of  the  late  chief  justice  of  this  court, 
in  Paddock  r.  Franklin  Ins.  Co.,  11  Pick.  231,  accompanied,  however, 
with  a  distinct  intimation  that  the  warranty  of  seaworthiness,  although 
it  might  be  applied  with  great  liberality  in  such  cases,  would  not  be 
wholl}'  dispensed  with.^  .   .  . 

It  is  eas3'  to  see  a  good  reason  for  holding  that  a  policy  on  time, 
effected  on  a  vessel  when  at  sea,  does  not  include  an3'  warranty  of  her 

1  Here  were  cited  Capen  v.  Wasliington  Ins.  Co.,  12  Cush.  517  (1853);  Small  v. 
Gibson,  16  Q.  B.  128,  141  (Ex  Ch.,  1850) ;  Gibson  v.  Small,  ante,  p.  478  (IT.  L.,  185.3) ; 
Thompson  v.  Hopper,  6  E.  &  B.  172  (1850) ;  Fuwcus  v.  Sarsfield,  6  E.  &  B.  192  (1856)  ; 
Marsliall  on  Ins.  (Sheo's  ed.)  127.  —  Ed. 

-  Here  were  cited  Mucks  v.  Thornton,  Holt  N.  P.  .30  (1815);  Hollingworth  v.  Brod- 
rick,  7  Ad.  &  E.  40  (1837);  Sadler  v.  ])i.\on,  8  M.  &  W.  895  (1841)  ;  3  Kent  Com. 
(6th  ed.)  287,  307  ;  1  I'hillips  on  Ins.  §§  095,  727  ;  Martin  r.  Fishing  Ins.  Co.,  20  Pick. 
389  (1838)  ;  and  Thompson  v.  Hopper,  6  E.  &  B.  172,  179  (1856),  where  Eule,  J.,  dis- 
senting, said :  "  It  does  not  appear  tliat  any  person  ever  expressed  the  opinion  that 
there  was  no  warranty  iu  any  time  policy  until  Baron  Parke  spoke  iu  the  House  of 
Lords."  —  Ed. 

'  Here  was  cited  1  Arnould  Ins.  (2d  ed.)  411,  669.  —  Ed. 


SECT.  I.]  HOXIE    v.    PACIFIC   MUTUAL   IXS.    CO.  493 

seaworthiness  at  the  commencement  of  tlie  risk.     In  such  case,  the  in- 
surance is  on  a  "  vessel  in  an  unknown  sea  in  an  unknown  state."    The 
insured  has  no  means  of  knowing  her  actual  condition,  or,  if  she  is 
injured  and  out  of  repair,  of  restoring  her  to  a  condition  of  seaworthi- 
ness.    Botli  parlies  enter  into  the  contract  with  a  full  knowledge  of 
these  facts.     It  would  not  only  be  pushing  a  rule  of  law  to  an  unrea- 
sonable extent  to  say  tliat  undi-r  sucii  circumstances  the  assured  under- 
takes to  warrant  his  ship,  of  the  condition  and  circumstances  of  which 
he  can  know  nothing,  to  be  then  seaworthy  for  any  purpose,  but  it 
would  be  contrary  to  the  manifest  intent  and  understanding  of  the 
parties.     In  such  cases,  the  circumstances  attending  the  making  of  the 
contract  of  insurance  tend  directly  to  rebut  any  implication  of  a  war- 
ranty of  seaworthiness  at  the  inception  of  the  risk.     But  when  it  is 
attempted  to  go  further,  and  to  say  that,  because  in  certain  cases  of 
insurance  on  time  it  cannot  be  reasonably  held  that  there  is  an  implied 
warranty  of  seaworthiness  at  the  inception  of  the  risk,  there  is  no  such 
implied  warranty  at  all  in  any  such  policy,  whatever  may  be  the  circum- 
stances under  which  the  contract  was  entered  into,  the  reasoning  is  fal- 
lacious and  unsound.     Such  a  conclusion  would  be  at  variance  with  the 
authorities  and  principles  on  which  the  doctrine  of  seaworthiness  as  the 
basis  of  the  contract  of  insurance  is  founded,  and  would  wrest  a  par- 
ticular class  of  policies  from  all  the  analogies  which  regulate  and  govern 
other  contracts  of  insurance  precisely  alike  in  all  respects  except  in  the 
single  particular  that  the  limitation  of  the  risk  is  regulated  by  a  fixed 
period  of  time,  instead  of  by  the  duration  of  a  voyage,  or,  as  it  is  some- 
times expressed,  by  the  motion  of  the  earth  instead  of  by  the  motion  of 
the  ship.     Certainly  it  would  be  contrary  to  all  the  received  canons  of 
legal  exposition  to  construe  policies  of  this  nature  as  if  they  were  iso- 
lated contracts,  having  no  connection  with  or  affinity  to  other  similar 
contracts  under  the  law  merchant,  and  to  which  only  the  general  rules 
regulating  the  interpretation  of  ordinary  written  contracts  are  to  be 
applied.     These  policies  ought  not  to  be  taken  out  by  the  mere  force  of 
judicial  construction  from  the  class  of  contracts  to  which  they  belong, 
or  from  the  rules  and  principles  by  which  such  contracts  are  interpreted, 
any  further   than   is   rendered   absolutely   necessary  by  the    peculiar 
stipulation  which  distinguishes  them  from  other  contracts  of  marine 
insurance.  .  .  . 

Why,  then,  should  the  implied  warranty  of  seaworthiness  be  wholly 
rejected  as  inapplicable  to  this  large  class  of  marine  insurances  ?  Most 
of  the  reasons  on  which  the  doctrine  of  such  warranty  is  founded,  and 
which  led  to  its  adoption  and  incorporation  into  our  system  of  commer- 
cial law,  apply  with  as  much  force  to  policies  on  time  as  to  those  for  a 
voyage.  So  far  as  the  rule  rests  on  sound  policy,  having  in  view  the 
benefit  of  commerce  and  the  preservation  of  human  life  by  guarding 
against  the  danger  of  carelessness  and  neglect  on  the  part  of  the  as- 
sured concerning  the  condition  of  the  ship  and  the  consequent  safety  of 
passengers  and  crew,  all  policies  on  time  certainly  ought  not  to  be 


494 


HOXIE    V.    PACIFIC   MUTUAL    INS.    CO.  fcHAP.  VI. 


exempted  from  its  operation.     So  far  as  it  is  deemed  to  be  of  the 
essence  of  tiie  contract  that  the  subject  of  it  shall  be  fit  and  suitable 
for  the  purpose  for  which  the  parties  understand  and  intend  that  it  is  to 
be  used,  so  that  the  insurer  may  have  a  fair  chance  of  earning  his  pre- 
mium, which  he  would  not  have  if  there  was  an  original  and  inherent 
vice  in  the  thing  for  the  loss  of  which  he  agrees  to  indemnify  the  owner, 
the  warranty  tliat  the  ship  is  seaworthy  would  seem  to  form  as  essential 
a  part  of  the  contract  of  insurance  in  a  time  policy  as  in  a  policy  for  a 
voyage.     Equally  necessary,  too,  is  such  warranty  in  botli  classes  of 
policies,  in  order  to  prevent  fraudulent  insurances  effected  with  a  design 
to  obtain  compensation  for  losses  not  happening  from  perils  of  the  sea. 
Nor  can  we  see  anything  in  the  nature  of  the  warranty  itself  which  ren- 
ders it  incapable  of  being  applied  to  most  policies  on  time,  substantially 
with  the  same  effect  as  to  voyage  policies.     Such  warranty  in  case  of  a 
voyage  policy  is  not  necessarily  implied  at  the  date  of  the  policy  or  the 
commencement  of  the  risk,  nor  does  it  always  extend  to  or  cover  a 
period  of  time  anterior  to  those  dates,  if  the  vessel  is  at  sea  when  the 
policy  is  effected.    In  a  policy,  for  instance,  for  a  voyage,  effected  after 
a  ship  has  sailed,  and  to  commence  on  a  designated  day  after  her 
dei)arture,  the  warranty  of  seaworthiness  is  satisfied  if  she  was  sea- 
worthy when  she  departed  from  port,  bound  on  her  voyage.     Nor  does 
the  warranty  in  a  voyage  policy  depend  on  the  question  whether  the 
owner  knows  of  the  defect  or  want  of  seaworthiness,  or  can  discover  it 
by  the  use  of  due  diligence,  nor  yet  on  the  port  where  the  vessel  may 
happen  to  be.     It  is  implied,  although  the  insured  may  have  been  igno- 
rant of  the  condition  of  the  ship  when  the  insurance  was  effected,  and 
although  she  may  at  the  time  be  in  a  distant  and  foreign  port.     The 
warranty  is  not  that  the  vessel  is  seaworthy  for  the  voyage  on  which 
the  vessel  is  bound,  but  for  that  portion  of  it  which  is  covered  by  the 
policy.     It  is  the  voyage  insured,  the  viaggium,  not  tlie  iter  navis,  to 
which  the  implied  warranty  extends.     These  may  be  and  often  are  the 
same ;  but  they  may  be  wholly  distinct.    A  vessel  may  be  bound  on  a 
succession  of  voyages.     If  the  policy  insures  the  vessel  for  all  the  voy- 
ages, the  warranty  is  that  she  shall  be  seaworthy  for  all,  and  the  aggre- 
gation of  the  voyages  constitutes  in  such  case  the  voyage  insured.    But 
a  policy  may  be  effected  to  cover  only  one  of  tlie  whole  number  of  such 
voyages,  in  which  case  the  warranty  would  be  that  she  was  seaworthy 
for  that  voyage  only,  and  it  would  not  extend  so  as  to  include  the  pas- 
sage of  tlie  vessel  from  any  previous  port,  nor  embrace  any  subsequent 
portion  of  her  route.     No  one  of  these  leading  characteristics  of  the 
doctrine  of  warranty  of  seaworthiness,  as  usually  applied  in  cases  of 
voyage  policies,  can  be  said  to  be  inapplicable  to  a  policy  on  time. 
If  a  vessel  is  in  port  when  a  policy  on  time  is  made  and  takes  eflfect, 
the  warranty  would  be  of  seaworthiness  at  that  time  and  place  ;  if  she 
is  at  sea,  it  would  relate  back  to  the  time  when  she  was  last  in  port, 
and  could  have  been  made  seaworthy  before  the  commencement  of  the 
terminus  a  quo  of  time  when  the  risk  commenced.     The  knowledge  or 


SECT.  I.  ]  HOXIE   V.    PACIFIC    MUTUAL   INS.    CO.  495 

ignorance  of  the  owner  or  his  agent  of  the  condition  of  the  ship  in  port, 
or  the  fact  that  she  was,  when  last  in  port,  abroad  and  distant  from  the 
place  of  lier  owner's  residence,  can  have  no  greater  force  as  an  argu- 
ment against  such  warrant}-  in  a  polic}-  on  time  than  in  one  on  a  voyage. 
As  the  warranty  may  be  for  part  of  a  voyage,  or  for  one  only  of  a  suc- 
cession of  voyages  on  which  a  vessel  is  bound,  so  by  parity  of  reason inc 
it  may  be  for  a  term  of  time,  though  not  identical  with  and  either  longer 
or  shorter  than  that  which  may  be  requisite  to  complete  the  actual  voy- 
age on  which  the  vessel  is  bound,  or  in  the  prosecution  of  which  she  mav 
be  engaged  at  the  commencement  of  the  risk. 

It  is,  however,  urged,  and  this  is  the  stronges*^  .rguraent  against  the 
analog}'  between  time  and  voyage  policies  in  respect  to  the  warranty  of 
seaworthiness,  that  in  the  application  of  H  tO  the  latter,  as  the  nature, 
extent,  and  necessities  of  a  specific  an.,  designated  voyage  are  known 
and  can  be  anticipated,  a  vessel  can  be  prepared  and  fitted  for  tlie  ser- 
vice for  which  she  is  destined,  so  as  to  be  seaworthy  in  the  broadest 
sense  of  that  term,  as  understood  in  the  modern  practice  and  law  of  in- 
siuance  ;  but  tliat  in  case  of  a  time  policy,  in  which  no  limits  or  termini 
are  given  except  the  days  named  which  fix  the  time,  and  no  specific 
service  or  voyage  is  designated,  and  the  insured  is  left  at  liberty  to 
employ  his  vessel  during  the  time  covered  by  the  policy  accoixling  as 
his  interest  or  necessities  may  dictate  or  require,  it  would  be  imprac- 
ticable to  make  her  seaworthy  for  the  voyage  insured,  that  is,  for  the 
time  during  which  the  risk  is  to  continue,  and  that  it  would  be  unrea- 
sonable to  imply  a  warranty  of  seaworthiness  under  such  circumstances. 
It  seems  to  us  that  this  objection  is  rather  theoretical  than  practical. 
There  is  no  doubt  that  the  warranty,  if  one  is  implied,  is  for  the  voy- 
age insured  —  using  this  phrase  as  nomen  juris,  to  designate  the  term 
covered  by  the  policy,  whether  its  termini  are  fixed  by  points  of  place 
or  time  —  and  that  seaworthiness  imports,  in  the  law  of  insurance,  a 
relation  between  the  condition  of  the  ship  and  the  perils  she  may  have 
to  encounter  in  the  situation  in  which  she  may  be  placed  ;  so  that  be- 
fore departure  on  a  voyage,  whether  limited  by  designated  ports  or 
places,  or  only  by  a  fixed  period  of  time,  she  must  be  fit  in  a  deo^ree 
which  a  prudent  owner  if  uninsured  would  require,  to  meet  the  perils 
of  the  service  she  is  engaged  in,  and  to  continue  so  during  the  voyage, 
unless  exposed  to  extraordinary  damage.  Now  the  alleged  want  of 
analogy  between  time  and  voyage  pohcies,  as  respects  the  practicability 
of  making  a  vessel  seaworthy  in  this  sense  for  a  specific  voyage,  and 
for  one  the  duration  of  v\hich  is  marked  by  time,  is  often  greatly  over- 
stated. In  the  first  place,  it  is  not  correct  to  say  that  all  the  necessities 
and  perils  of  a  voyage  described  by  ports  or  places  can  in  every  case  be 
foreseen  and  provided  for.  ...  In  the  next  place,  in  a  great  number  if 
not  in  a  majority  of  cases  of  insurances  on  time,  the  prospective  voyages 
of  the  ship  or  vessel  are  frequently  well  known  and  understood,  and  a 
policy  on  time  is  resorted  to  as  a  matter  of  convenience,  to  save  the 
enumeration  of  the  several  ports  or  places  which  it  may  be  necessary 


496  HOXIE   V.    PACIFIC   MUTUAL   INS.    CO.  [CHAP.  YI. 

to  visit  in  the  course  of  a  voyage,  or  to  avoid  the  risk  of  some  slight 
deviation,  which  would  invalidate  a  voj'age  polic}'.  .  .  .  And  even 
when  the  precise  course  or  kind  of  l)usiness  in  which  a  ship  or  vessel 
ma}-  be  engaged  is  not  known  at  the  time  when  insurance  is  effected, 
there  would  be  little  or  no  difficulty  in  making  her  seaworthy  for  any 
service  in  which  she  was  likel}'  to  be  employed  during  the  time  for 
which  she  was  insured,  or  in  ascertaining  whether  she  was  so  in  case 
of  disaster.  ...  In  the  practical  business  of  insurance  the  exception 
would  be  a  rare  one  in  which  it  would  be  impracticable  to  make  a  vessel 
scaworth}-  for  a  voyage  insured,  although  designated  only  by  limitations 
of  time.  Such  exceptional  cases  form  no  valid  reason  for  exemi)ting  all 
time  policies  from  a  condition  of  so  much  importance  and  value  to  the 
insured,  which  has  always  hitherto  been  held  to  form  the  basis  of 
the  contract  of  insurance.  Ad  ea  quce  frequentlus  accidunt  jura 
adaptantur. 

Nor  ought  it  to  be  overlooked,  in  the  consideration  of  this  question, 
that  the  introduction  into  the  law  of  insurance  of  a  rule  which  would 
exempt  all  policies  on  time  from  the  implied  warranty  of  seaworthiness 
would  lead  to  incongruities  and  to  a  want  of  harmony  in  the  application 
of  well-established  principles  to  the  different  classes  of  contracts  of 
marine  insurance,  which  ought,  if  possible,  to  be  avoided.  This  may 
be  illustrated  b}'  a  case  ...  of  a  ship  bound  on  a  voyage  to  India  or 
China.  Suppose  that  she  is  insured  by  the  same  or  two  different  own- 
ers, by  two  separate  policies,  one  half  of  her  value  by  a  policy  on  time, 
the  other  half  by  a  policy  for  the  voyage,  the  former  covering  substan- 
tially the  same  period  of  time  as  that  requisite  to  complete  the  vo3-age, 
so  that  the  risk  in  both  policies  is  essentially  the  same.  If  a  ship  thus 
insured  should  be  lost  in  the  prosecution  of  the  voyage,  after  having 
been  put  in  repair  so  far  as  due  diligence  by  the  owner  or  master  should 
render  it  necessar}-,  and  it  should  turn  out  that  she  was  unseaworthy  at 
the  commencement  of  the  voyage,  it  would  certainly  seem  to  be  con- 
trary to  all  the  received  rules  of  interpretation  to  construe  the  two 
contracts,  which  are  substantially  alike  in  all  respects,  so  as  to  arrive 
at  results  precisely  opposite  ;  that  is,  so  as  to  cast  the  loss  on  tlie  in- 
surers in  the  case  of  the  time  policy,  and  on  the  insured  in  the  case  of 
the  voyage  polic}'.   .  .   . 

It  was  suggested  by  the  counsel  for  the  plaintiff  that  if  any  warranty 
of  seawortliiness  was  implied  in  the  policy  declared  on,  it  was  fully  com- 
plied with  by  proof  of  the  fact  that  the  vessel  was  seaworthy  at  Perth 
Amboy  on  her  departure  thence  in  the  prosecution  of  the  adventure 
during  the  continuance  of  which  the  policy  was  effected  and  the  vessel 
was  lost.  But  we  are  unable  to  appreciate  the  soundness  of  tliis  sug- 
gestion. It  confounds  the  voyage  insured  with  the  actual  voyage  on 
which  the  vessel  happens  to  be  bound  at  the  date  of  the  policy.  As 
has  been  already  said,  these  two  have  no  necessary  connection.  Look- 
ing to  the  analogy  of  a  policy  for  a  voyage,  the  doctrine  suggested  cer- 
tainly finds  no  support  or  sanction.     In  a  policy  effected  on  a  vessel 


SFCT.  I.]  HOXIE   V.    PACIFIC   MUTUAL   INS.   CO.  497 

in  port,  whether  domestic  or  foreign,  whether  at  the  beghming  of  an 
adventure  or  after  a  part  of  it  is  completed,  there  is  no  warranty 
that  the  vessel  was  seaworthy  at  the  commencement  or  during  any 
antecedent  portion  of  the  voyage  in  the  prosecution  of  wliich  she  is  then 
engaged.  The  warranty  in  sucli  ease  applies  only  to  the  inception  of 
the  risk,  and  to  the  prospective  part  of  tlie  adventure  which  is  covered 
b}'  the  policy  and  thus  forms  the  voyage  insured,  as  distinguished  from 
the  V03"age  or  voyages  in  the  prosecution  of  which  the  vessel  happens 
to  be  engaged.  It  is  onl}'  when  the  vessel  is  at  sea  at  the  inception  of 
the  risk  that  the  warrant}-  of  seaworthiness,  in  the  case  of  a  voyage 
policy,  relates  back  to  the  time  when  the  voyage  insured  commenced. 
But  such  a  case  affords  no  analogy  for  determining  the  point  of  time  at 
which  such  warranty  is  to  be  implied,  when  a  polic}'  is  effected  on  a 
vessel  in  port,  where  full  repairs  can  be  made  at  the  inception  of 
the  risk,  and  the  commencement  of  the  term  of  time  covered  by 
the  policy.   ... 

These  considerations  have  led  our  minds  to  the  conclusion  that,  on 
the  facts  disclosed  at  the  trial  (and  we  do  not  mean  to  decide  anything 
beyond  the  precise  case  before  us),  there  was  an  implied  warranty  of 
seaworthiness  in  the  policy  declared  on,  in  analogy  to  that  which  would 
exist  under  similar  circumstances  in  a  policy  for  a  voyage  ;  and  that 
the  insurance  having  been  effected  on  a  vessel  while  in  port,  to  take 
effect  from  a  certain  day,  which  was  before  she  sailed  thence,  the  war- 
ranty mcludes  seaworthiness  for  port  as  well  as  seaworthiness  in  setting 
out  therefrom,  as  in  a  polic}'  at  and  from  a  particular  place.   .   .   . 

As  the  instructions  given  to  the  jury  negatived  the  existence  of  any 
such  warranty,  the  order  must  be  Neio  trial  granted.^ 

1  Ace:  Rouse  v.  Insurance  Co.,  3  Wall.  Jr.  367  (1862). 

Contra:  Thompson  v.  Hopper,  6  K.  &  B.  172  (1856)  ;  Fawcus  v.  Sarsfield,  ib.  192 
(1856);  Merchants'  Ins.  Co.  v.  Morrison,  62  111.  212  (1871);  Dudgeon  v.  Pembroke, 
3  App.  Cas.  284  (1877). 

See  Hoxie  v.  Home  Ins.  Co.,  32  Conn.  21  (1864). 
On  seaworthiness  in  oreneral.  see  also  :  — 

Bell  V.  Reed,  4  Binney.  127  (1811) ; 

Wilkie  i:  Geddes,  3  Dow,  57  (H.  L.  Sc  1815) ; 

Treadwell  v.  Union  Ins.  Co.,  6  Cow.  270  (1826) ; 

Phillips  V.  Headlam,  2  B.  &  Ad.  380  (1831) ; 

Cincinnati  Mntual  Ins.  Co.  v.  May,  20  Ohio,  211  (1851); 

Knill  V.  Hooper,  2  H.  &  N.  277  (1857) ; 

Merchants'  Ins.  Co.  v.  Algeo.  31  Pa.  446  (1858) ; 

Draper  v.  Commercial  Ins.  Co.,  21  N.  Y.  378  (1860)  ; 

Bouillon  r.  Lupton,  15  C.  B.  n.  S.  113,  132-137  (1863)  ; 

Walsh  V.  Washington  M.  lus.  Co.,  32  N.  Y.  427,  434-439  (1865) ; 

Lane  v.  Nixon,  L.  R.  1  C.  P.  412  (1866) ; 

Queen's  M.  Ins.  Co.  v.  Commercial  Bank,  L.  R.  3  P.  C.  234  (1870)  ; 

Anderson  v.  Morice,  L.  R.  10  C.  P.  58  (1874) ; 

Pickup  V.  Thames  and  Mersey  M.  Ins.  Co.,  3  Q.  B.  D.  594  (C.  A.,  1878).  — Eb 

32 


498  PLANCHE  V.   FLETCHER.  [CHAP.  VL 


SECTION   I.  (continued). 

(C)   Illegality  of  Voyage. 

Asseurances  se  peuvent  faire  sur  toute  sorte  de  rtiarchandises,  pourveu  que  le 
transport  ne  soit  pas  proJiihe  par  les  edicts  el  ordonnances  du  Roy:  toutesfois, 
en  prenant  ^conge  ou  licence  de  Sa  Majeste,  asseuranc*  se  pent  faire  sur  mar- 
chandises  defendues:  auquel  cas  la  licence  doit  notijiee  a  V asseureur,  et  specijie'e  en 
la  police,  autrement  Vasseurance  sera  nuJle. 

Guidon  de  la  3Ier,^  c.  ii.,  art.  ii.  (1556-1600). 


PLANCHE  AND   Another  v.   FLETCHER. 

King's  Bench,  1779.     1  Doug.  251. 

The  plaintiffs,  Planclie  and  Jacquer}',  merchants  in  London,  insured 
goods,  "  on  board  tlie  Swedish  ship  called  the  '  Maria  Magdalena,'  lost 
or  not  lost,  at  and  from  London  and  Ramsgate  to  Nantz,  with  liberty 
to  call  at  Ostend,  being  a  general  ship  in  the  port  of  London  for 
Nantz."  There  was  a  declaration  in  the  policy  that  the  insurance 
was  made  on  account  of  "  certain  persons  carrying  on  trade  under  the 
name  and  firm  of  Vallee  &  du  Plessis  Monsieur  Lusseau  le  Jeune, 
Guillaume  Albert,  et  Poitier  de  la  Gueule."  The  defendant  underwrote 
the  polic}'  for  £300  at  three  guineas  per  cent.  The  ship's  clearances 
from  the  custom-house  in  London,  and  her  other  papers,  were  all  made 
out  as  for  Ostend  onlj',  but  the  ship  and  goods  were  intended  to  go 
directly  from  London  to  Nantz,  without  going  to  Ostend.  Bills  of 
lading,  in  the  French  language,  dated  the  18th  of  Jul}-,  1778,  were 
signed  by  the  captain  in  London,  but  purporting  to  be  made  at  Ostend, 
and  that  the  goods  were  shipped  there  to  be  delivered  at  Nantz.  The 
polic}'  was  subscribed  by  the  defendant  on  the  7th  of  Jul}',  and  the 
lading  was  taken  in  between  the  24th  of  July  and  the  17th  of  August. 
The  proclamation  for  making  reprisals  on  French  ships,  &c.  bore  date 
the  29th,  and  appeared  in  the  Gazette  on  the  31st  of  Jul}'.  Two 
underwriters  had  signed  the  polic}'  after  the  proclamation,  at  the  same 
premium  of  three  guineas  ;  one  on  the  31st  of  July,  and  the  other  on 
the  7th  of  August.  The  ship  sailed  on  the  24th  of  August,  and  was 
taken  by  a  King's  cutter  on  her  way  to  Nantz.  After  her  departure 
from  Gravesend,  the  captain  threw  overboard  all  the  papers  he  had 
received  from  the  custom-house  at  London.  The}-  had  been  obliterated 
by  the  custom-house  officers  at  Gravesend,  and  were  no  longer  of  any 

1  From  tlie  version  given  by  Pardessus,  in  Collection  de  Lois  Maritimes,  vol.  2,  p. 
379. —  Ed. 


SECT.  I.]  PLANCH^    V.    FLETCHER.  499 

use.  The  ship  was  released  bj'  the  Admiralty,  but  the  goods  were 
condemned.  The  plaintift"  had  no  connection  or  share  in  the  ship. 
Such  were  the  material  facts  of  this  case,  as  they  were  stated  this  day, 
by  Lord  Mansfield  in  his  report,  upou  a  rule  to  show  cause  wh}- 
there  should  not  be  a  new  trial.  The  cause  had  been  tried  at  the  last 
Sittings  at  Guildhall,  and  a  verdict  found  for  the  plaintiffs.  The 
grounds  of  the  application  for  a  new  trial  were  two:  1.  That  there 
was  a  fraud  on  the  underwriters,  the  ship  having  been  cleared  out  for 
Ostend,  and  yet  never  having  been  designed  for  that  place.  2.  That, 
as  hostilities  were  declared  after  the  policy  was  signed,  and  before  the 
ship  sailed,  the  defendant  ought  to  have  had  notice,  that  he  might  have 
exercised  his  discretion  whether  he  would  choose  for  a  peace  premium 
to  run  the  risk  of  capture.  Besides  the  facts  above  mentioned,  his  " 
Lordship  stated  that  the  plaintiffs  had  produced  evidence  to  show 
that  all  ships  going  with  goods  of  British  manufacture  to  France  clear 
out  for  Ostend  without  meaning  to  go  thither,  and  that  this  is  uni- 
versally understood  by  persons  concerned  in  that  branch  of  commerce. 
The  reasonSsuggested  for  clearing  out  for  Ostend,  and  afterwards  mak- 
ing bills  of  lading  as  fi-om  that  place,  were,  that  the  lighthouse  duties 
are  saved,  which  are  payable  when  the  voyage  is  known  to  be  directly 
down  the  Channel,  and  that  the  French  duties  are  less  upon  goods 
from  Ostend  than  from  England. 

The  Solicitor  General  and  Boicer,  for  the  plaintiffs. 
Dunning  and  Davenport^  for  the  defendant. 

For  the  defendant,  the  fabrication  of  false  and  colorable  papers, 
and  the  suppression  of  the  true  destination  of  the  ship,  were  urged  as 
circumstances  of  fraud,  tending  to  mislead  the  underwriter,  as  to  the 
voyage  intended  to  be  insured,  and  the  nature  of  the  risk.  But  the 
second  objection  was  chiefly  relied  upon,  and  it  was  said  that  it  was 
the  duty  of  the  insured  to  have  given  the  underwriter  information  that 
the  ship  continued  in  the  River  after  the  proclamation.  It  was  also 
contended,  that  in  time  of  war  the  exportation  of  enemy's  property, 
even  in  neutral  bottoms,  was  illegal,  and  that  an  insurance  upon  such 
goods  was  void. 

In  answer  to  this,  it  was  said,  in  the  first  place,  that  there  was  no 
compulsion,  by  the  terms  of  the  insurance,  for  the  ship  to  go  to  Ostend. 
If  her  fixed  destination,  as  understood  by  the  underwriters,  had  been 
from  England  to  Ostend,  and  from  Ostend  to  Nantz,  the  policy  would 
have  been  otherwise  worded  ;  and  the  course  of  the  trade  being  noto- 
rious, the  defendant  could  not  be  deceived  or  misled  by  her  being 
cleared  out  for  Ostend.  As  to  the  second  objection,  the  rupture  with 
France  was  impending  and  expected  by  all  the  world  at  the  time  when 
the  policy  was  signed.  The  proclamation  did  not  contain  an  interdic- 
tion of  commerce  between  the  two  nations  ;  the  packets  and  mails 
passed  regularly  between  Dover  and  Calais  long  afterwards.  There 
was  nothing  illegal  in  exporting  or  insuring  French  property  in  neutral 
bottoms  after  the  proclamation,  and  the  premium  on  such  goods  in 


500  PLANCH^   V.   FLETCHER.  [CHAP.  VI. 

neutral  ships  did  not  rise  for  a  long  time  after  the  commencement  of 
hostilities.  If  the  transaction  had  not  been  strictly  legal,  there  were 
cases  where  the  court  had  refused  to  grant  a  new  trial  on  that  ground 
when  the  objection  was  against  the  justice  and  conscience  of  the  case.^ 
Lord  Mansfield.  This  verdict  is  impeached  upon  two  grounds  :  1. 
It  is  said,  there  was  a  fraud  on  the  underwriters  in  clearing  out  the 
ship  for'Ostend  when  she  was  never  intended  to  go  thither.  But  I 
think  tliere  was  no  fraud  on  them,  —  perhaps  not  on  anybody.  What 
had  been  practised  in  this  case  was  proved  to  be  the  constant  course  of 
the  trade,  and  notoriously  so  to  everybody.  The  reason  for  clearing 
for  Ostend,  and  signing  bills  of  lading  as  from  thence,  did  not  fully 
appear.  But  it  was  guessed  at.  The  Fermiers  Generaux  have  the 
management  of  the  taxes  in  France.  As  we  have  laid  a  large  duty  on 
French  goods,  the  French  may  have  doue  the  same  on  ours,  and  it 
may  be  the  interest  of  the  farmers  to  connive  at  the  importation  of 
English  commodities,  and  take  Ostend  duties,  rather  than  stop  the 
trade,  by  exacting  a  tax  which  amounts  to  a  prohibition.  But,  at  any 
rate,  this  was  no  fraud  in  this  country.  One  nation  does  not  take 
notice  of  the  revenue  laws  of  another.  With  regard  to  the  evasion  of 
the  lighthouse  duties,  the  ship  was  not  liable  to  confiscation  on  that 
account.  2.  The  second  objection  is,  that  the  polic}'  was  made  before, 
and  the  ship  sailed  after,  the  proclamation  for  reprisals.  But  every 
man  in  England  and  France,  on  the  17th  of  July,  expected  the  imme- 
diate commencement  of  a  war.  I  will  not  say  it  was  actuall}'  com- 
menced ;  but  the  ambassadors  of  both  countries  were  recalled ;  the 
Pallas  and  Licorne  were  taken  ;  the  fleets  at  sea;  and,  as  it  appeared 
afterwards,  waiting  for  each  other  to  fight.  It  does  not  appear  that 
the  goods  were  French  property  ;  ^  an  Englishman  might  be  sending 
his  goods  to  France  in  a  neutral  ship.  But  it  is  indifferent  whether 
they  were  English  or  French.  The  risk  insured  extends  to  all  cap- 
tures,^ and  as  to  other  underwriters  signed  at  the  same  premium,  after 
the  proclamation,  it  appears  that  the  war  risk  was  in  view  when  the 
defendant  signed.  Shall  he  avail  himself  of  an  event  which  increases 
the  risk,  but  which  he  had  in  contemplation  when  he  underwrote  the 
policy?     I  am  of  opinion  that  there  should  not  be  a  new  trial. 

The  rule  discharged.^ 

i  They  cited  Deerly  v.  The  Duchess  of  Mazarine,  B.  R.  H.  8  W.  3,  2  Salk.  646  ; 
Smith  I'.  Page,  M.  8  W.  3.  B.  R.  ibid.  644  ;  Sparkes  v.  Spicer,  B.  R.  H.  10  W.  3, 
2  Salk.  648;  s.  p.  recognized  in  Allen  v.  Peshall,  C.  B.  M.  18  Geo.  3,  2  Blackst. 
1177.  — Rep. 

2  It  was  assumed  by  the  counsel  for  the  defendant,  from  the  names  of  the  persons 
in  whom  the  interest  was  declared  being  French,  and  from  the  condemnation  at  the 
Admiralty.  —  Rep. 

8  The  description  of  the  risk  was  in  the  usual  printed  form.  —  Rep. 

*  In  Atkinson  v.  Abbott,  U  East,  135,  141  (1809),  Lord  Ellenborodgh,  C.  J., 
said :  "  There  is  nothing  illegal,  so  as  to  avoid  a  policy,  in  the  mere  circumstance  of  a 
ship  taking  out  a  clearance  for  a  place  named  in  the  policy  to  wliich  there  is  no  inten- 
tion of  going.  The  Stat,  of  ("ar.  II.  only  gives  a  penalty  of  £100  for  taking  out  a 
false  clearance :  but  there  is  nothing  in  that  to  make  the  voyage  illegal.     That  was 


SECT.  I.]  JOHNSTON   V.   SUTTON.  501 


JOHNSTON   AND   Another   v.   SUTTON. 
King's  Bench,    1779.     1  Doug.  254. 

This  was  an  action  on  a  polic}'  of  insurance  on  goods  on  board  the 
sliip  "  Venus,"  lost  or  not  lost,  "  at  and  from  London  to  New  York, 
warranted  to  depart  with  convoy  from  the  Channel  for  the  voyage." 

The  cause  was  tried  before  Lord  Mansfield,  at  the  last  Sittings  at 
Guildhall,  and  a  verdict  found  for  the  plaintiffs.  The  defendant 
obtained  a  rule  to  show  cause  why  there  should  not  be  a  new  trial, 
which  came  on  to  be  argued  immediately  after  the  foregoing  case  of 
Planche  v.  Fletcher.  The  facts,  upon  his  Lordship's  report,  appeared 
to  be  these :  The  ship  was  cleared  for  Halifax  and  New  York.  She 
had  provisions  on  board,  which  she  had  a  license  to  carry  to  New 
York,  under  a  proviso  in  the  prohibitory  act  of  16  Geo.  3.  c.  5.  But 
one  half  of  the  cargo,  including  the  goods  which  were  the  subject  of 
this  policy,  was  not  licensed,  and  was  not  calculated  for  the  Halifax 
market,  but  for  New  York.  Tliere  had  been  a  proclamation  by  Sir 
William  Howe  to  allow  the  entry  of  unlicensed  goods  at  New  York, 
and  though  there  were  bonds  usually  given  at  the  custom-house  here, 
by  which  the  captain  engaged  to  carry  the  goods  to  Halifax,  those 
bonds  were  afterwards  cancelled,  on  producing  a  certificate  from  an 
officer  appointed  for  that  purpose  at  New  York,  declaring  that  they 
were  landed  there.  The  commander-in-chief  had  no  authority  under 
the  act  of  Parliament  to  issue  such  proclamation,  or  to  permit  the  ex- 
portation of  unlicensed  goods.  The  "Venus"  was  taken  in  her  pas- 
sage to  New  York,^  by  an  American  privateer. 

Dunning  and  Peckham,  for  the  plaintiffs. 

The  Solicitor-  General  and  Lee,  for  the  defendant. 

On  the  part  of  the  plaintiffs,  it  was  contended  that  a  verdict  agree- 
able to  the  justice  and  conscience  of  the  case,  although  the  transaction 
might  not  be  strictly  legal,  would  not  be  set  aside  by  the  court.  The 
cases  cited  on  this  point  in  Planche  v.  Fletcher  were  insisted  upon, 
and  a  modern  case  of  Burton  v.  Thompson,  2  Burr.  664,  was  also  men- 
tioned in  support  of  the  same  doctrine. 

determined  in  Planche  v.  Fletcher ;  and  though  the  particular  statute  is  not  referred 
to  in  the  report  of  tlie  case,  yet  the  provision  of  it  was  probably  in  the  contemplation 
of  the  court."  —  Ed. 

1  The  statute  (§  1)  prohibits  all  commerce  with  the  province  of  New  York, 
(amongst  others),  and  confiscates  all  ships  and  their  cargoes  which  shall  be  found 
trading,  or  going  to,  or  coming  from  trading  with  them.  Then  there  is  a  provi.so 
(§2)  excepting  ships  laden  with  provisions  for  the  use  of  his  Majesty's  fleets  or  garri- 
sons, or  the  inhabitants  of  any  town  possessed  by  his  Majesty's  troops,  provided  the 
master  shall  produce  a  license,  specifying  the  voyage,  &c.  and  the  quantity  and  species 
of  provisions  ;  but  by  the  same  proviso  it  is  declared  that  goods  not  licensed,  found 
on  board  such  ship,  shall  be  forfeited.  —  Rep. 


502  POTTS   V.   BELL.  [cHAP.  VL 

On  the  other  side,  it  was  said  that  the  plaintiff's  counsel  were  so 
well  convinced  that  the  objection  was  fatal,  that  they  called  for  the  cryer 
to  non-suit  their  clients,  but  the  jury  delivered  their  verdict  before  he 
could  be  found.  That  there  was  no  imputation  on  the  defendant  in 
making  this  defence,  because,  on  the  face  of  the  policy,  it  was  lawful ; 
for  licensed  goods  might  be  legally  carried  to  New  York.  He  was  to 
presume  that  the  goods  insured  were  licensed.  The  insurer  has  no 
opportunity  of  seeing  the  clearances. 

Lord  Mansfield.  The  whole  of  the  plaintiffs'  case  goes  on  an 
established  practice,  directly  against  an  act  of  Parliament.  If  the 
defendant  did  not  know  that  the  goods  were  unlicensed,  the  objection 
is  fair  as  between  the  parties.  If  he  did,  he  would  not  deserve  to 
be  favoured.  But,  however  that  may  be,  it  was  illegal  to  send  tlie 
goods  to  New  York,  and,  in  pari  delicto,  potio7'  est  conditio  defendentis. 
It  is  impossible  to  bring  this  within  the  cases  which  have  been  cited, 
because  here  there  was  a  direct  contravention  of  the  law  of  the  land.  — 
As  to  the  nonsuit,  if  it  had  been  recorded,  J  should  have  set  it  aside, 
that  the  plaintiffs  might  not  imagine  themselves  injured  by  the  admis- 
sion of  their  counsel.  The  ride  made  absolute.^ 


POTTS  V.  BELL  and  Others. 
King's  Bench,  1800.     8  T.  R.  548. 

Upon  a  writ  of  error  brought  from  the  Court  of  Common  Pleas  it 
appeared  that  Bell  and  others  brought  an  action  against  Potts  upon  a 
policy  of  insurance  on  the  ship  '' Elizabetli"  and  goods  on  board  at 
and  from  Rotterdam  to  Hull,  with  liberty  to  touch  and  stay  at  any 
ports  or  places,  &c.  and  declared  as  for  a  loss  of  the  goods  loaded  on 
board  by  capture  by  enemies.  There  were  other  counts  for  money  liad 
and  received,  and  upon  an  account  stated  ;  to  which  the  general  issue 
was  pleaded. 

At  the  trial  a  verdict  was  found  for  the  plaintiffs  below ;  and  a  bill 
of  exceptions  was  tendered  and  allowed  on  the  part  of  the  plaintiff  in 
error,  whereby  it  appeared  that  at  the  trial  the  plaintiffs  below  proved 
in  evidence  the  polic\-  of  assm-ance  in  the  declaration  mentioned,  sub- 
scribed by  Potts  and  dated  the  7th  of  December,  1797  ;  and  that  the 
policy  was  effected  in  London  by  Barrett  and  Company,  insurance 
brokers  there,  by  the  orders  and  for  tlie  benefit  and  risk  of  the  plain- 
tiffs then  and  still  being  British  merchants  resident  in  London  and 
interested  in  the  goods  iiisured  to  the  value  mentioned.  That  the  ship 
"  Elizabeth"  was  a  neutral  ship  belonging  to  H.  Bannermann  and  Son 

1  Ace. :  Camden  v.  Anderson,  6  T.  R.  723  (1796) ;  8.  c.  affirmed  in  1  R.  &  P.  278 
<Ex.  Ch.,  1798).  — Ed. 


SECT.  I.]  POTTS   V.   BELL.  503 

of  Greetsil  and  Erabden  iu  Prussia,  bound  on  the  voyage  insured  from 
Rotterdam  to  Hull ;  and  that  the  clearance  of  the  ship  was  ostensibly 
from  Rotterdam  to  Norden,  because  the  persons  then  exercising  the 
poweis  of  government  in  the  United  Provinces  would  not  permit  the 
ship  to  be  cleared  out  from  Rotterdam  to  Hull  or  an}-  other  port  of 
Great  Britain  ;  and  that  the  goods  insured,  consisting  of  sixty  casks  of 
madders,  were  laden  on  board  the  "Elizabeth"  at  Rotterdam,  to  be 
conveyed  from  thence  to  Hull  by  one  Robert  Twiss,  then  being  the 
agent  of  the  plaintiffs  below  and  residing  at  Rotterdam  by  their  orders 
and  for  their  use,  and  were  consigned  by  him  to  Messrs.  Hewson  and 
Gunnes  at  Hull,  who  then  were  the  agents  of  the  plaintiffs  below,  by 
their  order  and  for  their  sole  account  and  risk.  That  the  ship  "  Eliza- 
beth "  having  the  goods  insured  on  board  afterwards  on  the  18th  of 
December,  1797,  sailed  from  Rotterdam  for  Hull,  and  was  captured 
on  her  voyage  the  next  day  by  a  French  ship,  an  enemy  to  the  King, 
AVhereupon  the  counsel  for  the  plaintiti' in  error,  on  his  part,  proved  in 
evidence  that  the  said  sixty  casks  of  madders,  before  the  lading  of 
tliem  on  board  the  "  Elizabetli  "  and  before  the  policy  was  subscribed, 
were  purchased  for  the  defendants  in  error  by  Twiss,  their  agent  resi- 
dent at  Rotterdam,  in  order  to  be  sent  from  Rotterdam  to  Hull  on 
their  account  and  risk  at  London,  and  were  afterwards  laden  on 
board  the  ship  at  Rotterdam  for  that  purpose.  That  six  bills  of 
exchange  were  drawn  by  Twiss  in  payment  for  the  madders  at  Rotter- 
dam, but  dated  at  Hamburg,  upon  the  defendants  in  error,  and  which 
bills  having  been  indorsed  by  the  payees  thereof  respectiveh',  were 
afterwards  duh'  accepted  and  paid  by  the  said  defendants  in  error  in 
London.  That  before  and  at  the  time  of  the  said  purchase  of  the 
said  sixty  casks  of  madders  by  Twiss,  and  of  the  loading  of  them  on 
board  the  "Elizabeth"  in  order  to  be  conveyed  from  Rotterdam  to 
Hull  for  and  on  account  of  the  defendants  in  error,  and  also  before 
and  at  the  time  that  the  plaintiff  in  error  subscribed  the  polic}'  of 
assurance  thereon,  and  before  and  at  the  time  of  the  ship's  departure 
from  Rotterdam  towards  Hull  and  of  the  capture  of  the  said  ship  and 
madders  as  aforesaid,  hostilities  had  commenced  and  still  existed 
between  Great  Britain  and  the  persons  exercising  the  powers  of 
government  in  the  said  United  Provinces.  That  the  plaintiff  in  error 
also  proved  the  payment  of  the  premium  into  court  in  this  action. 
Whereupon  the  counsel  for  the^ plaintiff  in  errorinsisted  at  the  trial 
that  upon  the  mattei^o  provecTin  evidence~the3pMQ^l''l^- ^gjow  wei-c^ 
not_entitled  to__recover  against  him  ;  that  the  policy  upon  the  ^ id 
m adders  was  void,  for  that  it  is  not  lawful  for  Eritish_subiects  to 
carry  on  trade  with  any  nation  which  at  the  time  is  in  a  state  of  open 
war  and  hostilities  with  Great  Britain,  nor  to  purchase  any  goods  in 
such  nation  and  import  them  from  thence  to  Gj'eat  Britain  The  bill 
of  exceptions  then  stated  the  Judge's  direction  to  the  jurv  to  find  a 
verdict  for  the  plaintiffs  below,  the  finding  of  such  verdict  accordinglyf 
and  the  assignment  of  errors  thereon  in  the  usual  form. 


504  POTTS  V.   BELL.  [CHAP.  VL 

This  case  was  first  argued  in  Micliaelmas  Term  last. 

Gibbs,  for  tlie  plaintiff  in  error. 

Wigley,  contra. 

In  tlie  course  of  the  argument  the  counsel  on  both  sides  referred  to 
some  cases  which  had  been  decided  at  the  Adrairalt}'  Court,  and  at 
the  Coclvpit ;  and  this  court,  considering  that  the  subject  was  more 
frequently  discussed  there  than  in  Westminster  Hall,  desired  to  hear 
a  second  argument  by  Civilians.  Accordingly  in  Hilary  Term  last  the 
case  was  argued  by 

Sir  Joh7i  JVichoU,  the  King's  advocate,  for  the  plaintiff  in  error. 

Dr.  Sicahey,  contra. 

Cur.  adij.  mdt. 

Lord  Kenyon,  C.  J.,  now  said  that  the  court  had  very  fully  con- 
sidered the  question  immediately  after  the  very  learned  argument 
which  had  been  made  by  the  King's  advocate  in  the  last  Term.  Tiiat 
the  reasons  which  he  had  urged  and  the  authorities  he  had  cited  were 
so  manv,  so  uniform,  and  so  conclusive  to  show  that  a  British  subject's 
trading  with  an  enemy  was  illegal,  that  the  question  might  be  con- 
sidered as  finally  at  rest.  That  those  authorities,  it  was  true,  were 
mostly  drawn  from  the  decisions  of  the  Admiralty  courts  :  and  that 
after  all  the  diligence  which  had  been  used  there  was  only  one  direct 
authoritj-  on  the  subject  to  be  found  in  the  common-law  books,  and 
that  one  was  to  the  same  effect ;  ^  but  that  the  circumstance  of  there 
being  that  single  case  only  was  strong  to  show  that  the  point  had  not 
been  since  disputed,  and  that  iXjniglilUlow^e  taken^fbiLgranted  that 
it  was  a  principle  ofJLhe  common  law  that  trading  with  an  enemy  with- 
out  the  King's  licence  was  illegal  in  British  subjects..  That  it  was 
therefore  needless  in  this  case  to  delay  giving  judgment  for  the  sake 
of  pronouncing  the  opinion  of  the  court  in  more  formal  terms  ;  more 
especially  as  the}-  could  do  little  more  than  recapitulate  the  judgment 
with  the  long  train  of  authorities,  already  to  be  found  in  the  clearest 
terms  in  the  printed  report  of  the  case  of  the  Hoop,  published  bv  Dr. 
Robinson:^ — That  the  consequence  was  that  the  judgment  of  the 
Court  of  Common  Pleas  must  be  reversed. 

Judgment  reversed. 

1  The  allusion  was  probably  to  Anonymous,  2  Kolle's  Abr.  173,  suh  voc.  Prerogative 
le  Roji,  (L)  Guerre,  pi.  3  (1320). 

-  See  The  Hoop,   1   Rob.  Adm,   196  (1799);  Furtado  i'.  Rodgers,  3  B.  &  P.   191 
(1802). 

.   In  Richardson  v.  Maine  F.  &  M.  Ins.  Co.,  6  Mass.  102,  111-115  (1809),  Tarsons, 
C.  J.,  for  the  court,  said  :  — 

"  We  will  first  consider  the  supposed  nullity  of  a  policy,  arising  as  it  is  said  from 
insuring  goods  on  illicit  voyages. 

"  Illicit  voyages  may  be  ranked  in  several  clas.'ies,  some  of  which  we  will  mention. 

"  When  the  sovereign  of  the  country  to  whicli  tlie  ship  beU>ngs  shall  prohibit  Ins 
subjects   from  trading  with  a  foreign  country  or  port,  whether  the  proTm)!!!!^  be  a"* 
conse(|Ucnce   of   his   declaring   war   against   the   foreign  C(J«ntry,  or    l)e  made   by  an 
express  ordinance  for  any  cau.se  at  the  will  of  the  sovereign,  a  voyage  to  that  country 
for  the  purpose  of  trade  is  illicit,  and  all  insurances  on  such  voyages  by  hie  subjects 


SECT.  I.]  POTTS  V.   BELL,  505 

are  void,  whether  the  assurers  had,  or  liad  not,  knowledge  of  the  prohibition.  For 
the  law  will  not  allow  any  effect  to  a  contract  made  to  protect  a  traflBc  which  it  has 
proliihited.  A  prohibition  of  this  kind  is  considered  by  Enierigon,  c.  12,  §  31,  vol.  i. 
542,  under  the  head  of  "  Interdiction  of  Commerce." 

"Another  class  of  illicit  voyages  are  those  which  are  proliibited  by  tlie  trade  laws 
of_a  Joreigii_state,  whetlier  those  laws  wholly  exclude  the  merchant  sliips  of  other 
states  from  its  ports,  or  only  prohibit  the  importation  or  exportation  of  particular 
species  of  goods.  Because  the  municipal  laws  of  any  state  have  not  the  force  of  laws 
without  its  jurisdiction,  voyages  prohibited  in  one  state  are  not  in  any  other  state 
deemed  for  that  reason  to  be  illegal.  These  voyages  may,  therefore,  be  the  subjects 
of  insurance  in  any  state  in  which  they  are  not  prohibited.  And  if  the  assurer  will 
expressly  insure  against  seizure  for  illicit  trade,  or  if,  with  a  full  knowledge  of  the 
nature  of  tlie  voyage,  he  will  insure  it  without  making  any  exception,  he  will  he 
bound  to  indemnify  the  assured  for  the  losses  arising  from  the  breaches  of  the  trade 
laws  of  the  foreign  state.  But  although  he  may  not  take  upon  himself  these  losses, 
and  thus  be  irrespon.sible  for  them,  yet  he  is  answerable  for  any  other  losses  insured 
against,  because  the  policy  is  not  void. 

"  The  last  class  we  shall  mention  is  the  transportation  bv  a  neutral  of  goods  con- 
traband of  war  to  the  country  of  either  of  the  belligerent  powers.  And  here  it  is 
said  that  these  voyages  are  prohibited  by  the  law  of  nations,  which  forms  a  part  of 
the  municipal  law  of  every  state,  and,  consequently,  that  an  insurance  on  such  voy- 
ages, made  in  a  neutral  state,  is  prohibited  by  the  laws  of  that  state,  and  therefore, 
as  in  the  case  of  an  insurance  on  interdicted  commerce,  is  void. 

"  That  there  are  certain  laws,  which  form  a  part  of  the  municipal  laws  of  all  civil- 
ized states,  regulating  their  mutual  intercourse  and  duties,  and  thence  called  the  law 
of  rations,  must  be  admitted;  as,  for  instance,  the  law  of  nations,  affecting  the  rights 
and  the  security  of  ambassadors.  But  we  do  not  consider  the  law  of  nations,  ascer- 
taining what  voyages  or  merchandise  are  contraband  of  war,  as  having  the  same 
extent  and  effect.  It  is  agreed  by  every  civilized  state,  that  if  the  subject  of  a  neutral 
power  shall  attempt  to  furnish  either  of  the  belligerent  sovereigns  witli  goods  contra- 
band of  war,  the  other  may  rightfully  seize  and  condemn  them  as  prize.  But  we  do 
not  know  of  any  rule,  established  by  the  law_of_Jjations,  that  the  neutral  shipper  of 
goocls  contraband  of  war  is  an  offender  against  his  own  80vereigu7^iid  liable^o  be 
punisiieJTn^  tlie  municipaLiaws  of  hia-x^vn  country.  ' 

"  When  a  neutral  sovereign  is  notified  of  a  declaration  of  war,  he  may,  and  usually 
does,  notify  liis  subjects  of  it,  with  orders  to  decline  all  contraband  trade  with  the 
nations  at  war,  declaring  that  if  they  are  taken  in  it,  he  cannot  protect  them,  but  not 
announcing  tlie  trade  as  a  violation  of  his  own  laws.  Should  their  sovereign  offer 
to  protect  them,  his  conduct  would  be  incompatible  with  his  neutrality.  And  as,  ou 
the  one  hnnd,  he  cannot  complain  of  the  confiscation  of  his  subjects'  goods,  so,  on  the 
other,  the  power  at  war  does  not  impute  to  him  these  practices  of  his  subjects.  A  neu- 
tral merchant  is  not  obliged  to  regard  the  state  of  war  between  other  nations;  but  if 
lie  ships  goods  proliibited  ^are  belli,  they  may  be  rightfully  seized  and  condemned.  It 
is  one  of  the  cases  where  two  conflicting  rights  may  exist,  which  either  party  may 
exercise,  without  charging  the  other  with  doing  wrong.  As  the  transportation  is  not 
prohibited  by  the  laws  of  the  neutral  sovereign,  his  subject  may  lawfully  be  concerned 
in  it ;  and  as  the  right  of  war  authorizes  a  belligerent  power  to  seize  and  condemn  the 
goods,  he  may  rightfully  do  it. 

"  We  will  mention  one  other  case.  A  neutral  ship  may  lawfully  be  laden  with  the 
property  of  one  of  the  hostile  powers  ;  but  the  other  may  seize  her,  carry  her  into 
port,  and  lawfully  take  from  the  ship  his  enemy's  goods.  Here  are  conflicting  rights, 
which  are  admitted  by  the  power  who  shall  seize  ;  for  he  will  pay  the  neutral  his 
freight,  when  he  acts  fairly,  attempting  no  improper  concealment. 

'■  But  we  know  of  no  case  where  the  neutral  merchant  has  been  punished  by  his 
own  sovereign  for  his  contraband  shipments.  If  he  will  adventure  "U  the  trade,  and 
his  effects  are  seized  and  condemned  as  prize, — to  this  penalty  lie  must  submit,  for 
his  sovereign  will  not  interfere,  because  tlie  capture  was  lawful.  And  it  may  be 
farther  observed,  that  if  the  exportation  of  contraband  goods,  from  a  neutral  countiy 


506  POLLEYS   V.   OCEAN   INS.   CO.  [cHAP.  VL 


POLLEYS  V.  OCEAN  INSURANCE  COMPANY. 
Supreme  Judicial  Court  of  Maine,  1837.     14  Me.  141. 

This  is  an  action  of  assumpsit  on  a  policy  of  insurance,  bearing  date 
July  17,  1833,  upon  the  schooner  called  the  "  Mary,"  and  owned  by 
the  plaintiff,  for  the  terra  of  one  year,  commencing  on  the  11th  of 
said  July,  the  sum  insured  being  $3,000.  The  schooner,  during  the 
year,  viz.,  June  10,  1834,  was  totally  lost. 

It  appeared  on  trial,  that  a  sloop  was  built  in  181G,  and  was  enrolled 
by  the  name  of  the  "  Sophronio,"  and  was  again  enrolled  in  the  Custom 
House  in  Portland,  by  the  same  name,  March  24,  1832;  that  the  said 
schooner  "  Mary  "  was  built  upon  the  keel,  floor-timbers,  and  naval- 
timbers  of  the  sloop  "  Sophronio,"  and  the  size  enlarged  nearly  twelve 
tons,  and  the  name  of  the  ''  Mary "'  given  to  her  afteu  being  so  enlarged  ; 
and  that  this  was  known  to  the  defendants  at  the  time  of  executing  the 
policy ;  and  that  the  certificate  of  the  builder  of  the  vessel  was  pro- 
cured by  the  plaintiff  and  presented  to  the  Custom  House,  to  obtain 
the  enrolment  of  the  schooner  "  Mary,"  without  any  intent  to  deceive 
or  defraud,  but  with  fair  and  honest  intentions,  as  the  jury  believed ; 
but  that  the  enrolment  of  the  sloop  "Sophronio"  was  not  first  sur- 

to  a  port  of  either  of  the  powers  at  war,  is  a  trade  which,  from  its  nature,  is  prohib- 
ited by  the  laws  of  the  ueutral  sovereign,  then  the  policy  on  such  goods  woukl  be 
void,  and  the  assurer  would  be  exempted  from  any  loss  or  damage  arising  even  from 
the  danger  of  the  sea.  But  an  exemption  of  this  kind  is  not  founded  on  any  sound 
principle,  nor  is  it  supported  by  any  usage. 

"  We  do  not,  therefore,  discover  any  just  distinction  between  an  interloping  trade 
in  a  foreign  port,  illicit  lege  loci,  and  a  trade  in  transporting  contraband  goods,  which 
is  illicit  Jure  belli,  so  far  as  either  may  be  an  object  of  insurance  by  neutrals  in  a  neu- 
tral country.  And  we  are  satisfied  that  an  insurance,  effected  in  the  country  of  a 
neutral  prince,  by  his  subjects,  against  capture  and  condemnation  of  their  goods, 
because  they  are  contraband  of  war,  is  not  prohibited  by  his  laws,  merely  because 
the  capture  and  condemnation  are  justified  by  tlie  laws  of  war.  But  if  goods  contra- 
band of  war  are  on  cargo,  the  assurer  is  not  responsible  for  their  capture  and  condem- 
nation on  that  account,  unless,  either  with  a  full  knowledge  of  the  nature  of  the 
goods,  and  of  the  voyage,  or  by  an  express  undertaking,  he  shall  insure  them  against 
such  capture.  So  an  insurer  is  not  answerable  for  a  seizure  and  confiscation  of 
goods,  for  the  violation  of  the  trade  laws  of  a  foreign  port,  unless,  with  a  full  knowl- 
edge of  the  trade,  or  by  an  express  undertaking,  he  shall  insure  them  against  suili 
seizure.  But  in  both  cases,  where  no  such  special  insurance  is  made,  the  policy  is  not 
void  because  the  ship  is  l)0und  on  an  interloping  or  contraband  voyage,  but  the 
assurer  will  be  answerable  for  the  other  risks,  against  which  he  has  insured. 

"  Goods  contraband  of  war  are  of  two  descriptions,  —  munitions  of  war,  the  property 
of  a  neutral,  bound  from  a  neutral  port  to  the  territory  of  either  of  the  belligerents, 
after  the  existence  of  the  war  is  known  ;  and  every  species  of  neutral  goods,  bound 
from  a  neutral  port  to  a  port  belonging  to  either  of  the  powers  at  war,  and  known  to 
be  blockaded  by  the  other  power.  The  principle,  therefore,  on  which  a  belligerent 
will  capture  and  condemn  as  prize  the  goods  of  a  neutral,  bound  to  a  port  known  by 
him  to  1)6  blockaded,  arises  from  tlie  consideration  that  all  such  goods  are  contraband 
of  war."  —  Eij. 


SECT.  I.]  POLLEYS   V.    OCEAN    INS.    CO.  507 

rendered  and  delivered  up  at  the  Custora  House  before  the  issuing 
of  the  enrolment  of  the  "  Mary,"  which  was  on  the  third  day  of  June, 
1833. 

The  counsel  for  the  defendants  objected  to  the  admission  in  evidence 
of  tiie  said  enrolment  of  June  3,  1833,  as  contrary  to  the  laws  of  the 
United  States;  but  Emery,  J.,  before  whom  the  trial  was,  overruled 
the  objection,  and  it  was  admitted.  And  the  same  counsel  further  in- 
sisted, that  said  schooner,  on  the  voyage  on  which  she  was  lost,  was 
sailing  under  circumstances  rendering  her  liable  to  forfeiture  for  the 
violation  of  said  laws  ;  and  that  therefore  a  policy  on  a  vessel,  pursuing 
such  a  voyage,  was  not  valid  or  legal,  or  binding ;  but  the  Judge  also 
overruled  this  objection,  as  insufficient  to  bar  said  action.^  .   .  . 

Tlie  cause  was  thereupon  submitted  to  the  jury,  who  returned  their 
verdict  in  favor  of  the  plaintiff.  To  these  opinions  and  rulings  of  the 
Judge,  the  counsel  of  the  defendants  excepted. 

Mellen  and  Daveis,  for  the  defendants. 

Fesseyiden  <&  Deblois,  for  the  plaintiff. 

Shepley,  J.  One  of  the  questions  presented  by  this  bill  of  excep- 
tions is,  whether  the  contract  declared  on  was,  under  the  circumstances, 
a  legal  contract.  To  enable  us  to  come  to  a  right  conclusion,  it  is  de- 
sirable that  the  principles  by  which  we  must  be  guided  should  be,  if 
possible,  clearly  stated. 

Neither  the  law  nor  the  court  can  degrade  itself  by  becoming  the 
minister  of  evil.  The  consideration  of  a  contract,  or  the  matter  out  of 
which  it  arises,  must  therefore  be  legal.  The  object  to  be  accom- 
plished, or  the  act  required  to  be  performed  by  it,  must  also  be  legal. 
And  although  by  itself  considered  the  objects  or  acts  required  by  it 
may  be  legal,  yet  if  the  design  of  the  contract  be  to  aid  or  assist  in  the 
accomplishment  of  an  illegal  purpose,  it  partakes  of  the  character  of 
the  transaction  with  which  it  thus  connects  itself,  and  becomes  tainted 
by  it  and  illegal.  To  prove  property  in  anything,  it  must  be  shown 
that  the  law  allows  that  thing  to  be  the  subject  of  property  in  the  char- 
acter and  under  the  circumstances  in  which  the  claim  is  asserted  ;  other- 
wise one  can  establish  no  right  of  property  in  it.  When  a  contract  is 
formed  upon  a  consideration  legal  at  the  time,  its  validity  will  not  be 
impaired,  though  the  law  sliould  afterwards  declare  the  matter  forming 
the  consideration  to  be  illegal.  So  if  the  act  required  to  be  performed 
be  at  the  time  legal,  and  the  law  afterward  make  the  performance 
illegal,  that  does  not  render  the  contract  illegal,  though  it  prevents 
the  performance  of  it. 

These  are  principles  alike  valuable  to  the  community,  as  they  are 
necessary  to  maintain  the  character  of  the  law  and  of  judicial  tribunals. 
But  while  they  are  by  no  means  to  be  infringed,  they  must  not  be  pushed 
to  such  extremes  as  to  interrupt,  or  embarrass  the  complicated  transac- 
tions of  society.    The  principles  do  not,  nor  would  it  be  consistent  with 

1  In  reprinting  the  statement  and  the  opinion,  passages  on  the  admissibility  of  evi- 
dence have  been  omitted.  —  Ed. 


508  POLLEYS  V.    OCEAN  INS.  CO.  [CHAP.  VL 

the  ordinary  transactions  of  life  thatthe}'  should,  require  all  contracts 
to  be  considered  illegal  which  grow  out  of  some  matter,  or  property,  in 
which  there  had  been  incorporated,  or  to  which  had  before  attached, 
some  illegal  act.  The  law  may  declare,  that  on  account  of  such  former 
illco-al  ingredient,  the  article  shall  no  longer  be  considered  the  subject 
of  property,  and  in  such  case  it  cannot  afterward  form  the  basis  of  a  legal 
contract.  "  But  if,  notwithstanding  the  illegal  act  or  ingredient  attaches 
to  it,  the  law  permits  it  to  be  the  subject  of  property,  either  absolutely 
or  conditionally,  until  forfeited  by  some  act  yet  to  be  performed,  it  may 
form  the  basis  of  a  legal  contract. 

When  contracts  are  formed  upon  new  or  collateral  considerations, 
and  when  they  partake  of  the  original  illegal  act,  was  much  considered, 
and  the  cases  were  collected  in  Armstrong  v.  Toler,  11  Wheat.  258. 
The  Chief  Justice  says:  "  How  far  this  principle  [that  of  illegality]  is 
to  affect  subsequent  or  collateral  contracts,  the  direct  and  immediate 
consideration  of  which  is  not  immoral  or  illegal,  is  a  question  of  con- 
siderable intricacy,  on  which  many  controversies  have  arisen  and  many 
decisions  have  been  made."  This  remark  must  be  understood  rather  as 
referring  to  the  difficulty  of  applying  the  rule  of  law  to  the  complicated 
transactions  of  business,  than  to  any  difficulty  in  comprehending  the 
rule  itself.  In  that  case  the  consignee  of  goods,  introduced  contrary 
to  law  by  collusive  capture,  and  afterward  decreed  forfeit,  was  allowed 
to  recover  the  money  paid  on  a  bond,  given  for  their  appraised  value. 
And  tlie  rule  is  there  stated  to  be,  that  "  if  the  promise  be  unconnected 
with  the  illegal  act,  and  is  founded  on  a  new  consideration,  it  is  not 
tainted  by  the  act,  although  it  was  known  to  the  party  to  whom  the 
promise  was  made."  That  case  may  serve  to  illustrate  the  application 
of  the  rule  where  the  new  contract  does  not  connect  itself  with  the  ille- 
gal act.  And  the  case  of  Cannan  v.  Bryce,  3  Barn.  &  Aid.  179,  as  an 
illustration  of  the  application  of  it,  when  the  new  contract  is  connected 
with  the  original  act.  The  act  of  7  Geo.  2,  ch.  8,  relating  to  stock  job- 
bing, prohibits  the  payment  of  any  money  on  account  of  not  transfer- 
ring stocks  in  such  cases  ;  and  it  was  decided  that  one  who  lent  moneys 
for  the  purpose  of  enabling  a  person  to  make  such  unlawful  payment 
with  a  full  knowledge  of  the  object  to  which  they  were  to  be  applied, 
and  for  the  express  purpose  of  accomplishing  tliat  object,  could  not  re- 
cover. Here  the  lending  of  the  money,  by  itself  considered,  was  an 
independent  and  legal  act,  but  being  for  the  very  purpose  of  assisting 
to  do  an  illegal  act,  it  became  connected  with  it  and  thereby  illegal. 

In  the  law  of  insurance  an  exception  to  these  rules  has  been  estab- 
lished in  the  most  commercial  countries  of  modern  times,  by  declaring 
those  contracts  to  be  legal  which  are  made  with  the  intention  to  violate 
the  laws  of  trade  of  a  foreign  country.  Such  an  exception  breaks  in 
upon  the  morality  and  harmony  of  legal  science  ;  and  since  tlie  reason- 
ings of  Pothier,  and  of  Story,  and  of  Kent,  and  of  other  eminent  jurists, 
the  exception  can  only  l^e  sustained  by  allowing  private  interest  to 
overcome  the  sense  of  moral  and  legal  right.     Whether  the  question 


SECT.  I  ]  POLLEYS  V.    OCEAN  INS.  CO.  509 

can  be  presented  so  as  to  enable  a  court  to  act  upon  it  de  novo,  or 
whetlier  it  must  remain  a  blot  upon  the  law,  may  be  doubtful. 

The  policy,  in  this  case,  was  not  upon  any  particular  voyage,  but  for 
the  term  of  one  year.  There  is  nothing  in  the  case  which  shows  that 
any  illegal  vo3'age  was  contemplated  by  the  contract,  or  that  any  such 
was  in  fact  undertaken.  The  contract  cannot  therefore  be  illegal  b}' 
reason  of  any  act  required  l)y  it,  nor  by  reason  of  any  aid  intended  to 
be  given  b}-  it  to  the  performance  of  an  illegal  adventure.  The  consid- 
eration was,  then,  the  payment  of  the  premium  on  the  one  hand  for, 
and  the  assumption  on  the  other  of,  tlie  risk  of  the  legal  employment 
of  the  vessel  for  one  year.  There  being  nothing  illegal  in  the  con- 
sideration of  the  contract,  or  in  the  employment  of  the  vessel  to  be 
aided  b}-  it,  the  contract  can  only  be  illegal  by  being  in  some  way 
connected  with  the  prior  illegal  act,  which  had,  b3-  the  manner  of 
building  and  b}'  the  use  of  the  enrolment,  attached  to  the  vessel. 
Is  there  any  such  connection  shown?  By  the  act  of  Congress  con- 
cerning the  registering  and  recording  of  ships  and  vessels,  ch.  146, 
sec.  14,  it  is  provided,  that  when  a  vessel  "  shall  be  altered  in  form  or 
burthen  by  being  lengthened  or  built  upon,"  she  shall  be  registered 
anew  hy  her  former  name  ;  and  that  her  former  certificate  of  registry 
shall  be  delivered  up,  under  a  penalty  of  five  hundred  dollai's.  The 
twenty-seventh  section  of  the  same  act  provides,  "  that  if  any  certificate 
of  registry  or  record  shall  be  fraudulentl}'  or  knowingly  used  for  an}' 
ship  or  vessel  not  then  actually  entitled  to  the  benefit  thereof,  accord- 
ing to  the  true  intent  of  this  act,  such  ship  or  vessel  shall  be  forfeited  to 
the  United  States."  By  the  act  for  enrolling  and  licensing  ships  and 
vessels,  ch.  153,  sec.  2,  vessels  enrolled  are  put  upon  the  same  footing 
as  to  qualifications,  and  are  subjected  to  the  same  requisites  as  regis- 
tered vessels.  The  jury  found  that  the  enrolment  b}-  the  new  name  was 
procured  by  the  plaintiff,  "  without  any  fraudulent  intent  to  deceive  or 
defraud  ;  "  but  that  finding  does  not  extend  to  the  after  use  of  it ;  and 
the  vessel  may  be  regarded  as  having  been  liable  to  seizure  and  for- 
feiture. This  liability  was  for  a  cause  in  no  manner  connected  with  the 
contract  of  insurance.  It  had  existed,  and  its  influence  had  been  as 
great  upon  the  vessel  as  it  could  at  any  time  be,  before  this  contract 
of  insurance  was  made.  The  act  was  complete.  It  neither  required, 
nor  could  it  receive,  aid  from  the  new  contract.  In  this  respect  it  was 
more  entirely  free  from  all  connection  with  the  new  contract  than  the 
illegal  act  in  the  case  of  Armstrong  v.  Toler  was.  It  would  be  very 
detrimental  to  the  commerce  of  the  country  to  hold  that  a  vessel  was 
not  the  subject  of  a  lawful  insurance  because  she  was  liable  to  seizure 
and  forfeiture  for  a  cause  not  connected  with  the  policy.  The  laws  of 
the  United  States  contemplate  that  vessels  are  thus  liable  for  causes 
arising  without  wilful  negligence  or  intention  of  fraud.  Cases  of  that 
kind  are  not  of  unfrequent  occurrence,  and  the  Secretary  of  the  Treas- 
ury is  authorized  by  law  to  remit  the  forfeiture.  It  could  never  have 
been  the  design  of  the  statute  under  such  circumstances  to  destroj  the 


5X0  POLLEYS  V.   OCEAN   INS.   CO.  [cHAP.  VI. 

legal  title,  or  lawful  right  of  employment,  until  the  forfeiture  was  ex- 
acted. The  risl£  is  not  increased,  nor  is  the  loss  for  such  cause  within 
the  policy.  The  assurers  cannot  place  themselves  in  the  situation 
of  the  government  and  claim  to  act  for  it.  None  can  claim  a  forfeiture 
but  those  authorized  by  law.  Nor  can  this  matter  be  properly  tried 
collaterally,  and  by  a  common  law  court.  Tlie  jurisdiction  belongs  to 
another  tribunal.  It  is  a  matter  between  others,  in  which  the  defend- 
ants are  not  interested,  and  with  which  they  have  no  concern. 

There  is  another  aspect  in  which  the  same  transactions  are  presented. 
It  is  insisted  that  the  enrolment  should  not  have  been  admitted  in  evi- 
dence in  proof  of  property,  because  an  unlawful  document  cannot  be 
used  as  proof.  In  considering  this  question,  it  will  be  necessary  to 
bear  in  mind  that  it  does  not  appear  in  the  case  that  the  vessel  was  in- 
sured as  a  vessel  of  the  United  States.  Her  national  character  does 
not  appear  to  have  entered  into  the  contract.  If  such  had  been  the  fact, 
the  plaintiff  could  not  recover,  because  the  laws  of  tlie  United  States 
declare  that  if  not  registered  by  the  former  name,  in  case  she  has  been 
built  upon,  "  she  shall  cease  to  be  deemed  a  ship  or  vessel  of  the  United 
States."  As  she  was  not  insured  as  a  vessel  of  the  United  States,  and 
as  the  laws  do  not  for  such  cause  destroy  the  title  to  the  property,  their 
effect  being  only  to  take  from  that  title  the  particular  character  of  being 
a  vessel  of  the  United  States,  the  document  was  properly  admitted. 

It  is  also  contended,  that  not  being  properly  and  legally  documented, 
she  was  not  seaworthy,  and  that  she  was  not  the  proper  subject  of  in- 
surance. It  is  necessary  here  again  to  notice  a  distinction.  If,  for 
the  want  of  legal  documents,  the  voyage  is,  by  the  laws  of  the  country, 
rendered  illegal,  then  the  policy  is  void  on  account  of  the  illegality  of 
the  voyage.  Upon  this  principle  alone,  the  case  of  Farmer  v.  Legg, 
7  Term  R.  186,  could  have  been  decided.  But  if,  as  in  the  present 
case,  the  laws  do  not  declare  the  voyage  to  be  illegal  on  account  of  the 
■want  of  the  proper  documents,  then  the  consequences  are  left  to  be  de- 
termined by  the  mercantile  law.  And  by  that  law,  where  the  national 
character  of  the  vessel  is  not  made  a  part  of  the  contract,  the  want  of 
such  documents  is  not  material,  unless  it  appears  that  the  risk  was  en- 
hanced, or  that  the  loss  happened  in  consequence  of  the  want  of  them  ; 
in  which  case  the  insured  cannot  recover.  7  East,  367,  Dawson  v. 
Atty ;  14  East,  374,  Bell  v.  Carstairs ;  2  Johns.  157,  Elting  et  al.  v. 
ScoU  et  al  Nothing  appearing  in  this  case  to  bring  it  within  this  rule, 
these  objections  cannot  prevail.  .  .  . 

Judgment  is  to  be  entered  upon  the  verdict.^ 

1  The  case  was  taken  to  the  Supreme  Court  of  the  United  States  upon  writ  of  error, 
and  is  reported  sub  nom.  Ocean  lus.  Co.  v.  Polleys,  13  Pet.  157  (1839),  where  Story,  J., 
for  the  court,  in  the  course  of  an  opinion  holding  that  the  writ  of  error  must  be  dis- 
missed for  want  of  jurisdiction,  said  :  — 

"  Then  as  to  the  other  point.  Tlie  objection  made  by  the  counsel  for  the  Insurance 
Company  was,  that  the  schooner  ("  Mary  "),  on  the  voyage  on  whicii  she  was  lost,  was 
sailing  under  circumstances  rendering  her  liable  to  forfeiture  for  a  violation  of  thehiws 
of  the  United  States ;  and  that  therefore  a  policy  on  a  vessel  pursuing  such  a  voyage 


SECT.  I.]  POLLEYS   V.   OCEAN   IXS.   CO.  oil 

was  not  valid,  or  legal  and  binding.  But  the  Judge  also  overruled  this  objection,  as 
insufficient  to  bar  the  action.  The  objection  was  founded  on  the  27th  section  of 
the  ship  registry  act  of  1792,  ch.  45,  above  referred  to,  which  declares  that  if  anv  cer- 
tificate of  registry  or  record  siiall  be  fraudulently  or  knowingly  used  for  any  ship  or 
vessel  not  then  actually  entitled  to  the  benefit  thereof,  according  to  the  true  intent 
of  this  act,  such  ship  or  vessel  shall  be  forfeited  to  the  United  States,  with  her  tackle 
apparel,  and  furniture.  The  objection  then,  as  insisted  on  by  the  counsel  for  the  In- 
surance Company,  involved  two  distinct  propositions.  The  first  was,  that  the  schooner 
was  sailing  on  the  voyage  under  circumstances  which  render  her  liable  to  forfeiture. 
The  second  was,  th;it  tlie  policy  on  her  was  therefore  void.  Now,  the  first  might  have 
been  most  fully  admitted  by  the  court,  and  yet  the  second  have  been  denied,  upon  the 
ground  that  the  policy  was  a  lawful  contract  in  itself,  and  only  remotely  connected  with 
the  illegal  tise  of  the  certificate  of  registry,  and  in  no  respect  designed  to  aid,  a.<sist,  or 
advance  any  such  illegal  purpose.  We  all  know  that  there  are  cases  where  a  contract 
may  be  valid,  notwithstanding  it  is  remotely  connected  with  an  independent  ilk-gal 
transaction,  which,  however,  it  is  not  designed  to  aid  or  promote.  The  case  of  Arm- 
strong V.  Toler,  11  Wheat.  R.  258,  presented  a  question  of  this  sort,  and  was  decided  in 
favor  of  .such  a  contract.  But  cases  might  easily  be  put  where  the  doctrine  itself  would 
admit  of  a  far  more  simple  and  easy  illustration.  Suppose  the  "  Mary  "  had  been  re- 
paired in  port,  and  the  sliipwrights  had  known  the  circumstances  under  which  she  had 
obtained  the  new  certificate  of  registry ;  would  they,  in  consequence  of  such  knowledge 
alone,  have  lost  their  title  to  recovery  for  their  own  work  and  labor  ?  Suppose  a  ves- 
sel had  been  actually  forfeited  by  some  antecedent  illegal  act,  are  all  contracts  for  her 
future  employment  void,  although  there  is  no  illegal  object  in  view,  and  the  forfeiture 
may  never  be  enforced  ?" 

On  illegality  of  voyage  in  general,  see  also  :  — 

Delmada  i-.  Motteux,  1  Park  Ins.  8th  ed.  503  (1784); 

Barker  v.  Blakes,  9  East,  283  (1808)  ; 

Pollock  V.  Babcock,  6  Mass.  234  (1810)  ; 

Carruthers  v.  Gray,  15  East,  35  (1812) ; 

Hagedorn  v.  Bell,"l  M.  &  S.  450  (1813); 

Bell  y.  Reid,  1  M.  &  S.  726  (1813)  ; 

Simeon  v.  Bazett,  2  M.  &  S.  94  (1813) ; 

Hagedorn  v.  Bazett,  2  M.  &  S.  100  (1813) ; 

Gibson  V.  Service,  1  Marsh.  119  (1814) ;  s.  c.  5  Taunt.  433; 

Parker  v.  Jones,  13  Mass.  173  (1816)  ; 

Russell  V.  Le  Grand,  15  Mass.  35  (1818) ; 

Pond  V.  Smith,  4  Conn.  297  (1822) ; 

Andrews  v.  Essex  F.  &  M.  Ins.  Co.,  3  Mason,  6,  18-20  (1822) ; 

Archibald  v.  Mercantile  Ins.  Co.,  3  Pick.  70  (1825) ; 

Clark  V.  Protection  Ins.  Co.,  1  Story,  109  (1840) ; 

Redmond  v.  Smith,  7  M.  &  G.  457  (1844) ; 

Cunard  v.  Hyde,  E  ,  B.  &  E.  670  (1858)  ; 

Cunard  v.  Hyde,  2  E.  &  E.  1  (1859).  — Ed. 


512       BOARDMAN   V.    MERRIMACK   MUTUAL   FIRE   INS.   CO.       [CHAP.  VI. 

SECTION  11. 

Fire  Insurance. 

{A)   Illegality   of  Business. 

BOARDMAN  and  Another  v.  MERRIMACK  MUTUAL  FIRE 

INS.  CO. 

BOARDMAN   v.    MERRIMACK   MUTUAL   FIRE   INS.    CO. 
Supreme  Jddicial  Court  of  Massachusetts,  1851.     8  Cush.  583. 

Shaw,  C.  J.  These  are  actions  on  policies  of  insurance,  one  on  a 
building,  the  other  on  personal  property,  consisting  of  leather  and 
other  materials  for  the  manufacture  of  shoes,  and  manufactured  stock 
in  the  same  building.  It  is  admitted  that  the  building  was  burnt  down, 
and  tlie  stock  in  it,  within  the  time,  and  that  the  defendants  are  liable, 
unless  they  are  discharged  by  the  circumstances  set  forth  in  the  facts 
agreed,  on  which  the  case  is  submitted.  These  circumstances  are,  that 
on  the  evening  preced]ng_tlie^re.  alottery  of  two  hundrejl  and  sixty 
tickeiSi^at  one  jdollar  each V  was  dTavimJji  one  of  the  rooms  in  the  build- 
ingj^nd  that  about  fift}'  persons  were  present  in  the  course  of  the  even- 
ing. This  use  of  the  building  was  with  the  consent  of  the  plaintiffs, 
both  of  whom  were  present,  and  each  held  a  ticket,  received  of  the  per- 
sons to  whom  such  consent  was  given.  The  part  of  the  building  used 
was  a  single  room,  in  the  second  story,  sixteen  by  twenty  feet,  in  which 
no  stock  was  kept.  It  further  appears,  that  the  tickets  not  having 
been  all  disposed  of,  those  remaining  were  raffled  for,  at  tlie  drawing  of 
the  lottery,  but  no  consent  was  given  by  the  plaintiffs  to  that,  nor  had 
they  any  knowledge  of  any  such  raffling. 

It  is  then  agreed,  that  upon  a  trial  there  would  be  conflicting  testi- 
mony as  to  whether  or  not  there  was  dissatisfaction  at  the  meeting  as 
to  the  proceedings  in  the  drawing.  There  was  no  open  altercation, 
nor  was  there  any  disturbance  whatever.  It  is  agreed,  if  admissible, 
that  one  Duffy  set  the  fire  which  consumed  the  building ;  and  that  it 
took  place  between  three  and  four  o'clock  in  the  morning,  after  the 
drawing  of  the  lottery ;  that  Duffy  attended  the  drawing,  and  had  a 
ticket. 

The  court  are  unable  to-  perceive  in  these  circumstances  an^-  ground 
of  defence  to  this  suit  on  a  contract  made  by  the  defendants  to  indem^ 
nnythe  plaintiff^ jigainst  loss  by  fire. 

In  the^rst  place,  this  contract  of  insurance  was  made  on  good  con- 
sideration, and  made  to  accomplish  a  good  and  lawful  purpose"!^  It 
does  not  therefore  come  within  that  class  of  cases  where  the  consider- 
ation is   a  violation  of  law  or  good  morals,  or  where  the  object  and 


SECT.  II.]      BOARDMAN   V.   MERRIMACK   MUTUAL   FIRE   INS.   CO.  513 

effect  of  the  contract  will  be  to  promote  or  advance  some  unlawful 
purpose  or  business  which  would  itself  be  a  violation  of  law  or  im- 
moral ;  as  that  of  letting  a  house  to  a  woman  of  ill  fame,  thereby  aid- 
ing, exciting,  and  encouraging  a  violation  of  the  law,  as  in  the  case  of 
Commonwealth  v.  Harrington,  3  Pick.  26.  So  here,  if  the  suit  were 
for  the  rent  of  rooms,  to  be  used  for  drawing  lotteries,  or  a  single  lot- 
ter}',  the  allowing  a  plaintiff  to  recover  judgment  would  be  to  lend  the 
aid  of  the  law  to  enable  one  to  reap  the  fruits  of  an  unlawful  bargain. 

But  the  ground  taken  distinctly  is,  that  the  building  insur.ed  was 
used  for  a  purpose  not  contemplated  by  the  polic}',  and  also  for  an 
unlawful  purpose.  In  regard  to  the  first,  the  argument  proceeds  on 
the  ground,  that  as  the  building  described  in  the  polic}'  was  described 
as  a  shoe  manufactory,  the  occupation,  or  even  the  temporary  use  of 
it.  for  another  purpose,  would  annul  and  vacate  the  policy.  On  the 
contrary,  we  suppose  the  law  to  be,  that  the  assured  may  occupy  and 
use  his  estate  for  anv  other  lawful  business  or  purpose  not  restrained 
by  any  provision  or  condition  in  the  contract,  and  which  does  not  in- 
crea.se  the  risk.  And  we  understand  that  it  is  not  suggested  in  this 
case  that  anj-  such  change  was  made  in  the  structure  or  use  of  the 
building,  as  within  its  terms  to  vacate  the  polic}" ;  and  if  any  such 
change  had  been  made  and  relied  on,  it  was  a  fact  to  be  distinctlv  put 
in  issue  and  tried  by  a  jur}'.  But  the  argument  is,  that  being  insured 
as  a  siioe  manufactorj',  a  business  well  understood,  it  presumes  no  as- 
semblage of  persons  on  the  premises,  but  the  contrary ;  because  the 
resort  there  of  numbers  must  interrupt -labor,  and  ma}'  endanger  the 
security  of  the  stock  by  exposing  it  to  depredation.  This  appears  to 
us  to  be  taking  too  limited  a  view  of  the  nature  of  the  contract  of  in- 
siu-ance  and  the  rights  of  the  assured.  Suppose  in  a  spare  large  room, 
like  the  one  described,  a  periodical  auction  sale  of  shoes  and  boots, 
their  own  and  others,  were  made,  which  would  bring  an  assemblage  of 
persons  there,  creating  no  increased  risk  of  fire,  would  it  avoid  the 
policy?  Suppose  that  such  spare  room  was  let,  occasionally  or  peri- 
odically, for  a  school,  a  h-ceum,  or  a  conference  meeting,  it  could  not 
affect  the  policy. 

But  it  comes  back  to  the  original  ground,  that  the  building  was  used 
for  an  unlawful  purpose,  and  so  there  was  an  unlawful  and  unwar- 
ranted use  of  the  building.  This  is  not  speaking  with  strict  accuracy  ; 
the  law,  which  forbids  the  setting  up  or  drawing  of  any  lottery,  and 
wliieh  renders  it  penal  for  any  person  who  shall  knowingly  permit  the 
drawing  of  any  lottery  in  any  house,  shop,  or  building  owned  or  occu- 
pied by  him,  does  not  subject  the  building  to  any  forfeiture ;  it  renders 
such  person  guilty  of  a  misdemeanor,  and  personally  liable  for  a  penalty. 
It  is  therefore  an  unlawful  use  of  the  house  only  in  the  sense  in  which 
every  person  may  be  said  to  make  unlawful  use  of  his  house  who  com- 
mits an  offence  under  its  roof  against  good  morals  or  positive  law. 
There  is  no  natural,  probable,  or  actual  connection  between  the  offence 
committed  and  the  loss  by  fire.     If  indeed  it  were  in  the  direct  com- 

33 


514        BOAKDMAN    V.    MERRIMACK   MUTUAL   FIRE   INS.    CO.       [CHAP.  VI. 

mission  of  some  unlawful  act,  b^-  the  assured,  that  the  fire  was  kindled, 
so  that  the  relation  of  cause  and  effect  could  be  shown  between  the  un- 
lawful act  done  and  the  loss  occasioned,  it  would  present  a  very  differ- 
ent question. 

The  cases  cited  in  the  argument  for  the  defendants  do  not  tend  to 
sustain  the  defence. 

Richardson  v.  Maine  Ins.  Co.,  6  Mass.  102.  The  cases  of  a  polic}-  on 
the  realt}'  against  loss  by  fire  and  of  one  on  a  vessel  or  cargo,  personal 
property,  are  not  \evy  analogous,  because  the  direct  use  and  employ- 
ment of  the  latter  may  be  infinitely  various,  to  be  controlled  and  di- 
rected by  the  owner  or  manager.  The  case  cited  recognizes  the 
distinction  between  a  policy  made  to  protect  a  traflflc,  prohibited  by 
the  sovereign  of  the  parties,  and  that  wliich  might  violate  the  law  of 
another  countr}-,  or  the  law  of  nations.  In  case  of  its  being  a  voyage 
in  violation  of  a  municipal  law  bj-  which  the3'  are  bound,  the  voyage  is 
illicit,  and  all  insurances  on  such  vo3'ages  are  void  ;  for  the  law  will 
not  allow  any  effect  to  a  contract  made  to  protect  a  traffic  which  it  has 
prohibited.  In  that  case,  the  verv  contract  sought  to  be  enforced  was 
void  in  its  inception,  because  illegal  in  its  inception.  The  case  of 
Warren  v.  jManufacturers'  Ins.  Co.,  13  Pick.  518,  is  not  more  in  point. 
On  the  contrar}',  it  was  there  held  that  a  non-compliance  with  a  posi- 
tive law  of  the  United  States,  in  the  conduct  of  the  voyage,  did  not 
avoid  the  polic}-. 

The  distinction  between  cases  where  contracts  are  or  are  not  void, 
as  against  law,  is  well  stated  by  Marshall,  C.  J.,  in  Armstrong  r. 
Toler,  11  Wheat.  271.  The  principle  established  is,  that  where  the 
consideration  is  illegal,  immoral,  and  wrong,  or  where  the  direct  pur- 
pose of  the  contract  is  to  effect,  advance,  or  encourage  acts  in  viola- 
tion of  law,  it  is  void.  But  if  the  contract  sought  to  be  enforced  is 
collateral  and  independent,  though  in  some  measure  connected  with 
acts  done  in  violation  of  law,  the  contract  is  not  void. 

Ill  the  present  case,  it  appears  to  us  that  the  illegal  conduct  of  the 
plaintiffs,  in  assisting  at  the  drawing  of  a  lottery,  or  in  permitting  one 
to_bc_dj-awji,  on  tlieir4ir,cmises,  alUioiigh  it  subiccted_  tlicrn^ personally 
to  a  penaltv,  did  not  affect  their  contract  with  the  insurance  company, 
but  was  wholly  independent  of  it  and  disconnected!  as~If  the^-IIad 
committed  any  other  misdemeanor  or  indictable  offence  under  the  same 
roof;  and  therefore  did  not  avoid  the  policy,  or  afford  any  ground  of 
defence  to  llic  company.  Any  other  rule  would  extend  the  penalty  for 
a  violation  of  the  law  much  beyond  that  prescribed  by  the  law  itself, 
and  deprive  the  party  of  his  civil  rights,  in  favor  of  third  parties  in  no 
dt'gree  afl!"ected  by  such  unlawful  acts. 

Judgment  for  the  plai7itiffs  in  both  cases. 

0.  P.  Lord,  for  the  plaintiffs. 

N,  J.  Lord  and  N.  W.  Hazen^  for  the  defendants. 


SECT.  II.]  NIAGARA   FIKE    INS.   CO.    V.   DeGSAFF.  515 


NIAGARA  FIRE  INSURANCE  COMPANY  v.  DeGRAFF. 
Supreme  Court  of  Michigan,  18G3.     12  Mich.  124.^ 

Error  to  Lenawee  Circuit. 

C.  A.  Stacy  and  C.  I.  Walker,  for  plaintiffs  in  error. 

A.  L.  Millerd,  H.  I).  Condict,  and  T.  31.  Cooley,  for  defendant  in 
error. 

Campbell,  J.  Plaintiffs  in  error  insured  DeGraff  upon  his  stock  of 
goods,  described  in  his  application  as  a  "  stock  of  dr}-  goods,  groceries, 
&c. ,"  dividing  the  risk  into  specific  sums  on  dry  goods,  groceries, 
hardware,  and  other  things  specificall}'  mentioned.  There  was  evidence 
tending  to  show  that  he  had  in  his  store  a  few  bottles  of  spirituous 
liquors,  and  a  barrel  of  alcohol.  Alcohol  was  among  the  articles  men- 
tioned in  the  second  class  of  hazards  in  the  second  subdivision  of  extra 
hazards.  Grocers'  stocks  general!}-  were  in  the  first  subdivision  of  the 
same  class.  Bottled  spirituous  liquors  were  not  classed  as  extra  haz- 
ardous, but  were  included  in  the  first  class  of  ordinar}'  hazards  in  the 
second  division  of  hazardous.  There  was  evidence  tending,  to  show 
that  the  insurance  agent,  wlio  drew  up  the  application,  was  informed 
of  the  presence  of  the  liquors  and  alcohol,  which  was,  however,  denied 
by  the  agent.  The  property  being  destroyed,  a  suit  was  brought  on 
the  polic}',  and  judgment  was  recovered.  *  Error  is  brought  on  the  rul- 
ings upon  the  trial.  The  points  taken  refer  mostlj-  to  a  clause  in  the 
policy  which  declared  that  if  the  store  should  be  used  "  for  storing  or 
keeping  therein  any  articles,  goods  or  merchandize,  denominated  haz- 
ardous, or  extra  hazardous,  or  specialh'  hazardous,  in  the  second  class 
of  the  classes  of  hazards  annexed  to  this  policy,  except  as  herein  spe- 
cially provided  for,  or  hereafter  agreed  to  by  this  corporation,  in  writ- 
ing upon  this  policy,  from  thenceforth,  so  long  as  the  same  shall  be  so 
used,  this  policy  shall  be  of  no  force  or  effect."  There  was  a  further 
clause  annulling  the  polic}'  whenever  gunpowder  or  any  other  article 
subject  to  legal  restriction  should  be  kept  in  greater  quantities  or  in  a 
different  manner  than  prescribed  liy  law. 

The  court  below  refused  to  charge,  as  requested,  that,  since  the  pas- 
sage of  the  Prohibitor}-  Liquor  Law,  alcohol  and  spirituous  liquors  are 
not  included  in  the  term  "  gi'oceries"  as  used  in  referring  to  goods  kept 
for  sale  ;  and  charged  that  the  question  whether  they  were  so  included 
was  one  of  fact  for  the  jury.     To  this  exception  is  taken. 

It  was  claimed  on  behalf  of  the  plaintiffs  in  error,  that  if  these  liquors 
can  be  allowed  to  be  included  in  a  policy,  the  polic}-  will  be  to  all  in- 
tents and  purposes  insuring  an  illegal  traffic ;  and  several  cases  were 
cited  involving  marine  policies  on  unlawful  voyages,  and  lotter}'  insur- 
ances, which  have  been  held  void  on  that  ground.     These  cases  are 

1  The  reporter's  statement  has  been  omitted.  —  Ed. 


516  NIAGARA  FIRE  INS.   CO.   V.   DeGRAFF.  [cHAP.  VI. 

not  at  all  parallel,  because  they  rest  upon  the  fact  that,  in  each  in- 
stance, it  is  made  a  necessary-  condition  of  the  policy  that  the  illegal 
act  shall  be  done.  The  ship  being  insured  for  a  certain  voyage,  tliat 
voyage  is  the  only  one  upon  which  the  insurance  would  apply,  and  the 
underwriter  becomes  thus  directly  a  party  to  an  illegal  act.  So  insur- 
ing a  lottery  ticket  requires  the  lottery  to  be  drawn  in  order  to  attach 
the  insurance  to  the  risk.  If  this  policy  were  in  express  terms  a  policy 
insuring  the  party  selling  liquors  against  loss  by  fine  or  forfeiture,  it 
would  be  quite  analogous.  But  this  insurance  attaches  only  to  prop- 
erty, and  the  risks  insured  against  are  not  the  consequences  of  illegal 
acts,  but  of  accident.  Our  statute  ^  does  not  in  any  way  destroy  or 
affect  the  right  of  property  in  spirituous  liquors,  or  prevent  title  being 
transmitted,  but  renders  sales  unprofitable  b}-  preventing  the  vendor 
from  availing  himself  of  the  ordinary  advantages  of  a  sale,  and  also 
affixes  certain  penalties.  Ilibbard  v.  People,  4  Mich.  125;  Bagg  v. 
Jerome,  7  Mich.  145.  If  the  owner  sees  fit  to  retain  his  property  with- 
out selling  it,  or  to  transmit  it  into  another  state  or  countr}-,  he  can  do 
so.  By  insuring  his  property  the  jnsunuice_^ompanyJjaye^  no  concern 
with  the  use  he  may  make  of  it,  and  as  ij^  is  suscepUble  of  lawful  uses, 
no  one  can  be  held  to  contract  concerning  it  in  an  illegal  manner  un- 
less the  contract  itself  is  for  a  direct!}'  illegal  purpose.  Collateral  con- 
tracts, in  which  no  illegal  design  enters,  are  not  afl^ected  by  an  illegal 
transaction  with  which  the}'  may  be  remotely  connected.  In  the  case 
of  The  Ocean  Insurance  Co.  v.  PoUeys,  13  Pet.  157,  an  insurance  upon 
a  ship  known  by  the  insurance  company  to  be  liable  to  forfeiture  under 
the  registry  laws  of  the  United  States  was  held  valid,  and  a  recovery 
was  permitted  for  a  loss  while  sailing  under  papers  known  to  be  illegal. 
The  case  of  Armstrong  v.  Toler,  1 1  Wheat.  258,  is  still  stronger.  It 
is  difficult  to  perceive  how  public  polic}'  can  be  violated  b}-  an  insurance 
of  any  kind  of  property  recognized  by  law  to  exist. 

The  question  then  arises  whether  the  court  rightly  left  it  to  the  jury 
to  say,  as  a  matter  of  fact,  whether  the  term  "groceries"  included 
spirituous  liquors  and  alcohol.  That  it  may  include  them  in  the  ab- 
sence of  such  a  statute  is  not  denied ;  the  recognized  definitions 
embracing  them  clearl}-,  so  that  it  ma}'  be  doubted  whether  it  might 
not,  in  that  case,  require  evidence  of  usage  to  exclude  that  meaning  if 
such  articles  existed  in  an  insured  stock  of  groceries.  See  New  York 
Equitable  Insurance  Co.  v.  Langdon,  6  Wend.  623.  There  was  evi- 
dence before  the  jury  in  the  case  before  us  that  these  things  did  in  fact 
form  a  part  of  the  stock,  and  evidence  tending  to  show  a  knowledge  of 
that  fact  by  the  agent.     The  statute  does  not  prohibit  the  sale  of  all 

1  1  Compiled  Laws  of  Michigan  (ed.  1857),  c.  52,  as  amended  by  Michigan  Laws 
of  1861,  p.  472. 

"  If  any  person  by  himself,  his  clerk,  agent,  or  servant,  shall,  directly  or  indirectly, 
sell,  or  keep  for  sale,  contrary  to  law,  any  such  liquor,  he  shall  forfeit  and  pay,  on  the 
first  conviction,  ten  dollars,  and  the  cost  of  suit  or  prosecution,  ami  shall  be  at  once 
committed  to  the  common  jail  of  the  county  until  the  same  be  paid."  —  1  Compiled 
Laws  of  Michigan  (ed.  1857),  c.  52,  b.  1663.  —  Ed. 


SECT.  II.]  NIAGARA   FIKE    INS.    CO.   V.   DeGRAFF.  517 

kinds  of  liquors,  but,  as  to  some,  expressly  recognizes  the  right  in 
every  one.  Whatever  may  be  the  2^restimption,  under  our  present 
statute,  as  to  the  extent  of  the  term  '' groceries,"  — a  question  not 
raised  in  the  case,  and  upon  wliich,  therefore,  it  would  be  improper  to 
pivss,  —  we  think  the  instruction  asked  was  altogether  too  broad,  in 
claiming  that  alcohol  and  other  liquors  could  not  possibly  be  included. 
The  question  was  properly  left  to  the  jury. 

If  the  jury  found  —  as  their  verdict  shows  they  must  have  done  — 
that  the  term  "  groceries  "  included  the  liquors  in  question,  then  the 
other  instructions  complained  of,  which  held  that  by  insuring  such  a 
stock  the  liquors  were  embraced,  although  extra  hazardous,  were  clearly 
correct.  By  the  use  of  a  term  including  them  they  are  "  sjyecicdly  iwo- 
videdfor  in  tcrlting  on  the  jyoUcij."  Insuring  a  class  of  goods  includes 
what  "is  usually  contained  in  it,  whether  extra  hazardous  or  not.  See 
Bryant  v.  Poughkcepsie  Mutual  Insurance  Co.,  17  N.  Y.  200;  Harper 
V.  Albany  Mutual  Insurance  Co.,  17  N.  Y.  194  ;  Harper  v.  N.  Y.  City 
Insurance  Co.,  22  N.  Y.  441  ;  Delonguemare  v.  The  Tradesmen's  In- 
surance Co.,  2  Hall,  589.  In  these  instructions  the  jury  were  directed 
to  include  the  articles  only  if  satisfied  that  they  were  commonl}-  kept 
and  sold  as  part  of  a  grocer's  stock.  This  qualification  was  sufficiently 
broad  to  prevent  any  improper  inferences. 

The  clause  of  the  policy  vitiating  it  if  gunpowder  and  other  articles 
subject  to  legal  restrictions  should  be  kept  in  greater  quantities  or  in  a 
different  manner  than  is  provided  by  law  was  not  pressed  very  strongly 
on  the  argument,  and  evidently  refers  only  to  articles  of  an  intrinsically 
dangerous  nature,  as  liable  to  cause  injury  accidentally  or  by  careless- 
ness. It  has  no  reference  to  any  risks  except  such  as  render  the  prop- 
erty more  likely  to  be  destroyed.  There  are  no  statutory  provisions 
concerning  liquors  analogous  to  the  laws  restricting  the  use  of  powder. 

Our  attention  has  been  called  to  the  fact  that  the  other  charges  given 
on  the  one  side,  and  refused  on  the  other,  are  inconsistent  with  those 
complained  of.  So  far  as  this  is  the  case,  however,  they  favored  the 
plaintiffs  in  error,  —  those  excepted  to  being  the  only  ones  which  could 
damnify  them.  Had  the  verdict  been  for  them,  the  discrepancies  would 
have  been  more  important  in  determining  the  rights  of  the  other  party. 
The  question  whether  the  jury  did  not  find  against  evidence,  or  per- 
versely, could  only  be  presented  in  the  Circuit  Court. 

The  judgment  should  be  affirmed,  with  costs. 

Manning,  J.,  concurred.  Christiancy,  J.,  also  concurred  in  the 
result.    Martin,  C.  J.,  was  absent. 


KELLY   V.   WORCESTER   MUTUAL   FIRE   INS.   CO.      [cHAP.  VL 


KELLY  V.  WORCESTER  MUTUAL  FIRE  INSURANCE 
COMPANY. 

Supreme  Judicial  Court  of  Massachusetts,  1867.     97  Mass.  284. 

Contract  upon  a  policy  of  insurance  on  a  building  comprising  the 
plaintiff's  store,  stable,  and  carriage-house,  for  one  year  from  January 
1,  1866.  Upon  the  face  of  the  policy  were  printed  these  provisions: 
"  Provided^  always,  that  whenever  a  building  hereby  insured  shall  be 
vinoccupied,  or  shall  be  occupied  or  used  for  the  manufacture  of  wool, 
cotton,  hcmi),  oil,  paper,  machinery,  iron  or  wood  work  of  any  kind, 
or  any  other  business  or  purpose  alike  hazardous  (unless  herein  spe- 
cially provided  for),  or  for  the  storage  of  wool,  cotton,  hemp,  or  wool 
or  cotton  waste,  or  if  unoccupied  or  used  for  unlawful  purposes,  or  if 
wood  ashes  are  allowed  in  wooden  vessels,  or  if  the  heating  apparatus 
for  any  purposes  are  not  well  secured  by  incombustible  materials,  this 
policv  shall  be  void  ;  and  provided  that  if,  without  the  consent  of  this 
compan}',  expressed  in  this  polic}',  the  assured  shall  now  have,  or  here- 
after make,  any  other  contract  of  insurance  against  loss  by  fire  on  the 
property,  or  any  part  thereof,  hereb}'  insured,  whether  such  other  con- 
tract shall  be  valid  or  not  as  against  the  parties  thereto,  or  either  of 
them  ;  or  if  the  risk  shall  be  increased  by  any  means  whatever  within 
the  control  of  the  assured  ;  or  if  the  title  to  the  propert}'  insured,  or 
an}'  part  thereof,  shall  be  alienated,  or  this  polic}',  or  any  interest 
therein,  shall  be  assigned  without  the  written  consent  of  the  company 
within  thirty  days  from  the  time  of  such  alienation  ;  or  if  smoking  is 
allowed  in  any  barn  or  stable  insured  or  containing  propo-ty  hereby 
insured ;  or  if  the  assured  shall  in  an}-  wa}'  attempt  to  defraud  said 
compan}-,  then,  and  in  either  such  case,  this  policy  shall  be  void." 

The  case  was  submitted  to  the  decision  of  the  court  upon  a  statement 
of  facts,  the  material  part  of  which  was  as  follows:  "The  building  in- 
sured was  totally  destroyed  by  fire  May  7,  1866,  and  due  notice  thereof 
and  of  the  amount  of  the  loss  was  given  to  the  defendants.  For  some 
months  previous  to  the  fire,  and  at  that  time,  Thomas  F.  Kelly,  a 
brother  of  the  plaintiff,  had  the  care  of  the  building.  In  February, 
1866,  Thomas  hired  of  the  plaintiff  the  store  for  the  alleged  purpose  of 
storing  in  it  a  quantity  of  whiskey,  and  immediately  afterwards  the 
whiskey  was  put  into  the  store  by  Thomas,  and  remained  there  till  the 
time  of  the  fire,  except  so  much  thereof  as  was  sold  at  the  store.  While 
the  whiskey  was  so  stored  in  the  building,  Thomas  from  time  to  time 
sold  to  various  individuals  in  the  store  quantities  of  whiskey,  varying 
from  one  glass  to  two  gallons,  and  delivered  the  same  in  the  store  with- 
out any  license  so  to  do.  The  store  was  generally  kept  locked,  and 
the  purchasers  were  admitted  to  it  by  Thomas.  No  other  property  was 
kept  there  for  sale.  At  the  time  of  the  fire  there  were  about  nine- 
teen barrels  of  whiskey  in  the  store,  all  of  which  was  destro3ed.     The 


SECT.  II.]       KELLY   V.   WOKCESTER  MUTUAL  FIRE   INS.    CO.  519 

plaintiff  knew  that  Thomas  hired  the  store  for  the  purpose  of  storing 
whiskey  in  it,  that  the  whiske}'  was  stored  there,  that  Thomas  kept 
said  Uqiiors  with  the  intent  to  sell  the  same  in  said  store,  and  that'lro 
had  no  license  to  sell  intoxicating  liquors,  but  the  plaintiff  did  not  know 
that  any  sales  of  said  whiskey  were  made  in  said  store." 

T.  G.  Kent,  for  the  plaintiff. 

G.  F.  Hoar  and  S.  Utley,  for  the  defendants. 

Gray,  J.  We  have  not  found  it  necessary  to  consider  the  question, 
which  was  much  discussed  at  the  bar,  whether,  by  the  fair  construction 
of  the  agreed  statement,  the  plaintiff  must  be  taken  to  have  known  tliat 
the  building  insured  was  used  for  unlawful  purposes  ;  because  we  are 
of  opinion  that  upon  the  undisputed  facts  such  knowledge  need  not  be 
shown  in  order  to  sustain  the  defence. 

The  plaintiff's  tenant,  for  two  or  three  months  before  the  fire,  stored 
a  number  of  barrels  of  intoxicating  liquors  in  the  building,  with  intent 
to  sell  such  liquors  in  it,  and  did  in  fact  from  time  to  time  sell  the  same 
there  by  retail  without  license,  in  violation  of  the  Gen.  Sts.  c.  86,  §§  28- 
34,  and  did  not  sell  or  keep  for  sale  on  the  premises  any  other  property. 
This  habitual  use  of  the  building  for  an  unlawful  purpose  by  the  ten- 
ant, even  if  unknown  to  the  owner,  avoided  his  policy  by  the  terms  of 
the  first  proviso,  the  manifest  object  of  which  is  to  define  certain  risks 
which  the  insurers  will  not  assume,  without  regard  to  the  question 
whether  they  arise  or  exist  by  the  act  or  with  the  knowledge  of  the  as- 
sured ;  and  the  omission  of  any  reference  to  him  in  this  proviso  is  made 
the  more  marked  by  the  repeated  mention  of  his  action  and  control  in 
the  proviso  which  immediately  follows.  The  clause  in  the  first  proviso, 
which  might  most  plausibly  be  argued  to  involve  his  knowledge  or  per- 
mission, fs  that  next  after  the  clause  "  if  occupied  or  used  for  unlawful 
purposes,"  by  which  it  is  further  stipulated  that  "  if  wood  ashes  are 
allowed  in  wooden  vessels,"  the  policy  shall  be  void.  But  it  has  been 
decided  by  this  court  that  a  policy  containing  a  clause  almost  precisely 
like  this  was  avoided  by  the  placing  of  ashes  in  a  wooden  barrel  by  a 
servant,  without  any  direction  of  the  assured.  Worcester  v.  Worcester 
Insurance  Co.,  9  Gray,  27,  See  also  Mead  v.  Northwestern  Insurance 
Co.,  3  Selden,  533  ;  Fire  Association  of  Philadelphia  v.  Williamson, 
26  Penn.  State,  196  ;  Howell  v.  Baltimore  Equitable  Society,  16  Mary- 
land, 377. 

In  some  of  the  cases  cited  for  the  plaintiff,  the  prohibited  use  was 
not  so  constant  or  habitual,  or  of  such  a  nature  as  to  fall  within  the 
terms  of  the  provision,  and  in  the  others  the  knowledge  or  assent  of  the 
assured  was  expressly  required  in  order  to  avoid  the  policy. 

Judgment  for  the  defendants. 


520  KELLY  to.   HOME  INS.   CO.  [CHiiP.  VL 


KELLY  V.   HOME  INSURANCE  COMPANY. 

KELLY  V.   CROTON  INSURANCE  COMPANY. 

Supreme  Judicial  Court  of  Massachusetts,  1867.     97  Mass.  288. 

Chapmax,  J.  Both  of  the  policies  on  which  these  actions  are  brouglit 
insure  the  plaintiff  on  his  stock  of  liquors  and  casks  in  a  certain  buikl- 
ing  in  Southborough  occupied  as  a  liquor  store  and  private  stable. 

It  appears  that  the  stock  consisted  of  nineteen  barrels  of  whiske}- ; 
and  at  the  time  of  the  insurance,  and  thereafter  to  the  time  of  the  loss, 
it  was  intended  for  sale  in  this  Commonwealth.  At  various  times  after 
the  insurance  was  made,  the  plaintiff  did  sell  to  various  individuals 
quantities  of  the  whiske}-,  varying  from  one  glass  to  two  gallons,  with- 
out license  or  authority.  The  insurance  was  made  March  3,  1866,  and 
the  loss  occurred  May  7,  1866.  It  thus  appears  that  the  property  was 
kept  for  sale  illegally  in  violation  of  Gen.  Sts.  c.  86.^  It  was  liable  to 
be  seized  and  confiscated  as  a  nuisancej  and  the  place  where  it  was  kept 
was  made  a  nuisance  by  the  plaintiff's  intent  to  sell  it  illegally.  By 
thus  keeping  it,  and  also  by  thus  selling  it,  the  plaintiff  committed  an 
offence  which  was  punishable  by  fine  and  imprisonment.  The  defend- 
ants contend  that  a  contract  to  insure  such  property  thus  kept  is  void, 
because  it  is  in  contravention  of  the  policy  of  the  law.  It  was  so  ruled 
in  the  Superior  Court,  and  the  plaintiff  alleged  exceptions. 

The  general  rule  of  law  on  this  subject  is  stated  in  Board  man  v. 
Merrimack  Insurance  Co.,  8  Cush.  583.  "When  the  direct  purpose  of 
the  contract  is  to  effect,  advance,  or  encourage  acts  in  violation  of  law, 
it  is  void.  But  if  the  contract  sought  to  be  enforced  is  collateral  and 
independent,  though  in  some  measure  connected  .with  the  acts  done  in 
violation  of  law,  the  contract  is  not  void."  No  cases  have  been  cited 
in  which  this  test  has  been  applied  to  contracts  of  insurance  against 
fire,  but  its  application  to  marine  insurance  is  well  settled.  In  marine 
insurance  there  is  held  to  be  an  implied  stipulation  that  the  voyage 
shall  be  conducted  legally  in  reference  to  the  laws  of  the  country  where 
the  vessel  belongs.  1  Phil.  Ins.  (5th  ed.)  §  736.  And  Phillips  states 
as  a  general  principle  that  a  contract  of  indemnity  is  void  if  incurring 
the  risk  or  permitting  indemnity  against  it  is  in  contravention  of  the 
provisions  or  obvious  policy  of  the  law.  lb.  §  906.  See  also  1  Arnould 
en  Ins.,  part  2,  c.  5.  Chancellor  Kent  thus  states  the  general  doctrine : 
'•An  insurance  on  a  voyage  undertaken  in  violation  of  a  blockade,  or  of 
an  embargo,  or  of  the  provisions  of  a  treat}-,  is  illegal,  whetiicr  the  pol- 
icy be  on  the  ship,  freight,  or  goods  embarked  in  the  illegal  traffic.    An 

^  "  No  person  shall  own,  possess,  or  keep  any  spirituous  or  intoxicating  li(iuor,  with 
intent  to  sell  the  same  in  this  state,  and  no  owner  of  such  liquor  sliall  permit  or  suffer 
any  other  person  to  keep  the  same  for  the  purpose  of  selling  it  in  this  state,  unless 
authorized  as  provided  in  this  cliapter."  General  Statutes  of  Massachusetts,  c.  86, 
B.  29. —  Ed. 


SECT.  II.]  KELLY  V.   HOME   INS.   CO.  521 

insurance  on  property  intended  to  be  imported  or  exported  contrary  to 
the  law  of  the  place  where  the  policy  is  made,  or  sought  to  be  enforced, 
is  voitl.  Tlie  illegality  of  the  voyage  in  all  cases  avoids  the  policy,  and 
the  voyage  is  always  illegal  when  the  goods  or  trade  are  prohibited,  or 
the  mode  of  its  prosecution  violates  the  provisions  of  a  statute."  3  Kent 
Com.  (6th  ed.)  262. 

This  court  has  held  that  when  the  government  prohibits  trade  with  a 
foreign  country  or  port,  for  any  cause  whatever,  a  voyage  to  that  coun- 
try or  port  is  illicit,  and  all  insurances  on  such  voyages  are  void, 
whether  the  assurers  had  or  had  not  knowledge  of  the  prohibition.  The 
reason  is  that  the  law  will  not  give  effect  to  a  contract  made  to  protect 
a  traffic  which  it  has  prohibited.  Richardson  v.  Marine  Insurance  Co., 
6  IMass.  111.     See  also  Breed  v.  Eaton,  10  Mass.  21. 

The  case  of  Cunard  v.  Hyde,  2  El.  &  El.  1,  was  an  action  upon  a  pol- 
icy on  a  cargo  to  be  sliipped  from  Miramichi,  a  port  in  Canada,  to  a 
port  in  the  United  Kingdom.  The  defence  was,  that,  by  the  customs 
consolidation  act,  before  any  clearing  officer  permits  a  ship,  wholly  or 
partly  laden  with  timber,  to  clear  out  from  any  port  in  North  America 
or  Honduras,  after  September  1  or  before  May  1,  in  any  year,  he  shall 
ascertain  that  the  whole  cargo  is  below  deck,  and  give  the  master  a  cer- 
tificate to  that  effect ;  and  the  master  shall  not  allow  any  part  of  the 
cargo  to  be  upon  deck,  or  sail  without  such  certificate,  under  penalt}'  of 
J 100.  It  was  held  that,  as  part  of  the  cargo  was  loaded  upon  deck 
with  the  previous  knowledge  of  the  assured,  in  violation  of  this  act,  the 
voyage  was  so  far  illegal  that  the  insurance  upon  the  cargo  was  void, 
though  the  terras  of  the  act  applied  the  prohibition  and  the  penalty  to 
the  master  only,  and  did  not  declare  the  voyage  illegal.  It  had  been 
decided,  the  previous  year  (1858),  in  Cunard  v.  Hjxle,  El.  Bl.  &  El.  670, 
that  such  an  insurance  would  not  be  void  as  against  the  assured  unless 
he  was  privy  to  the  illegal  act  of  the  master.  These  cases  were  affirmed 
in  Wilson  v.  Rankin,  34  L.  J.  (N.  S.)  Q.  B.  62,  and  s.  c.  in  Exch.  Ch. 
35  L.  J.  (N.  S.)  Q.  B.  87.  Thus  it  appears  that  the  law  will  not  enforce 
a  contiact  for  the  insurance  of  goods  against  the  perils  of  the  sea  if, 
with  the  knowledge  of  the  assured,  they  are  carried  on  deck  contrary 
to  the  provisions  of  a  statute  which  requires  the  captain  to  carry  thenj 
below  deck,  and  subjects  him  to  a  penalty*  for  the  offence. 

The  principles  above  stated  are  fully  recognized  in  Clark  v.  Protec- 
tion Insurance  Co.,  1  Story,  109,  and  were  applied  to  a  time  policy. 
The  defence  in  that  case  rested  on  the  ground  that  the  voyage  from 
"Waldoborough,  Maine,  to  New  Orleans,  and  thence  to  Liverpool,  was 
illegal,  because  the  captain  took  on  board  at  New  Orleans  a  chain  cable 
which  had  been  smuggled  into  the  United  States  in  another  vessel,  by 
the  procurement  of  the  captain,  for  the  purpose  of  being  used  on  this 
voyage.  But  the  offence  of  the  captain  in  respect  to  the  smuggling  was 
connected  with  the  other  vessel ;  and  taking  on  board  and  carrying  an 
article  which  had  been  smuggled  in  another  voyage  was  not  an  offence 
against  our  revenue  laws.     Therefore  the  voyage  was  not  illegal.     The 


522 


KELLY   V.   HOME   INS.    CO.  [CHAP.  VI. 


cable  was  liable  to  seizure,  and  it  was  held  that  if  from  this  cause  the 
vessel  bad  been  subject  to  loss  by  detention,  the  fnsurance  would  have 
been  void  as  to  such  loss  ;  but  as  the  loss  was  caused  by  the  perils  of 
the  sea  on  the  voyage  to  Liverpool,  the  insurance  was  held  to  be  valid. 
But  it  was  affirmed  by  the  court,  among  other  things,  that  if  a  voyage 
at  its  inception  is  founded  on  any  illegality,  in  which  only  one  of  the 
owners  participates,  it  is  utterly  void  as  to  all,  and  that  a  statute  im- 
posing a  penalty  imports  a  prohibition,  and  makes  the  prohibited  act 

illegal. 

The  same  principle  upon  which  it  is  held  that  goods  which  are  car- 
ried for  an  illegal  purpose,  or  in  an  illegal  manner,  cannot  be  the  sub- 
ject of  a  valid  insurance  against  the  perils  of  the  sea,  applies,  with  at 
least  equal  force,  to  an  insurance  against  fire  upon  goods  which  are  so 
unlawfully  kept  in  a  store  that  the  owner  is  liable  to  fine  and  imprison- 
ment, the  store  made  a  nuisance,  and  the  goods  subject  to  seizure  and 
forfeiture.  In  the  present  case  the  insured  was  the  guilty  party  ;  and 
his  direct  purpose  in  taking  the  policies  was  that  he  might  continue  his 
offence  with  the  greater  safety.  His  contract  was  in  contravention  of 
law,  and  void  as  to  him,  because  he  entered  into  it  in  order  to  protect 
himself  in  his  illegal  acts.  Exceptions  overrulecU 

T.  G.  Kent,  for  the  plaintiff.     . 

G.  F.  Hoar  and  S.  Utley,  for  the  defendants. 

1  Ace:  Johnson  v.  Union  M.  &  F.  Ins.  Co.,  127  Mass.  555  (1879);  Lawrence  v. 
National  F.  Ins.  Co.,  127  Mass.  557,  n.  (1880). 
On  illegality,  in  general,  see  also :  — 

Carrigau  v.  Lycoming  F.  Ins.  Co.,  53  Vt.  418  (1881) ; 

Hinckley  v.  Gerraania  F.  Ins.  Co.,  140  Mass.  38  (1885) ; 

Pollard  V.  Phoenix  Ins.  Co.,  63  Miss.  244  (1885) ; 

Erb  V.  German  American  Ins.  Co.,  98  Iowa,  606  (1896)' ; 

Erb  V.  German  Ins.  Co.,  99  Iowa,  398  (1896) ; 

Erb  V.  Fidelity  Ins.  Co.,  99  Iowa,  727  (1896) ; 

Phenix  Ins.  Co.  v.  Clay,  101  Ga.  331  (1897) ; 

Springfield  F.  &  M.  liis.  Co.  v.  Cannon,  46  S.  W.  Rep.  375  (Tex.  Civ.  App. 
1898).  — Ed. 


SECT.  II.]  DOBSON   V.   SOTHEBY.  523 

SECTION  II.   (continued), 
{B)  Conditions  prohibiting  the  Keeping  of  Certain  Things. 

DOBSON  V.    SOTHEBY  and   Others. 
Nisi  Prius,  King's  Bench,  1827.     Moo.  «&  M.  90. 

Assumpsit  upon  a  policy  of  insurance  against  fire,  against  the  de- 
fendants, three  of  the  directors  of  the  Beacon  Insurance  Compan}'. 

The  policy  was  effected  upon  "  a  barn,  situate  in  an  open  field,  tim- 
ber built  and  tiled,"  at  the  premium  of  Is.  6d.  per  £100. 

The  conditions  indorsed  upon  the  polic}'  required  the  insurer  to 
deliver  to  the  company  a  description  of  the  property  to  be  insured, 
and  provided  that  all  insurances  effected  on  propert}'  falsely  described, 
so  that  the  same  might  be  charged  at  a  lower  rate  of  premium  than 
would  otherwise  have  been  charged,  should  be  void,  and  the  premiums 
paid  forfeited  to  the  company. 

The  rate  of  premium  paid  by  the  plaintiff  was  the  lowest  rate,  and 
was  only  payable  for  buildings  of  a  certain  description,  wherein  no  fire 
is  kept,  and  no  hazardous  goods  are  deposited.  There  were  other 
articles  fixing  a  higher  rate  of  premium  for  buildings  of  other  descrip- 
tions, with  the  same  proviso  against  hazardous  goods ;  and  a  proviso 
that  "if  buildings  of  any  description  insured  with  the  company  shall, 
at  an}'  time  after  such  insurance,  be  made  use  of  to  stow  or  warehouse 
any  hazardous  goods,"  without  leave  from  the  company,  the  policy 
should  be  forfeited. 

The  premises  were  agricultural  buildings,  but  not  such  as  were 
strictly  to  be  described  as  a  barn ;  but  thej'  were  of  such  a  nature  that 
they  would  have  been  insured  by  the  company  at  the  same  rate,  if  they 
had  been  more  accurately  described.  They  required  tarring ;  and  a 
fire  was  consequently  lighted  in  the  inside,  and  a  tar-barrel  was 
brought  into  the  building,  for  the  purpose  of  performing  the  necessary 
operations.  In  the  absence  and  by  the  negligence  of  the  plaintiffs 
servant,  the  tar  boiled  over,  took  fire,  communicated  with  that  in  the 
barrel,  and  the  premises  were  burnt  down. 

i^.  Pollock,  for  the  defendant,  contended,  that  the  plaintiff  could  not 
recover;  first,  because  the  premises  were  incorrectly'  described  as  a 
barn ;  secondly,  because  the  lighting  a  fire  within  the  building  was 
a  contravention  of  the  terms  of  the  policy,  which  required  that  no  fire 
should  be  kept  in  buildings  on  which  the  rate  of  insurance  in  the  pres- 
ent case  was  paid  ;  thirdl}-,  that  the  tar-barrel  came  under  the  descrip- 
tion of  hazardous  goods,  and,  therefore,  that  bringing  it  within  tlie 
premises  was  also  a  breach  of  the  conditions  of  the  policy ;  and  that 
all,  or  any  of  these  circumstances,  occasioned  a  forfeiture  of  the 
insurance. 


524  MEA.D   V.   NOKTHWESTERN   INS.   CO.  [CHAP.  VI. 

Lord  Tentekden,  C.  J.,  said  :  If  the  property  insured  has  not  been 
correctl}-  described,  the  defendants  certainly  are  not  liable ;  but  I  do 
not  think  there  is,  in  this  case,  any  mis-description  which  will  tfc- 
charge  them.  The  word  "  barn  "  is  not  the  most  correct  description 
of  the  premises ;  but  it  would  give  the  compan}'  substantial  informa- 
tion of  their  nature :  there  would  be  no  difference  in  the  risk,  and  the 
insurance  would  have  been  at  the  same  rate,  whether  the  word  "  barn," 
or  a  more  correct  phrase,  had  been  used;  I  think,  therefore,  that  they 
are  substantialh"  well  described.  Nor  do  I  think  that  the  other  circum- 
stances relied  on  furnish  an}-  answer  to  the  action.  If  the  company 
intended  to  stipulate,  not  merely  that  no  fire  should  habitiuill}'  be  kept 
on  the  premises,  but  that  none  should  ever  be  introduced  upon  them, 
they  might  have  expressed  themselves  to  that  effect ;  and  the  same 
remark  applies  to  the  case  of  hazardous  goods  also.  In  the  absence  of 
any  such  stipulation,  I  think  that  the  condition  must  be  understood  as 
forbidding  only  the  habitual  use  of  fire,  or  the  ordinary  deposit  of 
hazardous  goods,  not  their  occasional  introduction,  as  in  this  case,  for 
a  temporary  purpose  connected  with  the  occupation  of  the  premises. 
The  common  repairs  of  a  building  necessarily  require  the  introduction 
of  fire  upon  the  premises,  and  one  of  the  great  objects  of  insuring  is 
security  against  the  negligence  of  servants  and  workmen.  I  cannot, 
therefore,  be  of  opinion  that  the  polic}-  in  this  case  was  forfeited  ;  and 
certainly,  if  it  is  valid,  the  circumstance  that  the  fire  happened  through 
the  negligence  of  the  plaintiff's  servant  furnishes  no  answer  to  the 
action .  Verdict  for  the  plaintiff'.  ^ 

Scarlett,  A.  G.,  Gurney^  and  Toinlinson,  for  the  plaintiff. 

J^.  Pollock  and  Patteson,  for  the  defendants. 


MEAD  V.    NORTHWESTERN   INSURANCE   COMPANY. 

Court  of  Appeals  of  New  Youk,  1852.     7  N.  Y.  530. 

This  action  was  brought  upon  five  policies  of  insurance,  executed  by 
the  defendants  upon  five  stores  owned  by  the  plaintiffs  in  Brooklyn, 
forming  a  single  block  of  buildings.  The  stores  insured  by  three  of 
the  policies  were  described  as  "  his  brick  dwelling  and  store  not  coped, 
with  tin  roof;"  and  those  covered  by  the  other  two  policies  as  "his 
four-story  brick  an^l  framed  dwelling  and  store  filled  in  with  brick,  roof 
part  tin  and  part  shingles."  No  other  description  of  the  buildings  and 
none  of  the  business  to  be  carried  on  in  them  was  contained  in  the 
policy.  Each  of  the  policies  contained  the  following  clause:  "  In  case 
the  ajjuya^xgcntioned  premises  shall  at  any  time  after-lha-xnaldng^^and 

1  See  Shaw  v.  Robberds,  6  Ad.  &  E.  75  (1837) ;  Glen  v.  Lewis,  8  Ex.  607,  619 
(1853)  —Ed. 


SECT.  II.]  MEAD   V.   XORTHWESTERN   INS.    CO.  525 

during  the  time  this  policy  would  otherwise  continue  in  force,  be  appro- 
priated,  applied,  or  used  to  or  for  the  purpose  of  carrying  on  or  exer- 
cising therein  anj-  trade,  business,  or  vocation  denominated  hazardous 
or  extra  hazardous^  or_sj)ecified  in  the  memorandum  of  special  rates 


in  the  proposals  annexed  to  this  polic3jor  for  the  purpose  of  storin<y 
therein  any  of  the  articles,  goods,  or~mercIian(lise  in_tbe  same  pro-" 
posaTs  denominated  hazardovLs_or_eM)'<Ji^ hazardotis^  or  included  in  the 
vimwranduwi'qfljjeciai  rates,  unless  otherwise  specialh'  provided  for, 
or  hereafter  agr^ed_to  by  this  company  in  writing,  to  be  added  to  or 
indorsed  upon  this  policy,  then  and  from  thenceforth,  so  long  as  the 
samenslTall  be  so  appropriated,  applied,  or  used,  these  presents  shall 
cease  and  be  of  no  Jorce  or  effect.  _  And  it  is  moreover  declared  that 
tills  polic}'  is  made  and  accepted  in  reference  to  the  proposals  and  con- 
ditions hereunto  annexed,  which  are  to  be  used  and  resorted  to  in 
order  to  explain  the  rights  and  obligations  of  the  parties  hereto  in  all 
cases  not  herein  otherwise  specially  provided  for." 

In  the  proposals  and  conditions  referred  to  and  which  were  printed 
upon  the  same  sheet  of  paper  with  each  polic}'  "  spirituous  liquors  " 
are  included  in  the  list  of  '•  trades,  goods,  wares,  and  merchandise  con- 
sidered hazardous,"  and  it  is  declared  that  "  camphene  cannot  be 
used  in  the  building  where  insurance  is  effected  unless  bj-  special  per- 
mission in  writing."  ^  .  .  ,  The  cause  was  tried  in  April,  1851,  at  the 
circuit  in  Kings  County,  before  Justice  Morse.  Upon  the  trial  the 
plaintiff  proved  the  making  of  the  policies  and  the  destruction  of 
the  buildings  insured  by  fire  in  June,  1850,  and  their  value  and  rested. 
The  defendants  then  gave  evidence,  that  camphene  was  used  for  light 
in  the  buildings  by  their  occupants,  and  offered  evidence  that  in  one  of 
the  buildings  articles  denominated  hazardous  and  extra  hazardous  were 
kept,  which  was  excluded.  It  was,  however,  proved  that  in  one  of  the 
buildings  a  grocery  was  kept,  in  which  spirituous  liquors  were  kept  and 
sold,  but  it  appeared  that  the  fire  did  not  originate  from  the  camphene 
or  spirits,  and  that  they  were  removed  before  the  fire  reached  the  build- 
ings. The  remaining  facts  of  the  case,  together  with  the  ruling  of  the 
justice  at  the  circuit,  and  the  exceptions,  appear  sufficiently  in  the 
opinion  of  the  court.  A  verdict  was  taken  for  the  plaintiff,  subject  to 
the  opinion  of  the  court  upon  a  case,  with  leave  to  convert  it  into  a  bill 
of  exceptions,  upon  which  judgment  was  given  for  the  plaintiff  at  a 
general  term  held  in  the  city  of  Brooklyn,  in  April,  1852.  The  defend- 
ants appealed  therefrom. 

J.  Neilson,  for  appellants. 

D.  E.  Wheeler,  for  respondent. 

Wklles,  J.  Upon  the  trial  the  defendants'  counsel  offered  to  prove 
by  the  witness  Halliday,  who  occupied  one  of  the  buildings  insured  at 
the  time  of  the  fire,  that  he  did  business  and  kept  articles  in  said  build- 
ing denominated  hazardous  and  extra  hazardous,  at  the  time  of  the 
fire.     The  evidence  was  objected  to,  and  the  objection  sustained  bj-  the 

^  A  re(iuireraent  as  to  a  survey  has  not  been  reprinted.  —  Ed. 


526  MEAD   V.    NORTHWESTERN   INS.    CO.  [CHAP.  VI. 

judge,  to  which  the  defendants'  counsel  excepted.  In  this  I  think 
there  was  error.^  .  .  .  The  offer  was  nearly  in  the  language  of  one  of 
the  above  provisions,  to  show  its  violation. 

The  answers  given  by  the  respondent's  counsel  to  this  point  are,  first, 
that  the  fire  did  not  originate  in  the  store  occupied  by  the  witness ; 
second,  that  no  knowledge  of  the  business  carried  on  was  shown  in  the 
respondent;  third,  that  there  was  no  proof  that  the  business  had  been 
changed  from  the  time  the  insurance  was  eflected  to  the  time  of  the 
fire ;  and  fourth,  that  this  point  was  not  reserved  by  the  appellants' 
counsel  at  the  close  of  the  case,  and  is  not  among  the  objections  then 
raised.  None  of  these  answers  are  sufficient.  The  provision  of  the 
policy  referred  to  amounted  to_a  prospective  or  promissory  warranty, 
and  was  as  obligatory  as  ifTtJiaTbccn  retrospective  or  concurrent.^  It 
wailherefore  of  no  consequence  that  the  fire  was  not  produced  by  its 
violation  or  breach  (Murdock  v.  Chenango  Co.  Mut,  Ins.  Co.,  2  Comst. 
210).  It  is  equally  unimportant  that  the  respondent  was  ignorant  that 
such  business  was  carried  on.  The  question  whether  a  warranty  has 
been  broken  can  never  depend  upon  the  knowledge  or  ignorance  or 
intent  of  the  party  making  it,  touching  the  acts  or  the  fact  constituting 
the  breach.  It  was  undoubtedly  competent  for  the  parties  to  contract 
in  relation  to  the  future  business  to  be  carried  on  in  the  building  in- 
sured, without  reference  to  the  previous  business,  and  such  was  the 
case  here.  That  the  business  prohibited  had  been  carried  on  up  to  the 
time  the  policy  was  made,  was  no  excuse  for  a  violation  of  the  con- 
tract. And  finally,  it  was  not  necessary  or  proper  for  the  counsel  to 
do  more  than  to  except  to  the  decision  of  the  judge  at  the  circuit,  over- 
ruling the  evidence  offered.  He  was  in  fact  precluded  from  making 
the  point  in  any  other  stage  of  the  case  by  the  exclusion  of  the  evi- 
dence.  .... 

Lawrence  Flynn,  a  witness  for  the  defendants,  testified  that  he  lived 
in  one  of  the  buildings  insured,  and  which  was  consumed  by  the  fire; 
that  he  sold  candles,  oil,  camphene,  and  lamps ;  that  he  had  less  than 
a  gallon  of  camphene  when  the  fire  took  place  ;  that  he  took  tlie  cam- 
phene and  oil  out  before  the  fire  ;  that  he  went  into  possession  May  1st, 
1851,  and  remained  there  until  the  fire  ;  that  the  building  was  used  for 
a  milliner's  shop  before  he  went  there.  The  defendants'  counsel  ofljered 
to  prove  by  this  witness  that  camphene  was  used  in  this  building  by 
the  person  who  occupied  it  previous  to  May  1st,  1850.  This  evidence 
was  objected  to,  and  the  objection  was  sustained,  to  which  the  defend- 
ants' counsel  excepted.  Each  of  the  policies  contained  a  clause  to  the 
ettect  that  they  were  made  and  acce[)ted  in  reference  to  the  proposals 
aiul  conditions  thereto  annexed,  which  were  to  be  used  and  resorted  to 
to  explain  the  rights  and  obligations  of  the  parties  thereto  in  all  cases 
not  therein  specially  provided  for ;  and  in  the  proposals  annexed  was 

^  In  reprinting  the  opinion,  passages  have  been  omitted  that  repeated  the  facts 
given  in  tlie  statement  or  that  bore  exclusively  upon  matters  as  to  which  no  error 
was  found.  —  Ed. 


SECT.  II.]  MEAD    V.    NOUTHWESTERN   INS.    CO.  527 

the  following  provision:  "  Camphene  cannot  be  used  in  the  building 
where  insurance  is  effected,  unless  b}-  special  permission  in  writing, 
and  is  then  to  be  charged  an  extra  premium." 

The  bill  of  exceptions  states  that  "  in  each  case  the  policy  itself  and 
the  conditions  and  proposals  annexed  were  on  the  same  sheet  of  paper, 
physically  attached."  The  prohibition,  therefore,  in  relation  to  the  use 
of  camphene,  must  be  taken  and  regarded  as  a  part  of  the  polic}'  or 
contract  of  insurance  (Jennings  v.  The  Chenango  Mut.  Ins.  Co., 
2  Denro,  75)  ;  and  it  seems  to  me  also  that  the  provision  in  question 
on  that  subject  was  a  warranty  that  camphene  should  not  be  used  in 
the  building  insured.  The  only  question  in  my  mind  is,  whether  the 
use  of  the  prohibited  article  at  one  period  of  the  time  for  which  the 
policy  should  by  its  terms  continue,  will  avoid  the  policy  in  a  case 
where  the  loss  occurred  at  a  time  subsequent  to  such  use.  For  the  pur- 
poses of  this  question  it  should  be  treated  the  same  as  if  the  use  of 
the  camphene  had  been  permanently  discontinued  before  the  occurrence 
of  the  fire  which  destroyed  the  property.  A  warranty  in  a  contract  of 
insurance  is  in  tlie  nature  of  a  condition  precedent.  It  is  settled  b}' 
numerous  decisions,  that  if  the  warranty  is  violated,  it  avoids  the 
policy,  and  that  it  is  immaterial  whether  the  breach  affects  the  risk  or 
is  connected  with  the  loss  or  not.  It  would  seem,  in  theory,  that  it 
was  equally  immaterial  wliether  the  act  or  thing  to  which  the  warranty 
related  continued  up  to  the  time  of  tlie  loss,  or  had  ceased  or  been  dis- 
continued before.  Jhe  amount  of  it  is,  the  defendants  undertook  to 
indemnify  the  plaintiff  against  damage  or  loss  by  fire,  &c.,  upon  con- 
dition that  certain  stipulations  were  observed  and  kept  by  and  on 
behalf  of  the  plaintiff  and  not  otherwise.  If  the  plaintiff  failed  to  per- 
form those  stipulations,  the  defendants'  liability  to  indemnify  ceased  ; 
could  the  plaintiff  revive  it  at  pleasure  b}-  fulfilling  his  agreement  —  in 
this  case,  b}'  removing  the  camphene?  If  he  could  in  one  instance  he 
could,  for  aught  I  see,  in  any  number  of  cases.  I-incline  to  the  opinion 
that  this  could  not  be  done  in  any  case  without  Tne~consent  of  the  de- 
fendantsT^and  that  the  onh*  safe  rule  is  to  hold  the  contract  of  insur- 
ance  at  an  end  the  moment  the  warrant}'  is  broken,  and  that  it  cannot 
be  rcvTved  again  without  the  consent  of  botlTparties,  unless  the  insurer 
has  by^me  act  or  line  of  conduct  waived  the  breach  or  violation  of 
the  warralityT"        ' 

If  this'^be  so,  the  judge  erred  in  excluding  the  evidence  offered. 
"Weir  V.  Aberdeen,  2  B.  &  Aid.  320  ;  McLanahan  v.  Universal  Ins.  Co., 
1  Pet.  170.   .  .  . 

For  the  errors  at  the  circuit  before  mentioned,  I  think  the  judgment 
below  should  be  reversed,  and  a  new  trial  ordered  with  costs  to  abide 
the  event. 

All  the  judges  present,  except  Morse,  J.,  who  gave  no  opinion, 
concurring.  Judgment  reversed  and  neiv  trial  ordered} 

1  See  TurnbuU  r.  Home  F.  Ins.  Co.,  83  Md.  312,  321  (1896).  — Ed. 


)28  HYNDS    V.   SCHENECTADY   CO.    MUTUAL   IXS.    CO.       [cHAP.  VI. 


HYNDS  ET  AL.  V.   SCHENECTADY  COUNTY  MUTUAL 

INS.  CO. 

Court  of  Appeals  of  New  York,  1854.     11  N.  Y.  554.^ 

Action  upon  a  polic}'  dated  June  10,  1848,  b}'  which  the  defendant 
insured  the  plaintiffs  against  loss  bj-  fire  to  the  amount  of  81,500  on 
their  flouring  mill  and  machiner}'  and  8500  on  their  carding  machine 
and  machiner\\  The  case  was  tried  at  the  Schoharie  Count}^  Circuit 
before  Wright,  J.,  and  a  jury.  The  policy  contained  a  provision 
against  using  the  premises  for  the  purpose  eitlier  of  storing  or  of  keep- 
ing therein  any  of  the  articles  denominated  hazardous  in  the  terms  an- 
nexed to  the  policy.  Flax  was  among  the  articles  thus  denominated 
hazardous.  Prior  to  JMay  27,  1848,  the  carding  machine  building  had 
been  used  for  the  business  of  dressing  flax.  Before  June  10,  1848, 
this  business  was  discontinued,  and  the  building  was  ai)propriated  for 
a  carding  machine.  When  the  change  was  made,  the  refuse  flax  and 
tow  were  removed;  but  some  unbroken  flax,  being  in  bulk  about  two 
and  a  half  feet  high,  three  feet  wide,  and  of  the  length  of  the  flax,  was 
left  in  one  room,  where  it  remained  at  the  time  of  the  fire.  On  June 
12,  1848,  a  fire  originated  in  the  carding  machine  building  and  con- 
sumed all  the  propert}'  insured. 

The  counsel  for  the  defendant  moved  for  a  nonsuit,  and  excepted  to 
the  court's  overruling  of  this  motion. 

The  counsel  for  the  defandant  requested  the  court  to  charge  the 
jury:  1.  That  if  they  believed  that  there  was  flax  kept  in  the  lower 
room  of  the  carding  machine  building  at  the  time  of  the  fire,  the  polic}' 
■would  be  of  no  effect.  The  court  refused  to  charge  upon  this  proposi- 
tion other  than  as  is  hereafter  stated ;  to  which  refusal  the  defend- 
ant's counsel  excepted.  2.  That  if  the  jury  should  believe  that  there 
was  flax  in  the  lower  story  of  the  carding  machine  building  for  safe 
keeping  and  not  for  the  purpose  of  consumption,  or  in  the  usual  course 
of  business  for  which  the  building  was  occupied,  the  plaintiffs  were 
not  entitled  to  recover.  The  court  refused  to  charge  upon  this  prop- 
osition, other  than  as  is  hereafter  stated  ;  to  which  refusal  the  defend- 
ant's counsel  excepted.  3.  That  if  the  jur^'  believed  that  the  fire 
originated  in  the  flax  or  tow  in  the  lower  room  of  the  carding  machine 
building,  the  plaintiffs  are  not  entitled  to  recover.  The  court  refused 
so  to  charge,  and  the  defendant's  counsel  excepted. 

The  court  then,  amongst  other  things,  charged  the  jury,  that  if,  at 
the  time  the  fire  occurred,  the  building  was  appropriated,  applied,  or 
used  for  the  storage  of  flax,  the  policy  was  of  no  force,  and  the  i)lain- 
tiff  should  not  recover;  but  if  the  building  was  not  devoted  to  or  used 
for  that  purpose,  and  the  small  pile  of  undressed  flax,  said  to  have 

1  The  statement  has  been  rewritten.  —  Ed. 


SECT,  n.]      HYNDS  V.   SCHENECTADY    CO.    MUTUAL   INS.    CO.  529 

been  in  the  lower  room  of  the  carding  machine  building,  was  there 
but  temporarily,  and  with  no  intention  of  having  it  regiihirly  stored  or 
kept  there,  then  the  policy  would  not  be  avoided.  To  the  last  branch 
of  this  paragraph  of  the  charge  the  defendant's  counsel  excepted. 

Tlie  jury  rendered  a  verdict  in  favor  of  the  plaintiffs  for  $2,289.20, 
upon  wl'ic-h  judgment  was  entered.  The  defendant  made  a  bill  of 
exceptions,  and  on  appeal  the  judgment  was  affirmed  by  the  Supreme 
Court  silting  in  llie  Third  District,  at  General  Term.  (See  16  Barb. 
119).     The  (h-fendant  appealed  to  this  court. 

P.  Potter,  for  the  appellant. 

N.  IliU,  tTr.,  for  the  respondents. 

Gardiner,  C.  J.  The  language  of  the  condition  of  the  policy  in 
question,  so  far  as  it  is  applicable  to  the  case  before  us,  is  ''  that  in 
case  the  premises  insured  shall  be  appropj'iated,  ajjplied  to  or  used  for 
the  purpose,  either  of  storing  or  I'eeping  therein  an}-  of  the  articles, 
goods,  &c.,  denominated  hazardous,  &c.,  then,  from  thenceforth,  so 
long  as  the  same  shall  be  so  appropriated,  applied,  or  used,  these 
presents  shall  be  of  no  force  or  effect."  It  is  not  enough,  according 
to  this  phraseology,  that  hazardous  articles  are  upon  the  premises. 
They  must  be  there  for  the  purpose  of  being  stored  or  kept ;  and  the 
premises  must  be  appropriately  applied  or  used  to  effect  that  purpose. 
This  is  the  definition  that  has  been  settled  by  repeated  decisions  in 
reference  to  the  word  "  storing ;"  and  there  is  no  reason  why  it  should 
not  be  applied  to  "keeping,"  a  word  of  more  extensive  signification 
undoubtedly,  but  which,  in  this  connection,  seems  to  demand  a  con- 
tinued occupation  of  the  whole,  or  a  part  of  the  premises  insured,  in 
pursuance  of  a  design  for  that  specified  purpose.  Thus,  the  storing  of 
gunpowder  implies  the  user  of  the  premises  for  that  purpose,  and 
such  a  condition  would  not  be  violated  by  keeping  that  article  for  sale 
at  retail.  But  such  a  ' '  keeping  "  would  be  a  breach  of  the  condition 
of  this  policy,  because  it  would  require  a  continued  user  of  some  part 
of  the  premises  to  effect  that  purpose.  J5ut  if  the  insured,  on  liis 
return  from  hunting,  should  leave  his  flask,  containing  powder,  in  a 
desk  in  a  building  covered  by  the  policy,  for  an  hour,  or  a  day,  this 
would  not  be  within  the  prohibition,  for  the  act  would  not  involve  the 
notion  of  the  appropriation,  application,  or  user  of  the  premises  for 
the  purpose  of  storing,  or  keeping  gunpowder.  The  counsel  for  the 
appellant  was  probably  right  in  his  suggestion  that  the  word  '•  keeping" 
was  introduced  into  these  policies  after  the  decisions  in  1  Hall.  226, 
and  other  cases  which  restricted  the  term  "storing"  to  its  ordinary 
commercial  meaning.  The  alteration  was  designed  to  reach  a  class 
of  cases  where  hazardous  goods  were  kept  for  retail,  or  other  pur- 
poses, which  presupposed  a  continued  deposit,  and  whicli  were  ex- 
cluded from  the  condition  by  the  construction  given  b}'  the  courts  to 
the  policies  in  the  cases  mentioned.  But  it  is  not  to  be  presumed  that 
the  company  in  this  case  intended  by  a  formal  condition  to  prohibit 
the  insured  from  bringing  a  match  upon  the  premises  for  the  purpose 

34 


530  HARPEE   V.   ALBANY   MUTUAL   INS.    CO.  [CHAP.  VL 

of  lighting  a  fire,  or  a  bottle  of  oil  to  appl}-  to  the  machinery,  although 
both  might  remain  in  the  building  for  a  brief  period,  and  although  it 
might  be  said  that  in  the  broadest  sense  of  the  term  that  both  were 
ke2yt  upon  the  premises,  while  they  remained  there.  There  is  a  mani- 
fest distinction  between  a  deposit  of  hazardous  goods  and  a  deposit 
for  the  purpose  of  keeping  them.  A  distinction  v/hich  is  recognized 
by  the  terms  of  the  condition,  and  which  is  necessary  to  prevent  the 
policy  from  being  altogether  worthless  as  an  indemnity,  if  not  a  mere 
imposition  on  the  insured. 

This  is  the  only  point  presented  of  any  importance.  It  was  raised 
on  the  motion  to  nonsuit  and  in  the  request  to  the  judge  for  specific 
instructions  to  the  jury.  The  charge  was  in  conformity  to  the  views 
above  suggested.  The  judgment  of  the  Supreme  Court  should  be 
affirmed. 

RuGGLEs,  Dexio,  Johnson,  and  Edwards,  JJ.  ,  concurred  in  the 
foregoing  opinion. 

Selden,  Paekee,  and  Allen  were  in  favor  of  reversing  the  judg- 
ment. Judgment  affirmed} 


.   HARPER  AND  Othees  v.  ALBANY  MUTUAL  INS.   CO. 
Court  of  Appeals  of  New  York,  1858.     17  N.  Y.  194. 

Appeal  from  the  Supreme  Court.  The  action  was  upon  a  policy  of 
insurance  against  damage  by  fire,  issued  b}'  the  defendant,  upon  the 
plaintiffs'  printing  and  book  materials,  stock,  paper,  and  stereotype 
plates  and  printed  books,  contained  in  certain  buildings  in  the  city  of 
New  York,  therein  described,  "  and  privileged  for  a  'printing  office^ 
bindery^  and  bookstore:,  also  for  a  steam-boiler  in  the  jard. 

The  policy  contained  provisions  that  "  if  the  premises  should  at  any 
time  be  altered,  appropriated,  applied,  or  used  to  or  for  the  purpose  of 
carrying  on  or  exercising  therein  anj'  other  trade,  business,  or  vocation 
denominated  hazardous  or  extra  hazardous,  or  specified  in  the  memo- 
randum of  special  rates  in  the  proposals  or  conditions  annexed  to  the 
policy,  or  for  the  purpose  of  storing  or  keeping  therein  any  of  the  like 
hazardous  goods,  wares,  or  merchandise,  unless  as  therein  specially 
provided  for  or  thereafter  agreed  to  by  the  company,  otherwise  to  be 
added  or  indorsed  upon  the  policj'  in  writing,  then  and  from  thence- 

1  Ace. :  Mears  v.  Humboldt  Ins.  Co.,  92  I'a.  15  (1879).—  Ed. 

Ou  "storing,"  see  Langdon  v.  New  York  Equitable  Ins.  Co.,  1  Hall,  226  (1828); 
8.  c.  on  error,  sub  nom.  New  York  Equitable  Ins.  Co.  i'.  Langdon,  6  Wend.  623 
(1831) ;  City  F.  Ins.  Co.  v.  Corlies,  21  Wend.  367  (1839)  ;  TJaffcrtv  v.  New  Brunswick 
F.  Ins.  Co.,  18  N.  J.  L.  (3  Harr.)  480  (1842)  ;  O'Niel  v.  Buffalo'F.  Ins.  Co.,  .3  N.  Y. 
122  (1849) ;  Renshaw  v.  Missouri  State  Mut.  F.  &  M.  Ins.  Co.,  103  Mo.  595,  605  (1890). 
—  Ed. 


SECT.  IL]  harper   V.    ALBANY    MUTUAL   I\S.    CO.  531 

forth,  so  long  as  the  same  should  be  so  appropriated,  applied,  or  used, 
the  policy  should  cease  and  be  of  no  force  or  effect." 

In  the  conditions  annexed  to  the  policy,  in  the  class  of  goods  specified 
as  hazardous  were  spiritous  liquors,  and  in  the  class  specified  as  extra 
hazardous  were  spirits  of  turpentine  and  stocks  of  booksellers.  Under 
the  head  of  special  rates  were  classed  bookbinders,  camphene  on  sale, 
printers  of  books,  and  job  printers.  Under  this  head  was  also  this_pro-^ 
vision:  ^'  Cnmphfnp^^^iint  gas,  or  burning  fluid  cannot  be  used  in  the 
building  where  insurance  is  effected,  unless  pei-mission  for  such  use  be 
indorsed  in  writing  upon  the  policy,  and  is  then  to  be  charged  an  extra 
premium."  The  policy  was  a  printed  blank,  filled  up  in  the  usual  form, 
and  the  above  provisions  were  contained  in  the  printed  part  of  the 
policy. 

The  trial  was  at  the  New  York  Circuit,  before  Mr.  Justice  Roosevelt 
and  a  jurj-.  The  plaintiffs  proved  a  loss  by  fire  exceeding  the  amount 
of  insurance  ;  and  it  appeared,  b}-  the  evidence  on  their  part,  that 
the  fire  was  occasioned  by  the  act  of  a  plumber  engaged  in  making 
some  repairs,  who  accidentally'  threw  a  lighted  match  or  paper  into  a 
pan  containing  a  small  quantit}'  of  camphene,  used  for  the  purpose  of 
cleaning  the  rollers  employed  by  the  plaintiffs  in  inking  their  forms  of 
type,  wood  cuts,  etc. 

It  also  appeared  that  the  plaintiffs  carried  on  an  extensive  book  print- 
ing establishment,  and  that  they  used  camphene  fur  cleaning  rollers, 
and  for  cleaning  wood-cuts  and  electrotype  plates  in  the  course  of  their 
business  of  book  making ;  and  that  the  use  of  it  was  limited  to  the  nec- 
essary purposes  of  their  business  as  printers.  It  also  appeared  that 
this  application  of  camphene  was,  and  for  many  years  had  been,  ordi- 
nary and  usual  among  printers,  and  that  such  use  was  necessary  and 
rndispensable. 

It  was  insisted,  on  the  part  of  the  defence,  that  such  use  of  cam- 
pliene  was  prohibited  b}'  the  clause  in  the  policy  respecting  the  use  of 
"  camphene,  spirit  gas,  or  burning  fluid."  The  judge  charged  the  jurj-, 
under  exception  by  the  defendant,  that  the  policy  of  insurance  gave  the 
plaintiffs  the  privilege  of  carrying  on  the  printing  business,  and  that  if 
they  sliould  find  that  camphene  was  a  necessary  and  ordinary  material 
used  in  the  business  of  printing,  and  that  it  was  a  general  custom  in 
such  establishments  as  the  plaintiffs'  to  employ  that  material  and  that 
the  plaintiffs  used  it  for  that  purpose,  then  there  was  no  breach  of  the 
contract,  and  the  plaintiffs  were  entitled  to  a  verdict.  The  plaintiffs 
had  a  verdict,  suVtject  to  the  opinion  of  the  court  at  General  Term  ; 
and  the  Supreme  Court,  at  General  Term  in  the  First  District,  having 
ordered  judgment  upon  the  verdict,  the  defendant  appealed  to  this  court. 

A.  Thompson,  for  the  appellant. 

'Williara  M.  Evarts^  for  the  respondents. 

Pratt,  J.  The  judgment  of  the  Supreme  Court,  I  think,  should  be 
affirmed. 

First.    The  exclusion_of  the  use  of  eamphene_in  the  hnilding  wh^rg^ 


532 


HARPER    V.   ALBANY   MUTUAL   INS.    CO.  [CHAP.  VL 


jnsimrnpt^  ^  effected  has  j;efcrence  toJts_use  in  Ijghtingjbejjremise 
This  is  evident,  I  think,  from  the  connection  in  which  it  is  found  with 
other  articles  used  alone  for  that  purpose.  I  know  of  no  other  use  to 
which  spirit  gas  and  burning  fluid  are  applicable  except  for  the  purpose 
of  lighting  buildings.  And  that  is  the  ordinary  and  more  general  use 
to  which°camphene  itself  is  applied.  The  three  articles  for  lighting 
buildings  being  thus  placed  together  in  the  prohibition,  in  connection 
with  the  consideration  that  such  use  is  extremely  hazardous,  raises  a 
strong  presumption  that  its  use  for  lighting  alone  was  designed  to  be 
prohibited  in  this  clause. 

But,  taken  in  connection  with  the  other  provisions  of  the  policy,  the 
presumption  becomes  conclusive.  In  the  class  of  special  rates  we  find 
enumerated  camphene  on  sale,  without  any  such  special  prohibition  ;  and 
in  the  same  class,  is  found  printers  of  books  and  job  printers,  the  very 
articles  which  the  policy  by  its  terms  covers.  Its  use  for  cleaning 
rollers  is  clearly  no  more  hazardous  than  keeping  it  for  sale.  I  am 
satisfied,  therefore,  that  it  was  not  the  mere  presence  of  the  article 
which  was  designed  to  be  prohibited  by  this  special  clause  in  the 
policy,  but  its  common  though  hazardous  use  for  ligliting  buildings. 

Second.    But  ifjhat__clause  shou]^^  include  any  and 

every  use  of  camphene,  it  would  notaA[oid^_th£]^pohcy^  The  insur- 
ance iiPthis  case  is  upon  the  stock "uTtrade  used  in  the  business  of 
printers  of  books  and  bookbinders,  and  covers  all  such  articles  as  are 
necessarily  and  ordinarily  used  in  such  business.  The  term  "stock  in 
trade  "  in  a  specified  business,  when  used  as  matter  of  description  in 
a  policy  of  insurance,  "includes,  besides  materials,  everything  neces- 
essary  for  carrying  on  that  business."  (1  Phil.  Ins.,  §  489.)  They 
are  just  as  clearly,  therefore,  embraced  in  the  policy  as  if  each  article 
thus  necessarily  used  was  enumerated  at  length.  (2  Hall,  589  ;  Wall 
V.  Howard  Ins.  Co.,  14  Barb.  383,  affirmed  in  this  court  December, 
1854.)  And  the  underwriters  must  be  deemed  to  have  been  acquainted 
with  the  business,  and  with  the  materials  ordinarily  and  necessarily 
used  by  the  trade  in  prosecuting  it.  In  issuing  the  policy  they  must  be 
deemed  to  have  intended  to  include  all  such  materials  in  the  risk.  In 
construing  the  policy,  therefore,  it  is  to  be  treated  as  if  the  article  of 
camphene  for  the-  use  to  which  it  was  in  fact  applied,  had  been  enu- 
merated with  the  other  articles  covered  by  the  policy.  Thus  consid- 
ered, the  rulings  at  the  Circuit  were  clearly  right. 

A  policy  of  insurance,  like  any  other  contract,  should  be  construed 
so  as  to  give  it  effect  rather  than  to  make  it  void.  The  company  have 
received  a  premium  adequate,  it  is  presumed,  to  the  risk  which  they 
have  taken,  and  hence  nothing  but  the  most  stern  legal  necessity  should 
constrain  the  court  to  give  it  a  construction  which  would  nullify  it  and 
render  it  a  mere  deception  instead  of  the  protection  which  the  i)arties 
to  it  designed. 

It  is  a  well  settled  point  that  the  written  part  of  a  policy  shall  always 
prevail  over  the  printed  part,  in  cases  of  repugnancy.     (2  Hall,  G22.) 


SECT.  II.]  HAKPEE   V.    ALBANY    MUTUAL    INS.    CO.  533 

The  printed  forms  are  very  general  in  their  terms.  The  prohibitions 
inserted  therein  are  more  particuUxrly  applicable  to  the  ordinary  and 
more  common  policies  of  insuram-e  upon  non-hazardous  property,  for 
tlie  piu-pose  of  protecting  the  insurers  against  any  Increased  liazard  in 
consequence  of  a  change  of  business  or  the  use  of  any  material  more 
hazardous  than  that  insured  against.  In  mucli  the  greater  portion  of  in- 
surances there  would  be  no  repugnancy  between  the  written  and  printed 
part  of  the  policy  ;  and  effect,  in  such  cases,  should  undoubtedly  be  given 
to  every  part  of  the  instrument.  Still  the  substance  of  the  contract  is 
in  the  written  part  of  the  policy  ;  and  when  the  insurance  is  upon  haz- 
ardous or  extra  hazardous  goods  or  trades,  or  upon  those  specified  in 
the  memorandum  of  special  rates,  these  printed  portions  are  not  ap- 
plicable, or  at  most  only  in  a  limited  degree.  Even  in  such  case  some 
eflfect  may  be  given  to  these  printed  prohibitions.  They  would  be  held 
probably  to  prohibit  a  change  of  business  from  the  one  designated  to 
another^  not  designated,  although  the  latter  should  be  no  more  haz- 
ardous.    In  such  cases  they  would  not  be  entirely  useless. 

But  when  the  insurance  is  directly  upon  the  stock  in  trade,  as  for 
example  in  the  business  of  manufacturing  and  sale  of  camphene,  to 
hold  that  a  general  printed  prohibition  (contained  in  every  policy  of 
insurance)  against  keeping  or  using  it,  unless  permission  be  specially 
given  and  indorsed  upon  the  policy,  would  have  the  effect  to  nullify  its 
direct  and  positive  stipulations,  would  be  preposterous.  Indeed,  pre- 
sented in  this  form,  no  one  would  contend  for  such  a  proposition.  And 
still  that  is  substantially  the  point  presented  in  this  case.  For  if  I  am 
rnght  in  the  proposition  that  if  the  article  was  necessarily  and  ordinarily 
used  in  the  business  it  is  included  in  the  term  "  stock"  used  in  the 
policy,  it  is  as  plainly  within  the  risk  assumed  by  the  defendants  as  if 
written  in  at  length.  Upon  the  whole  I  think  the  rulings  at  the  Circuit 
were  correct  and  the  judgment  must  be  affirmed. 

All  the  judges  concurring.  Judgment  affirmed} 

i  Ace:  Leggett  v.  ^Etua  Ins.  Co.,  10  Rich.  S.  Car.  Law,  202,  208  (1856);  Bryant 
V.  Pou>;hkeepsie  Mut.  Ins.  Co.,  17  N.  Y.  200  (1858) ;  Whitmarsh  v.  Conway  F.  Ins. 
Co.,  16'Gray,359  (1860)  ;  Phoenix  Ins.  Co.  v.  Taylor,  5  Minn.  492  (1861) ;  Niagara  F. 
Ins.'  Co.  V.  De  Graff,  12  Mich.  12-4  (1863)  ;  Pindar  v.  Kings  County  Ins.  Co.,  36  N.  Y. 
648  (1867);  Viele  r.  Germania  Ins.  Co.,  post,  pp.  1046,  1058-1059  (1868);  Collins  v. 
Farinville  Ins.  &  Banking  Co.,  79  N.  Car.  279  (1878) ;  Carrigan  v.  Lycoming  F.  Ins  Co, 
5J  Vt.  418,  425-427  (1881);  Carlin  v.  Western  Assurance  Co.,  57  Md.  515  (1881);  Bar- 
nard 1-.  National  F.  Ins.  Co.,  27  Mo  App.  26  (1887) ;  Maril  v.  Connecticut  F.  Ins.  Co  .  95 
Ga.  604  (1894) ;  Yoch  v.  Home  Mut.  Ins.  Co.,  Ill  CaL  503  (1896) ;  Phceni.x  Ins.  Co.r. 
Fleming,  65  Ark.  54  (1898). 

See  Harper  v.  X.  Y.  City  Ins.  Co.,  22  N.  Y.  441  (1860) ;  Commercial  Ins.  Co.  v. 
Mehlman,  48  111.  313  (1868)  ;  Archer  v.  Merchants'  and  Manufacturers'  Ins.  Co.,  43 
Mo.  434  (1869) ;  Hall  v.  Ins.  Co.  of  North  America,  58  N.  Y.  292  (1874) ;  Buchanan  v. 
E.xchange  F.  Ins.  Co.,  61  X.  Y.  26  (1874)  ;  Lancaster  Silver  Plate  Co.  v.  National  F. 
Ins.  Co.,  170  Pa.  151  (1895);  Lancaster  Silver  Plate  Co  v.  Manchester  F.  Assurance 
Co.,  170  Pa.  166  (1895)  ;  Mascott  v.  First  National  F.  Ins.  Co.,  69  Vt.  116  (1896). 

Compare  Macomber  v.  Howard  F.  Ins.  Co.,  7  Gray,  257  (1856);  McEwen  ?•.  Guth- 
rido-e,  13  Moo.  P.  C.  304  (1860)  ;  Whitmarsh  v.  Charter  Oak  F.  Ins.  Co.,  2  Allen,  581 
(1861);  Pindar  v.  Continental  Ins.  Co.,  38  N.  Y.  364  (1868) ;  Birmingham  F.  Ins.  Cok 


534  WHEELER   V.   TRADERS'   INS.   CO.  [CHAP.  VI. 

WHEELER  V.   TRADERS'   INSURANCE   COMPANY. 
Supreme  Court  of  New  Hampshire,   1882.     62  N.  H.  326. ^ 

Assumpsit  on  a  policy  of  insurance  on  a  woollen  mill  and  its  con- 
tents. The  policy  contained  the  provision  that  "if  the  assured  shall 
keep  or  use  gunpowder,  fireworks,  nitroglycerine,  phosphorus,  salt- 
petre,  nitrate  of  soda,  petroleum,  naphtha,  gasoline,  benzine,  benzole, 
or  benzine  varnish,  or  keep  or  use  caraphene,  spirit  gas,  or  any  burn- 
ing fluid  or  chemical  oils,  without  written  permission  in  this  policy, 
then  and  in  ever}  such  case  this  policy  is  void,  and  all  insurance  there- 
under sliall  immediately  cease  and  determine."  About  an  hour  before 
the  fire  the  assured  carried  a  barrel  of  naphtha  into  the  mill,  poured 
some  of  it  into  a  watering-pot,  and  sprinkled  it  upon  the  wool  for  the 
purpose  of  killing  moths.  The  naphtha  had  been  bought  for  the  purpose 
of  killing  the  moths,  and  the  intention  was  to  take  the  remainder  out- 
side the  building  and  there  clean  the  windows,  which  had  already  been 
taken  out,  but  the  fumes  of  the  naphtha  mixed  with  the  air  made  an 
explosive  and  inflammable  compound,  and  thus  the  fire  arose. 
'The  case  was  submitted  to  the  court  upon  agreed  facts. 

Marston  &  Eastman  and  J.  S.  H.  Frink,  for  the  plaintiflT. 

S:  C.  Eastman,  for  the  defendants. 

Doe,  C.  J.  Whether  the  expression  "keep  or  use"  means  a  keep- 
ing or  use  on  a  single  occasion,  or  frequentl}-  repeated,  or  continued 
for  several  days  or  months,  depends  upon  the  subject-matter  of  the 
contract,  and  the  intention  of  the  parties  proved  by  competent  evi- 
dence. If  the  plaintiff  had  walked  through  his  mill  with  a  vial  of 
naphtha  in  his  pocket,  the  transit  might  not  have  involved  the  insured 
property  in  the  danger  which  he  had  agreed  should  annul  the  policy. 
A  drop  of  the  liquid  carried  into  the  mill,  and  instantly  used  there  as 
medicine,  might  create  no  appreciable  hazard  of  fire.  The  policy 
covered  certain  risks ;  but  the  danger  of  fire  where  naphtha  is  kept  or 
used  is  such  that  the  defendants  expressly'  refused  to  assume  it,  and 
the  plaintifl!'  agreed  to  at  least  as  much  as  this, — that  his  keeping  or 
usTngliaphtha,  if  it  involved  the  mill  in  substantial jdanger,  should  ter- 
minate the  insurance^  Whether  his~agreement  j^s  broader  than  that, 
we^  need  not  inquire.  '       ' 

Naphtlnrwas'several  times  drawn  from  the  cask  into  a  watering-pot 
holding  about  two  quarts,  carried  across  the  room,  and  sprinkled  upon 
the  wool.  Thus  mixed  with  the  air  in  a  manner  favorable  to  rapid 
evaporation,  its  bulk  was  quickly  multiplied  five  or  six  hundred  times, 

V.  Kroegher,  83  Pa.  64  (1876);  Cobb.   v.  Ins.  Co.  of  North  America,  17  Kans.  492 
(1877)  ;  Lancaster  F.  Ins.  Co.  v.  Lenlieim,  89  Pa.  407  (1879);  Beer  i-.  Insurance  Co., 
39  Ohio  St.  107  (1883);  Pittshurgh  Ins.  Co.  v.  Frazee,  107  Pa.  521  (1884);  Western 
Assurance  Co.  v.  Rector,  85  Ky.  294  (1887).  —  Ed. 
^  The  case  has  been  restated.  —  Ed. 


SECT.  II.]  WHEELER    V.    TRADERS'    INS.    CO.  535 

and  it  became  explosive  and  very  inflammable.  Penetrating  all  sources 
of  combustion,  it  flowed  over  the  mill,  and  exposed  it  and  its  contents 
to  imminent  danger  of  destruction.  Unaware  of  the  dangerous  nature 
of  tlie  material  he  was  using,  the  plaintiff  put  all  the  insured  property 
in  an  enormous  peril,  which  continued  as  long  as  the  property  existed. 
He  had  agreed  that  if  he  should  do  this,  the  whole  fire  risk  should  be 
his,  and  not  the  defendants',  and  he  does  not  contend  that  his  ignorance 
of  the  hazardous  character  of  his  act  is  material.  In  pursuance  of  his 
agreement  the  insurance  ceased  when  the  naphtha  risk  began. 

There  was  no  contract  that  the  defendants  should  bear  any  risk 
a  year  or  a  day  after  he  wittingly  or  unwittingly  introduced  such  a 
danger  as  that  which  resulted  from  his  use  of  naphtha.  If  he  had  in- 
tended to  use  it  every  day  for  a  year,  as  he  used  it  on  the  day  of 
the  fire,  and  the  fire  had  been  caused  by  its  use  a  moment  after  the 
first  act  of  sprinkling  the  wool,  the  policy  would  have  been  invalidated 
by  the  dangerous  use,  and  not  by  the  consequent  fire.  It  would  not 
he  material  whether  the  fire  started  the  first  moment  of  the  use  in- 
tended to  be  continued  a  year,  or  the  last  moment  of  the  year's  actual 
use.  It  was  not  a  mere  intention  to  use  naphtha  once  or  many  times, 
nor  a  fire  resulting  from,  or  made  irresistible  by,  its  use,  nor  a  naphtha 
risk  prolonged  an  unreasonable  time,  but  a  use  of  naphtha  exposing  the 
proi)erty  to  substantial  danger,  that  was  to  put  an  end  to  the  defend- 
ants' liability.  "  If  the  assured  shall  keep  or  use  .  .  .  naphtha,  .  .  . 
tliis  policy  is  void,  and,  all  insurance  thereunder  shall  immediately 
cease."  The  immediate  cessation  of  the  insurance  when  the  plaintiff 
used  naphtha  does  not  mean  that  under  such  a  naphtha  risk  as  enveloped 
the  mill  when  the  fire  broke  out,  the  insurance  would  continue  down 
to  the  last  moment  of  the  undefined  period  at  the  expiration  of  which 
that  risk  would  become  a  habit  of  the  plaintiff,  and  a  customary  con- 
dition of  the  property.  On  the  facts  stated,  the  plaintiff  cannot 
recover.  Case  discharged} 


WHEELER  V.   TRADERS'   INSURANCE   COMPANY, 

Supreme  Court  of  New  Hampshire,  1883.     62  N.  H.  450. 

MoTiox  for  rehearing  Wheeler  v.  Traders'  Insurance  Compan}-,  ante, 
p.  534. 

Ifarston  &  Eastman  and  J.  S.  H.  Frinh,  for  the  plaintiff. 
8.  C.  Eastman,  for  the  defendants. 

1  See  Williams  v.  Fireman's  Fund  Ins.  Co.,  54  N.  Y.  569.  572-573  (1874)  ;  Bayly 
V.  London  &  Lancashire  Ins.  Co.,  4  Ins.  L.  J.  503  (U.  S.  C.  C,  D  La.,  1875) ,  .s.  c  2 
Fed.  Cas.  1087  ;  Matson  v.  Farm  Buildings  Ins.  Co.,  73  N.  Y.  310  (1878). 

Compare  Farmers'  and  Mechanics'  Ins.  Co.  v.  Simmons,  30  Pa.  299  (1858)  ;  Mears 
V.  Humboldt  Ins.  Co.,  92  Pa.  15,  20  (1879) ;  La  Force  v.  Williams  City  F.  Ins.  Co^ 
43  Mo.  App.  518,  530-532  (1890).  —  Ed. 


536  WHEELER   V.   traders'   INS.    CO.  [CHAP.  VI. 

Allen,  J.  The  stipulation  in  the  policy,  that  "  if  the  assured  shall 
keep  or  use  .  .  .  petroleum,  naphtha,  gasoline,  benzine,  benzole,  or 
benzine  varnish,  or  keep  or  use  camphene,  spirit  gas,  or  an}'  burning 
fluid  or  chemical  oils  without  written  permission  in  this  policy,  then  and 
in  every  such  case  this  policy  is  void,  and  all  insurance  thereunder  shall 
immediately  cease  and  determine,"  was  a  part  of  the  contract  of  in- 
surance entered  into  by  the  plaintiff  with  tlie  defendants,  without  any 
apparent  mistake,  deception,  or  fraud.  The  plaintiff  expressly  agreed 
that  a  violation  of  the  condition  should  of  itself  be  a  forfeiture  of  all 
insurance  under  the  policy.  Having  voluntarily  entered  into  the  con- 
tract thus  restricted,  the  plaintiff  cannot  reasonably  complain  of  the 
enforcement  of  the  forfeiture  for  a  violation  of  the  condition.  Mead  i-. 
N.  W.  Ins.  Co.,  7  N.  Y.  o30 ;  Lee  v.  Howard  Ins.  Co.,  3  Gray,  583; 
Kelly  V.  Home  Ins.  Co.,  97  Mass.  288. 

There  is  no  ambiguity  in  the  meaning  of  the  words  used,  or  the 
sense  in  which  they  were  employed,  by  which  the  plaintiff  might  have 
the  benefit  of  a  doubt.  Smith  v.  Ins.  Co.,  32  N.  Y.  399.  The  con- 
tract must  be  interpreted,  and  the  terms  used  must  be  defined  in  the 
light  of  the  mischief  intended  to  be  avoided  by  the  restriction.  The 
prohibition  of  the  keeping  or  use  for  any  purpose,  or  for  any  measura- 
ble time,  of  an  article  so  inviting  to  fire  as  that  described  in  tlie  case, 
was  a  reasonaljle  prohibition,  the  violation  of  which,  in  any  degree  and 
for  any  time,  would  expose  the  insured  premises  to  an  extreme  degree 
of  danger ;  and  to  give  the  restrictive  clause  in  the  policy  a  construc- 
tion which  would  permit  the  introduction  into  the  premises  of  naphtha 
or  benzine,  and  its  use  there  for  any  dangerous  purpose  for  any  time, 
•woukl  be  a  practical  nullification  of  that  part  of  the  contract.  If  it 
could  be  said  that  merely  "keeping"  it,  not  for  sale,  nor  for  any 
general  use  in  the  business  of  manufacturing,  but  for  temporary  storage, 
could  not  be  within  the  prohibition  intended  b}'  the  parties  to  the  con- 
tract, certainly  the  "  use  "  made  of  it  was  one  subject  to  the  prohibition 
of  the  use  of  an  article  hazardous  to  an  extraordinary  degree,  if  the 
use  of  any  combustible  material  ever  could  be. 

The  cases  in  which  a  disregard  of  the  prohibition  of  keeping  or  using 
extraordinaril}'  hazardous  articles  had  not  been  held  to  work  a  for- 
feiture of  the  polic}'  are  those  where  tlie  use  made  was  one  incident  to 
the  business  of  the  insured,  adopted  from  necessity  or  custom,  and 
iicognized  by  the  insurer,  so  that  a  waiver  of  the  prohibitory  clause 
l\)llowed.  Such  cases  are:  Carlin  v.  Assurance  Co.,  57  Md.  515,  in 
wliich  the  prohibited  oil  was,  at  the  time  of  the  insurance,  known 
l»y  the  insurers  to  be  commonly  used  by  the  insured  to  lubricate 
machinery;  Buchanan  v.  Ins.  Co.,  Gl  N.  Y.  26,  where  the  oil  was 
known  to  be  commonl}'  used  for  illuminating  purposes  ;  and  Whitmarsh 
V.  Ins.  Co.,  16  Gra}',  359,  in  which  the  inhibited  article  was  known  to 
be  usually  kept  and  dealt  with  as  a  part  of  a  stock  of  goods  in  a 
countrj-  store  insured.  The  use  by  the  plaintiff  of  the  benzine  or 
naphtha  did  not  come  within  the  doctrine  of  any  of  these  cases,  nor  was 


SECT.  II.]        McFARLAXD   V.    ST.    PAUL    F.    AND    M.    IXS.    CO.  537 

it  a  use  in  a  small  quantit}'  as  a  medicine,  or  for  other  special  and  not 
dangerous  purpose,  as  in  Williams  v.  Ins.  Co.,  54  N.  Y.  569. 

The  plaintiff  claims  that  the  policy  was  not  forfeited  by  the  use 
of  the  naphtha,  because  the  use  was  not  habitual,  but  temporary,  and 
confined  to  a  single  occasion.  The  cases  relied  on  as  authority  for  this 
position  are  cases,  for  the  most  part,  where  there  was  no  express 
stipulation  or  warranty  against  the  use  of  the  particular  dangerous 
article  or  material  in  question,  but  only  a  prohibition  in  general  terms 
of  keeping  hazardous  things  on  the  premises  or  of  carrying  on  a 
different  or  more  dangerous  trade.  Dobson  v.  Sotheby,  M.  &  M.  90  ; 
iShaw  V.  Eobberds,  6  A.  &  E.  76.  But  where  there  is  a  stipulation 
that  the  policy  shall  be  avoided  on  the  use  of  an  article  expressly 
named,  and  there  is  nothing  in  the  policy  from  which  a  permission  to 
use  the  article,  in  a  partial,  limited,  or  temporary  wa}-,  can  be  inferred, 
full  effect  has  usuall}-  been  given  to  the  prohibitive  clause  by  a  for- 
feiture of  the  polic}-  for  its  violation.  Glen  v.  Lewis,  8  Exch.  607  ; 
Faulkner  v.  Central  Ins.  Co.,  1  Kerr,  N.  B.,  279  ;  Worcestei'  v.  Ins. 
Co.,  9  Gray,  27;  Matson  v.  Ins.  Co.,  73  N.  Y.  310;  Birmingham  Ins. 
Co.  V.  Kroegher,  83  Pa.  St.  64  ;  Cerf  v.  Home  Ins.  Co.,  44  Cal  320. 

No  reason  has  been  suggested  by  the  plaintiff  why  the  restrictive 
clause  in  the  policy  of  insurance  in  this  case  should  receive  a  construc- 
tion by  rules  different  from  those  applied  to  ordinary  business  con- 
tracts. The  terms  of  the  prohibitive  clause  are  simple,  well  known, 
and  in  common  use.  There  is  nothing  ambiguous  about  them,  and 
there  can  be  no  doubt  as  to  their  meaning.  The  stipulation  was  a 
plain,  unqualified  agreement  that  the  policy  should  be  forfeited  if 
naphtha  were  used  in  the  premises  insured.  It  was  a  reasonable 
restriction  against  the  use  of  a  very  dangerous  and  combustible 
material ;  and  a  construction  which  would  uphold  the  polic}-,  in  spite 
of  a  plainly  hazardous  use  of  anj-  substantial  quantity  of  so  dangerous 
a  fluid  on  the  premises,  for  any  substantial  time,  would  defeat  the 
object  for  which  the  restriction  was  made.  Motion  denied. 


McFARLAND  v.  ST.  PAUL   F.  &  M.  INS.  CO. 
ScPREME  Court  of  Minnesota,  1891.     46  Minn.  519. 

Appeal  by  plaintiff  from  an  order  of  the  District  Court  for  Eamsey 
County,  "WiLKix,  .1.,  presiding,  refusing  a  new  trial  after  verdict  di- 
rected for  defendant,  in  an  action  to  recover  $1,450  on  a  fire  insurance 
policy. 

Johns,  Michael  &  Johns,  for  appellant. 

George  L.  Bunn,  for  respondent. 

Collins,  J.  Although  the  policj'  of  insurance  upon  which  plaintiff 
seeks  to  recover  in  this  action,  for  a  loss  caused  by  the  explosion  of  a 


538 


McFARLAND  V.    ST.  PAUL  F.  AND  M.  INS.  CO.   [CHAP.  VI. 


gasoline  stove,  contained  a  clause  which  provided  that,  jf_the_assured 
should  keep  or  use_^asoUiie_upon  the  insured  premises  —  a  dwelling- 
liO„se  —  withqut_the_written  permission  of  the  defendant  company,  the 
policy  should  be  void,  it  is  contended  by  him  tliat,  as  the  house  was 
insured  without  an  application  in  writing,  and  without  any  representa- 
tions being  made,  after  the  company's  agent  had  full  opportunity  to 
examine  the  premises,  by  which  examination  he  would  have  discovered 
that  the  gasoline  stove  was  in  common  use  for  cooking  purposes,  it  was 
cliargeabte  with  such  knowledge  as  an  investigation  would  have  dis- 
close'cl ;  and  that  therefore  it  assumed  the  risk  as  it  actually  existed 
when  the  policy  was  issued,  subject  to  any  use  as  a  dwelling-house  not 
so  exceptional  and  peculiar  that  the  defendant  company  could  not  be 
supposed  to  have  anticipated.  To  put  the  plaintiff's  proposi tion  iD- 
a nother  formULi'i  thnt  wh^"  ^"  i-ngm-nnpp  pompnnv  issups  a  fire  policy 
\nfhout  hi^uiry^oujnthont  ?ppHnQtir>n  m-  roprpsontntionsT  it  consents 
t7ni7^j;^"^^Tstin£jise  of  the  in  property  which  it  could  have  ascer- 

t.'HneTbyjeasonaMe  investigation,  aUhongh  by  the"  ternisofthcpolicy 
iireTTariiseircxiJrcsslv  prohibited,  and  there  is  notliing'about  the  de- 
scription  of  the  property  which  necessarily  implies  or  indicates  that  it 
may  be  used  in  the  prohibited  manner. 

On  the  trial,  testimony  was  offered  and  received  in  plaintiff's  behalf 
which  tended  to  prove  tliat  tlie  practice  of  using  gasoline  stoves  in 
dwelling-houses  had  liecome  quite  prevalent  in  the  city  wherein  the  in- 
sured property  was  located.  Undoubtedly,  the  purpose  of  this  testi- 
mony was  to  show  that  tlie  use  of  the  forbidden  article  in  dwellings 
was  not  exceptional  or  peculiar,  but,  on  the  contrary,  had  become  es- 
tablished by  custom.  Its  sufficiency  in  this  respect  we  need  not  stop 
to  consider,  for  all  of  this  class  of  testimony  should  have  been  excluded 
as  immaterial.  The  policy,  which  had  gone  into  plaintiff's  hands,  and 
the  contents  of  which  he  is  presumed  to  have  known,  was  unequivocal 
on  this  point,  and  declared  that  if  gasoline  was  used  on  the  premises 
the  contract  for  insurance  should  be  void.  There  was  no  language  in 
the  instrument  from  which  a  different  or  contrary  intention  —  an  intent 
to  permit  the  use  of  gasoline  —  could  be  gathered.  The  clause  wherein 
its  use  was  forbidden  was  not  repugnant  to  any  other  provision,  nor 
were  there  elsewhere  terms  or  conditions  from  which  it  could  be  implied 
that  the  defendant  company  waived  the  prohibition.  The  plaintiff  has 
not  brought  his  case  within  an  application  of  the  rule  laid  down  in 
rhcenix  Ins.  Co.  v.  Taylor,  5  Minn.  303  (492),  in  which  it  was  held 
that  printed  conditions  in  an  insurance  policy  prohibiting  the  keeping 
of  gunpowder  in  tlie  building  containing  the  merchandise  insured  were 
controlled  and  governed  by  the  written  portion,  describing  the  prop- 
erty covered  by  the  policy  as  a  "  stock  of  goods,  consisting  of  .  .  ., 
and  such  goods  as  are  usually  kept  in  a  general  retail  store,"  —  it  hav- 
ing been  shown  that  gunpowder  was  usually  kept  in  such  a  store.  By 
the  use  of  general  terms  in  the  written  part  of  the  policy,  —  terms 
which  would  ordinarily  include  the  forbidden  article,  —  the  insurance 


SECT.  II.]    McFAELAND  V.    ST.  PAUL  F.  AND  M.  INS.  CO.        539 

conipan}-  was  deemed  to  have  waived  the  invalidating  printed  clause  as 
effectually  as  if  the  article  had  been  expressly  insured.  We  think  it 
may  be  said,  safely,  that  none  of  the  well-considered  cases  go  beyond 
this,  proceeding  strictly  upon  the  principle  that  the  written  portion  of 
the  contract  must  be  given  the  controlling  force  where  a  conflict  or  want 
of  harmony  arises  between  it  and  a  printed  stipulation.  But  in  the  case 
at  bar  there  was  no  conflict  or  want  of  harmony'.  The  defendant  insured 
the  plaintiff's  dwelling-house  upon  an  express  condition  that  the  use  of 
gasoline  should  terminate  the  contract.  The  defendant  did .  not  use 
ambiguous  language,  or  insert  in  one  portion  of  its  policy  a  clause  at 
variance  with,  or  repugnant  to,  a  clause  found  elsewhere,  and  thus  mis- 
leacTthe  insured  as  to  the  burdens  or  restrictions  imposed  upon  him; 
but,  on  the  other  hand,  it  emphatically  notified  him  that  if  he  used  p-as- 
oITne,  as  well  as  other  w'ell-known  hazardous  articles,  liis  policy  bccame_ 
void.  The  cases  cited  by  appellant  where  there  were  ambiguous  and 
conflicting  clauses  and  terms  in  the  policies,  in  line  witli  Pha?nix  Ins. 
Co.  V.  Taylor,  sirjjra,  have  no  application  to  the  facts  now  before  us. 

Nor  can  it  aid  the  plaintiff  that  he  made  no  application  for  insurance, 
and  no  representations  as  to  the  use  or  non-use  of  gasoline  on  the 
premises.  This  is  not  a  case  where,  there  being  no  conditions  ia  the 
policy  governing  the  matter,  it  might  be  held  that  the  insured  need 
not  disclose  facts  incident  to  the  risk,  such  as  an  incumbrance  upon  it, 
unless  required  to  do  so ;  nor  is  it  a  case  where  the  conditions  are  pred- 
icated upon,  or  referable  to,  an  application  made  by  the  insured.  The 
general  rule  is  well  stated  to  be  that,  where  there  is  no  applicatron,  the 
insured  is  bound  b}-  the  conditions  found  in  the  policy  which  he  has 
accepted  and  retained  without  objection.  Swan  v.  Watertown  Fire 
Ins.  Co.,  96  Pa.  St.  37  ;  IMay,  Ins.  167.  Exceptions  may  be  found  to 
this  rule,  t)ut  there  are  none  which  can  be  of  service  to  appellant ;  for 
the  polic}'  alone,  unmodified  by  representations  or  in  any  other  man- 
ner, was  the  contract  existing  between  the  parties.  The  conclusive 
effect  of  a  condition  in  an  insurance  polic}',  under  like  circumstances, 
was  in  fact  determined  in  the  recently  decided  case  of  Collins  v.  St. 
Paul  F.  &  M.  Ins.  Co.,  44  Minn.  440  (46  N.  W.  Rep.  906).  The  plain- 
tiff tlierein  was  not  allowed  to  recover  as  against  an  explicit  condition 
in  the  policy  that  the  company  should  not  be  liable  if  the  interest  of  the 
assured  in  the  propert}'  was  not  one  of  absolute  and  sole  ownership, 
because  it  appeared  beyond  controversy-  that  plaintiff  had  but  a  life- 
estate.  There  was  no  attempt  on  the  trial  of  that  case  to  show  that  the 
plaintiff's  application  for  insurance  contained  an}-  question  or  answer 
in  respect  to  the  title.  The  right  to  recover  was  successfully  resisted 
by  the  insurance  compan}-  solely  upon  the  condition  found  in  the  policj*. 

Order  affirmed.^ 

1  Ace. :  Reeve  v.  Phoenix  Ins.  Co.,  23  La.  Ann.  219  (1871). 

In  Heron  v.  Phcenix  Mut.  F.  Ins.  Co.,  180  Pa.  257  (1897),  the  policy  insured  house- 
hold goods,  etc.,  and  provided  that  it  should  be  void  "  if  (any  usage  or  custom  of  trade 
or  manufacture  to  the  contrary  notwithstanding)  there  he  kept,  useil,  or  allowed  on 
the  above  described  premises,  benzine,  benzole,  dynamite,  ether,  fireworks,"  etc.     The 


540  FAUST   V.    AMERICAN   FIRE   INS.   CO.  [CHAP.  VI 


FAUST,  Appellant,  v.  AMERICAN   FIRE   INS.    CO., 
Respondent. 

Supreme  Court  of  Wisconsin,  1895.     91  Wis.   158.^ 

Appeal  from  a  judgment  of  the  Circuit  Court  for  Dane  Count}'. 

The  action  was  upon  a  fire  insurance  policy  of  the  Wisconsin 
standard  form.  The  written  part  said  :  "  Joseph  Faust :  Four  hundred 
duUars  on  his  two-story  frame,  shingle-roof  building  .  .  .  occupied  as 
a  furniture  store  and  repair  shop.  .  .  .  Four  hundred  dollars  on  the 
stock  of  furniture,  upholstery  goods,  and  other  merchandise,  not  more 
hazaraous^usuqIJ(L,a_retaiLf'^'-"'^'''-'^  store,  while  contained  therein." 
tT;^^15nnted~paTtsn]^  "■  This  entire  policy,  unless  otherwise  provided 
bfagreement  indorsed  hereon  or  added  hereto,  shall  be  void  ...  if  (any_ 
usa^'e  or  custom  ot  trade  or  manufacture  to  the  contrary  notwithstand- 
Ingflliere~be  kept^sed.  or  allowed  on  the  above  described  premises 
li^z^ine,"  etc.  There  were  also  provisions  as  to  proofs  of  loss  and  as 
to  waiver. 

The  defence  was  a  breach  of  the  condition  forbidding  the  keeping 
or  using  of  benzine,  and  also  a  failure  to  furnish  the  requisite  proofs 
of  loss.  The  evidence  showed  that  both  at  the  issue  of  the  policy  and 
at  the  time  of  the  fire  the  assured  kept  benzine  on  the  premises,  that 
the  amount  was  small,  that  it  was  kept  solely  for  use  in  the  repair 
shop,  and  that  it  was  necessary  for  such  use.  The  evidence  also 
showed  that  after  the  fire  the  insurance  company's  adjuster  investi- 
gated the  loss,  discovered  the  use  of  benzine,  thereupon  notified  the 
assured  that  this  use  avoided  the  policy,  and  took  away  and  retained 
a  list  of  the  destroyed  items  which  had  been  furnished  by  the  assured, 
and  that  no  communication  had  been  received  from  the  company 
thereafter. 

The  defendant  moved  for  a  nonsuit  on  the  ground  that  the  policy 
was  avoided  by  the  keeping  or  use  of  the  benzine.  Siebecker,  J., 
granted  the  motion,  and  judgment  was  rendered  accordingly,  where- 
upon the  plaintiff  appealed. 

Burr  W.  Jones  and  E.  E.  Stevens,  for  the  appellant. 

BasJiford,  O'Connor,  cC*  Ayhoard,  for  the  respondent. 

Marshall,  J.  The  main  question  presented  on  this  appeal  is 
whether  the  presence  of  a  small  amount  of  benzine  on  the  premises 

assured  caused  fireworks  to  be  placed  in  the  house,  on  the  morning  of  July  3,  for  use 
on  the  following  evening.  The  fireworks  took  fire  on  the  afternoon  of  July  3,  and 
caused  the  loss  for  which  action  was  brought.  The  facts  being  undisputed,  it  was 
held  that  the  jury  should  have  been  instructed  to  find  for  the  defendant,  Sterrett, 
C.  J.,  for  the  court,  saying :  "  There  is  no  ground  for  a  presumption  that  the  parties 
here  contemplated  even  the  temporary  presence  of  fireworks  in  the  insured  building  in 
the  face  of  an  express  contract  to  the  contrary."  —  Ed. 

'  The  statement  has  been  rewritten  ;  and  the  provisions  as  to  proofs  and  waiver  have 
not  been  reprinted.  —  Ed. 


SECT.  II.]  FAUST   V.   AMERICAN   FIRE   INS.   CO.  541 

for  use  in  the  repair  shop  rendered  the  contract  of  insurance  void. 
Keeping  in  mind  the  undisputed  evidence  that  the  prohibited  article 
was  not  kept  as  an  article  of  merchandise  for  sale,  but  as  an  article 
usually-  and  necessarily  kept  in  operating  the  business  of  the  repair 
department  of  the  furniture  store,  which  the  policy  expressly  covered 
we  find  abundant  authority  to  support  the  general  rule,  which  we 
adopt,  that  where  a  contract  of  insurance,  bj-  the  written  portion, 
covers  property  to  be  used  in  conducting  a  particular  business,  lEe 
keepmg  of  an  article  necessarily  used  in  such  business  will  not  avoid 
the  poTTc}-,  even  though  expressly  prohibited  in  the  printed  conditions 
of  the  contract.  To  that  effect  are  Mears  v.  Humboldt  Ins.  Co.,  92 
Ta.  St.  10  ;  Viele  v.  Germania  Ins.  Co.,  26  Iowa,  9  ;  Collins  v.  Farm- 
ville  Ins.  &  B.  Co.,  79  N.  C.  279,  —cited  by  appellant's  counsel,  to 
which  many  may  be  added:  Carrigan  v.  Lycoming  F.  Ins.  Co.,  53  Vt. 
418  ;  Stout  V.  Comm.  U.  Ass.  Co.,  11  Biss.  313  ;  Franklin  F.  Ins.  Co. 
V.  Updegraff,  43  Pa.  St.  350,  353  ;  Plinsky  v.  Germania  F.  &  M.  Ins. 
Co.,  32  Fed.  Rep.  47;  Bryant  ■y.  Poughkeepsie  Mut.  Ins.  Co.,  17  N.  Y. 
200  ;  Phoenix  Ins.  Co.  r.  Taylor,  5  Minn.  492  ;  Whitmarsh  v.  Conway 
F.  Ins.  Co.,  16  Gray,  359  ;  Franklin  F.  Ins.  Co.  v.  Chicago  I.  Co.,  36 
Md.  102  ;  Carlin  v.  Western  Ass.  Co.,  57  Md.  515  ;  Harper  v.  Albany 
Mat.  Ins.  Co.,  17  N.  Y.  197 ;  Hall  v.  Ins.  Co.  of  N.  A.,  58  X.  Y.  292  ; 
and  many  others. 

In  the  early  case  of  Harper  v.  Albany  Mut.  Ins.  Co.,  17  X.  Y.  197, 
it  was  held  that  the  underwriters  must  be  presumed  to  have  been 
acquainted  with  the  business  and  with  the  materials  necessarily  used 
in  prosecuting  it,  and  to  have  included  such  materials  in  the  risk,  the 
same  as  if  each  article  had  been  particularly-  mentioned  in  the  written 
portion  of  the  polic}- ;  that  the  written  portion  in  that  regard  will  con- 
trol the  printed  portion  prohibiting  the  keeping  of  such  articles.  This 
case  has  been  frequently  cited  and  approved,  and  may  be  said  to  be 
strictly  in  line  with  the  great  weight  of  authority  on  the  sul)ject.  In 
Hall  V.  Ins.  Co.  of  N.  A.,  58  N.  Y.  292,  the  court  referred  to  Harper  v. 
Albany  Mut.  Ins.  Co.,  17  N.  Y.  197,  and  several  others  of  like  char- 
acter, stating,  in  effect,  that  they  were  all  cases  where  the  use  of  the 
prohibited  article  was  necessaiT  in  the  business  ;  while  in  the  case  then 
under  consideration  it  was  only  said  to  be  usually  used.  It  was  sought 
by  the  insurance  company  to  avoid  the  policy,  notwithstanding,  by 
distinguishing  between  necessary  and  customary  use,  but  the  court 
held  that,  under  a  policy  covering  a  business,  permission  to  use  all 
articles  ordinarily,  as  well  as  articles  necessarily,  used  must  be  held  to 
be  given  and  covered  by  the  contract  of  insurance.  In  Carlin  v. 
Western  Ass.  Co.,  57  Md.  515,  the  policy  covered  a  factory  and 
macliinery,  and  .prohibited  the  keeping  or  use  of  petroleum."  The 
court  held,  in  effect,  that  if  the  engine  room  and  machinery  were 
included  in  the  description  of  the  insured  premises,  the  keeping  of 
petroleum,  although  among  the  prohibited  articles,  would  not  avoid 
the  policy  if  the  evidence  showed  that  it  was  an  appropriate  and  cus- 


542  FAUST   V.   AMERICAN   FIEE   INS.   CO.  [CHAP.  VL 

toiuiiiy  article  used  in  the  assured's  trade  for  lubricating  machiner}', 
and  that  he  kept  it  solely  for  that  purpose  ;  that  the  insurance  com- 
pany, when  it  issued  the  policy,  knew  that  the  factory  could  not  be  run 
without  machinery,  and  it  must  be  supposed  to  have  contracted  with 
reference  to  such  use  as  an  ordinary  incident  of  the  business;  that  if 
petroleum  oil  was  usual  and  necessary,  then  such  use  must  have  been 
contemplated,  though  prohibited  in  the  printed  portion  of  the  policy. 
The  court  concluded  that  the  rule  in  respect  to  the  question  under 
consideration  as  stated  is  well  settled. 

It  must  be  recognized  that  there  is  some  conflict  in  the  authorities 
on  this  subject,  but  the  great  weight  of  authority  fully  sustains  the  rule 
as  above  stated. 

In  the  light  of  the  foregoing,  obviousl}'  the  contract  of  insurance 
which  covered  the  building  to  be  used  as  a  repair  shop  in  connection 
with  the  furniture  store  permitted  all  things  necessary  to  the  enjoy- 
ment of  the  property  for  such  use.  The  clause  in  the  written  portion 
of  the  policy,  "  Four  hundred  dollars  on  the  stock  of  furniture,  uphols- 
tery goods,  and  other  merchandise,  not  more  hazardous,  usual  to  a 
retail  furniture  store,"  must  be  construed  to  cover  merchandise  kept  in 
the  trade  in  the  furniture  store,  and  the  words  "  not  more  hazardous" 
to  refer  to  such  merchandise  onl}-,  and  have  no  reference  to  the  neces- 
sary articles  kept  for  use  in  the  repair  shop.  The  words  "  any  usage 
or_custoin_QiLi^''ni1p  or  mnpijfncture  to  the  contrary  notwithstanding," 
contained  in  the  prin ted  portion  of  the  policy,  so  far  aa  they  wf)nTd 
otherwise  prohibit  the  necessary  use  of  benzine  in  the  repair  shop. 
must  be  held  to  be  controlled  by  the  written  portion  of  the  policy, 
which  expressly  insures  the_building  in  part  as  a  repair  shop;  this 
upon  the  presumption,  that  must  exist,  that  the  parties  intended  that 
the  repair  shop  as  it  was,  and  as  it  must  necessarily  continue  to  be  if 
it  continued  at  all,  must  be  carried  on  with  all  usual  and  necessary 
incidents,  and  that  as  such  it  was  protected  bj-  the  contract  oT  insur- 
ance ;  also  by  force  of  tlie  well-established  rule,  that  the  written  special 
description  of  the  particular  subject-matter,  wherever  inconsistent  with 
the  printed  clauses  of  the  policy,  must  control.  Citizens'  Ins.  Co.  v. 
McLaughlin,  53  Pa.  St.  485  ;  Cushman  v.  N.  W.  Ins.  Co.,  34  Me.  487; 
Archer  v.  Merchants'  &  M.  Ins.  Co.,  43  Mo.  434.  The  construction 
we  thus  give  the  policy  renders  the  contract  just  and  reasonable,  and 
carries  out  the  obvious  intention  of  the  parties  to  it.  Any  other  con- 
struction  wouldJeacLto  the  absurd  vosnlt  tli.it  the  prohibitory  clause^f 
tliij)olicy\vould  absolutely  prevent  thp.  cirrying  op  of  the  business 
expressly  ])crmitted  in  the  written  portion.  No  such  absurdity  can  l)e 
held  to  have  been  contemplated  by  the  parties,  unless  the  terms  of  the 
contract  are  such  as  not  to  permit  of  any  other  reasonable  construc- 
tion. As  said  in  Carlin  y.  Western  Ass.  Co.,  57  Md.  515:  "Where 
the  contrary  is  not  expressly  made  to  appear,  it  is  not  to  be  presumed 
that,  when  an  insurance  is  effected  with  reference  to  an  established  and 
current  business,  whose  protection  is  really  the  object  of  the  insurance, 


SECT.  II.]  LONDON,   ETC.   FIKE   INS.    CO.   V.   FISCHER.  543 

such  a  narrow  and  stringent  construction  of  the  provisions  of  the 
pohc}'  was  intended  as  will  necessarily  cause  its  serious  embarrass- 
ment or  suspension." 

The  only  other  question  which  requires  consideration  is  whether 
there  has  been  a  failure  to  comply  with  the  condition  requiring  proofs 
of  loss,  so  as  to  defeat  a  recovery  on  the  policj'.^  .  .  . 

Judgment  reversed  and  new  trial  granXed? 


LONDON  AND   LANCASHIRE  FIRE  INS.    CO.   v.   FISCHER. 

United  States  Circuit  Coukt  of  Appeals,  Sixth  Circuit,  1899. 
92  Fed.  R.  500.^ 

Error  to  the  Circuit  Court  of  the  United  States  for  the  District  of 
Kentuck}'. 

This  was  an  action  on  a  policy  of  fire  insurance  of  $3,000,  "  on  stock 
of  merchandise,  principall}- hardware  and  cutlery,  stoves  and  tinware, 
and  materials  used  in  his  business,  contained  in  frame  metal-roof  build- 
ing  occupied  by  assured  as  dealer  in  above-described  goods,  with  privi- 
lege to  manufacture  tinware  by  hand  power,  and  upper  floors  occupied 
and  known  as  '  Highland  Hall,'  and  situate  No.  1627  Baxter  Avenue, 
Louisville,  Ky." 

The  defence  rested  upon  violations  of  three  conditions  of  the  policy, 
one  of  which  was  :  "This  entire  policy,  unless  otherwise  provided  by 
agreement  indorsed  hereon  or  added  hereto,  shall  be  void  ...  if  (any 
usage  or  custom  of  trade  or  manufacture  to  the  contrarj-  notwithstand- 
ing) there  be  kept,  used,  or  allowed,  on  the  above-described  premises, 
benzine,  benzole,  dynamite,  ether,  fireworks,  gasoline,  Greek  fire,  gun- 
powder exceeding  twenty-five  pounds  in  quantit}',  naphtha,  nitro- 
glycerine, or  other  explosives,  phosphorus,  or  petroleum  or  anj-  of 
its  products  of  greater  inflammability  than  kerosene  oil  of  the  United 
States  standard."  .  .  . 

As  to  the  condition  quoted,  the  charge  to  the  jury  was  as  follows  : 

"  Did  the  plaintiff  in  this  case,  between  the  7th  of  October,  1895,  and 
the  31st  of  May  (the  time  of  the  fire),  1896,  —  did  he,  in  the  language 
of  the  policy,  '  keep,  use,  or  allow  in  the  premises,  to  wit,  the  main 

^  The  remainder  of  the  opinion  dealt  with  this  question.  —  Ed. 

2  See  Liincaster  Silver  Plate  Co.  v.  National  F.  Ins.  Co.,  170  Pa.  151  (1895)  ;  Lan- 
caster Silver  Plate  Co.  v.  Manchester  F.  Assurance  Co.,  id.  166  (1895) ;  American 
Central  Ins.  Co.  v.  Green,  16  Tex.  Civ.  App.  531  (1897);  Davis  v.  Pioneer  Furni- 
ture Co.,  102  Wis.  .394  (1899).  — Ed. 

3  s.  c.  34  CCA.  503.  The  statement  has  been  rewritten  with  the  aid  of  the  opin- 
ion of  Barr,  J.,  in  Fischer  v.  London  &  Lancashire  F.  Ins  Co.,  83  Fed.  R.  807  (U.  S. 
C  C,  D.  Ky.,  1897).  In  the  statement  and  the  opinion,  matters  bearing  on  other  in- 
surance chattel  mortgage,  and  waiver  have  been  omitted.  —  Ed. 


544  LONDON,   ETC.    FIRE   INS.    CO.    V.    FISCHER.  [CHAP.  VI, 

building,  gasoline'?  If  you  conclude  that  he  did  'keep,  use,  or  allow  ' 
to  be  used,  or  kept,  gasoline  in  the  premises,  thus  described,  why,  then, 
you^ould  "EiKpfor  the  delendahI71)ecause  by  the  very  terms  of  the 
p'STTc^Mjie jjlaintiff~agreed  thai  Llie  paltcy_shou]dJ)e  voin7~if4TC  did  this  - 
thing,  which  was^irohibited.  YoiTmust  keep  in  mind,  now,  tliis  propo- 
sitionl^fers  onl}'  to  the  mamnBiiilding,  which  excludes  the  shed  behind. 
Now,  this  language  here  is  not  used  in  any  technical  sense,  either.  It 
is  for  you  to  say  whether,  from  the  evidence,  this  plaintiff  kept,  used, 
or  allowed  to  be  kept  or  used,  gasoline  between  the  7th  of  October, 
1895,  and  the  31st  of  May  following.  You  must  consider  the  whole 
evidence  on  that  subject." 

The  jury  found  for  the  plaintiff. 

Augustus  E.  Wilson,  for  plaintiff  in  error. 

John  Barret,  for  defendant  in  error. 

The  opinion  of  the  court  (Taft  and  Lurton),  circuit  judges,  was 
delivered  by 

Taft,  Circuit  Judge.  .  .  .  The  second  assignment  is  based  upon 
the  construction  which  the  court  gave  of  the  word  '•'•  allowed  '^  in 
flie~clause  providing  that  the  policy  should  be  void  '■''  if  there  be 
kgT)t,  "used,  or  allowed  "  on  the  premises  gasoline.  The  court  con- 
strued  U^ie  word  "  allowed  "  to  mean  ''allowed  to  be  kept  or  used." 
The  evidence  tended  to  show  that  gasoline  was  carried  through  the 
store  from  a  shed  in  the  back  3ard,  not  connected  with  the  main 
building,  where  the  stock  of  goods  was  insured.  It  was  conceded 
that  such  carrying  of  gasoline  through  the  store  without  leaving  it 
there  permanently'  did  not  come  within  the  adjudicated  meaning  of 
the  terms  "  kept  and  used  ;  "  but  it  was  contended  that  the  word 
"allowed"  embraced  more  than  "kept  or  used,"  and  was  suffi- 
ciently broad  to  include  the  carrying  of  gasoline  through  the  store 
for  immediate  deliver}'  to  customers,  even  though  gasoline  was  not 
allowed  to  be  stored  on  the  premises,  or  to  remain  there  longer  than 
the  time  required  to  carry  it  from  the  back  door  to  the  customer, 
and  to  deliver  It  to  him.  The  court  construed  the  word  "  allowed" 
as  if  inserted  for  the  purpose  of  making  it  clear  that  the  condition 
would  be  broken,  whether  tlie  keeping  and  using  was  done  b}-  the  in- 
sured himself,  or  was  allowed  or  permitted  by  him  to  be  done  b}'  some 
one  else.  The  argument  made  on  this  construction  is  that  under  it  the 
word  "  allowed"  is  merely  redundant,  and  adds  nothing  to  the  mean- 
i)ig  of  the  other  two  words,  because  it  has  often  been  adjudicated  that 
they  are  broad  enough  to  cover,  not  only  the  act  of  the  insured,  but 
also  the  act  of  any  person  whom  the  insured  may  permit  or  allow  to 
keep  or  use  gasoline  upon  the  premises,  and  in  some  cases  even  the  act 
of  a  tenant  in  keeping  gasoline  against  the  express  command  of  the  in- 
sured. The  mere  fact  that  tlie  words  "  kept  or  used  "  might,  by  con- 
struction, be  made  wide  enough  to  include  "allowed,"  does  not  require 
of  us,  when  the  word  "  allowed  "  is  expressly  made  a  part  of  the  polic}', 
to  give  it  any  different  meaning  from  what  it  would  liave  when  it  was 


SFX'T.  II  ]  LONDON,   ETC.   FIEE   INS.   CO.    V.   FISCHEK.  545 

implied  from  the  use  of  other  words.  The  habit  of  using  apparent]}- 
redundant  expressions  in  statutes  and  contracts  and  deeds,  for  the  pur- 
pose of  excluding  an}'  possibility  of  a  misconstruction,  is  very  frequent. 
It  justifies  us  in  ghing  the  word  ^^  allowed  "  its  ordinary  meaning,  in- 
stead of  attributTng  to  it  a  strained  and  vague  significance,  which  will 


defeat  the  policy.  The  duty  of  the  court,  where  the  meaning  is  am- 
biguous, is  to  construe  the  words  used  against  the  insurer,  who  framed 
them,  so  as  to  validate  the  policy,  rather  than  destroy  it.  London 
Assurance  v.  Corapanhia  De  Moagens  Do  Barreiro,  167  U.  S.  157,  17 
Sup.  Ct.  785  ;  Imperial  Fire  Ins.  Co.  v.  Coos  Co.,  151  U.  S.  462, 
14  Sup.  Ct.  379  ;  National  Bank  v.  Insurance  Co.,  95  U.  S.  673.  This 
disposes  of  all  the  assignments  of  error  made  by  the  plaintiff  in  error, 
and  leads  to  an  affirmance  of  the  judgment.^ 

1  On  "  kept,  used,  or  allowed,"  and  the  like,  see  also  :  — 
Duncan  v.  Sun  F.  Ins.  Co.,  6  Wend.  488  (1831) ; 
Faulkner  v.  Central  F.  Ins.  Co.,  1  Kerr,  N.  B.  279  (1841) ; 
We-stfall  v.  Hudson  River  F.  Ins.  Co.,  12  N.  Y.  289  (1855)  ; 
Bowman  v.  Pacific  Ins.  Co.,  27  Mo.  152  (1858); 
Cerf  V.  Home  Ins.  Co.,  44  Cal.  320  (1872)  ; 
Arkell  v.  Commerce  Ins.  Co.,  69  N.  Y.  191  (1877) ; 
State  Ins.  Co.  v.  Hughes,  10  Lea,  461,  467-469  (1882) ; 
Tischler  v.  California  Farmers'  Mut.  F.  Ins.  Co.,  66  Cal.  178  (1884)  ; 
'"      ■  Liverpool  &  London  Ins.  Co.  v.  Gunther,  116  U.  S.  113,  128-131  (1885) ; 

Frost's  Detroit  Lumber  and  Wooden- Ware  Works  v.  Millers'  and  Manufac- 
turers' :Mutual  Ins.  Co.,  37  Minn.  300  (1887) ; 
Snyder  v.  Dwelling-House  Ins.  Co.,  59  N.  J.  L.  544  (1896).  —  Ed. 


86 


546  MERRIAM    V.    MIDDLESEX   MUTUAL   FIRE    INS.   CO.       [CHAP.  VL 

SECTION  II.  (continued). 
(C)  Conditions  prohibiting  Increase  of  Hazard. 

MERRIAM  V.  MIDDLESEX  MUTUAL  FIRE  INSURANCE 

COMPANY. 

Supreme  Judicial  Court  of  Massachusetts,  1839.     21  Pick.  162. 

Assumpsit  upon  a  policy  of  insurance  against  fire,  to  recover  for  a 
loss  which  liappened  on  March  3,  1836.  Trial  before  Morton,  J. 
The  building  insured  was  in  Lowell.  It  was  a  block  of  wooden  houses, 
divided  into  two  parts  b}-  a  brick  wall,  running  east  and  west.  The 
fire  originated  in  the  southerly  part,  which  was  consumed  down  to  the 
ground  floor.     The  northerly  part  was  but  slightly  burnt. 

The  defendants  insisted  that  the  fire_BLa^_occasionedJbjlthe  gross 
careTessnesslind  negligence  of  tlie  plaintiff,  and  thatjie  had  alteredjiis 
building  after  effecting  insurance,  in  such  a  manner  as  to  make  it  more 
liazardous  in  regard  to  Sre,  alid  so  had  avoided  the  policy. 

There  was  evidence  tending  to  show,  that  after  the  insurance  had 
been  effected,  stoves  were  pnt  up  in  the  northerly  part  of  the  block; 
that  the  tenants  applied  to  the  plaintiff  to  put  up  stoves  in  their  rooms, 
but  that  he  refused,  saying  they  had  fireplaces,  and  if  the}'  wanted 
stoves,  they  must  procure  them  at  their  own  expense ;  and  that  the 
tenants  put  in  the  stoves  themselves  and  in  a  careless  and  unsafe 
manner. 

The  jury  were  instructed,  that  an  alteration  of  the  building,  after  in- 
surance, without  the  consent  of  the  insurers,  so  as  to  make  the  building 
more  exposed  to  fire,  would  render  the  policy  void  ;  but  that  the  altera- 
tion must  be  such  tliat  a  higher  rate  of  premium  would  be  demanded  to 
insure  the  building  in  tlie  altered  state  than  would  be  demanded  before 
such  alteration ;  otherwise  the  alteration  would  not  be  material. 

The  jury  found  a  verdict  for  the  defendants. 

The  plaintiff  moved  for  a  new  trial,  because  the  jury  were  misin- 
structed,  and  because  the  verdict  was  against  the  evidence  and  the 
weight  of  the  evidence. 

H.  H.  Fuller^  in  support  of  the  motion. 

Ilosmer  and  J.  Keyes^  for  the  defendants. 

Wilde,  J.,  delivered  the  opinion  of  the  court.  The  plaintiff  moves 
far  a  new  trial  for  a  supposed  misdirection  to  the  jury  in  matter  of  law, 
and  because  the  verdict  is  against  the  weight  of  the  evidence. 

The  defendants,  at  the  trial,  relied  on  several  grounds  of  defence, 
only  one  of  which,  however,  is  material  in  the  decision  of  the  present 
motion. 

Tlie  ground  on  which  the  jiu'y  found  their  verdict  was,  that  after  the 
plaintiff  liad  effected  the  insurance,  and  before  the  fire,  the  building  ia- 


SECT.  II.]  LOUD    V.    citizens'*  MUTUAL    INS.    CO.  547 

sured  had  been  altered  by  the  tenants  of  the  plaintiff,  and  with  his  con- 
sent, in  such  a  manner  as  to  expose  it  more  to  the  hazard  of  fire,  and 
that  thereb}'  the  polic}',  b\'  the  terras  of  it,  was  rendered  null  and  void. 
The  evidence  reported  has  a  tendency  to  show  that  such  an  alteration 
had  been  made  with  the  knowledge  and  the  permission  of  the  plaintiff, 
and  thereupon  the  jury  were  instructed,  that  if  they  should  be  satisfied 
that  any  such  alteration  had  been  so  made,  it  would  avoid  the  policv ; 
"  but  that  the  alteration  must  have  been  such  that  a  higher  rate  of  pre- 
mium would  have  been  demanded,  to  insure  the  building  in  its  altered 
state,  than  would  be  demanded  before  such  alteration  ;  otherwise  tlie 
alteration  would  not  be  material.'"  To  these  instructions  the  plaintiff's 
counsel  excepted,  and  they  contend  that  no  such  alteration  would  avoid 
the  policy,  unless  it  could  be  shown  that  the  loss  was  occasioned  by  tlie 
alteration.  In  support  of  this  exception,  the  case  of  Stebbins  v.  The 
Globe  Ins.  Co.,  2  Hall  (New  York),  632,  and  other  authorities,  are  re- 
lied on  ;  but  they  are  not  applicable,  as  the  terms  of  the  policies  in 
those  cases  and  the  present  materially  differ. 

This  policy  was  made  in  pursuance  of  §  13  of  the  defendants'  act  of 
incorporation  (St.  1825,  c.  141),  which  provides,  "  that  if  any  altera- 
tion should  be  made  in  any  house  or  building  by  the  proprietor  thereof, 
after  insin-ance  has  been  made  thereon  with  said  compan}-,  whereby  it 
may  be  exposed  to  greater  risk  or  hazard,  from  fire,  than  it  was  at  the 
time  it  was  insured,  ^hen.  in  every  such  case,  thpi  insnr.nnce  made  upon 
suclj^lioMSp.  or  building  shall  bp j\vjir^_rmlpss  an  additional  premium  and 
deposit,  after  such  alteration,  be  settled  with,  and  paid  to,  the  directors  ; 
but  no  alterations  or  repairs  in  buildings  not  increasing  such  risk  or 
hazard  shall  in  anywise  affect  the  insurance  previously  made  thereon." 

This  being  the  contract  between  the  parties  in  thi3j2articular.  there  can 
be  no  queMioL)  that  the  instnrctfonsTo  the  jurj-^wercperfectly  correct. 

In  respect  to  the  motion  to  set  aside  the  verdict,  as  one  against  the 
weight  of  the  evidence,  we  are  of  opinion  that  the  weight  of  the  evidence 
is  in  favor  of  the  verdict,  and  certainly  not  against  it.  The  most  that  can 
be  said  in  favor  of  the  motion  is,  that  the  evidence  was  in  some  respects 
conflicting,  and  upon  such  evidence  the  finding  of  the  jury  is  not  to  be 
disturbed.  Judgment  on  the  verdict} 


LOUD  AND  Another  v.  CITIZENS'  MUTUAL  INS.  CO. 

Supreme  Judicial  Court  of  Massachusetts,  1854.     2  Gray,  221. 

Action  of  contract  on  a  policy,  whereby  the  plaintiffs  were  insured, 
under  the  conditions  and  limitations  expressed  in  the  rules  and  regula- 
tions thereto  annexed,  $2,500  against  loss  or  damage  by  fire,  for  one 

1  Ace. :  Lyman  v.  State  Mut.  F.  Ins.  Co.,  14  Allen,  329  (1867).  —  Ed. 


548  LOUD   V.    CITIZENS*    MUTUAL   INS.    CO.  [CHAP.  VI. 

)-ear  from  the  18th  of  January,  1853,  on  lumber,  lime,  nails,  and  lead  in 
their  two  stores  on  their  wharf  at  Weymouth.  One  of  the  rules  and 
regulations  annexed  to  the  policy  was  this  :  •'  Art._10._Whenever  the 
circuuisLances  disclosed  in  any  application  shall  become  so  changed  u^ 
to  increase  the  risk,  the  policy  thereon  shall  be  void,  unless  the  insurecl 
make  a  new  and  full  representatkni-^tD  the  directors,  and  pay  such 
further  premium  and  deposit  as  tliey  shall  determine/^ 

The  plaintiffs,  in  their  application  for  insurance,  which  was  expressly 
made  a  part  of  the  policy,  represented  that  the  stores  were  used  for 
storing  lumber,  &c.,  and  that  one  room  in  one  of  them  was  used  as  a 
counting-room.  The  application  also  contained  the  following  question 
and  answer:  "  How  are  the  buildings  warmed,  and  how  are  the  stove- 
pipes secured?  jSTumber  of  stoves,  if  any?"  Answer.  "Counting- 
room  warmed  with  coal  stove.  One  stove,  j'unnel  and  stove  well 
secured,.     No  lights  used  in  the  building,  evenings." 

The  question  of  the  liability  of  the  defendants  was  submitted  to  the 
court  upon  the  following  facts:  On  the  17th  of  September,  1853,  the 
schooner  "  Statira,"  having  on  board  a  cargo  of  lumber  of  the  plaintiffs, 
when  near  their  wharf,  got  aground  and  filled.  The  beds  and  bedding 
on  board,  having  been  brought  on  deck,  and  being  wet  with  the  rain, 
were,  by  the  plaintiffs'  permission,  removed  into  the  store  in  which  the 
counting-room  was.  The  vessel  was  then  lightened,  hauled  into  the 
wharf,  and  r?iade  fast.  About  midnight,  one  of  the  plaintiffs,  at 
the  request  of  the  captain  and  crew,  gave  them  permission  to  sleep  in 
the  counting-room,  but  told  them  that  they  should  not  make  or  use 
an}'  fire  or  light,  or  even  smoke.  There  was  a  stove  in  the  counting- 
room,  the  funnel  of  which  passed  through  the  loft  overhead,  used  for 
storing  lumber,  but  was  not  then  in  a  safe  condition.  The  captain 
and  crew,  being  wet  and  cold,  disregarded  the  prohibition  of  the 
plaintiffs,  and  made  a  fire  in  the  stove,  which,  in  consequence  of  the 
defect  in  the  funnel,  quickly  communicated  to  the  building  and  lumber 
al)ove,  and  so  destroyed  the  property  insured. 

e/".  tjr.  Clarke,  for  the  plaintiffs. 

T.  S.  Harloio,  for  the  defendants. 

Metcalf,  J.  The  representation  made  hy  the  plaintiffs  in  their 
application  for  insurance  was,  that  the  counting-room  was  warmed 
with  coal  by  one  stove,  and  that  the  funnel  and  stove  were  wx^ll  secured. 
And  there  is  nothing  in  the  case  to  show  that  this  was  not  a  true  repre- 
sentation when  it  was  made.  At  tlie  time  of  the  fire,  however,  that 
part  of  the  funnel  which  was  in  the  loft  over  the  counting-room  was 
not  in  a  safe  condition.  And  the  first  question  is  whether,  upon  the 
facts  of  the  case,  the  unsafe  condition  of  the  funnel,  at  that  time, 
avoided  the  policy. 

It  is  contended  bv  the  defendants,  that  as  the  funnel  of  the  stove 
was  not  in  a  safe  condition  when  the  loss  happened,  the  circumstances 
disclosed  in  the  plaintiffs'  application  were  so  changed  as  to  avoid  tlie 
policy,  under  the  tenth  of  the  rules  and  regulations  annexed  thereto. 


SECT.  II.]  LOUD    V.   citizens'    MUTUAL   INS.    CO.  549 

This  might  be  so,  if  the  plaintiffs  had  continued  to  warm  the  counting- 
room  by  fire  in  the  stove.  But  if  the}-  used  no  fire  in  the  stove,  the 
risk  was  not  increased  by  the  insecurity  of  the  funnel,  nor  even  by  its 
being  wholly  detached  from  the  stove.  It  is  a  common  practice  to 
remove  a  funnel  from  its  connection  with  a  stove,  during  the  months 
when  a  fire  is  unnecessary  and  would  be  oppressive.  And  this  does 
not,  of  itself,  enhance  the  risk  assumed  by  underwriters  on  the  contents 
of  the  building.  It  is  the  use  of  fire  in  a  stove,  and  that  alone,  which 
makes  it  necessary  that  the  stove  and  funnel  should  be  well  secured. 
Aud  the  representation  that  the  counting-room  was  warmed  by  a  stove 
and  funnel  thus  secured,  must  be  understood  to  mean,  that  when  it 
was  warmed  at  all,  it  was  thus  warmed  ;  and  not  that  the  stove  and 
funnel  were  well  secured  during  the  summer  season,  when  there  was 
no  occasion  to  warm  the  room. 

It  does  not  appear,  from  the  papers  in  the  case,  how"  the  funnel  of 
the  stove  came  into  an  unsafe  condition.  But  it  was  orallj-  agreed,  at 
the  argument,  that  the  part  of  the  funnel  which  was  in  the  loft  over 
the  counting-room  obstructed  the  free  passage  of  persons  about  the 
loft,  and  was  taken  down  in  May  or  June  ;  and  that  the  plaintiffs  never 
afterwards  made  a  fire  in  the  stove. 

If  the  plaintiffs  had  used  the  stove  on  the  night  of  the  fire,  or  had  au- 
thorized the  use  of  it  which  was  then  made  by  the  crew  of  the  "  Statira," 
the  defendants  would  not  have  been  liable  for  the  loss.  But  the  plain- 
tiffs did  not  authorize  the  use  of  fire  in  the  stove.  On  the  contrary, 
the}'  forbade  the  use  of  fire  in  the  room,  in  any  wa}'.  The  violation  of 
that  injunction,  by  the  seamen,  does  not  furnish  a  defence  against  the 
plaintiffs'  claim.  It  was  a  wrongful  act  of  third  persons,  for  the  con- 
sequences of  which  the  defendants  are  liable,  in  the  same  manner  and 
to  the  same  extent  as  if  those  persons  had  unlawfully  broken  into  the 
counting-room  and  burned  the  building  by  kindling  a  fire  on  the  floor. 
The  plaintiffs  were  under  no  obligation,  legal  or  moral,  to  keep  their 
stove  secure  against  fire  that  might  be  kindled  in  it  by  trespassers  and 
burglars,  nor  against  forbidden  acts  of  persons,  "  wet  and  cold,"  whom 
they  admitted  to  the  room  as  a  shelter.  Nor  did  this  act  of  humanity 
of  itself  avoid  the  policy.  Though  the  building  was  represented  as 
occupied  for  storing  lumber,  and  having  a  counting-room  in  it,  yet  the 
use  of  the  counting-room  for  a  single  night,  as  a  resting  place  for 
strangers,  was  not  such  a  change  of  use  as  exempts  the  defendants 
from  their  liability  to  pay  the  loss  sustained  by  the  plaintiffs.  See 
Boardman  v.  Merrimack  Mutual  Fire  Ins.  Co.,  8  Cush.  585;  Dobson 
V.  Sotheby,  Mood.  &  Malk.  90  ;  Shaw  v.  Robberds,  1  Nev.  &  P.  279, 
and  6  Ad.  &  El.  75  ;  Barrett  v.  Jermy,  3  Exchequer  Reports,  545. 
[Hynds  v.  Schenectady  County  Mutual  Ins.  Co.,  1  Kernan,  554.] 

Judgment  for  the  plaintiffs} 

1  See  Breuner  v.  L.  L.  &  G.  Ins.  Co.,  51  Cal.  101  (1875).  —  Ed. 


550  TOWNSEND   V.   NORTHWESTERN   INS.    CO.  [CHAP.  VL 


TOWNSEND  ET  AL.   V.   NORTHWESTERN  INSURANCE 
COMPANY. 

Court  of  Appeals  of  New  York,  1858.     18  N.  Y.  168. 

Appeal  from  the  Supreme  Court. 

The  action  was  upon  a  policy  of  insurance  against  fire  on  a  cotton 
factory  and  its  machinerj'.  Upon  the  trial  before  Brown,  J.,  and  a 
jury,  a  defence  was  that  there  had  been  an  increase  of  hazard  in  de- 
fiance of  a  condition  in  the  policy.  The  judge  having  refused  to  direct 
a  nonsuit  and  having  given  a  charge  to  which  the  defendant  company 
excepted,  the  plaintitfs  had  a  verdict  and  judgment,  which  having  been 
affirmed  at  general  term,  the  defendant  appealed.  Further  facts  appear 
in  the  opinion.^ 

Scmiuel  Beardsleij,  for  the  appellant. 

M  L.  Fancher,  for  the  respondents. 

Harris,  J.^  .  .  .  It  was  made  a  condition  in  the  contract  of  in- 
surance that  if  after  insurance  effected  thel-isk  shouIcTbelncreased,  by 
any  means  wbatever~withiu  the  control  of  jhej.ssnrpfT7ffrshnnTd  T-P.irlpr 
the  insurance  void.  Tlie  plaintiffs  bad  represented  that  there  was  a 
good  forcinjg^ump^esigned  exi)ressiylbr~protectioh  against_gres,  and 
at  all  times  in  condition  for  use. 

It  appeared  upon  the  trial  that  the  bulkhead,  at  the  pond  which 
supplied  the  factory  with  water,  which  was  of  wood,  being  out  of  re- 
pair, was  taken  down,  and  a  new  bulkhead,  constructed  of  stone 
masonry,  was  substituted  in  its  place.  While  this  was  being  done,  the 
water  was  turned  off  and  the  pump  rendered  useless.  It  was  insisted 
by  the  defendants'  counsel  that,  by  making  this  change,  the  plaintiffs 
had  materially  increased  the  risk,  and  thus  rendered  the  insurance  void. 
Upon  this  ground,  also,  the  court  was  asked  to  nonsuit  the  plaintiffs. 
The  nonsuit  was  refused,  and,  upon  this  point,  the  court  charged  the 
jury  that  the  defendants  had  assumed  the  risk  of  making  ordinary  and 
necessary  repairs  ;  and  if,  in  making  such  repairs,  the  supi)ly  of  water 
had  been  necessarily  interrupted,  and  there  had  been  no  unreasonable 
delay  in  making  the  repairs,  the  interruption  would  not  avoid  the 
policy ;  but  if,  on  the  other  hand,  the  supply  of  water  had  been  un- 
necessarily interrupted,  and  the  risk  thus  increased,  the  plaintiffs  could 
not  recover.  To  this  part  of  the  cliarge,  and  to  this  only,  the  defend- 
ants excepted.  It  was  said  upon  the  argument,  and  periiaps  with 
truth,  that  "  the  upshot  of  this  charge  was,  that  the  plaintiffs  had  a 
right,  if  the  old  bulkhead  was  ruinous,  to  remove  it  and  build  a  new 
one  of  stone,  although  the  pump  was  thereby  totally  disabled  and  the 
risk  of  fire  increased." 

1  The  reporter's  statement  has  not  been  reprinted.  — Ed. 

2  A  passage  as  to  misrepresentation  has  been  omitted.  —  Ed. 


SECT.  II.]  TOWXSEND    V.    NORTHWESTERN   INS.    CO.  551 

This  doctrine  I  understand  to  have  been  distinctly  asserted  by  this 
court  in  this  very  case,  when  before  it  upon  a  former  occasion. 

[The  learned  judge  here  quoted  from  tlie  opinion  then  delivered  b}' 
Johnson,  (now)  C.  J.,  which  is  hereinafter  given  at  large,^  and  then 
continued  :  — ] 

There  can  be_no  doubt^j_thiDk,  that  where  there  is  no  express  pro- 
vision  in  the  contract  involving  a  relinquishment  ofthe  right  to  [^cy- 
form  the  ordiiiarylicitr^T  ownership  which  are  usually  exercised  in' 
owners  oveftbeir  own  property,  or  restricting  the  party  insured  as  to 
Avhat  he  may^lo  uponTiis  ow'tTproperty,  he  is  authorizecLwittiout  vacar, 
ting  his  policy,  to  make  any  repairs  which  may  be  required  to  render 
the'gremisesjaseful  for  the  purposes  to  which  they  are  devoted.  It  is 
noFto  be  presumed,  in  the  absence  of  any  express  agreement  on  the 
subject,  that  wlien  he  effects  an  insurance  on  his  building  the  owner 
deprives  himself  ofthe  right  to  use  it  in  the  common  and  ordinary  mode, 
including  the  right  to  make  all  proper  and  reasonable  repairs. 

But  it  was  insisted,  on  the  trial,  that  the  removal  of  the  old  bulkhead 
and  the  substitution  of  a  stone  structure  in  its  place  was  an  alteration 
and  not  a  mere  repair.  The  court  was  accordingly  requested  to  charge 
the  jury  that,  if  an  entirely  new  bulkhead  was  constructed  in  place  of 
the  old  one  torn  down,  of  different  materials  and  in  different  form,  de- 
signed as  an  improvement  upon  the  old  one,  then  it  was  not  a  case  of 

1  The  opinion  delivered  by  Johnson,  C  J.,  at  the  earlier  stage  of  the  case  has  not 
been  fully  reprinted  herein ;  but  the  most  important  passages  were  these  :  — 

"  In  order  to  sav  wlietlier  tlie  risk  has  been  increased,  it  is  necessary  to  inquire,  in 
the  first  place,  what  risk  was  originally  assumed.  In  other  words,  upon  the  insurance 
of  a  building,  is  not  the  risk  incident  to  the  process  of  necessary  repairs  a  part  of  the 
general  risk  assumed  by  the  insurers,  in  the  absence,  of  course,  of  any  stipulation  in 
the  contract  importing  the  contrary  ? 

"  AVhen  a  building  is  insured,  it  is,  of  course,  understood  that  it  is  to  be  used  in  the 
ordinary  way  of  using  similar  buildings,  and  no  one  expects  tliat  it  is  to  be  set  apart 
and  wholly  devoted  to  being  kept  safely.  One  of  the  ordinary  incidents  to  this  usual 
occupation  is  that  of  making  repairs.  The  general  right  to  make  these  has  never  been 
doubted,  when  the  policy  contained  no  special  provision  upon  the  subject.  It  ha.s 
never  been  supposed  that,  to  a  claim  for  a  loss  happening  in  the  course  of  or  by  means 
of  necessary  repairs,  tlie  insurer  could  say,  the  risk  by  which  that  loss  was  occasioned 
was  not  within  the  terms  of  my  contract.  In  all  the  cases  I  have  met  with,  where  the 
subject  is  spoken  of,  the  right  to  make  such  repairs  is  assumed  to  be  clear,  and  no- 
where is  it  denied,  unless  upon  the  ground  of  some  special  stipulation  to  the  contrary. 
Stetson  V.  Massachusetts  Mutual  Fire  Insurance  Co.,  4  Mass.  330 ;  Jolly  v.  Baltimore 
Equitable  Insurance  Co.,  1  Harr.  &  Gill,  295  ;  Dobson  v.  Sotheby,  1  Mood.  &  Malk. 
90;  Grant  v.  Howard  Insurance  Co.,  5  Hill,  10  ;  Jennings  v.  Chenango  Mutual  Insur- 
ance Co.,  2  Denio,  7.5;  O'Neil  v.  Buffalo  Fire  Insurance  Co.,  3  Comst.  122,  all  illus- 
trate this  position.  It  is  quite  true  that  while  such  repairs  are  being  made  there  may 
be  a  greater  exposure  to  loss  by  fire,  as  may  be  also  the  case  when  fires  are  re- 
quired in  the  winter  for  the  comfort  of  the  occupants.  Such  exposure,  however,  is 
part  of  the  proper  risk  insured  against.  It  is  a  hazard  which  the  subject  insured  un- 
dergoes in  the  course  of  ordinary  occupation,  and  which,  therefore,  cannot  be  deemed 
an  increase  of  risk,  within  the  condition  set  up  by  the  defendants  as  avoiding  their 
contract. 

"  In  my  own  opinion,  the  language  of  tlie  condition  is  not  such  as  to  permit  its 
application  to  the  hazard  occasioned  by  making  ordinary  repairs."  —  Ed. 


552  TOWNSEND   V.   NOKTHWESTERN   INS.   CO.  [cHAP.  VI 

ordinaiy  repairs.  In  the  lefusal  so  to  charge  there  was  no  error.  The 
substitution  of  a  new  bulkhead  for  one  that  had  become  useless  by  de- 
ca}'  was  certainly  a  repair,  and  not  the  less  so  because,  in  making  the 
repair,  the  owner  thought  fit  to  make  use  of  a  more  durable  material 
than  had  at  first  been  employed. 

All  that  the  court  refused  to  do  was  to  charge,  as  matter  of  law,  that 
the  substitution  of  a  new  bulkhead  for  an  old  one  was  not  a  case  of 
ordinary  repair.  At  the  most,  it  could  only  have  been  required  to 
submit  the  question  to  the  jury ;  and  this  in  fact  was  done,  for,  without 
deciding  whether  the  new  bulkhead  was  to  be  regarded  as  a  repair  or 
an  alteration,  the  court  instructed  the  jury  that,  if  by  any  means  what- 
soever within  the  control  of  the  assured,  except  in  regard  to  reasonable 
and  necessary  repairs,  any  change  had  been  made  in  the  condition  of 
the  building  or  the  machinery  therein,  or  in  the  apparatus  for  the  ex- 
tinguishment of  fires,  whereby  the  risk  had  been  increased,  the  insur- 
ance was  void.  This  was  certainly  enough.  The  jury  were  left, 
without  restriction,  to  inquire  whether  anything  had  been  done,  beyond 
the  making  of  reasonable  and  necessary  repairs,  whereby  the  defendants' 
risk  had  been  increased,  with  the  instruction  that,  if  the  result  of  this 
inquiiy  should  be  in  favor  of  the  defendants,  they  were  entitled  to  a 
verdict.  This  was  all  that  the  defendants  had  a  right  to  claim.  The 
judgment  should  be  affirmed. 

Selden,  J.,  expressed  no  opinion  ;  all  the  other  judges  concurring. 

Judgment  affirmed.^ 

1  See  Houghton  v.  Manufacturers'  Mutual  F.  Ins.  Co.,  8  Met.  114,  121-122  (1844) ; 
Lymau  v.  State  Mut.  F.  Ins.  Co.,  14  Allen,  329  (1867);  Frost's* Detroit  Lumber  and 
Wooden-Ware  Works  v.  Millers'  and  Manufacturers'  Mutual  Ins.  Co.,  37  Minn.  300 
(1887) ;  Mack  v.  Rochester  German  Ins.  Co.,  106  N.  Y.  560  (1887). 

lu  First  Congregational  Church  v.  Holyoke  Mut.  F.  Ins.  Co.,  158  Mass.  478  (1893), 
Knuwltox,  .J  ,  for  the  court,  said  :  — 

"  The  policies  sued  on  in  these  six  cases  are  all  alike  in  containing  provisions  which 
are  relied  on  in  defence,  and  which  are  as  follows :  '  This  policy  sliall  be  void  if  .  .  . 
witliout  the  assent  in  writing  or  in  print  of  tlie  company  .  .  .  the  situation  or  circum- 
stances affecting  the  risk  sliall  ...  be  so  altered  as  to  cause  an  increase  of  such  risk  ; 
or  if  campliene,  benzine,  naphtha,  or  other  chemical  oils  or  burning  fluids  shall  be 
kept  or  used  l)y  the  insured  on  the  premises  insured.'  .  .  .  The  property  insured  was 
a  ciiurch  edifice,  built  of  wood,  not  clapboarded,  but  sheathed  horizontally  with 
grooved  and  tongued  sheatliing,  closely  matched  together,  and  painted  and  sanded  on 
the  outside.  The  paint  had  peeled  and  curled,  and  at  the  time  of  the  fire  the  plaintiff 
was  repainting  the  building.  .  .  .  One  Gilson,  a  painter,  .  .  .  was  to  burn  off  the  old 
paint  with  a  torch,  or  some  such  implement,  preparatory  to  repainting.  He  procured 
for  the  purpose  a  naphtha  torch,  so  made  as  to  hold  a  ([uart  or  more  of  naphtha,  with 
a  handle  at  one  side  of  the  receptacle,  and  a  tube  extending  out  on  tlie  opposite  side 
tiirough  which  a  flame  could  bo  emitted,  produced  by  the  gas  from  the  naphtha  and 
com])ressed  air.  .  .  .  Wiien  the  work  had  been  going  on  about  four  weeks,  the  torch 
.  .  .  having  been  used  daily,  .  .  .  the  building  caught  fire  on  the  edge  of  a  board 
where  there  was  a  crack  ami  where  the  torch  had  just  been  used,  and  was  entirely 
consumed.  This  was  on  the  16th  day  of  July,  1890,  and  there  was  evidence  that  the 
weather  was  hot  and  that  the  l)oards  were  very  dry.  There  was  also  evidence  that,  as 
a  ])rotecti(jn  against  fire,  a  i)ail  of  watec  was  kept  on  hand  while  the  work  was  going 
ou.     Tlie  evidence  tended  stronglv  to  show  that  the  danger  of  a  conflagration  was 


SECT.  IL]  TOWNSEND   V.   NORTHWESTERN   INS.    CO.  553 

greatly  increased  by  the  use  of  the  naphtha  torch  on  the  dry,  inflammable,  soft  pine 
boards,  with  their  shrunken  joints.  .  .  . 

"  Was  a  change  of  this  kind  increasing  the  risk  ...  an  alteration  of  'the  situation 
or  circ-unistauces  affecting  the  risk,'  within  tlie  meaning  of  those  words  in  the  policies  ? 
Those  words  imply  soinethiug  of  duration,  and  a  casual  cliange  of  a  temporary  char- 
acter would  not  ordinarily  render  the  policy  void  under  this  provision.  .  .  .  We  are  of 
opinion  that  the  change  of  the  condition  was  sufficiently  long  continued  to  be  deemed 
a  change  in  '  the  situation  or  circumstances  affecting  the  risk.'  .  .  . 

"  We  find  no  evidence  that  naphtlia  was  kept  on  the  premises.  The  word  '  kept,* 
as  used  in  the  policy,  implies  a  use  of  tiie  premises  as  a  place  of  deposit  for  the  pro- 
hibited articles  for  a  considerable  period  of  time.  .  .  . 

"  For  nearly  four  weeks  napiitha  was  used  within  a  few  inches  of  the  outer  wall 
...  to  produce  the  flame  which  was  brought  in  contact  with  the  building.  It  would 
be  a  narrow  and  unreasonal)le  construction  of  the  policies  in  reference  to  the  purposes 
for  wliich  the  words  were  inserted  to  say  that  the  use  of  naphtha  was  not  '  on  the 
premises  '  because  while  in  liquid  form  it  was  a  few  inches  outside  of  the  wall,  when 
it  was  made  to  produce  an  effect  directly  on  the  premises  by  burning  it  in  the  form  of 
gas  and  directing  it  against  the  building.  .  .  . 

"  The  only  ground  on  which  the  plaintiff  could  fairly  ask  to  present  a  question  to 
the  jury  is  upon  its  contention  that  the  use  of  the  naphtha  and  the  change  in  condi- 
tions affecting  the  risk  occuired  tlirongh  making  ordinary  repairs  in  a  reasonable  and 
proper  way,  and  that  in  the  provisions  quoted  from  the  policies  there  is  an  implied 
e.xception  of  what  is  done  in  making  ordinary  repairs.  .  .  .  Both  parties  to  a  contract 
for  insurance  must  be  presumed  to  expect  that  the  property  will  be  preserved  and 
kept  in  a  proper  condition  by  making  repairs  upon  it.  Policies  on  buildings  are  often 
issued  for  a  term  of  five  years  or  more.  The  making  of  ordinary  repairs  in  a  reason- 
able way  may  sometimes  increase  the  risk  more  or  less  while  the  work  is  going  on,  or 
involve  the  use  of  an  article  whose  use  in  a  business  carried  on  in  the  building  is  pro- 
hibited by  tiie  policy.  In  the  absence  of  an  ex])ress  stipulation  to  that  effect,  a  con- 
tract of  insurance  should  not  be  held  to  forbid  the  making  of  ordinary  repairs  in  a 
reasonably  safe  way,  and  provisions  like  these  we  are  considering  should  not  be 
deemed  to  apply  to  an  increase  of  risk  or  to  a  use  of  an  article  necessary  for  the 
preservation  of  the  property.  We  are  therefore  of  opinion,  that  if  the  use  of  naphtha 
at  the  time  and  in  the  manner  in  which  it  was  used  was  reasonable  and  proper  in  the 
repair  of  the  building,  having  reference  to  the  danger  of  fire  as  well  as  to  other  con- 
siderations, it  would  not  render  the  policies  void.  But  the  questions  submitted  to  the 
jury  on  the  answers  to  which  verdicts  were  ordered  for  the  plaintiff  did  not  sufficiently 
present  the  matters  of  fact  in  issue.  The  only  question  bearing  on  the  most  vital 
part  of  the  issue  was  as  follows :  "  Was  the  method  used  the  metliod  ordinarily  pur- 
sued to  remove  the  paint  on  the  outside  of  a  building  preparatory  to  scraping  it  off 
to  repaint  it  ?  "  The  order  of  verdicts  for  the  plaintiff  on  an  affirmative  answer  to 
this  question  assumed  tliat  the  removal  of  the  paint  from  this  building  was  reasonably 
necessary  to  the  repair  of  the  building.  It  also  assumed  that  this  building,  in  refer- 
ence to  the  danger  from  moving  the  flaming  torch  all  over  its  external  surface,  was 
like  ordinary  buildings.  Many  buildings  are  built  of  brick,  and  painted  on  the  outer 
walls.  Many  others  are  clapboarded  in  such  a  way  as  to  make  a  very  close,  tight 
covering.  If  this  is  the  method  ordinarily  pursued  when  paint  is  to  be  removed  from 
tlie  outside  of  a  building,  it  does  not  follow  that  it  is  ordinarily  pursued  when  the 
building  is  covered  with  soft  pine  sheathing,  tongued  antl  grooved  and  put  on  hori- 
zontally, and  when,  at  the  time  of  doing  the  work,  the  weather  is  very  hot  and  dry, 
and  the  boards  shrunken  so  that  in  some  places  there  are  cracks. 

"Gilson  testified  that,  although  he  had  been  a  house  painter  in  Eocklaud  twenty- 
five  years,  he  had  never  burned  off  paint  from  the  outside  of  a  building  before.  The 
architect  who  was  consulted  by  the  plaintiff  in  regard  to  repairs  advised  removing  the 
old  paint  by  the  application  of  a  paint  remover,  which  was  a  preparation  to  be  applied 
by  a  brush  or  a  sponge.  The  use  of  naphtha  and  the  increase  of  risk  by  an  alteration 
of  the  circumstances  affecting  it  were  permitted  under  the  implied  exception  only 
when  reasonably  required  for  the  making  of  repairs.     If  it  was  unreasonable  to  use 


554  KYTE   V.    COMMERCIAL   UNION    ASSURANCE    CO.        [CHAP.  VL 

KYTE  V.  COMMERCIAL   UNION   ASSURANCE   COMPANY. 
Supreme  Judicial  Court  of  Massachusetts,  1889.    149  Mass.  116.^ 

Contract  upon  two  policies  of  insurance,  one  upon  a  dwelling-liouse 
and  the  other  upon  a  barn,  in  the  form  prescribed  by  the  Pub.  Sts.  c. 
119,  §  139  (St.  1887,  c.  214,  §  60),  against  loss  by  fire,  eacli  for  three 
years,  from  Januaiy  24,  1881,  and  April  2,  1881,  respectively. 

Trial,  before  Blodgett,  J.,  in  the  Superior  Court,  Suffolk  Count}-, 
after  the  former  decision,  reported  in  144  Mass.  43. 

The  jur}-  returned  a  verdict  for  the  plaintiff ;  and  the  defendant  al- 
leged exceptions,  as  indicated  in  the  opinion. 

-C.  13.  Poioers  and  S.  L.  Poioers,  for  the  defendant. 

C.  Q.  Tlrrell,  for  the  plaintiff. 

C.  Allen,  J.  These  policies  were  in  the  form  of  the  Massachusetts 
Standard  Policy,  and  each  provided  that  "  this  policy  shall  be  void 
...  if,  without  such  assent  [namely,  the  assent  in  writing  or  in  print 
of  the  company],  the  situation  or  circumstances  affecting  the  risk  shall, 
by  or  with  the  knowledge,  advice,  agency,  or  consent  of  the  insured,  be 
so  altered  as  to  cause  an  increase  of  such  risks,  ...  or  if  gunpowder 
or  other  articles  sul^ject  to  legal  restriction  shall  be  kept  in  quantities 
or  manner  different  from  those  allowed  or  prescribed  by  law."  Various 
other  circuuistances  were  enumerated  which  would  also  avoid  the  policy. 
At  the  beginning  of  the  trial,  the  defendant  waived  every  defence  ex- 
cept increase  of  risk.  The  defence  of  the  illegal  keeping  of  intoxicat- 
ing liquors,  as  a  separate,  and  distinct  defence,  was  therefore  waived. 

We  have  to  consider,  in  the  first  place,  whether  the  instructions  re- 
quested by  the  defendant  were  given  in  substance.  The  plaintiff  con- 
tends that  they  were.  The  learned  judge  before  whom  the  case  was 
tried  adopted  in  substance  the  third  and  fifth  instructions  asked  for  by 
the  defendant,  and  thus  instructed  the  jury,  that  if  they  should  find 
that  during  the  time  for  which  these  policies  were  issued  the  plaintiff 
Kyte,  by  obtaining  a  common  victualler's  license  and  making  use  of 
this  building  under  said  license,  and  legally  or  illegally  selling  intoxi- 
cating liquors  therein,  increased  the  risk,  then  this  policy  became  void  as 
to  the  plaintiff  Kyte,  and  he  could  not  recover  for  his  interest  therein  ; 
and  if  the}-  should  find  that  while  these  policies  were  in  force  intoxicat- 
ing liquors  were  kept  and  sold  in  this  building  by  the  plaintiff  Kyte,  or 
with  his  consent  or  knowledge,  and  that  thereb}^  the  risk  was  increased, 

naphtha  under  the  circumstances,  at  the  time  and  in  the  manner  disclosed  by  the  evi- 
dence, the  use  was  not  within  tlie  exception,  and  the  jralicies  liecame  void.  The  ques- 
tion for  the  jury  was  whether  the  defendants,  if  familiar  with  the  condition  of  the 
building  and  the  methods  usually  adopted  in  making  repairs,  should  have  contemplated 
when  tliey  issued  tlie  policies  that  the  j)laintiff  corporation  would  burn  off  the  paint 
at  such  a  time  and  in  such  a  way  as  it  did.  Was  such  a  use  of  naphtha  a  reasonably 
safe  and  proper  way  of  making  repairs  on  this  building  under  the  circumstances?  The 
questions  submitted  to  the  jury  were  not  equivalent  to  these."  —  Ed. 
1  The  reporter's  .statement  has  been  omitted.  —  Ed. 


SECT.  II.]      KYTE    V.    COMMERCIAL   UNION   ASSURANCE   CO.  555 

this  policy  became  void  as  to  his  interest,  and  he  could  not  recover. 
This  was  a  general  and  broad  instruction,  including  the  increase  of  risk 
by  using  the  premises  as  a  common  victualling  place,  or  as  a  place  for 
selling  intoxicating  liquors  legally  or  illegally,  and  well  covered  the  gen- 
eral question  of  the  etiect  of  an  increase  of  risk.  From  this  instruction, 
taken  alone,  a  jury  might  well  have  inferred  that  the  policy  would  be 
void  in  case  of  any  such  increase  of  risk  at  any  time  during  the  time 
covered  by  the  policies  and  before  the  fire. 

But  the  defendant,  in  the  fourth  request  for  instructions,  asked  for  a 
special  instruction,  adapted  to  the  case  of  a  temporary  increase  of  risk 
which  had  ceased  before  the  time  of  the  fire ;  that  is  to  say,  that  if  the 
jury  should  find  that,  by  the  illegal  sale  of  intoxicating  liquors  in  this 
building  by  the  plaintiff  Kyte,  or  by  others  with  his  consent  and  knowl- 
edge, for  a  certain  portion  of  the  time  for  which  these  policies  were 
issued,  the  risk  was  for  that  period  increased,  this  policy  would  be  void 
as  to  Kyte's  interest,  and  he  could  not  recover,  although  this  increase 
was  not  permanent.  The  judge  declined  to  give  this  ruling,  and  in- 
structed tlie  jury,  in  substance,  that  if  that  illegal  use  was  temporary, 
not  contemplated  at  the  time  when  the  policy  was  taken  by  the  plain- 
tiff, and  ceased  before  the  fire,  then  the  fact  that  he  had  made  an  illegal 
use  of  the  premises  in  1882,  which  was  during  the  time  covered  by 
the  policy,  would  not  deprive  the  plaintitf  of  the  right  to  maintain  the 
action  ;  and  that  his  right  under  the  policy,  if  suspended  while  the 
illegal  use  of  the  building  continued,  would  revive  when  he  ceased  to 
use^it  illegally.  This  instruction  did  not  in  express  terms  mention  the 
sul)ject  of  an  increase  of  risk  by  the  illegal  use  of  the  premises  for  sell- 
ing liquor  ;  but  the  instruction  was  given  in  place  of  the  fourth  request 
for  instructions,  and  that  request  was  refused,  the  judge  saying  that  he 
had  given  what  would  be  entirely  inconsistent  with  it. 

Thequestion  is  thus  presented  whether  the  provision  of  the  policy 
that  it  shall  be  void  in  case  of  an  increase  of  risk  means  that  it  shall  be 
voTcT  only  during  theTTmewhiic  theincrease  of  risk  may  last,  and  nTay 
"fievive  aganrupon  the  termination  of  the  increase  of  risk.  The  pro- 
vision^Ts'tharthe  policy  shall  be  void  if  any  one  of  several  circum- 
stances successively  enumerated  shall  be  found  to  exist.  Some  of  these 
circumstances  relate  to  the  time  of  issuing  the  policy,  and  others  could 
not  arise  till  afterwards.  They  are  of  different  degrees  of  importance, 
some  of  them  going  to  the  essential  matters  of  the  contract,  and  others 
being  comparatively  trivial  in  character.  The  language  of  the  policy 
is  tiie  same  in  respect  to  them  all,  that  the  policy  shall  be  void. 

In  Hinckley  v.  Germania  Ins.  Co.,  140  Mass.  38,  the  policy  was  in 
the  same  form  as  those  in  the  present  cases,  and  for  a  short  time 
during  the  term  of  the  policy  the  plaintiff  kept  a  bowling  alley  and  bil- 
liard table  without  having  any  license  therefor.  There  was  no  question 
of  increase  of  risk,  or  other  actual  prejudice  to  the  insurer  ;  and  under 
these  circumstances  two  questions  arose  :  first,  whether  the  plaintiff's 
act  fell  within  the  provision  that  the  policy  should  be  void  if  gunpowder 


556  KYTE   V.    COMMEKCIAL   UNION   ASSURANCE   CO.        [CHAP.  VI. 

or  other  articles  subject  to  legal  restriction  should  be  kept  in  a  manner 
different  from  that  allowed  by  law ;  and  secondly,  whether,  assuming 
that  the  policy  would  be  void  during  the  time  of  the  illegal  keeping  of 
the  bowling  alley  and  billiard  table,  it  would  revive  after  such  tempo- 
rary' use  had  ceased.  In  deciding  the  case,  the  court  intimated  that 
the  plaintiffs  act  was  not  within  the  meaning  of  the  provision  in  the 
policy',  unless  the  risk  was  thereby  increased,  but  placed  the  decision 
upon  the  second  ground,  that  the  policy  would  revive.  The  court  now 
thinks  it  would  have  been  better  to  place  the  decision  of  this  part  of 
the  case  solel}'  upon  the  first  ground,  leaving  it  an  open  question 
whether  a  departure  from  the  terms  of  the  provision  of  the  polic}',  with- 
out an  increase  of  risk,  may  be  deemed  merely  to  suspend,  and  not 
absolutely  to  avoid  the  polic}'.  However  that  ma}-  be,  we  think  an  in- 
crease of  risk  entitles  the  insurer  to  avoid  the  policy  absolutely.  The 
contract  of  insurance  depends  essentially  upon  an  adjustment  of  the 
premium  to  the  risk  assumed.  If  the  assured  by  his  voluntary  act  in- 
creases the  risk,  and  the  fact  is  not  known,  the  result  is  that  he  gets 
an  insurance  for  which  he  has  not  paid.  In  its  effect  upon  the  com- 
pany, it  is  not  much  different  from  a  misrepresentation  of  the  condition 
of  the  property. 

If  tlie  provision  stood  alone,  that  in  case  of  any  material  misrepre- 
sentation as  to  the  risk  or  an}'  voluntary  increase  of  risk  afterwards  the 
policy  should  be  void,  it  could  hardly  be  doubted  that  the  words  should 
be  taken  in  their  natural,  obvious  meaning.  The  fact  that  with  this 
are  coupled  the  other  provisions  above  referred  to  does  not  change  its 
meaning  with  reference  to  the  effect  and  consequence  of  an  increase  of 
risk.  An  increase  of  risk  which  is  substantial,  and  which  is  continued 
for  a  considerable  period  of  time,  is  a  direct  and  certain  injur}'  to  the 
insurer,  and  changes  the  basis  upon  which  the  contract  of  insurance 
rests  ;  and  since  there  is  a  provision  t,h.akJn_casfi_of  an  increase  of  risk 
which  is  consented  to  orknown  bv  the  assured,  and  not  disclosed  and 
tlie"asseni  of  ihe  insurer~obtained,  the  policy  shaH  bp  void,  wp  do  "^_t 
feel  at  liberty  lo  qu al i fy  thc_meaning  ^^  thpgia_y^vfio  i^j  h'-^Ming  that 
tIie~i)oTrcy  is  onlj  suspended  durin_g  the  continuance^of  such  increase  of 
risk.  Lyman  v.  State  Ins.  Co.,  14  Allen,  329.  Mead^ v.  Norttwestei'n 
Ins.  Co.,'  7  N.  Y.  530. 

It  follows,  therefore,  that  the  fourth  instruction  which  was  requested, 
or  something  in  substance  like  it,  should  have  been  given.     Upon  the 
facts_stated  and  assumed,  the  increase  of^risk,  if  there  was  one,  con^ 
tinned  for  fifteen  months,  and  could  not  ba.  treated  as  a  casuatnnM^ 
vertent.  or  inevitable  thing.  Exception  sustained.^ 

\  The  law  appears  to  be  otherwise  in  Illinois.  New  England  F.  &  M.  Ins.  Co.  v. 
Wetmore,  32  111.  221  (186.3)  ;  Schmidt  v.  Peoria  M.  &  F.  Ins.  Co.,  41  111.  29.')  (1866)  ; 
Traders'  Ins.  Co.  v.  Catlin,  163  111.  2,56  (1896). 

In  Imperial  Fire  Ins.  Co.  v.  Coos  County,  1.51  U.  S.  452  (1894),  Jackson,  J.,  for 
the  court,  said  :  — 

"  It  will  be  necessary  to  notice  only  the  exceptions  l)ased  upon  the  refusal  of  the 
court  to  instruct  tlie  jury,  as  requested  by  tlie  defendant,  "  that  if  the  work,  done  by 


SECT.  11.]       KYTE   V.   COMMERCIA.L   UNION   ASSURANCE   CO.  557 

the  mechanics,  as  disclosed  by  the  evidence,  increased  the  hazard  while  such  work  was 
hein"-  done,  then  the  plaintiff  is  not  entitled  to  recover;"  and  the  exception  to  the 
instrliction  given,  to  the  effect  that  the  question  was  whether  the  work  and  repairs 
done  upon  the  building  increased  tlie  risk  at  the  time  of  the  fire.  .  .  . 

"  Contracts  of  insurance  are  contracts  of  indemnity  upon  the  terms  and  conditions 
specified  in  the  policy  or  policies,  embodying  the  agreement  of  the  parties.     For  a 
comparatively  small  consideration  the  insurer  undertakes  to  guaranty  the  insured 
ao-ainst  loss  or  damage,  upon  the  terms  and  conditions  agreed  upon,  and  upon  no 
other,  aud  when  called  u]ion  to  ])ay,  in  case  of  loss,  the  insurer,  therefore,  may  justly 
insist' upon  the  fulfilment  of  these  terms.     If  the  insured  cannot  bring  himself  within 
the  conditions  of  the  policy,  he  is  not  entitled  to  recover  for  the  loss.     The  terms  of 
the  policy  constitute  the  measure  of  the  insurer's  liability,  and  in  order  to  recover,  the 
assured  must  show  himself  within  tliose  terms  ;  and  if  it  appears  that  the  contract  has 
been  terminated  by  the  violation  on  the  part  of  the  assured,  of  its  conditions,  then 
tliere  can  be  no  riglit  of  recovery.     The  compliance  of  the  assured  with  the  terms  of 
the  contract  is  a  condition  precedent  to  the  right  of  recovery.     If  the  assured  has 
violated,  or  failed  to  perform  the  conditions  of  the  contract,  and  such  violation  or  want 
of  performance  has  not  been  waived  by  the  insurer,  then  the  assured  cannot  recover. 
It  is  immaterial  to  consider  the  reasons  for  the  conditions  or  provisions  on  which  the 
contract  is  made  to  terminate,  or  any  other  provision  of  the  policy  which  has  been 
accepted  aud  agreed  upon.     It  is  enough  that  the  parties  have  made  certain  terms, 
conditions  on  which  their  contract  shall  continue  or  terminate.     The  courts  may  not 
make  a  contract  for  the  parties.     Their  function  and  duty  consist  simply  in  enforcing 
and  carrying  out  the  one  actually  made. 

"  It  is  settled,  as  laid  down  by  this  court  in  Thompson  v.  Phenix  Ins.  Co.,  136  U.S. 
287,  that,  when  an  insurance  contract  is  so  drawn  as  to  be  ambiguous,  or  to  require 
interpretation,  or  to  be  fairly  susceptible  of  two  different  constructions,  so  that  reason- 
ablv  intelligent  men  on  reading  the  contract  would  honestly  differ  as  to  the  meaning 
thereof,  that  construction  will  be  adopted  which  is  most  favorable  to  the  insured. 

"  But  the  rule  is  equally  well  settled  that  contracts  of  insurance,  like  other  con- 
tracts, are  to  be  construed  according  to  the  sense  and  meaning  of  the  terms  which  the 
parties  have  used,  and  if  they  are  clear  and  unambiguous,  their  terms  are  to  be  taken 
and  understood  in  tlicir  plain,  ordinary,  and  popular  sense. 

"  It  is  entirelv  competent  for  the  parties  to  stipulate,  as  they  did  in  this  case,  "  that 
this  policy  should  be  void  and  of  no  effect,  if,  without  notice  to  the  company,  and  per- 
mission tlierefor  indorsed  liereon,  .  .  .  tlie  premises  shall  be  used  or  occupied  so  as 
to  iEcrease  the  risk,  or  cease  to  be  used  or  occupied  for  tlie  purposes  stated  herein ; 
.  .  .  oV  the  risk  be  increased  by  any  means  witliin  the  knowledge  or  control  of  the 
assnireTTf.  .  .  or,  if  mechanics  are  employed  in  building,  altering,  or  repairing  prem- 
ises-nained  herein,  except  in  dwelling-houses,  where  not  exceeding  five  days  in  one 
yeantre  allowed  for  repairs." 

"  Theseprovisions  are  not  unreasonable.  The  insurer  may  have  been  willing  to 
carry  the"  risk  at  the  rate  charged  and  paid,  so  long  as  the  premises  continued  in  the 
condition  in  wliich  they  were  at  the  date  of  the  contract ;  but  the  company  may  have 
been  unwilling  to  continue  the  contract  under  other  and  different  conditions,  and  so  it 
had  a  right  to  make  the  above  stipulations  and  conditions  on  which  the  policy  or  the 
'  contract  should  terminate.  These  terms  and  conditions  of  the  policy  present  no 
ambiguity  whatever.  .  .  . 

"  It  being  shown  that  the  insured  in  August,  1886,  without  the  knowledge  or  writ- 
ten consent  of  the  insurer,  employed  carpenters  and  brick  masons,  and  reconstructed 
and  enlarged  the  vaults  and  offices  of  the  court-house  —  reconstructing  the  foundations 
corresponding  to  the  enlargement  of  the  vaults,  which  necessitated  the  cutting  of  the 
floors  and  ceilings  of  the  different  offices — and  that  this  work  occupied  five  or  six 
weeks  ;  and  in  connection  there^vith  necessitated  painting,  and  a  new  method  of  heat- 
ino-  the  offices  of  the  register  of  probate  and  the  clerk  of  the  court  (this  change  in  the 
metliod  of  heating  being  completed  about  midnight  of  November  3,  1 886,  and  the  fire 
wliich  destroyed  the  building  occurring  some  two  hours  thereafter),  clearly  entitled 
the  plaintiff  in  error  to  the  instruction  requested.  .  .  . 


558  ANGIER   V.   WESTERN   ASSURANCE   CO.  [CHAP.  VI. 

ANGIER  ET  AL.   V.   WESTERN  ASSURANCE  CO. 
Supreme  Court  of  South  Dakota,  1897.     10  S.  Dak.  82. 

Appeal  from  Circuit  Court,  Minnehaha  County.  Hon.  Jos.  W. 
Jones,  Judge. 

Action  upon  a  policy  of  fire  insurance.  Plaintiff  had  judgment, 
from  which,  and  from  an  order  denying  its  motion  for  a  new  trial, 
defendant  appeals.     Affirmed. 

The  facts  are  stated  in  the  opinion. 

McDonald  &  Fauntleroy  and  C.  S.  Palmer,  for  appellant. 

TI.  S.  G.  Cherry,  for  respondent. 

Corson,  P.  J.  This  is  an  action  upon  a  fire  insurance  policy.  A 
verdict  was  directed  for  the  plaintiffs,  and  the  defendant  appeals.^  .   .   . 

The  second  defence  is  based  upon  the  following  stipulation  in  the 
policjv  "  This  entire  policy  shall  be  void  ...  if  tlie  hazard  be  increased 
bj'  an}'  means  within  the  control  or  knowledge  of  the  insured,  ...  or  if 
(an}'  usage  or  custom  of  trade  or  manufacture  to  tlie  contrarj'  notwith- 
standing) there  be  kept,  used,  or  allowed  on  the  above  described 
premises, .  .  .  phosphorus  or  petroleum,  or  any  of  its  products  of  greater 

"The  court  not  only  refused  tliis  instruction,  but  in  its  charge  to  the  jury  so  con- 
strued the  condition  tlint  if  'mechanics  are  employed  in  building,  altering,  or  repair- 
ing the  premises  named  herein,'  without  the  consent  of  the  insurer,  as  to  make  it 
mean  that  such  alterations  and  repairs  must  be  shown  to  have  increased  the  risk  in 
point  of  fact,  and  that  such  increase  of  risk  must  have  existed  at  the  time  of  the  fire. 

"If  the  mechanics  were  employed  in  altering  and  repairing  the  building  in  a  man- 
ner beyond  what  was  required  for  its  ordinary  repair  and  preservation,  and  in  such  a 
material  way  as  constituted  a  breach  of  the  condition  of  the  contract,  it  is  difficult  to 
understand  upon  what  principle  the  charge  of  the  court  can  be  sustained.  The  con- 
dition which  was  violated  did  not,  in  any  way,  depend  upon  the  fact  tliat  it  increased 
the  risk,  but  by  the  express  terms  of  the  contract  was  made  to  avoid  the  policy  if  the 
condition  was  not  observed.  The  instruction  of  the  court  gave  no  validity  or  effect  to 
tlie  condition  and  its  breach,  but  made  it  depend  upou  the  question  whether  the  acts 
done  in  violation  of  it,  in  fact,  increased  the  risk,  and  whether  such  increased  risk  was 
operative  at  tlie  date  of  the  fire. 

"  The  court  l)elo\v  proceeded  upon  the  tlieory  that  the  fire  having  occurred  after 
the  employment  of  the  mechanics  had  ceased,  such  employment,  and  the  making  of 
the  alterations  and  repairs  described,  did  not  constitute  a  breach  at  the  time  of  the 
fire  ;  that  the  increased  risk,  which  was  necessary  to  render  the  policy  void,  must  be 
found  to  have  existed  at  the  time  of  the  fire,  and  not  at  any  preceding  date.  .  .  . 

"  It  is  competent  for  the  parties  to  agree  that  this  or  that  alteration  or  chan"-e 
shall  work  a  forfeiture,  in  which  case  the  only  inquiry  will  be  whether  the  one  in 
question  comes  within  the  category  of  changes  which  by  agreement  shall  work  a 
forfeiture.  .  .  . 

"In  Kyte  ?•.  Commercial  Union  Assurance  Co.,  U9  Mass.  116,  ...  the  Supreme 
Court  reversed  tlie  lower  court,  which  had  proceeded  upon  the  same  theory  adopted 
by  the  Circuit  Court  in  the  case  under  consider.ation.  The  principles  laid  down  in  tliis 
and  the  other  cases  cited  clearly  establish  that  the  gener.al  instruction  to  tiie  jury  com- 
plained of  in  the  present  case  was  erroneous."  —  Ed. 

1  The  omitted  passage  stated  the  pleadings  and  dealt  with  waiver  of  proofs  of  loss. 
—  Ed. 


SECT.  II.]  AXGIER   V.   WESTE^X    ASSURANCE    CO.  559 

inflammability  than  kerosene  oil  of  the  United  States  standard  (which 
last  may  be  used  for  liglit,  and  kept  for  sale  according  to  the  law,  but 
in  quantities  not  exceeding  five  barrels  provided  it  be  drawn  and  lamps 
filled  by  daylight,  or  at  a  distance  not  less  than  ten  feet  from  artificial 
light."  Sec.  4175.  Comp.  Laws,  provides:  "An  insurer  is  not  liable 
for  a  loss  caused  b}-  the  wilful  act  of  the  insured  ;  but  he  is  not  exon- 
erated by  the  negligence  of  the  insured,  or  of  his  agents  or  others." 
Tiie  facts  in  regard  to  the  origin  of  the  fire  are  thus  stated  by  the 
plaintiff  Stevens  on  cross  examination,  and  are  undisputed  :  "  I  took 
a  tomato  can,  maybe  two-thirds  or  half  full  of  kerosene  oil,  and  put 
some  of  the  oil  on  the  kindling.  I  turned  to  strike  a  match  to  set  it 
afire.  I  had  on  a  pair  of  celluloid  cuffs,  and  the  flame  caught  on  m}- 
cuffs,  and  in  a  moment  they  blazed  up.  I  had  the  can  in  my  left  hand 
and  it  fell  on  the  floor,  and  the  fire  caught  in  the  stove  the  same  time. 
I  rushed  out  and  tried  to  get  my  coat  off.  Q.  And  the  whole  thing 
caught  fire  and  burned  up?  A.  Yes.  Q.  How  much  oil  would  that 
tomato  can  hold?  A.  A  pint  or  so.  .  .  .  Q.  You  put  the  oil  on  the 
wood,  and  struck  a  match  for  the  purpose  of  lighting  this  coal  oil? 
A.  Yes,  sir.  Q.  And  it  fell  on  your  celluloid  cuffs,  you  say?  A.  Yes, 
sir.  Q.  And  that  set  fire  to  the  caff,  and  the  fire  fell  down  on  the  oil 
in  the  stove?  A.  Yes,  sir."  As  will  have  been  observed,  there  is  no 
clause  in  the  policy  prohibiting  the  plaintiff  from  keeping  kerosene  oil 
upon  his  premises  to  the  extent  of  five  barrels,  United  States  standard, 
and  there  is  no  evidence  that  the  oil  used  by  plaintiff  was  below  the 
prescribed  standard.  The  quantity  on  hand  at  the  time  of  the  fire  was 
less  than  one  gallon.  In  view  of  the  stipulation  in  the  polic}',  the 
provisions  lof  the  statute,  and  the  evidence,  it  is  somewhat  difl3cult  to 
compi'oliend  the  theory  of  the  defendant.  It  seems  to  be  contended 
that  the  kerosene  oil,  used  in  the  manner  testified  to  by  the  plaintiff 
Stevens,  increased  the  hazard,  and  therefore  relieved  the  defendant 
from  liability.  Undoubtedly,  the  use  of  the  kerosene  in  the  manner 
detailed  by  the  witness  was  a  careless  and  negligent  act,  but  it  was  not 
such  an  act  as  is  understood  by  the  term  "increase  of  hazard."  The 
stipulation  of  tlie  policy  is  that  "  the  entire  policy  .  .  .  shall  be  void 
.  .  .  if  the^  hazard  be  increased  by  any  means  within  the  control  or 
knowledge  of  the  insured."  Keeping  kerosene  upon  the  premises  in 
TioTnanner  violated"  the  stipulations  of  the  parties,  and  could  not 
therefore  be  held  to  constitute  an  increase  of  the  hazard,  within  the 
meaning  of  the  policy.  The  term  "increase  of  hazard"  denotes  an 
alteration  or  change  in  the  situation  or  condition  of  the  property 
insured,  which  tends  to  increase  the  risk.  These  words  imph'  some- 
thing of  duration,  and  a  casual  change  of  a  temporary  character  would 
not  ordinarilv  render  the  policy  void,  under  the  stipulations  therein 
contained.  First  Congregational  Church  v.  Holyoke  Mut.  Fire  Ins. 
Co.,  3.3  N.  E.  572,  158  Mass.  475.  In  that  case  the  Supreme  Court  of 
Massachusetts  held  the  use  of  naphtha  (the  use  or  keeping  of  which 
on  the  insured  premises  was  prohibited  by  the  policy)  for  a  period  of  a 


560  ANGIEK   V.    WESTERN    ASSURANCE    CO.  [CHAP.  VI, 

month,  in  burning  paint  from  the  outside  of  a  wooden  church,  and 
causing  the  burning  of  the  church,  constituted  such  a  change  or 
alteration,  and  was  sufficient!}'  long  continued  to  be  deemed  a  change 
in  the  situation  or  circumstances  affecting  the  risk.  In  Lj-man  v. 
Insurance  Co.,  14  Allen,  329,  three  weeks  was  held  sufficient. 

In  the  case  at  bar  the  contention  of  counsel  for  appellant  that  the 
use  of  kerosene  at  onl^'  one  time,  in  the  manner  detailed,  constituted 
an  increase  in  the  hazard,  in  the  sense  in  which  that  term  is  used  in 
the  polic}',  is  not  tenable.  It,  as  w^have  said,  constituted  negligence 
on  the  pnrt  of  the  plnintjjfg^jbut  did  not  increase  the  hazard  in  the 
sense  that  the  term  is^used  in  the  policies  of  insurance.^  .   .   . 

The  judgments  of  the  Circuit  Court  and  order  denying  a  new  trial 
are  affirmed.^ 

1  The  omitted  passage  dealt  with  negligence  and  procedure.  — Ed. 

2  On  increase  of  hazard  in  general,  see  also :  — 

Stetson  V.  Massachusetts  Mutual  F.  Ins.  Co.,  4  Mass.  330  (1808); 

Richards  v.  Protection  Ins.  Co.,  30  Me.  273  (1849)  ; 

Sanford  v.  Mechanics'  Mutual  F.  Ins.  Co.,  12  Cush.  541  (1853)  ; 

Reid  V.  Gore  District  Mutual  F.  Ins.  Co.,  11  U.  C.  Q.  B.  345  (1854) ; 

Francis  v.  Somerville  Mutual  Ins.  Co.,  25  N.  J.  L.  (1  Dutch.)  78  (1855)  ; 

Washington  Mutual  Ins.  Co.  v.  Merchants'  and  Manufacturers'  Mutual  Ins.  Co., 
5  Ohio  St.  450  (1856); 

Clark  V.  Hamilton  Mutual  F.  Ins.  Co.,  9  Gray,  148  (1857) ; 

Joyce  V.  Maine  Ins.  Co.,  45  Me.  168  (1858) ; 

Allen  V.  Massasoit  Ins.  Co.,  99  Mass.  160  (1868) ; 

Peterson  v.  Mississippi  Valley  Ins.  Co.,  24  Iowa,  494  (1868); 

Dittmer  v.  Germania  Ins.  Co.,  23  La.  Ann.  458  (1871) ; 

Commonwealth  v.  Hide  &  Leather  Ins.  Co.,  112  Mass.  136  (1873) ; 

Parker  v.  Arctic  F.  Ins.  Co.,  59  N.  Y.  1  (1874)  ; 

Cornish  v.  Farm  Buildings  F.  Ins.  Co.,  74  K  Y.  295  (1878) ; 

Pottsville  Mut.  F.  Ins.  Co.  v.  Horan,  89  Pa.  438  (1879)  ; 

Crane  r.  City  Ins.  Co  ,  2  Flippin,  575  (U.  S.  C.  C,  S.  D.  0.,  1880),  s.  c.  3  Fed. 
Rep.  558; 

Albion  Lead  Works  i'.  Williamsburg  City  F.  Ins.  Co.,  2  Fed.  Rep.  479  (U.  S. 
C.  C,  D.  Mass.,  1880). 

Daniels  v.  Equitable  F.  Ins.  Co  ,  48  Conn.  105  (1880)  ; 

Long  V.  Beeber,  106  Pa.  466  (1884)  ; 

Rife  V.  Lebanon  Mutual  Ins.  Co.,  115  Pa.  530  (1886)  ; 

Planters'  Mutual  Ins.  Co.  v.  Rowland,  66  Md.  236  (1886); 

Davis  V.  Western  Home  Ins.  Co.,  81  Iowa,  496  (1890) ; 

Martin  V.  Capital  Ins.  Co.,  85  Iowa,  643,  650-651  (1892) ; 

Willow  Grove  Creamery  Co.  v.  Planters'  Mutual  Ins.  Co.,  77  Md.  532  (1893) ; 

Franklin  Brass  Co.  v.  Phoenix  Assurance  Co.,  25  U.  S.  App.  119- (Fourth  Cir- 
cuit, 1895),  s.  c.  65  Fed.  Rep.  773,  and  13  C.  C.  A.  124  ; 

King  Brick  Mfg.  Co.  v.  Phoenix  Ins.  Co.,  164  Mass.  291  (1895) ; 

Collins  V.  Merchants'  and  Bankers'  Mutual  Ins.  Co.,  95  Iowa,  540,  543-544 
(189.5); 

Des  Moines  Ice  Co.  v.  Niagara  F.  Ins.  Co.,  99  Iowa,  193,  200-201  (1896) ; 

Bentley  v.  Lumbermen's  Ins.  Co.,  191  Pa.  276  (1899).—  Ed. 


SECT.  II.]  SOYE   V.   merchants'    INS.    CO.  561 


SECTION  II.  (continued). 
{D)  Conditions  prohibiting  Vacancy  and  the  like. 

SOYE  V.   MERCHANTS'  INS.  CO. 
Supreme  Court  of  Louisiana,   1851.     6  La.  Ann.  761. 

Appeal  from  the  Fourth  District  Court  of  New  Orleans,  Straw- 
bridge,  J. 

A.  Pilot,  for  plaintiff. 

L.  Pierce^  for  defendants. 

The  judgment  of  the  court  was  pronounced  by 

Slidell,  J.  This  action  is  upon  a  fire  policy,  by  which  a  dwelling- 
house  was  insured.  The  defendants  answered  tliat  they  were  not  lia- 
ble, because,  at  the  time  of  the  fire,  and  long  previous  thereto,  the  house 
liad  been  abandoned,  and  was  left  open  and  without  a  tenant,  and  that 
with  ordinary  care,  attention,  and  supervision,  tiie  loss  would  not  have 
occurred.  There  was  judgment  for  the  plaintiff,  and  the  defendants 
have  appealed. 

It  appears  that  the  house  was  built  about  a  year  previous  to  the  fire, 
and  the  assured  liad  not  been  able  to  procure  a  tenant,  except  during 
one  month.  Tlie  key  of  the  house  was  left,  during  the  princii)al  portion 
of  the  time,  with  a  neighbor,  who  was  requested  to  rent  or  sell  it,  and 
who  sliowed  it  to  such  persons  as  came  to  look  at  it.  One  witness  says 
that,  about  two  months  before  the  fire,  a  window  was  left  open  for  two 
or  three  nights  and  days  ;  he  mentioned  it  to  the  assured,  and  recom- 
mended to  him  to  send  some  one  to  watch  and  occupy  the  house  during 
the  niglit.  Another  witness  says  that,  several  times  in  tlie  daytime 
(the  dates  he  does  not  specify),  he  had  seen  the  front  doors  partially 
open.  Tlie  house  was  in  a  thinly  populated  quarter.  How  tlie  fire 
originated  does  not  clearly  appear ;  but  it  is  probable  it  was  the  work 
of  an  incendinry. 

There  is  no  clause  in  the  policy,  nor  are  we  aware  of  any  rule  of  law 
or  usage,  whicirwoulcTmake  it  the  duty  of  an  assured  to  have  his  house, 
if  untenanted,  guarded  by  a  keeper.  It  is  said  by  counsel  that  leaving 
an  untenanted  house  open  is  a  temptation  to  incendiaries  ;  but  there  is 
no  evidence  that  the  house  was  in  that  condition  on  the  night  of  the  fire, 
so  that  the  legal  effect  of  such  negligence  need  not  be  determined. 

Judgment  affirmed^  vnth  costs. 


36 


56; 


KEITH    V.   QUINCY    MUTUAL    ^liiV.   INS.    CO.  [cHAP.  VI, 


KEITH  V.  QUINCY   MUTUAL  FIRE  INS.   CO. 
Supreme  Judicial  Coukt  of  Massachusetts,  1865.     10  Allen,  228. 

Contract  upon  a  policy  of  insurance  for  one  year,  dated  Febumry 
21,  1863,  issued  by  the  defendants  upon  the  plaintiff's  wooden  build- 
ing in  West  Sandwich,  occupied  by  him  for  a  trip-hammer  shop,  and 
on°a  water-wheel  and  the  machinery  therein.  The  policy  contained  a 
provision  tlt-^M^IIlL^  iMiildino^  insured  remains  unoccupied  over  thirty 
"dayrwkhnnt^"nt.ice^this  policy  shall  be  void."  The  answer  set  ui), 
ai^i^st  other  things,  that  at  the  time  of  the  alleged  fire  the  building 
had  remained  unoccupied  for  many  months. 

At  the  trial  in  the  Superior  Court,  before  Lord,  J.,  a  verdict  was 'ren- 
dered for  the  defendants.  The  plaintiff  tendered  a  bill  of  exceptions, 
which  the  judge  refused  to  allow,  certifying  that  the  report  was  very 
erroneous  in  many  respects ;  that  the  ruling  upon  the  question  of  occu- 
pancy was  as  given,  but  in  all  other  respects  the  bill  was  so  erroneous 
that  It  must  be  disallowed.  The  ruling  upon  the  question  of  occupancy 
was  as  follows:  "It  is  not  sufficient  to  constitute  occupancy  that  the 
tools  remained  in  the  shop,  and  that  the  plaintiff's  son  went  through 
the  shop  almost  every  day  to  look  around  and  see  if  things  were  right, 
but  some  practical  use  must  have  been  made  of  the  building ;  and  if  it 
thus  remained  without  any  practical  use  for  the  space  of  thirty  days,  it 
was,  within  the  meaning  of  the  policy,  an  unoccupied  building  for  that 
time,  and  the  policy  became  void." 

The  first  count  in  the  declaration  was  upon  an  agreement  to  renew  a 
former  policy  of  insurance  upon  the  same  premises,  which  expired  on 
the  day  of  the  date  of  this  policy,  and  which  did  not  contain  the  pro- 
vision requiring  the  building  to  be  occupied;  and  the  answer  denied 
the  making  of  any  such  agreement.  The  plaintiff's  bill  of  exceptions, 
as  tendered,  contained  a  statement  of  certain  facts  upon  which  he  con- 
tended that  this  count  could  be  supported,  and  also  of  a  ruling  of  the 
court  that  he  could  not  rely  and  rec^over  upon  it. 

The  plaintiff  also  took  some  steps  toward  proving  the  truth  of  his  bill 
of  exceptions,  as  tendered  to  the  judge  of  the  Superior  Court ;  but  no 
additional  exception  was  ever  established  or  allowed. 

F.  W.  Sawyer,  for  the  plaintiff.  The  meaning  given  by  the  judge  to 
the  word  "  unoccupied  "  is  erroneous.  The  true  meaning  as  applied  to 
buildings  is,  ''not  taken  up,  vacant,  unused."  Any  substantial  use  of 
premises  by  persons,  tools,  or  furniture  is  an  occupancy.  Walker  v. 
Furbush,  11  Cush.  366.  This  shop  was  no  more  unoccupied  than  is  a 
store  with  goods  in  it  during  the  night ;  a  dwelling-house  when  the  fam- 
ilv  are  away  ;  a  warehouse  when  no  goods  are  coming  in  or  going  out ; 
a  farmer's  barn  full  of  products  ;  or  a  school-house  during  vacation. 

G.  Marston,  for  the  defendants. 


SECT.  II.]  KEITH    V.    QUINCY    MUTUAL   FIRE    INS.    CO.  563 

Dewey,  J.  This  case  must  be  decided  solely  upon  the  ruling  of  the 
court  with  reference  to  the  clause  in  the  policy,  ''  if  the  building  insured 
remains  unoccupied  over  thirty  days  without  notice,  this  policy  shall  be 
void."  Tlie  plaintiff  had  procured  a  policy  of  insurance  upon  a  wooden 
building  occupied  by  him  for  a  trip-hammer  shop.  The  presiding  judge, 
in  reference  to  the  defence  set  up  in  the  answer  that  the  building  had 
remained  unoccupied  over  thirty  days  without  notice,  instructed  the 
jury  that  "  it  is  not  sufficient  to  constitute  occupancy  that  the  tools  re- 
mained in  the  shop,  and  tliat  the  plaintiff's  son  went  througli  tlie  shop 
almost  every  day  to  look  around  to  see  if  things  were  right,  but  some 
practical  use  must  have  been  made  of  the  building ;  and  if  it  thus  re- 
maincd  without  any  practical  use  for  the  space  of  thirty  days,  it  was, 
within  the  meaning  of  the  policy,  an  unoccupied  building  for  that  time, 
and  the  policy  became  void." 

As  adapted  to  the  provisions  in  the  policy  we  cannot  say  that  these 
instructions  were  erroneous.  The  case  presented  is  only  the  abstract 
one  of  the  correctness  of  the  general  principle  stated,  the  particular 
facts  of  the  case  not  being  before  us  by  any  allowed  bill  of  exceptions. 
The  presiding  judge  refused  to  certify  the  bill  of  exceptions  as  drawn 
up  by  the  counsel  for  the  plaintiff,  and,  upon  a  hearing  before  this  court 
on  the  application  in  behalf  of  the  plaintiff  for  an  allowance  of  the 
same,  it  has  only  further  appeared  that  the  plaintiff  offered  to  prove 
that  the  defendant's  agent,  through  whom  the  insurance  was  effected, 
knew  how  the  trip-hammer  shop  had  been  used  by  the  plaintiff  in  pre- 
vious years,  and  that  it  had  always  been  used  from  time  to  time,  as  the 
course  of  the  plaintiff's  business  required  trip-hammer  and  other  lighter 
forging  work.  But  this  evidence  of  such  knowledge,  if  in  the  case  and 
if  imobjectionable  otherwise,  would  be  immaterial,  as  the  stipulation  in 
the  policy  alleged  to  have  been  violated  was  wholly  in  reference  to  the 
future,  and  was  not  to  be  qualified  by  any  particular  previous  use  of 
this  trip-hammer  shop. 

The  court  also  properly  ruled  that  the  plaintiff  could  not  recover 
under  the  first  count,  setting  forth  an  agreement  to  insure  in  a  differ- 
ent form.  The  plaintiff  received  the  policy  without  objection,  and  it 
thus  became  a  valid  contract  between  the  parties.  He  gave  notice  of 
his  loss  under  it,  and  has  sought  to  make  it  the  foundation  of  a  legal 
claitn.  Excejytions  overruled.^ 

1  Ace. :  Halpin  v.  Phenix  lus.  Co.,  118  N.  Y.  165  (1890).  —  Ed. 


564  WHITNEY   V.    BLACK   EIVER   INS.    CO.  [CHAP.  VI. 


WHITNEY,   Respondent,   v.   BLACK  RIVER  INS.   CO., 

Appellant. 

Court  of  Appeals  of  New  York,  1878.     72  N.  Y.  117. 

Appeal  from  a  judgment  of  the  General  Term  of  the  Supreme  Court, 
in  the  third  judicial  department,  affirming  a  judgment  in  favor  of  plain- 
tiff entered  upon  a  verdict.     (Reported  below,  9  Hun,  37.) 

This  action  was  brought  upon  a  policy  of  fire  insurance  issued  by 
defendant.  The  defence  was  an  alleged  forfeiture  of  the  policy  by 
violation  of  conditions  therein. 

The  facts  sufficiently  appear  in  the  opinion. 

James  F.  /Starbuck,  for  appellant. 

Leslie  W.  Jiitssell,  for  respondent. 

Andrews,  J.  The  insurance  was  upon  the  plaintiflf's  saw-mill, 
gang,  water-power,  and  on  his  fixed  and  movable  machinery,  mill-tools, 
and  implements  contained  and  used  in  the  mill ;  and  among  the  several 
pages  of  printed  conditions  and  stipulations  in  the  policy  is  a  condition 
that  if  the  premises  become  "  vacant  and  unoccupied,"  the  policy  shall 
be  void.  It  is  quite  obvious  that  the  parties  did  not  intend  by  this 
provision  that  the  saw-mill  should  be  inhabited,  or  that  any  person 
should  remain  in  it  so  as  to  watch  and  guard  it  against  fires,  in  order 
that  the  plaintiff  should  have  the  protection  of  the  policy.  The  saw- 
mill, when  the  policy  was  issued,  was  used  during  the  day,  and  was  left 
open  night  and  day,  as  saw-mills  usually  are.  The  plaintiff  lived  near 
it,  and  the  mill  had  such  oversight  as  under  such  circumstances  he 
could  give  it.  The  saw-mill  was  not  intended  as  a  domicile,  and  the 
meaning  of  this  condition,  when  used  in  a  policy  upon  a  dwelling- 
house,  may  be  quite  different  from  its  meaning  when  applied  to  a  saw- 
mill. The  condition  against  vacancy,  although  designed  mainly  for 
cases  where  the  building  insured  is  used  as  a  habitation,  is,  however, 
found  in  the  policy,  and  eflfect  is  to  be  given  to  it.  But  it  is  to  be  con- 
strued in  view  of  the  situation  and  character  of  the  property  insured, 
and  tlic  contingencies  affecting  its  use,  to  which  this  and  other  propert}' 
of  like  character,  similarly  situated,  is  subject.  The  description  in 
the  policy  shows  that  the  defendant  knew  that  the  mill  was  operated  by 
water-power,  and  as  it  was  a  saw-mill  the  insurer  must  be  presumed  to 
have  known  that  saw-mills  are  or  may  be  used  as  well  for  custom  work 
as  for  sawing  the  logs  of  the  owner ;  and  as  machiner}'  was  used  for 
the  operation  of  the  mill,  the  fact  that  it  was  liable  to  break  down  and 
need  repairs  must  also  have  been  within  the  contemplation  of  the  parties 
when  the  policy  was  issued.  The  interruptions  of  the  business  and  the 
discontinuance  of  the  active  use  of  the  saw-mill  by  reason  of  low  water, 
diminished  custom,  or  derangement  of  the  machinery,  if  held  to  be  a 
violation  of  the  condition,  and  to  create  a  vacancy  and  non-occupation 
of  the  building  within  the  true  meaning  of  the  condition,  would  greatly 


SECT. 


II.]  WHITNEY    V.    BLACK    RIVER    INS     CO.  •  565 


impair  tlie  vnlue  of  the  contract  as  a  contract  of  inrlemnity,  and  tlie 
result  would  be  that  the  contract  would  be  deemed  forfeited  by  the 
happening  of  events  which  might  reasonably  have  been  anticipated, 
and  which  were  among  the  common  incidents  of  the  business  carried 
on  on  the  insured  premises. 

We  do  not  think  this  would  be  a  reasonable  construction  of  the  con- 
tract. Delays  and  interruptions  incident  to  the  business  of  conducting 
a  saw-mill,  although  involving  a  temporary  discontinuance  of  the  active 
use  of  the  mill  for  sawing  purposes,  would  not,  we  think,  make  the  mill 
"vacant  and  unoccupied"  within  the  meaning  of  the  policy.  Take 
the  case  of  the  insurance  of  a  church  building  or  schoolhouse,  or  cider- 
mill.  Would  the  fact  that  the  church  was  closed  for  six  days  consecu- 
tively each  week  be  a  violation  of  the  condition  in  question,  or  would 
the  schoolhouse  in  vacation  time,  or  the  cider-mill,  when  no  apples 
were  to  be  had,  be  without  the  protection  of  the  policy  ?  These  illus- 
trations serve  to  show  that  the  condition  against  vacancy  and  non- 
occupation  is  to  be  construed  and  applied  in  view  of  the  subject-matter 
of  the  contract,  and  of  the  ordinary  incidents  attending  the  use  of  the 
insured  property. 

The  referee  finds  that  the  plaintiff's  mill  was  not  vacant  and  unoccu- 
pied at  or  before  the  fire,  and  this  finding  is  conclusive,  unless  upon 
the  uncontroverted  facts  a  vacancy  and  non-occupation  was  established. 
We  think  the  finding  of  the  referee  upon  this  question  cannot  be  dis- 
turbed. The  breaking  of  the  journal  the  last  of  February,  1873,  ren- 
dered the  gang  of  saws  temporarily  useless,  and  the  condition  of  the 
water  making  it  difficult  at  that  time  to  repair  the  journal,  the  repairs 
were  not  made.  But  the  other  saws  continued  to  run  without  interrup- 
tion to  the  last  of  March,  when  the  sawyer  who  had  been  employed 
by  the  plaintiff  left.  He  returned  the  first  week  in  April,  and  did  some 
sawing,  and  no  more  sawing  was  d6ne  until  the  last  of  April  or  first  of 
May,  when  several  hundred  feet  of  lumber  were  sawed,  and  some 
planing  was  done.  The  fire  occurred  on  the  sixteenth  of  May,  and  no 
sawing  had  been  done  for  sixteen  or  eighteen  days  before.  But  there 
were  logs  in  the  mill-yard  and  elsewhere,  which  the  plaintiff  intended 
to  saw  at  the  mill.  There  was  lumber  piled  in  the  yard,  and  a  small 
quantity  was  kept  in  the  mill  up  to  the  time  of  the  fire,  from  which, 
from  time  to  time,  small  sales  were  made,  —  the  last  one  the  day  before 
the  fire.  The  evidence  would  not  have  justified  the  finding  that  the 
plaintiff  had  abandoned,  or  intended  to  abandon,  the  use  of  the  mill. 
There  was  no  error,  therefore,  in  the  finding  of  the  referee,  that  the  mill 
did  not  become  vacant  and  unoccupied  within  the  meaning  of  the 
policy. 

The   policy  also  contains  a  condition  that   it  shall  be  void  if  the  , 
insured   premises  "  shall   be  occupied  or  used  so  as  to  increase  the 
risk,"  without  the  consent  of  the  company.     There  was,  at  the  time  of 
the  insurance,  a  planer  in  the  mill,  which  was  used  from  time  to  time 
in  planing  lumber  cut  at  the  mill,  and  this  occasional  use  was  continued 


566  WHITNEY    V.    BLACK    KIVER   INS.    CO.  [CHAP.  VI. 

after  the  polic}'  was  issued.  It  is  claimed  that  this  was  an  increase  of 
the  risk  within  the  covenant.  It  is  a  conclusive  answer  to  this  position, 
that  the  covenant  only  prohibits  a  new  and  different  use  of  the  prop- 
erty from  that  to  which  it  was  applied  when  the  policy  was  issued,  by 
which  the  risk  is  increased.  The  continuation  of  an  existing  use,  in 
the  absence  of  warranty  against  such  use  or  fi-audulent  representation 
or  concealment,  neither  of  which  is  alleged  in  the  answer,  is  not  a  vio- 
lation of  the  contract,  and  it  is  not  material  that  the  company  did  not 
know  that  the  planer  was  used  when  the  policy  was  issued.  We  have 
examined  the  exceptions  to  the  admission  and  rejection  of  evidence, 
and  find  no  error  in  the  rulings  of  the  referee. 

The  judgment  should  be  affirmed. 

All  concur.  Judgment  affirmed.^ 

1  In  Poss  v.  Western  Assurance  Co.,  7  Lea  (Tenn.),  704  (1881),  Cooper,  J.,  for  the 
court,  said  :  "The  point  which  the  parties  desire  to  have  determined,  which  has  been 
argued  before  us,  and  which  is,  though  iiiartificially,  made  by  the  pleading,  is 
whether,  under  the  terms  of  the  policy,  a  temporary  cessation  of  the  operation  of  the 
chair  and  furniture  factory  of  the  insured,  by  reason  of  the  ]n-evalence  of  the  yellow 
fever  in  epidemic  form,  would  avoid  the  policy;  in  other  words,  whether  tlie  condi- 
tion of  the  policy,  that  it  siiall  become  void  if  the  manufacturing  establisliment 
insured  "  shall  cease  to  be  operated,"  applies  only  to  a  permanent  and  not  a  tempo- 
rary cessation  of  the  operations  of  tlie  establishment.  And  we  are  very  clearly  of 
opinion  that  the  policy  contemplates,  in  tliis  connection,  only  the  permanent  ceasing 
to  be  operated.  The  language  is,  "  cease  to  be  operated."  If  the  letter  of  tlie  con- 
tract be  alone  looked  to,  the  cessation  of  work  on  Sunday,  the  stoppage  of  operations 
by  the  necessity  of  cleaning  out  the  boiler,  by  an  accident  to  the  machinery,  or  by  a 
strike  of  the  hands,  might  lie  held  to  vitiate  tlie  policy.  Of  course,  the  parties  never 
contemplated  such  a  construction  of  their  words,  nor  has  the  argument  submitted  on 
behalf  of  the  defendant  gone  to  that  length.  But  if  a  temporary  cessation  to  operate 
the  establishment,  by  reason  of  these  and  other  common  occurrences,  would  not  avoid 
the  policy,  it  can  scarcely  be  successfully  maintained  that  a  temporary  cessation 
(Occasioned  by  the  visitation  of  Providence  in  the  form  of  a  deadly  epidemic  shall  have 
a'gffeater  effect.  The  whole  clause  of  the  policy,  which  we  have  (pioted  above,  shows 
that  the  parties  contemplated  a  jiermaneut  cessation  of  operations.  The  language 
used  is  the  language  of  the  insurance  company,  and  must  lie  taken  most  strongly 
against  the  company  whenever  it  admits  fairly  of  two  constructions.  It  could  never 
have  been  intended  to  apply  to  a  ceasing  to  o]ierate  occasioned  by  the  usujil  incidents 
to  the  business,  among  which  would  be  the  impossibility  of  procuring  operatives  tem- 
porarily for  any  cause.  The  clause  in  question,  moreover,  probably  exclusively 
applies  to  an  insurance  of  the  building  in  which  manufacturing  is  carried  on,  and  not 
to  an  insurance  of  the  boiler,  machinery,  etc.,  as  in  the  case  before  us." 

See  Ladd  v.  JEUia.  Ins.  Co.,  147  N.  Y.  478  (1895) ;  Des  Moines  Ice  Co.  v.  Niagara 
F,  lus.  Co.,  99  Iowa,  193,  198-200  (1896).— Ed. 


SECT.  11.]        STUPETSKI    V.    TRAN.SATLANTIC    FIRE    INS.    CO.  567 


STUPETSKI   V.   TRANSATLANTIC   FIRE   INS.    CO. 
Supreme  Court  of  Michigan,  1880.     43  Mich.  373. 

Error  to  Superior  Court  of  Detroit. 

Assumpsit  on  insurance  policy.     Plaintiff  brings  error. 

John  C.  Donnelly,  for  plaintiff  in  error. 

Morgan  E.  Doiding.  for  defendant  in  erroi'. 

Campbell,  J.  Plaintitl'  sued  defendant  on  a  policy  of  insurance,  for 
the  destruction  of  his  dwelling  and  contents  by  fire.  The  policy  was 
b\'  one  of  its  conditions  made  void  if  the  house  should  '•'•  become  vacant 
orji noccupied  "  without  assent  of  the  _comj2anv. 

The  fire  which  destroyed  the  property  was  on  September  4,  1879. 
Plaintiflf  used  the  premises  as  his  own  dwelling.  About  ten  days  before 
the  fire  he  received  a  telegraphic  despatch  from  South  Bend,  Indiana, 
announcing  that  his  daughter,  who  lived  there,  was  dangerously  ill,  and 
at  the  point  of  death.  He  with  his  wife  and  another  daughter  at  once 
went  there,  intending  to  return,  and  he  did  return  the  next  day  but  one 
after  the  fire.  A  son  who  was  not  boarding  at  home  was  directed  to 
and  did  visit  the  house  dailv  to  look  after  the  house  and  feed  the  stock. 

The  court  below  instructed  the  jury  that  this  was  enough  to  require 
the  house  to  be  regarded  as  vacant  and  unoccupied,  and  directed  a 
verdict  for  the  defendant. 

There  is  not  much  authority  upon  this  precise  form  of  condition,  but 
we  think  it  must  be  construed  as  it  would  be  usualh'  understood  b}'  ordi- 
nary persons  reading  and  acting  on  it.  We  think  it  would  not  convey  to 
anordinary  mind  the  idea  that  a  house  is  vacant  or  unoccupied  when  it 
has  an  inhabitant  who  intends  to  remain  in  it  as  his  residence,  and  who 
Has  left  it  for  a  temporary4^Lqiose.  If  the  phrases  were  used  in  their 
sTrTct  legal  sense,  no  one  would  imagine  that  the  tenant  was  not  such  an 
occupant  as  would  be  liable  to  tlie  responsibilities  attached  by  law  to 
occupants,  or  that  there  was  such  a  vacancy  of  possession  as  would 
suspend  possessor^'  rights.  It  would  be  burglary  to  feloniously  break 
and  enter  the  house,  and  arson  to  maliciously  burn  it.  There  mav  be 
less  occasion  to  care  for  a  house  in  which  no  one  lives  than  for  one  ton- 
anted,  but  a  person  temporarily  absent  will  usually  take  some  pains  to 
have  his  premises  kept  under  oversight,  and  in  the  present  case  such 
provision  was  made  for  the  domestic  animals  as  well  as  for  the  house 
itself.  It  would,  we  think,  be  regarded  as  singular  doctrine  to  hold  that 
families  leaving  their  houses  on  excursions  or  other  temporary  occasions 
cease  to  occup}*  them.^  .  .  . 

It  is  not  safe  to  resort  to  extreme  definitions  beyond  the  usual  under- 
standing.   We  think  in  the  case  before  us  the  premises  did  not  become 

1  Here  were  stated  Cummins  v.  Agricultural  Ins.  Co.,  67  N.  Y.  260  (1876) ;  and 
Whitney  v.  Black  River  Ins.  Co.,  ante,  p.  564  (1878).  —  Ed. 


56S  HERRMAN    V.   Mf:KCHANTS'   INS.    CO.  [CHAP.  VI. 

vacant  or  unoccupied,  if  left  for  the  purpose  testified  to,  and  that  it  was 
error  to  charge  the  jur}-  as  was  done  here. 

The  judgment  must  be  reversed  with  costs,  and  a  new  trial  granted.-^ 

The  other  justices  concurred. 


HERRMAN,  Respondent,  v.  MERCHANTS'  INS.  CO.,  Appellant. 

Court  of  Appeals  of  New  York,   1880.     81  N.  Y.  184. 

'  "Appeal  fi-ora  judgment  of  tlie  General  Term  of  the  Suj^erior  Court 
of  the  city  of  New  York,  affirming  a  judgment  in  favor  of  plaintitf 
entered  upon  a  verdict  directed  by  the  court.  (Reported  below,  12 
J.  &  S.  444.) 

The  nature  of  the  action  and  the  facts  are  set  forth  sufficiently  in  the 
opinion. 

George  W,  Parsons^  for  appellant. 

N.  B.  Uoxie^  for  respondent. 

Earl,  J.  Tliis  is  an  action  upon  a  fire  polic}-,  and  the  defence  is  a 
breach  of  certain  warranties  contained  in  the  polic}'. 

The  insurance  was  upon  a  dwelling-house  and  other  buildings,  and 
upon  certain  personal  propert}^  therein,  and  the  fire  which  occasioned 
the  loss  occurred  in  the  daytime,  in  April,  1877,  and  probably  was  of 
incendiary  origin.  The_policy_co"tained  a  condition  that  it  should  be 
void_jf_the_^remises  should  become^"  vacant  and  unoccupied."  The 
dwelling-liouse  was  a  summer  residence  of  the  plaintiff.  He  resided  in 
it  in  the  summer  and  fall  of  1876,  and  removed  therefrom  in  November 
of  that  year,  and  went  with  his  family  to  the  city  of  New  York,  intend- 
ing to  return  again  about  the  middle  of  May.  He  left  all  his  fuiniture 
in  the  house,  which  was  furnished  throughout,  and  left  his  house  in 
charge  of  a  person  who  lived  near  thereto. 

"We  should  have  had  a  different  question  for  consideration  if  the  con- 
dition had  been  tliat  the  policy  should  become  void  if  the  house  should 
become  "vacant  or  unoccupied,"  or  simply  "unoccupied."  Here  we 
have  the  two  words  joined  together,  "vacant  and  unoccupied;"  and 
what  do  they  mean?  They  should  not  be  taken  in  any  technical  or  nar- 
row sense.  They  need  not  be  taken  in  the  sense  in  which  they  may  have 
been  understood  b}'  underwriters,  as  botli  parties  to  this  contract  were 
not  underwriters,  supposed  to  be  familiar  with  the  meaning  of  such 
words  when  used  in  the  business  of  fire  insurance.     But  the}*  must  be 

1  Arc  :  Hill  ('.  Ohio  Ins.  Co.,  09  Mich.  466  (1894);  Home  F.  Ins.  Co.  r.  Peyson,  .54 
Neb.  49.')  (1898). 

See  Ashworth  f.  Builders' Mut.  F.  Ins.  Co.,  112  Mass.  422  (187.3);  Corrigan  v. 
Connecticut  F.  In.s.  Co.,  122  Ma.ss.  298  (1877)  ;  Shackelton  v.  Sun  Fire  Office,  .55  Mich, 
288  (1884);  Agricultural  Ins.  Co.  v.  Hamilton,  82  Md.  83  (1895). 

Compare  Fitzgerald  v.  Connecticut  F.  Ins.  Co.,  64  Wis.  463  (1835).  —  Ed. 


SECT.  II.]  HERRMAX   V.    MERCHANTS'    IXS.    CO.  569 

taken  in  their  ordinaiy  sense,  as  commonly  used  and  understood;  and 
if  the  sense  in  which  they  were  used  is  uncertain,  as  they  are  found  in 
a  contract  prepared  and  executed  by  the  insurer,  they  should  be  con- 
strued most  favorably  to  the  insured.  Hoffman  r.  iEtna  Ins.  Co.,  32 
N.  Y.  405  ;  Rann  v.  Home  Ins.  Co.,  59  N.  Y.  387.  We  do  not  prooress 
much  b}-  ascertaining  what  the  insurer  meant  by  these  words  ;  but  we 
must  endeavor  to  ascertain  how  the  insured  understood  and  could  prop- 
erly understand  them,  —  in  other  words,  the  meanino:  which  they  convey 
to  the  common  mind. 

A  dwelling-house  is  unoccupied  when  no  one  lives  therein,  but  is  not 
then  necessarily  vacant.  A  house^led  with  furniture  throughout  cannot 
be  said  to  bej^_vacanljlthe  primary  and  ordinary  meaning  of  which  js 
'\empt3%"  To  avoid  the  policy,  the  premises  must  not  only  be  unoccu- 
pied but  also  vacant.  Force  should  be  given  to  both  words.  This  is  not 
a  casual  contract  drawn  in  haste,  in  which  language  has  been  carelesslv 
used  ;  but  it  is  a  form  of  contract  used  by  the  defendant  in  its  business, 
probably  adopted  with  great  deliberation,  every  word  of  which,  as  we  may 
suppose,  has  been  carefully  weighed.  It  was  not  intended  that  more  non- 
occupancy  should  avoid  the  policy  ;  if  it  bad  been,  it  cannot  be  supposed 
that  the  word  "  vacant"  would  have  been  superadded.  It  is  not  nec- 
essarj-  to  hold  that  a  house  with  a  few  articles  of  furniture  in  it,  from 
which  the  owner  or  tenant  has  removed,  with  no  definite  intention  of 
returning,  might  not  be  regarded  as  vacant,  or  found  to  be  so  l\v  a  jury. 
It  is  sufficient  to  hold  that  a  house  thoroughly  furnished,  from  which  the 
owner  has  removed  for  a  season,  intending  to  return  again  and  resume 
possession,  is  not,  in  any  proper  sense,  a  vacant  house.  There  are 
man}-  houses  in  and  about  the  city  of  New  York,  and  elsewhere,  which 
are  occupied  only  in  the  summer  as  summer  residences,  or  onl}-  in  the 
winter  as  winter  residences,  the  furniture  remaining  in  them  all  the 
time ;  and  for  aught  we  know,  these  two  words  were  adopted  with  a 
view  to  insurances  upon  such  houses.^  .  .   . 

There  was  also  a  condition  in  this  policy  that  if  the  risk  should  be 
increased  either  "  internally  or  externally,"  the  insured  should  give 
proper  notice  thereof  in  writing,  and  have  the  same  entered  on  the 
policy,  and  that  any  failure  to  comply  with  the  condition  should  render 
the  policy  void.  It  is  claimed  on  the  part  of  the  defendant  that  this 
condition  was  violated  by  non-occupancy  of  the  house.  Its  counsel 
offered  to  show  that  the  risk  was  increased  by  such  non-occupancv, 
and  the  proof  was  rejected.  Upon  the  assumption  that  the  risk  was 
thus  inci'eased,  we  are  of  opinion  that  this  condition  was  not  violated. 
The  policy  contained  express  conditions  as  to  vacancy  and  occupancy, 
and  as  to  the  mode  in  which,  and  purposes  for  which,  the  house  was  to 
be  used  ;  and  it  is  not  to  lie  supposed  that  this  general  condition  was 
intended  for  any  of  the  cases  thus  specially  noticed.    What  is  to  be  re- 

1  Here  were  summarized  Alston  u.  Old  North  State  Ins.  Co.,' 80  N.  Car.  326  (1879)  j 
North  American  F.  Ins.  Co.  v.  Zaenger,  63  111.  464  (1872)  ;  and  American  Ins.  Co  w 
Padfield,78  lU.  167  /1875).  — Ed. 


570  HEKRMAN   V.   ADRIATIC   FIRE  INS.   CO.  I_0HAP.  VI. 

garded  in  the  business  of  insurance  as  an  increase  of  risk  is  frcquentl}' 
a  matter  of  raucli  difficult}',  about  wliich  men,  even  experts,  differ. 
Such  general  language  must,  therefore,  be  strictl}'  construed  against 
the  underwriter,  or  else  one  ma}'  not  know  whether  he  has  violated  his 
polic}'  or  not,  until  the  verdict  of  a  jur}'  upon  disputed  evidence.  The 
words  risk  increased  "either  internally  or  externalh',"  do  not  convey 
to  my  mind  an  increase  of  risk  by  removal  from  the  house,  but  an  in- 
crease of  risk  b}'  internal  or  external  changes  in  the  house  itself,  or 
its  exposure,  which  manifestly  increase  the  risk  of  fire  so  that  it  is  not 
the  same  risk  insured. 

There  was  no  question  of  fact  for  submission  to  the  jur}-,  and  the 
court  did  not  err  in  directing  a  verdict  for  plaintiff. 

The  judgment  should  be  affirmed. 

All  concur.  Judgment  affirmed.^ 


HERRMAN,    Respondent,    v.    ADRIATIC   FIRE   INS.    CO., 

Appellant. 

Court  op  Appeals  of  New  York,  1881.     85  N.  Y.  162.^ 

This  was  an  action  upon  a  polic}"  of  fire  insurance  issued  to  the 
plaintiff  for  three  3'ears,  beginning  June  3,  1874,  insuring  specific 
amounts  upon  a  dwelling-house,  household  furniture  therein,  outhouses, 
barn,  carriage-house,  farmer's  house  and  outbuildings,  produce  in  barn, 
live  stock,  horses,  carriages,  and  harness.  Tlie  polic}'  provided  that 
"  if  the  above-mentioned  premises  .  .  .  shall  become  vacant  or  un- 
occupied^ and  so  remain  for  more  than  thirty  days,  without  notice  to 
and  consent  of  this  company  in  writing,  .  .  .  this  policy  shall  be  void." 
The  premises  were  a  farm  and  summer  residence.  In  November,  1876, 
the  plaintiti'  and  his  familv  returned  to  their  cit}'  home  for  the  winter, 
leaving  in  the  insured  dwelling-house  their  summer  clotliing  and  all  tlie 
furniture.  The  farmer  employed  by  the  plaintiff  lived  in  the  farmer's 
house,  watched  tlie  dwelling-house  insured,  and  once  a  week  caused  it 
to  be  ventilated,  and  then  to  be  locked  up  again.  The  plaintiff  himself 
visited  the  dwelling-house  once  a  fortnight,  going  through  the  rooms 
and  eating  a  lunch  there,  but  not  remaining  over  night.  Three  days 
before  the  fire,  he  and  his  wife  made  such  a  visit  to  the  premises.  On 
April  8,  1877,  the  dwelling-house,  its  furniture,  and  the  outhouses  were 
destroyed  by  fire.  The  loss  exceeded  the  amount  insured  upon  these 
items. 

A  verdict  was  directed  for  the  defendant  compan}',  whereupon  the 

1  See  Norman  v.  Missouri  Town  Mutual  Ins.  Co.,  74  Mo.  App.  456  (1898). 
Compare  Moore  v.  Phoenix  Ins.  Co.,  64  N.  H.  140  (1886).  —Ed. 

2  The  reporter's  statement  has  not  been  reprinted.  —  Ed. 


SECT.  II.]  HEREMAN   V.   ADRIATIC    FIRE   INS.   CO.  571 

plaintiff  excepted.     The  General  Term  of  the  Superior  Court  of  the 
City   of   New    York    sustaiued    the    plaintiff's    exceptions,    set    aside 
the  verdict,  and  ordered  a  new  trial,  as  reported  in  13  J.  &  S.  394. 
The  defendant  company  appealed. 
James  2'hoinson,  for  appellant. 
iV;  B.  Hoxie,  for  respondent. 

FoLGER,  C.  J.  This  is  an  action  on  a  policy  of  fire  insurance.  The 
property  insured  consisted  of  different  buildings,  and  different  kinds  of 
chattel  property  kept  in  those  buildings,  respectively.  The  different 
properties  insured,  and  the  different  amounts  put  at  risk,  each  are 
specifically  named  in  the  policy  with  much  minuteness.  The  property 
destroyed'  and  for  the  loss  of  which  the  action  is  brought  was  but  parts 
of  the  whole  at  risk,  being  the  dwelHng-house,  and  most  of  the  contents 
of  it,  and  four  outbuildings,  essential  or  convenient  for  use  with  the 
dwelling. 

The  question  in  agitation  at  the  trial  term  and  at  the  General  Term 
was,  whether  the   policy  was  avoided  by  the  breach  of  tlie  condition, 
that  if  the  premises  should  become  vacant  or  unoccupied,  and  so  re- 
main for  more  than  thirty  days  without  notice  to,  and  consent  of,  the 
defendant,  in  writing,  the  policy  should  be  void.     The  plaintiff  con- 
tends that  the  two  woi'ds  "vacant"  and  "unoccupied"  are  synonyms, 
and  are  to  be  interpreted  as  having  the  same  meaning,  and  that  that 
meaning  is  empty  ;  and  then  argues  that,  as  the  dwelling-house  was 
not  empty,  tliere  was  no  breach  of  the  condition.     There  are  doubtless 
conditions  of  a  dwelling-house,  or  other  like   structure,  when  either 
word  applied  to  it,  or  both  words  applied  to  it,  will  express  a  like  state 
of  it.     There  are,  however,  states  of  it  when  that  will  not  be  the  case. 
It  is  so,  because  the  different  things  that  are  receptive  of  the  epithets 
of  "vacant"  and  "unoccupied  "  are  different  in  their  capability  and  sus- 
ceptibility of  being  filled  or  occupied.     Some  cannot  have  one  of  those 
terras  applicable  to  tliem,  without  the  other  at  the  same  time  being  also 
applicable.     Some,  from  the  nature  of  the  use  which  goes  with  the  oc- 
cupation of  them,  may  not  be  vacant,  and  yet  they  will,  in  any  just  use 
of  the  term  as  applicable  to  them,  be  unoccupied.     A  dwelling-house 
is  chiefly  designed  for  the  abode  of  mankind.     For  the  comfort  of  the 
dwellers  in  it,  many  kinds  of  chattel  property  are  gathered  in  it.     So 
that,  in  the  use  of  it,  it  is  a  place  of  deposit  of  things  inanimate  and  a 
place  of  resort  and  tarrying  of  beings  animate.     With  those  animate 
far  away  from  it,  but  with  those  inanimate  still  in  it,  it  would  not  be 
vacant,  for  it  would  not  be  empty  and  void.     And  as  a  possible  case, 
with  all  inanimate  things  taken  out,  but  with  those  animate  still  remain- 
ing in  it,  it  would  not  be  unoccupied,  for  it  would   still  be  used  for 
shelter  and  repose.     And  it  is  because,  in  our  experience  of  the  pur- 
pose and  use  of  a  dwelling-house,  we  have  come  to  associate  our  notion 
of  the  occupation  of  it  with  the  habitual  presence  and  continued  abode 
of  liunian  beings  within  it,  that  that  word  applied  to  a  dwelling  always 
raises  that  conception  in  the  mind.     Sometimes,  indeed,  the  use  of  the 


572  HERRMAN   V.    ADRIATIC   FIRE   INS.    CO.  [CHAP.  VI. 

word  "  vacant,"  as  applied  to  a  dwelling,  carries  the  notion  that  there 
is  no  dweller  therein  :  and  we  should  not  be  sure  alwaj's  to  get  or  eon- 
ve}'  the  idea  of  an  emptj*  house  b}'  the  words  "  vacant  dwelling  "  ap- 
plied to  it.  But  when  the  phrase  "  vacant  or  unoccupied  "  is  applied 
to  a  dwelling-house,  plainly  there  is  a  purpose,  —  an  attempt  to  give  a 
different  statement  of  the  condition  thereof;  by  the  first  word,  as  an 
empty  house,  by  the  second  word,  as  one  in  which  there  is  not  habitu- 
ally the  presence  of  human  beings.  In  the  case  of  Herrman  v.  Tlie 
Merchants'  Insurance  Company,  81  N.  Y.  184,  in  this  court,  in  June 
last,  the  decision  went,  not  on  the  ground  that  the  two  words  were  used 
to  mean,  or  that  they  meant,  the  same  condition  of  the  building,  but 
that,  by  the  use  of  the  copulative  conjunction  with  them,  there  was  a 
contract  framed  of  which  there  was  no  breach,  unless  the  house  was 
at  the  same  time  in  the  double  state  expressed  by  the  phrase  ;  that  is, 
both  vacant  and  unoccupied  at  the  time  of  the  fire,  both  empty  and 
unused  for  abode. 

It  is  clear,  from  the  testimony,  that  the  dwelling-house  insured  by 
the  defendant  was  not  occupied  as  such  at  the  time  of  the  fire.  The 
fortnightly  visits  of  the  plaintiff  and  his  wife  to  it  were  not  the  occu- 
pation that  is  meant  when  a  dwelling-house  is  spoken  of.  The  weekly 
tours  of  inspection  of  the  farmer  and  members  of  his  family  living  on 
the  grounds,  and  his  supervision  of  it  from  his  own  house,  were  more 
useful,  but  they  fell  short  of  being  occupation  of  it.  The  term  "  un- 
occupied," used  in  the  policy,  is  entitled  to  a  sense  adapted  to  the 
occasion  of  its  use,  and  the  subject-matter  to  which  it  is  applied.  It 
does  not  need  tliat  we  go  into  discussion  of  the  good  reasons  for  exact- 
ing the  condition  on  taking  a  risk  upon  a  dwelling-house.  It  is  enough 
that  the  parties  have  come  into  that  covenant.  It  is  to  have  a  meaning 
fitted  to  the  circumstances  in  which  it  was  made  and  to  the  subject  to 
which  it  related.  We  have  already  said  enough  to  show  our  opinion 
that,  for  a  dwelling-house  to  be  in  a  state  of  occupation,  there  must  be 
in  it  the  presence  of  human  beings  as  at  their  customary  place  of 
abode,  not  absolutely  and  uninterruptedly  continuous,  but  that  must 
be  the  place  of  usual  return  and  habitual  stoppage.  We  think  that  a 
verdict  of  a  jury  would  not  have  been  allowed  to  stand,  that  found  that 
this  dwelling-house  was  occupied  at  the  time  of  the  fire,  within  the 
terms  of  the  policy.  But  it  is  said,  that  though  this  may  be  so  in  gen- 
eral, yet  that  the  defendant  made  its  contract  with  a  view  to  just  the 
state  of  things  that  existed  with  this  property  ;  that  it  was  chargeable 
with  a  knowledge  of  the  character  and  use  of  the  premises,  and  that 
there  would  be  a  change  of  occupancy,  such  as  in  fact  occurred.  We 
cannot  yield  to  that  view.  It  may  be  that  the  defendant  knew  that  it 
was  but  the  place  of  summer  abode  for  the  plaintiff.  Its  contract  was 
issued  in  the  summer,  when  the  property  was  in  strict  occupancy,  and 
it  provided  for  tlie  coming  of  the  fall,  when  that  occupancy  would  be 
abandoned  or  modified  ;  for  the  policy  was  not  void  at  once  on  a  cessa- 
tion of  occupancy.     That  cessation  must  last  for  thirty  days,  and  be 


SECT.  II.]  HEERMAN   V.   ADRIATIC   FIRE   INS.   CO.  573 

unnotified  to  the  defendants  and  continue  thereafter  without  its  con- 
sent. There  was  opportunity'  for  the  plaintiff  to  keep  up  that  indem- 
nity or  to  get  other;  and  to  the  defendant  to  retain  the  risk,  or  to  be 
freed  from  it,  when  that  occupancy  was  about  to  cease,  and  notice  was 
given. 

Nor  are  we  able,  after  much  consideration,  to  agree  with  the  learned 
General  Term  on  the  ground  upon  which  it  put  its  judgment.  The  con- 
dition of  the  policy  is  :  "  Or  if  the  above-mentioned  premises  shall  .  .  . 
become  vacant  or  unoccupied  .  .  .  this  policy  shall  be  void."  As  we 
have  above  said,  tliere  were  several  different  kinds  and  pieces  of  prop- 
erty insured,  and,  as  was  indicated  by  the  description  of  them,  the 
whole  making  up  a  well-to-do  proprietor's  rural  establishment.  The 
understanding  must  have  been  that  there  was  comprised  in  the  whole 
the  buildings  on  a  farm  or  country  seat  and  the  chattel  property  usually 
kept  at  such  a  place.  The  contention  is  that  the  words  "  above-men- 
tioned premises"  are  collective  and  apply  to  all  the  property  described, 
and  the  intent  of  the  condition  is  that  if  all  of  it  should  be  left  unoccu- 
pied, then  the  policy  should  be  void  ;  but  that  one  or  several,  or  man}* 
of  the  buildings  might  be  unoccupied,  yet,  if  the  rest  were  occupied, 
the  condition  of  the  policy  would  be  saved.  To  give  this  construction 
to  the  phrase  in  question,  it  would  need  to  carry  it  through  all  the  con- 
ditions in  the  polic}',  to  manifest  absurdity  and  to  an  inconvenient 
precedent.  There  is  a  condition  against  other  insurance,  "on  the 
pro[)erty  hereby  insured."  If  the  plaintiff  had  over-insured  his  dwell- 
ing-house, would  not  the  condition  have  been  broken,  as  to  that,  though 
he  had  not  increased  that  on  his  kitchen  detached  ?  There  is  a  con- 
dition against  the  change  of  title  of  the  property.  If  the  plaintiff  had 
sold  off  so  man}'  acres  as  would  include  the  farmhouse,  would  he  have 
retained  his  insurance  on  that  building  because  he  had  not  transferred 
the  whole  premises?  The  plaintiff  grasps  at  a  two-edged  sword,  when 
he  seeks  to  make  such  application  of  those  general  words  of  the  policy. 
He  contends  that  when  words  are  used  in  the  polic}'  referring  back  to 
the  property  described,  the}'  mean  to  include  the  whole  property.  Tliis 
would  be  to  make  the  contract  of  insurance  entire  and  indivisible  ;  and 
to  aflect  all  the  property  insured  with  any  act  of  the  insured,  which,  as 
to  any  item  thereof,  worked  a  breach  of  any  condition.  This  is  not 
the  true,  just,  or  equitable  construction.  The  clause  is  to  be  used  dis- 
tributively,  and  to  be  applied  to  each  singular  of  the  previous  descrip- 
tion of  the  property,  as  the  kind  of  that  property  and  the  nature  of  the 
use  of  it  may  demand.  It  was  upon  this  principle  that  we  grounded 
our  decision  in  Merrill  v.  Agr.  Ins.  Co.,  73  N".  Y.  452.  There  we 
said:  '* Though  there  ma}' have  been  some  conduct  of  the  insured  as 
to  some  of  the  property,  not  evil  in  itself,  but  working  a  breach  of  the 
condition  in  its  letter,  the  effect  of  that  breach  may  be  confined  to  the 
insurance  upon  that  property,  the  contract  as  to  that  be  held  to  be 
avoided,  and  as  to  the  other  subjects  held  valid."  Tins  was  the  con- 
verse of  the  proposition  that  we  are  now  maintaining. 


574  HERKMAN    V.    ADlilATIC    FIRE    INS.    CO.  [CHAP.  VI. 

The  case  of  Brjau  v.  Peabody  lus.  Co.,  8  W.  Va.  605,  is  not  par- 
allel with  this. 

Therefore,  though  the  farm  preuiises  and  some  of  the  buildings 
thereon  were  in  actual  human  occupation,  that  use  of  them  did  not  ex- 
tend to  and  take  in  the  dwellings  burned,  so  as  to  keep  good  the  con- 
dition of  the  polic}'.  It  is  further  claimed  that  it  was  erroneous  for 
the  trial  court  to  direct  a  verdict  for  the  defendant,  because  all  of  the 
propert}'  burned  was  not  unoccupied.  Besides  the  dwelling-house, 
there  was  lost  a  wash-house,  a  wood-house,  a  kitchen,  and  a  privy.  It 
is  contended  that  there  was  no  evidence  that  these  were  unoccupied. 
The  reasoning  is  ingenious,  but  it  is  not  convincing.  It  is  said  that 
it  does  not  appear  that  the  occupation  of  these  structures  was  confined 
to  the  plaintiff  or  the  members  of  his  immediate  family  as  it  was  made 
up  when  he  dwelt  upon  the  place,  and  that  it  might  be  that  the  farmer 
and  the  members  of  his  family  might  have  used  and  occupied  them. 
Now,  these  out-buildings  were  appurtenant  to  the  dwelling-house  ;  the 
use  of  them  was  concurrent  with  the  use  of  the  dwelling-house  ;  the}' 
were  parts  of  the  one  domestic  establishment,  and  separated  but  forty 
feet  from  the  main  building.  It  is  too  plain  for  denial,  save  as  a 
dernier  ressoH^  that  the  occupancy  of  them,  in  habitual,  continuous 
use  for  the  purposes  for  which  they  were  built  and  to  which  they  were 
put,  began  when  that  of  the  dwelling-house  began,  and  ended  when 
that  ended. 

The  plaintiff  and  the  defendant  made  their  conti'act  in  such  terms  as 
it  pleased  them  both.  It  may  or  may  not  be  a  strict  and  rigorous  ap- 
plication to  the  facts  of  the  case  of  the  condition  that  we  have  been 
considering  ;  but  we  cannot,  consistently  with  lasting  principles  of  con- 
struction and  interpretation,  hold  otherwise  than  that  the  plaintiff  made 
a  breach  of  a  binding  condition,  and  must  abide  the  unfortunate  con- 
sequence. 

The  order  of  the  General  Term  should  be  reversed,  and  judgment 
absolute  rendered  in  favor  of  defendant  upon  the  verdict,  with  costs. 

All  concur,  except  Miller,  J.,  not  voting. 

Order  reversed  and  judgment  accordingly.^ 

1  Compare  Bryan  v.  Peabody  Ins.  Co.,  8  W.  Va.  605  (1875)  ;  Harrington  v.  Fitch- 
burg  Mut.  F.  Ins.  Co.,  124  Mass.  126  (1878) ;  Connecticut  F.  Ins.  Co.  v.  Tilley,  88  Va. 
1024  (1892) ;  Worley  v.  State  Ins.  Co.,  91  Iowa,  150  (1894).  —  Ed. 


SECT.  II.]  MOORE   V.   PIICENIX   INS.   CO.  575 


MOORE    V.   PHCEXIX   INS.    CO. 

Supreme  Court  of  New  Hampshire,  1882.     62  N.  H.  240.* 

This  was  an  action  of  assumpsit  upon  a  policy  insuring  the  plaintiff's 
house,  shed,  and  barn  for  $800,  and  tlie  hay  and  produce  in  the  barn 
for  $50.  One  defence  was  that  th^jjoUe^wns  not  binding  at  the  time 
of  the  fire,"  by  reason  of  a  breach  ofjhe  provision  against  vacancy  and 
unoccupancy.  Tlie  essential  facts  appear  in  the  opinion. 
""ThcTc^urt  denied  the  defendant  company's  motion  for  a  verdict, 
instructed  the  jury,  as  matter  of  law,  that  the  non-occupancy  from 
August  26  to  December  11,  1876,  did  not  avoid  the  policy,  and  denied 
the  defendant  company's  motion  that  the  verdict  for  the  plaintiff 
should  be  set  aside.  The  defendant  company  excepted  to  each  of 
these  rulings. 

Philip  Carpenter^  Bingham  &  Aldrich,  and  Bingham^  Ilitchells 
&  Batcliellor,  for  the  defendants. 

Ray,  Drew  &  Jordan,  Band  &  Morse,  and  J.  L.  Foster,  for  the 
plaintiffs. 

Smith,  J.  The  defendants  are  liable  only  in  accordance  with  the 
terms  and  stipulations  expressed  in  their  contract  as  the  conditions  of 
their  liability.  The  contract  is  in  writing,  and  is  contained  in  the 
policy  of  insurance.  In  consideration  of  $8.50  paid  by  the  plaintiff", 
the  defendants  covenanted  to  insure  his  property  against  loss  or 
damage  by  fire  for  the  term  of  three  years  commencing  August  15, 
1876.  The  policy  contained  this  condition  ;  "  If  the  above-mentioned 
premises  shall  be  occupied  or  used  so  as  to  increase  the  risk,  or  become 
vacant  and  unoccupied  for  a  period  of  more  than  ten  days,  or  the  risk 
be  increased  by  any  means  whatever  within  the  control  of  the  assured, 
without  the  assent  of  this  company  indorsed  hereon,  .  .  .  then,  and 
in  every  such  case,  this  policy  shall  be  void."  The  premises  remained 
unoccupied  from  August  24  until  December  11,  1876,  and  on  the  18th 
or  19th  of  that  month  were  destroyed  by  fire.  The  contract  was,  not 
that  the  policy  should  be  void  in  case  of  loss  or  damag^by  fire  during 
the  period  nfjinoccnpancv.  but  that  vacancy  and  unoccnpancv  should 
terminatelhe  policy.  There  is  no  occasion  to  inquire  what  distinction 
there  may  be  between  a  vacant  and  an  unoccupied  building  (Herrman 
V.  Merchants'  Ins.  Co.,  81  N.  Y.  184  ;  Herrman  v.  Adriatic  Ins.  Co., 
85  N.  Y.  162 ;  N.  A.  Fire  Ins.  Co.  v.  Zaenger,  63  111.  464  ;  American 
Ins.  Co.  V.  Padfield,  78  111.  167),  for  no  point  was  made  at  the  trial 
that  the  plaintiff's  buildings  were  not  both  vacant  and  unoccupied  from 
August  24  until  December  11.  Nor  is  it  necessary  to  go  into  an 
inquiry  of  the  reasons  for  exacting  this  condition.  It  is  enough  that 
the  parties  entered  into  the  covenant.     It  was  a  condition  that  would 

1  The  reporter's  statement  has  not  been  reprinted.  —  Ed. 


576  MOORE    V.    PHCENIX    INS.    CO.  [CHAP.  VI. 

afford  protection  of  a  substantial  character  against  fraudulent  incendi- 
arism, of  whicli  insurers  may  well  avail  themselves.  Hill  v.  Ins.  Co., 
58  N.  H.  82;  Sleeper  v.  Ins.  Co.,  56  N.  H.  406.  The  insurers  had 
a  right,  by  the  terms  of  the  policy,  to  the  care  and  supervision  which 
are  involved  in  the  occupanc}'  of  the  buildings.  Ashworth  v.  Ins.  Co., 
112  Mass.  422. 

There  was  no  waiver  by  the  defendants  of  the  condition,  nor  an}' 
assent  to  the  changed  condition  of  the  premises  insured,  for  thev  had 
no  notice  or  knowledge  that  the  buildings  were  unoccupied  until  the 
plaintiff  furnished  his  proofs  of  loss.  A  waiver,  to  be  effectual,  must 
be  intentional.  The  premises  were  left  unoccupied  more  than  ten 
dajs  ;  and  if  the  non-occupation  had  continued  to  the  time  of  the  fire, 
the  plaintiff  could  not  recover.  Fabyan  v.  Ins.  Co.,  33  N.  H.  206 ; 
Shepherd  v.  Ins.  Co.,  38  N.  H.,  240;  Sleeper  v.  Ins.  Co.,  56  N.  H. 
400;  Hill  V.  Ins.  Co.,  58  N.  H.  82;  Baldwin  v.  Ins.  Co.,  60  N.  H. 
164  ;  Lyman  v.  Ins.  Co.,  14  Allen,  329  ;  Merriam  v.  Ins.  Co.,  21  Pick. 
162;  Herrman  v.  Ins.  Co.,  85  N.  Y.  162;  Harrison  v.  Ins.  Co.,  9 
Allen,  231  ;  Wustum  v.  Ins.  Co.,  15  Wis.  138;  Mead  v.  Ins.  Co.,  7 
N.  Y.  530  ;  May  Ins.  (ed.  1873)  s.  248. 

It  is  contended  by  the  plaintiff,  upon  the  authority  of  State  v. 
Ili(;limoud,  26  N,  H.  232,  that  the  policy  had  not  become  absolutely 
void  at  the  expiration  of  ten  days  from  the  time  the  house  became 
unoccupied,  but  was  voidable  only  at  the  election  of  the  defendants. 
In  the  construction  of  contracts  words  are  to  be  understood  in  their 
ordinary  and  popular  sense,  except  in  those  cases  in  which  the  words 
used  have  acquired  by  usage  a  peculiar  sense  different  from  the  ordi- 
nary and  popular  one.  In  this  case  the  word  "  void  "  has  not  acquired 
by  usage  a  different  signification  from  the  ordinary  and  popular  one  of 
a  contract  that  has  come  to  have  no  legal  or  binding  force.  Whether 
the  cessation  of  the  executory  contract  of  insurance  was  temporary  and 
conditional,  or  perpetual  and  absolute,  is  a  question;  but  "void" 
means  that  on  the  eleventh  day  of  continuous  non-occupation  the 
plaintiff  was  not  insured.  The  defendants  might  have  waived  the 
condition  altogether,  or  might  have  waived  its  breach ;  but  having 
had  no  opportunity  before  the  loss  to  make  their  election  to  waive  the 
breach,  tlieir  refusal  to  pay,  when  notified  of  the  loss  and  unoccupancy, 
was  an  effectual  election  that  the}'  insisted  upon  the  condition  in  the 
policy. 

The  duty  of  obtaining  the  consent  of  the  defendants  to  tlie  changed 
condition  of  the  buildings  rested  with  the  plaintiff.  By  his  neglect  to 
comply  with  this  requirement  of  the  contract,  it  came  to  an  end  by  force 
of  its  own  terms.  Girard  Ins.  Co.  v.  Ilebard,  95  Pa.  St.  45.  If,  when 
the  unoccupanc}'  commenced,  he  had  requested  the  assent  of  the 
defendants,  they  would  have  had  their  option  to  continue  the  policy 
upon  payment  of  such  additional  premium  as  the  increased  risk  called 
for,  or  to  cancel  the  policy,  refunding  the  unearned  premium.  Lyman 
V.  Ins.  Co.,  14  Allen,  329.     There  is  no  presumption  that  they  would 


SECT.  II.]  MOOKE    V.    PH(ENIX    INS.  "CO.  577 

have  given  their  assent  to  the  unoccupancy  of  the  buildings  without 
the  payment  of  a  premium  eommensurate  with  the  additional  hazard. 

The  contract  being  once  terminated,  it  could  not  lie  i-evived  without 
the  consent  of  both  of  the  contracting  parties.  It  is  innnaterial,  then, 
whether  the  loss  of  the  buildings  is  due  to  unoccupancy  or  to  some 
other  cause.  Mead  v.  N.  W.  Ins.  Co.,  7  X.  Y.  530,  53.5,  536  :  Lyman 
V.  State  M.  F.  Ins.  Co.,  14  Allen,  329,  335;  Mcrriam  v.  Ins.  Co.,  21 
Pick.  162;  Jennings  v.  Ins.  Co.,  2  Dcuio,  81;  Shepherd  v.  Ins.  Co.. 
38  N.  H.  232,  239,  240  ;  Poor  v.  Ins.  Co.,  125  Mass.  274;  Alexander 
V.  Ins.  Co.,  QQ>  N.  Y.  464,468;  Sleeper  r.  Ins.  Co.,  bQ  N.  H.  401  : 
Hill  V.  Ins.  Co.,  58  N.  H.  82.^  .   .  . 

This  result  is  in  accordance,  also,  with  that  rule  of  the  law  of  marine 
insurance  which  holds  that  a  deviation  fi-om  the  stated  voyage  against 
a  condition  in  the  policy  discharges  the  insurer,  though  the  loss  docs 
not  hap()en  during  the  deviation,  nor  the  risk  be  increased  tliereby. 
Kettell  r.  Wiggin,  13  Mass.  68;  Burgess  r.  Ins.  Co.,  126  Mass.  70; 
Fernandez  v.  Ins.  Co.,*48  N.  Y.  571  ;  Ins.  Co.  '".  Le  Ro}-,  7  Crancll, 
26.  Kent  says:  "The  courts  are  exceedingly  strict  in  requiring  a 
prompt  and  stead}'  adherence  to  the  performance  of  the  precise  voyage 
insured;  and,  considering  the  particular  state  of  facts  upon  which  cal- 
culations of  the  value  of  risks  arc  made,  and  the  uncertainty  and  danger 
of  abuse  that  relaxations  of  the  doctrine  would  introduce,  the  severity 
of  the  rule  is  founded  in  sound  [)olicy.'"     3  Kent  Com.  314.   .   .   . 

The  decisions  in  Maine,  cited  l)y  the  plaintiff,  are  not  in  point,  for 
c.  34,  Laws  1861,  3Iaine,  provides  that  "Any  change  in  the  property 
insured,  its  use  or  occupation,  or  breach  of  any  of  the  conditions  or 
terms  of  the  conti'act  hj  the  insured,  shall  not  affect  the  contract  unless 
the  risk  was  thereby  materially  increased."  May  Ins.  269  ;  Cannell  v. 
Phoenix  Ins.  Co.,  59  Me.  582. 

The  cases  cited  from  Illinois  seem  to  have  followed  the  decision  in 
Ins.  Co.  V.  Wetmore,  32  111.  245,  where  the  policy  provided  for  a  sus- 
pension of  liabilit}'  so  long  as  the  premises  should  be  appropriated  and 
occupied  in  violation  of  the  terms  of  the  policy.  And  accordinglv,  in 
N.  E.  F.  &  M.  Ins.  Co.  v.  Schettler,  38  111.  16^6;  Schmidt  v.  Ins.'Co., 
41  111.  296  ;  and  Ins.  Co.  v.  McDowell,  50  111.  120,  it  was  held  that  the 
insurer's  liability  recommenced  when  the  increased  risk  termiiTated.  .  .  . 

The  strict  and  literal  meaning  of  the  stipulation  that  the  policy  shall 
l)e  void  if  the  premises  remain  unoccupied  more  than  ten  daj-s  is  not 
that  the  insurance  will  be  suspended  merely  during  non-occupation 
after  the  ten  days,  and  will  revive  when  occupation  is  resumed.  In 
ordinary  speech,  a  void  policy  is  one  that  does  not  and  will  not  insure 
the  holder  if  the  insurer  seasonably  asserts  its  invalidity.  It  might  be 
argued  that  this  clause  should  be  so  construed  as  to  accomplish  no 
more  than  the  purpose  for  which  it  was  inserted  ;  that  its  sole  purpose 

1  In  reprinting  the  opinion,  it  has  seemed  necessary  to  omit  several  passages  dis- 
cussing authorities  on  the  effect  of  breaking  conditions  as  to  prohibited  articles,  other 
insurance,  and  alienation.  —  Ed. 

37 


578  MOORE    V.    PHCENIX   INS.    CO.  [CHAP.  VI. 

was  to  protect  the  insurer  against  the  risk  resulting  from  non-occupa- 
tion ;  and  that  if  this  risk  was  terminated  by  reoccupation,  tlie  parties 
intended  the  insurance  should  be  suspended  only  during  the  existence 
of  the  cause  of  a  risk  which  the  company  did  not  assume.  On  the 
other  hand,  it  might  be  argued  that  such  an  intention  would  have  been 
manifested  by  words  specially  and  expressly  providing  for  a  suspension 
and  resumption  of  the  insurance,  and  would  not  have  been  left  to  be 
inferred  from  the  general  agreement  that  the  policy  should  be  void  ; 
that  a  final  termination  of  the  insurance  at  the  end  of  ten  days  of  non- 
occupation  is  plainh-  expressed  b}-  the  provision  that  the  policy  shall 
then  be  void ;  and  that  the  parties  would  not  think  it  necessarj-  to  go 
further,  and  provide  that  the  void  policy  should  not  become  valid  on 
reoccupation. 

Without  determining  the  true  construction,  or  what  the  result  would 
be  if  there  were  no  authority  in  this  state,  we  are  inclined  to  follow  the 
decision  in  Fabyan  i\  Insurance  Company,  33  N.  H.  203,  although  in 
that  case  the  question  of  suspension  seems  not»to  have  been  presented 
b}-  the  plaintiff  or  considered  by  the  court.  It  was  apparently  assumed 
that  "  void  "  meant  finally  extinguished,  and  not  temporarily  suspended  ; 
and  in  the  present  state  of  the  authorities  we  are  not  prepared  to  hold 
that  the  assumption  was  erroneous. 

Verdict  set  aside} 

Blodgett  and  Carpenter,  JJ.,  did  not  sit ;  Stanley,  J.,  dissented  ; 
the  others  concurred. 

1  For  the  later  history  of  the  litigation,  see  Moore  v.  Phoenix  F.  Ins.  Co.,  64  N.  H. 
140(1886). 

Compare  Laselle  v.  Hobokeii  F.  Ins.  Co.,  43  N.  J.  L.  468  (1881). 
On  A'acancy  and  the  like,  see  also  :  — 

Sleeper  v.  N.  H.  F.  Ins.  Co.,  56  N.  IT.  401  (1876)  ; 

Hill  V.  Equitable  M.  F.  Ins.  Co.,  58  N.  H.  82  (1877)  ; 

Cornish  v.  Farm  Buildings  F.  Ins.  Co.,  74  N.  Y.  295  (1878) ; 

American  Ins.  Co.  v.  Fo.ster,  92  111.  334  (1879) ; 

Sonneborn  v.  Manufacturers'  Ins.  Co.,  44  N.  J.  L.  220  (1882); 

Short  r.  Home  Ins.  Co.,  90  N.  Y.  16  (1882) ; 

Insurance  Co.  v.  Wells,  42  Ohio  St.  519  (1885)  ; 

Snyder  i'.  Fireman's  Fund  Ins.  Co.,  78  Iowa,  146  (1889) ; 

Halpin  v.  Ins.  Co.  of  North  America,  120  N.  Y.  73  (1890)  ; 

Continental  Ins.  Co.  v.  Kyle,  124  Ind.  132  (1890)  ; 

England  v.  Westchester  F.  Im.  Co.,  81  Wis.  583,  588  (1892); 

Limburg  v.  German  F.  Ins.  Co.,  90  Iowa,  709  (1894) ; 

Home  Ins.  Co.  v.  Scales,  71  Miss.  975  (1894) ; 

Moody  V.  Ins.  Co.,  52  Ohio  St.  12,  20-24  (1894)  ; 

Names  v.  Dwelling  House  Ins.  Co.,  95  Iowa,  642,  649-6.50  (1895); 

East  Texas  F.  Ins.  Co.  v.  Kempner,  12  Tex.  Civ.  App.  .533  (1896) ; 

Home  Ins.  Co.  v.  Mendenhall,  164  111.  458,  468-469  (1897) ; 

Jone^  V.  Granite  State  F.  Ins.  Co  ,  90  Me.  40  (1897) ; 

Clifton  Coal  Co.  v.  Scottish  U.  &  N.  Ins.  Co.,  102  Iowa,  300  (1897) ; 

Stolteuburg  i;.  Continental  Ins.  Co.,  106  Iowa,  565  (1898).  — Ed. 


SECT.  II.]  KEAPER   CITY    INS.    CO.    V.   BRENNAN.  579 


SECTION   II.  (continved). 

(E)     CONDITIOKS   AS   TO   OWNERSHIP   AT    THE    INCEPTION    OF    THE    CONTRACT. 

REAPER   CITY   INS.    CO.   v.    BRENNAN. 
Supreme  Court  of  Illinois,  1871.     58  111.  158. 

Appeal  from  the  Circuit  Court  of  Sangamon  County ;  the  Hon. 
B.  S.  J^DWARDS,  Judge,  presiding. 

Tliis  was  an  action  on  a  policy  of  insurance,  brouglit  by  Brennan 
against  tlie  Reaper  City  Insurance  Company.  Judgment  was  rendered 
in  favor  of  the  plaintiff,  from  which  the  defendant  appealed. 

Messrs.  X  C  <&  C.  L.  ConMing^  for  the  appellant. 

Messrs.  Herndon  &  Orendorff^  for  the  appellee. 

Mr.  Cbiep  Justice  Lawrence  delivered  the  opinion  of  the  court : 

This  is  an  action  on  a  policy  of  insurance.  At  the  time  the 
insurance  was  effected,  the  property  had  been  sold  on  a  judgment  and 
execution  against  the  assured,  but  the  twelve  months  allowed  for 
reclemption  had  not^exiDTredT"' TTTs^lnsisted^  tlie  non-disclosure  of  this 
sale  avoids  the  policy,  by  virtue  of  the  following  clause  therein  : 

"If  the  property  to  be  insured  be  held  in  trust  or  on  commission, 
or  be  a  leasehold  interest  or  equity  of  redemption.,  or  if  the  interest  of 
the  insured  to  the  property  be  any^other  than  the  entire,  unconditional, 
ami  sole  ownersUTp^onthe  property,  for  the  use  and  benefit  of  the^ 
insTiredjTTmust  be  so  represented  to  the  company,  and  so  expressed 
in  the  written  part  of  this  policy  ;  otherwise  the  policy  shall  be  void." 

We  must  hold  this  defence  valid.  It  cannot  truthfully  be  said  that 
the  assured  had,  at  the  date  of  the  insurance,  "the  entire,  uncondi- 
tional, and  sole  ownership  of  the  property."  On  the  contrary,  the 
purchaser  at  the  sheriff's  sale,  although  he  had  not  acquired  a  complete 
title,  either  legal  or  equitable,  as  held  in  Phillips  v.  Demoss,  14  111. 
412.  had  certainly  acquired  an  interest  in  the  land  to  the  extent 
of  his  bid,  which  would,  in  a  few  months,  ripen  into  a  title  unless 
redeemed.  •Withjthis  outstanding  and  paramount_interest  vested  in 
another,  the  title  of  the  assured  was  not  "  entire,  unconditional,  and 
jole^ 

The  judgment  must  be  reversed  and  the  cause  remanded. 

Judgment  reversed. 


580  CLAY  p.  AND  M.  INS.  CO.  V.  HURON  SALT,  ETC.  CO.       [CHAP.  VL 


CLAY   FIRE  AND   MARINE   INS.    CO.   v.    HURON   SALT 
AND   LUMBER   MANUFACTURING   CO. 

Supreme  Court  of  Michigan,  1875.     31  Mich.  346.^ 

Error  to  Ba}-  Circuit. 

This  was  an  action  of  assumpsit  brought  b}'  the  Huron  Salt  and 
Lumber  Manufacturing  Co.,  for  the  use  and  benefit  of  George  C. 
Smith,  upon  a  policy  insuring  The  Huron  Salt  and  Lumber  Manufac- 
turing Co.,  to  the  amount  of  81, 500,  on  "  their  one-stor\-  frame  salt 
block,"  and  certain  machinery  contained  therein,  "  loss  payable  to 
George  C.  Smith,  ...  as  his  interest  may  appean"  The  poRcy  said 
tUaT'"]?  the  assured  is  not,  the  sole  aiid_  uiicoiiditional  owner  oXJli;^ 
property  insured,  or  (if  said  property  be  a  building  or  buildings)  of  the 
land  on  which  such  building  or  buildings  stand,  by  a  sole,  uncondi- 
tional, and  entire  ownership  and  title,  and  is  not  so  expressed  in  the 
written  portion  of  the  policy,  —  then  .  .  .  this  policy  shall  be  void." 
The  insurance  was  for  one  year  from  April  2,  1873.  The  property 
was  destroyed  by  fire  on  June  22,  1873. 

The  insurance  company  pleaded  the  general  issue  and  gave  notice  of 
defences,  that  when  the  policy  was  issued  the  plaintiff  corporation  was 
not  the  entire,  unconditional,  and  sole  owner ;  that  the  interest  of  the 
plaintiff  corporation  was  not  expressed  in  the  written  part  of  thepolic}' ; 
that  on,  or  about  April  1,  1868,  the  plaintiff  corporation,  by  a  written 
contract  in  the  name  of  the  president,  sold  the  property  to  John  W. 
Babcock,  who  fully  paid  for  the  property,  went  into  possession,  and  at 
the  date  of  the  policy  and  of  the  loss  was  equitable  owner  and  entitled 
to  conveyance  and  possession  ;  that  at  the  date  of  the  policy  and  of  the 
loss  the  plaintiff  company  had  no  interest  except  as  trustee  of  the 
naked  legal  title  ;  and  that  George  C.  Smith  had  no  interest  in  the  prop- 
erty at  the  date  of  the  policy  or  of  the  loss. 

At  the  trial  the  defendant  company  offered  to  make  proof  of  the  facts 
stated  in  the  notice  as  to  the  equitable  title  of  Babcock.  The  offer  was 
rejected.  The  defendant  compan}'  also  requested  a  charge  that  no 
recovery  could  be  had  without  proof  of  some  legal  or  equitable  interest 
l)elonging  to  George  C.  Smith.  This  was  refused.  The  jury  found 
for  the  plaintiff  company.  The  case  came  to  the  Supreme  Court  upon 
a  bill  of  exceptions.  The  exceptions  included  some  matters  not  men- 
tioned in  this  statement. 

Ilohnes,  ILiynes  &  Stoddard^  for  plaintiff  in  error. 

McDonell  &  Cohh^  and  Hoyt  Post^  for  defendant  in  error. 

Graves,  C.  J.'''  .  .  .  The  point  raised  by  a  request  to  charge,  as 
before  mentioned,  is  not  well  taken.   .   .  . 

^  The  statement  has  been  based  upon  the  opinion.  — Ed. 

2  In  reprinting  the  opinion,  the  statement  of  the  case  has  been  omitted  ;  and  so 
have  passages  foreign  to  ownership,  which  was  the  only  point  as  to  which  error  was 
found.  —  Ed. 


SECT.  II.]        CLAY  F.  AND  M.  INS.  CO.  V.  HURON  SALT,  ETC.  CO.  581 

The  occurrence  iu  the  policy  of  the  direction  to  pay  to  George  C. 
Smith,  as  his  interest  might  appear,  did  not  necessitate  proof  of  any 
interest  by  him  in  tlie  insured  property.  The  insurance  was  not  made 
with  iiim,  but  with  the  salt  and  lumber  company.  They  paid  the  con- 
sideration and  were  the  promisees.  The  expression  in  the  policy  in 
regard  to  paying  to  Smith  as  his  interest  might  appear,  seems  to  have 
been  chosen  as  a  mode  of  appointing  that  payment  should  be  made  by 
the  insurance  company  to  him  to  the  extent  of  some  claim  he  had  or  was 
expected  to  have  against  the  assured.  Bates  /•.  Equitable  Ins.  Co.,  10 
Wall.  33.  Whatever  might  be  paid  to  him  consistently  and  in  accord- 
ance with  his  claim  against  the  assured,  which  this  appointment  con- 
templated, would  be  a  payment  to  the  assured. 

No  interest  of  Smith  appears  to  have  been  contemplated  as  the  sub- 
ject of  the  insurance,  and  no  interest  by  him  in  the  property  insured 
was  made  a  condition  of  the  right  of  the  assured  to  assert  a  remedy  in 
the  policy.  His  chance  and  the  right  of  the  assured  were  not  intended 
to  depend  upon  his  having  an  insurable  interest  in  the  property,  but 
upon  the  requisite  ownership  of  the  assured. 

We  come  now  to  the  offer  of  the  defence  to  prove  that  Babcock  held 
the  entire  equitable  estate  and  interest  and  the  right  to  be  immediately 
invested  with  the  legal  title,  and  that  this  bare  legal  title  then  due  to 
Babcock  was  the  only  badge  of  ownership  which  the  assured  possessed. 

As  the  offer  was  refused,  we  must  consider  the  case  as  though  the 
fact  proposed  to  be  shown  had  1)ecn  established.  And  it  must  be 
borne  in  mind  that  the  question  is  not,  whether  the  salt  and  lumber 
corapan}-,  as  lawful  possessor  for  the  time  being  of  the  bare  legal  title, 
had  a  scintilla  of  insurable  interest,  but  it  is,  whether  the  clause  which 
insisted  that  it  should  be  stated  in  the  policy,  if  the  fact  were  so,  that 
the  assured  was  not  the  sole  and  unconditional  owner  by  a  sole,  un- 
conditional, and  entire  ownership  and  title,  was  satisfied  by  the  facts  as 
we  must  assume  them  to  have  been  under  the  offer  of  proof  and  the 
statement  in  the  policy  that  the  property  was  "  their"  propertj^. 

If  it  was  not,  then  the  policy  l)y  its  own  terras  was  made  ineffectual, 
and  the  plaintiff  corporation  was  not  entitled  to  recover. 

After  much  consideration,  I  am  unable  to  concur  with  the  circuit 
court  upon  this  point.  No  reasonable  interpretation  of  the  policy  has 
been  intimated  or  has  suggested  itself  which  will  harmonize  the  require- 
ments of  the  policy,  the  statement  as  to  ownership  in  the  clause  de- 
scribing the  property,  and  the  condition  of  things  contemplated  by  the 
offer  of  proof  The  express  statement  in  regard  to  ownership  was  not, 
when  viewed  in  connection  with  the  subsequent  clause,  a  correct  state- 
ment. It  gave  no  intimation  of  any  outstanding  right  in  Babcock,  or 
in  anybody  else.  It  conveyed  no  other  idea  than  that  of  complete 
and  exclusive  ownership  by  the  salt  and  lumber  company.  There  was 
no  qualification  whatever.  The  matter  will  appear  in  the  clearest  light 
by  reading  the  statement  in  the  beginning  of  the  policy,  that  the  prop- 
erty was  "  their  "  propert}-,  in  connection  with  the  clause  before  quoted. 


582  CLAY  F.  AND  M.  INS.  CO.  V.  HURON  SALT,  ETC.  CO.        [CHAP.  VL 

requiring  it  to  be  stated,  if  true,  that  it  was  not  their  property  b}-  entire 
ownership  and  title,  etc.  • 

When  thus  examined,  tlie  policy  will  be  seen  to  import  that  the  salt 
and  lumber  company  was  not  merely  owner,  but  owner  by  a  sole,  un- 
conditional,  and  entire  0W7iership  and  title. 

At  tills  very  time,  however,  as  must  be  conceded  for  the  purpose  of 
the  question,  Babcock's  right  was  in  every  way  so  ample  and  complete 
that  a  statement  in  the  policy  that  the  property  belonged  to  him  would 
have  been  warranted.  Certainly  it  cannot  be  claimed  that  a  party 
holds  by  a  sole,  unconditional,  and  entire  ownership  and  title,  when  in 
truth  another  at  the  same  time  has  so  complete  a  right  and  interest 
tliat  he  may  be  rightly  considered  as  owner. 

The  point  appears  too  clear  to  justify  elaborate  discussion.  Among 
a  number  of  cases  having  some  bearing,  only  two  will  be  noticed.  The 
liist  is  the  Columbian  Insurance  Co.  v.  Lawrence,  2  Pet.  25.^  .   .   . 

The  other  case  is  Hough  v.  City  Fire  Insurance  Co.,  29  Conn.  10. 
There  the  applicant,  Samuel  W.  Hough,  described  the  property  as  "  his 
dwelling-house,"  and  it  was  likewise  so  described  in  the  policy.  The 
policy  contained  the  following  condition:  "If  the  interest  in  the  prop- 
erty to  be  insured  is  not  absolute,  it  must  be  so  represented  to  the 
company  and  expressed  in  the  policy  in  writing ;  otherwise  the  insur- 
ance shall  be  void." 

It  appeared  at  the  trial  that  Hough's  ownership  was  similar  to  that 
claimed  for  Babcock  in  the  case  at  bar.  The  legal  title  was  in  another, 
with  whom  Hough  had  made  a  parol  contract  to  purchase  for  a  fixed 
price.  He  had  agreed  absolutely  to  paj',  had  paid  part,  had  entered  as 
purchaser,  and  made  valuable  improvements. 

The  court  were  of  opinion  that  as  he  had  a  right  to  the  property  and 
the  power  b^'  law  to  enforce  that  right,  it  might  properly  be  denomi- 
nated his.  Among  other  observations,  the  court  said  :  *•'  The  evidence 
conduced  to  prove  that  the  plaintiff's  interest  in  that  property  was  an 
absolute  interest.  That  is  an  absolute  interest  in  property-  which  is  so 
completely  vested  in  the  individual  that  he  can  by  no  contingenc}'  be 
deprived  of  it  without  his  own  consent,  and  b}-  this  contract  with 
Eliakim  Hough,  and  its  part  performance,  the  plaintiff  had  acquired  a 
right  to  the  whole  property,  of  which  he  could  not  be  deprived  without 
his  own  consent.  So,  too,  he  is  the  owner  of  such  absolute  interest 
who  must  necessarily  sustain  the  loss  if  the  propert}-  is  destroyed."  ^ 

If  Hough,  as  held  in  this  case,  had  an  absolute  interest,  and  was  so 
far  owner  that  the  property  could  rightl}'  be  described  as  his  property 
in  an  application  for  insurance,  and  in  a  policy,  most  clearlv  Babcock, 
if  in  the  position  contemplated  by  the  offer  of  proof,  held  an  absolute 
interest,  and  was  in  a  situation  which  would  have  justified  describing 

*  Here  was  stated  Columbian  Ins.  Co.  v.  Lawrence,  ante,  p.  248,  n.  (1829).  —  Ed. 
2  Ace:  Loveiithal  v.  Home  Ins.  Co.,  112  Ala.  108  (1896). 

Compare  Brown  i-.  Williams,  28  Me.  252  (1848)  ;  Hinmau  v.  Hartford  F.  Ins.  Co.. 
3G  Wis.  1.59,  167  (1874). —Ed. 


SECT.  II.]  MERS    V.   FEANKLIX   INS.    CO.  583 

bim  as  oicner,  in  the  polic}-  in  suit,  and  the  salt  and  lumber  company 
was  not  at  the  same  time  holding  by  a  sole,  unconditional,  and  entire 
ownership  and  title. 

The  view  taken  disposes  of  the  case,  and  renders  a  new  trial  neces- 
sary. The  judgment  should  be  reversed,  with  costs,  and  a  new  trial 
awarded.^ 


MERS  V.  FRANKLIN  INS.  CO. 
Supreme  Court  of  Missouri,  1878.     68  Mo.  127.^ 

Appe.\l  from  Cass  Circuit  Court. 

This  was  an  action  upon  a  policy  whereby  the  defendant  insured  the 
plaintiff  for  one  year  from  March  10,  1873,  against  loss  bj-  fire  to  the 
amount  of  §1,000  on  his  hotel,  and  Si, 000  on  personal  property.  All 
the  property  was  destroyed  b}'  fire  on  April  18,  1873. 

The  policy  provided  that  "  if  the  interest  in  the  property  to  be  in- 
sured be  a  leasehold  interest,  or  other  interest  not  absolute,  it  must  be 
so  repi;esented  to  the  company  and  expressed  in  the  policy  in  writino^ 
otherwise  the  insurance  shall  be  voicL"  There  was  nothing  to  show 
that  the  plaintiff  signed  a  written  application  for  insurance,  or  made 
any  representation  as  to  the  ownersliip  of  the  house  ;  but  in  the  polic}- 
it  was  described  as  "  his." 

The  plaintiff  had  owned  the  house,  but  in  November,  1872,  it  was 
sold  to  one  Yocura  at  sheriff's  sale  under  an  execution.  On  Dec.  16, 
1872.  the  plaintiff  and  Yocum^  the  latter  acting  byian  agent,  executed 
an  instrument,  under  seal,  whereby  Yocum  agreed  to  execute  a  quit- 
clajm  to  the  plaintiff  in  case  the  latter  ijhoiild4iay_$L,480  on  or  before* 
JuneJ^.  1873.  On  Dee.  16,  1^2,  the  same  parties  executed  a  lease  of 
tlie  premises  for  one  3'ear.  The  plaintiff  went  into  possession  and  paid 
rent.  Up  to  the  day  of  the  fire  the  plaintiff  paid  nothing  under  the 
agreement  for  a  convcA'ance. 

On  this  state  of  facts  the  defendant  contended  that  the  policy  was 
A-oid  as  to  the  building.  The  plaintiff  recovered  judgment  for  the  full 
amount  of  the  policy.     The  defendant  appealed. 

AdcDHS  &  Sherlock^  for  appellant. 

JR.  0.  Jior/gess,  for  respondent. 

Hough,  J.^  .  .  .  We  think  it  quite  clear  from  the  record  that  the 
plaintiff  had.  at  the  time  of  the  fire,  onl}'  a  leaseliold  interest  in  the 
building.  The  instrument  executed  by  Yocum,  through  his  agent, 
Briant,  was  not  a  contract  of  sale,  and  conferred  upon  the   plaintiff 

1  Ace:  Barnard  v.  Xational  F.  Ins.  Co.,  27  ^ro.  App.  26  (1887);  Hamilton  v 
Dwellinoj  House  Ins.  Co.,  98  Mich.  535  (1894).  —Ed. 

^  The  statement  has  been  based  upon  the  opinion.  —  Ed. 
s  After  stating  the  case.  —  Ed. 


584  MERS   V.   FRANKLIN    INS.    CO.  [CIIAP.  VI. 

none  of  the  rights  of  a  vendee  of  the  propert}'  in  question,  and  hence 
does  not  come  within  the  rule  laid  down  in  Gaylord  v.  Lamar  Fire  Ins. 
Co.,  40  Mo.  13.  So  far  as  appears,  this  instrument  was  without  any 
consideration,  iu  fact  was  a  simple  gratuity,  and  conferred  a  mere 
privilege  upon  the  plaintiff  to  redeem  the  estate  upon  the  payment  of 
a  specitied  sura.  It  conferred  a  mere  option,  and  not  a  vested  interest. 
By  it  no  obligation  is  created,  on  the  part  of  the  plaintiff,  to  pay  the 
sum  named  at  the  time  specified,  or  at  anj-  time,  and  there  is  no  evi- 
dence of  any  independent  undertaking  to  that  effect.  That  the  parties 
themselves  considered  it  a  mere  privilege  is  manifested  b}'  the  fact  that 
plaintiff,  at  the  time  of  receiving  it,  accepted  the  lease  from  Yocum  of 
tlie  very  premises  embraced  in  the  agreement,  and  paid  rent  therefor. 
It  is  quite  evident,  therefore,  that  the  plaintiff  w^ent  into  possession  as 
lessee  and  not  as  vendee  ;  and  that  his  interest  was,  at  the  time  of  the 
contract  and  the  loss,  a  leasehold  only.  Hand  v.  Insurance  Co.,  57 
N.  Y.  41. 

"We  are  next  to  consider  whether  the  condition  of  the  policy  above 
recited  has  been  complied  with.  A  warrant}-  is_ai^art  of_tlie^on tract, 
and  must  be  exactly  and  literally  fulfilled.  It  is  in  the  nature  of  a  con- 
ditionpreceTIent^^hd  no  inquiry  is  allowed  into  the  materialit}'  or  ira- 
materialit}'  of  the  fact  warranted.  Loehner  v.  Home  Mut.  Ins.  Co.,  17 
Mo.  255.  Where  arepresentation  is  inserted  in  the  policy,  or  where  it 
is  referred  to  in  the  policy  as  forming  a  part  thereof,  the  representation 
becomes  a  warranty.  Flanders,  233,  and  cases  cited.  Conditions  an- 
nexed to  a  policy  of  insurance  are,  likewise,  a  part  of  the  policy,  and 
are  of  the  same  effect  as  if  incorporated  in  it.  By  the  general  law  of  in- 
surance, the  interest  of  the  insured  in  the  propertv  is  not  required  to  be 
specifically  described  in  the  policy.  Franklin  v.  The  Atlantic  Fire  Ins. 
Co..  42  Mo.  459.  The  object  of  the  condition  above  cited  undoubtedly 
was  to  require  in  all  cases  a  representation  as  to  the  interest  of  the 
assured,  and  to  make  such  representation  a  warranty.  This  condition 
is  a  reasonable  and  valid  one.  In  the  case  last  cited  this  court,  in 
speaking  of  a  similar  clause  in  a  policy  then  before  it,  said  that  its  ob- 
ject doubtless  was  to  protect  the  company  against  the  danger  of  taking 
risks  on  the  property  insured  for  so  large  an  amount  in  proportion  to 
its  value,  or  the  value  of  the  interest  of  the  assured,  as  to  furnish  a 
temptation  to  fraudulent  conduct.^  .  .   . 

Wiien,  by  the  terms  of  the  policy,  no  disclosure  is  required  of  the 
assured  as  to  the  extent  of  his  interest,  and  no  inquiry  is  made  by  the 
company  in  reference  thereto,  a  lessee  may,  in  effecting  insurance, 
properly  describe  the  premises  as  his,  but  his  recovery  will,  in  case  of 
loss,  be  restricted  to  his  qualified  interest.  Nil)lo  v.  ]S"orth  American 
Fire  Ins.  Co.,  1  Sand.  551,  561  ;  Fletcher  v.  Commonwealth  Ins.  Co.,  18 
Pick.  419  ;  Sussex  Co.  Mut.  Ins.  Co.  r.  Woodruff,  2  Dutcher,  541.  But 
when  a  disclosure  of  the  true  interest  of  the  assured,  if  the  same  is  not 
absolute,  is  required  to  be  made  by  a  condition  of  the  policy,  such  in- 

1  Here  wa.s  stated  Franklin  v.  Atlantic  F.  Ins.  Co.,  42  Mo.  456,  459  (18G8).  — Ed. 


SECT.  II.]       DAKIN  V.  LIVERPOOL,  LONDON  AND  GLOBE  INS.  CO.  585 

terest  must  be  stated  to  the  compan}-,  or  the  policy  will  be  void.  The 
acceptance  of  a  polic}-  containing  the  condition  under  consideration, 
witliout  any  representation  as  to  title,  or  any  statement  of  the  specific 
interest  of  the  assured,  amounts  to  a  declaration,  on  the  part  of  tlie 
assured,  that  his  interest  is  an  absolute  one.^  If  the  plaintiff  had  truly 
represented  his  interest  in  the  property  insured,  the  failure  of  the  agent 
to  incorporate  it  in  the  policy  would  not  avoid  the  policy.  But  as  it 
does  not  appear  that  the  plaintiff  stated  his  real  interest  in  the  build- 
ing, he  cannot  recover  for  the  loss  thereof.  The  judgment  must,  there- 
fore, be  reversed  and  the  cause  remanded.  Reversed. 

Judges  Napton  and  Henry  concur.     Sherwood,  C.  J.,  and  Nor- 
ton, J.,  dissent. 


(majoJ 


DAKIX,  Respondent,    v.    LIVERPOOL,  LOXDOX   AND  GLOBE 
INSURANCE  COMPANY,   Appellant. 

Court  of  Appeals  of  New  York,   1879.     77  N.  Y.  600.^ 

This  action  was  brought  upon  four  policies  of  insurance,  issued  b}- 
defendant  upon  a  tannery  in  Schuyler  County.  (Mem.  of  decision 
below,  13  Hun,  122.) 

The  policies  were  similar,  save  as  to  dates  and  amounts.  In  each 
the  insurance  was  to  "  S.  D.  Wood  and  T.  W.  Moore  «S:  Co.,  as 
interest  may  appear.  .  .  .  Loss,  if  any,  payable  to  Lyon  &  Dakin." 
The  property  was  owned  by  T.  W.  Moore  &  Co.  Wood  had  a  mort- 
gage thereon,  as  had  also  L^on  &  Dakin,  theirs  being  the  first 
mortgage.  The  interest  of  Lyon,  in  the  mortgage  last  mentioned, 
passed  subsequently  to  Dakin,  who  conve3'ed  an  interest  therein  to 
Wood.  The  defendant  urged,  among  other  objections  to  a  recovery, 
that  Wood's  interest,  as  mortgagee,  was  not  expressed  in  the  policies, 
and  that  there  was,  therefore,  a  breach  of  conditions  of  each  polic}', 
forfeiting  it  "if  the  interest  of  the  assured  in  the  propert}-,  whether 
as  owner,  trustee,  consignee,  factor,  agent,  mortgagee,  lessee,  or  other- 
wise, be  not  stated  in  the  policy  ;  "  or,  "  if  the  interest  of  the  assured 

1  .-ice.;  Lasher  v.  St.  Joseph  F.  &  M.  Ins.  Co.,  86  X.  Y.  42.3  (1881) ;  Scottish  Union 
&  National  Ins.  Co.  v.  Petty,  21  Fla.  399  (1885)  ;  Wilcox  v.  Continental  Ins.  Co.,  85  Wis. 
19.3,  198  (1893);  Hamilton  v.  Dwelling-House  Ins.  Co.,  98  Mich.  535,  540-542  (1894); 
Syndicate  Ins.  Co.  v.  Bohn,  27  U.  S.  App.  564  (Eighth  Circuit,  1894) ;  s.  c.  12  C.  C.  A. 
5.31,  and  65  Fed.  R.  165;  ^tna  Ins.  Co.  v.  Holcomb,  89  Tex.  404,  410,  412  (1896); 
Dumas  v.  Northwestern  National  Ins.  Co.,  12  Dist.  Col.  App.  245  (1898). 

Contra :  Philadelphia  Tool  Co.  v.  British  American  Assurance  Co.,  132  Pa.  236 
(1890) ;  Wright  v.  Fire  Ins.  Co.,  12  Mont.  474  (1892) ;  Schroedel  v.  Humboldt  F.  Ins. 
Co.,  158  Pa.  459  (1893) ;  Phenix  Ins.  Co.  !'.  Fuller,  53  Neb.  811  (1898) ;  ^Manchester  F. 
Ass.  Co.  V.  Abrams,  61  U.  S.  App.  276  (Ninth  Circuit,  1898) ;  3.  c.  32  C.  C.  A.  426, 
and  89  Fed.  R.  932.— Ed. 

2  Among  "  memoranda  of  causes  not  reported  in  full."  —  Ed. 


586  DAKIN'  V.  LIVERPOOL,  LONDON  AND  GLOBE  INS.  CO.       [CHAP.  VL 

in  the  property-  be  an}'  other  than  the  entire,  unconditional,  and  sole 
ownership  of  the  property  for  the  use  and  benefit  of  the  assured,"  and 
it  is  not  "  so  expressed  in  the  written  part  of  tliis  polic\'."  Held^  that 
the  interest  of  Wood  was  sufficiently  expressed  in  the  policies,  and 
there  was  no  breach  of  these  conditions. 

The  portion  of  the  opinion  upon  that  subject  is  as  follows  :  — 
"  The  second  point  is,  that  Simeon  D.  Wood  was  assured  as  owner, 
while  his  interest  was  really  that  of  a  mortgagee,  whereby  there  was  a 
breach  of  some  conditions  in  the  policy  which  we  have  given  above.  But 
some  effect  is  to  be  given  to  the  phrase  'as  interest  ma^-  appear.' 
This  was  in  manuscript,  inserted  in  the  printed  form  of  policy  b}-  the 
defendant.  It  indicated  uncertaintj- ;  that  there  was  something  contin- 
gent and  undetermined  in  the  mind  of  the  contracting  parlies  as  to  the 
interest  of  Wood  in  the  property  at  risk.  The  defendant  claims  that 
it  indicated  uncertainty'  as  to  the  extent  of  the  interest,  and  not  as  to 
its  quality  or  character.  But  when  it  is  once  conceded  or  held  that  this 
phrase  indicates  uncertainty,  we  know  not  wh}'  we  should  confine  that 
uncertaint}'  to  one  element  of  an  insui-able  interest  rather  than  another, 
unless  there  have  been  rules  laid  down  giving  such  effect  to  the  phrase. 
No  adjudication  has  been  cited  to  us  so  deciding.  A  somewhat  exhaust- 
ive search  fails  to  bring  one  to  our  attention  ;  while  Pitney  v.  Glens 
Falls  Ins.  Co.,  65  N.  Y.  6,  tends  the  other  way.  We  know  no  reason, 
where  the  use  of  the  phrase  indicates  such  uncertainty  in  the  drafts- 
man, and  creates  such  doubt  in  the  mind  of  one  called  to  interpret  as 
that  there  is  an  ambiguit}',  to  be  explained  onl}'  by  evidence  aliunde 
the  paper,  wh}'  the  evidence  may  not  be  directed  to  the  fact  that  the 
kind,  as  well  as  the  extent,  of  interest  was  not  clearly  ascertained  by 
the  contracting  parties,  or  was  purposely  left  without  statement  in  full. 
Nor  does  the  meaning  of  the  word  '  interest,'  used  in  the  phrase,  con- 
fine the  intention  of  the  draftsman  to  the  extent  rather  than  the  kind. 
The  phrase  '  an  interest,'  though  primarilv  it  included  the  terms  estate, 
right,  or  title  (Co.  Litt.  345  b,  *155)  has  latterly  come  often  to  mean 
less,  and  to  be  the  same  as  concern,  share,  and  the  like.  luhab.  of 
Northampton  v.  Smith,  11  Mete.  390.  In  contracts,  in  general,  that 
word  means  the  peculiar  right  of  property  which  one  has  in  a  thing. 
More  especially  is  this  so  in  contracts  of  insurance,  in  the  law  of  which 
so  much  space  is  taken  by  the  topic  of  insurable  interest,  whicli  deals 
especialh'  with  the  kind  rather  than  the  extent  of  right  in  the  pioperty  ; 
as  is  apparent  when  we  begin  to  enumerate  the  interests  usually  in- 
sured ;  as  owner,  mortgagor,  mortgagee,  agent,  consignee,  factor,  and 
the  like,  ad  infinitum.  The  use  of  a  similar  phrase  in  a  policy  viz.  : 
'  on  account  of  whomsoever  it  might  concern  at  the  time  of  loss,'  lia.s 
been  held  to  leave  it  undetermined,  until  the  loss  took  place,  who 
might  then  be  the  owner  of  the  property  and  entitled  to  the  moncN'. 
Rogers  v.  Traders'  Ins.  Co.,  6  Paige,  583.  Effect  has  been  given  to  a 
more  restricted  phrase,  '  for  account  of  whom  it  may  concern ; ' 
though  there  must  have  existed,  at  the  time  the  contract  of  insurance 


SECT.  11.]       DAKIN  V.  LIVERPOOL,  LONDON  AND  GLOBE  INS.  CO.  587 

was  made,  an  intention  to  protect  the  person  who  claims  the  payment : 
Steele  v.  Ins.  Co.,  17  Penn.  St.  290  ;  yet  that  intention  might  be  made 
known  subsequent!}'  by  evidence  aliunde  the  policy'.  The  use  of  such 
indeteiMuinate  phrases  makes  way  for  evidence  in  explanation  of  them, 
and  of  what  was  the  purpose  in  the  use  of  them.  Finney  v.  Ins.  Co., 
8  Met.  348.  After  the  door  is  thus  opened  for  the  admission  of  such 
evidence,  what  rule  is  there  that  will  keep  out  any  that  will  show  what 
was  in  the  mind  of  the  contracting  parties,  on  tlie  subject  of  the 
interest  to  be  insured?  In  \Vatson  v.  Swann,  11  C.  B.  [N.  S.],  755, 
there  was  an  open  policy,  '  upon  any  kind  of  §oods  and  merchandise, 
as  interest  might  appear!  The  effect  of  the  opinion  delivered  there 
is,  that  under  such  a  phrase,  persons  who  could  not  be  named  and 
ascertained  at  the  time  the  policy  is  effected  are  allowed  to  come  in 
and  take  the  benefit  of  the  insurance,  if  the}'  were  persons  contem- 
plated at  the  time  the  polic}'  was  made.  It  is  so  then,  that  the  use  of 
such  phrases,  expressive  of  uncertaint}-  in  the  mind  of  the  insurers,  at 
the  time  of  the  framing  of  the  contract  they  have  given  out,  as  to  some 
matter  with  which  the  contract  is  concarned,  does  open  the  instrument 
to  explanation  by  proof  aliunde  the  instrument.  In  the  absence  of  any 
rule  or  reason  confining  tlie  effect  of  such  proof,  any  material  mailer 
which  was  then  in  doubt  may  be  made  sure  by  evidence,  when  the 
time  has  come  that  certainty  is  wished.  Where  the  clause  expressive 
of  doubt  shows  that  the  uncertainty  is  as  to  the  person  who  is  to  have 
the  benefit  of  the  contract,  who  the  person  is  may  be  proven.  Where 
it  is  as  to  the  interest  which  is  to  be  protected,  what  the  interest  is  ma}' 
be  proven,  and  what  is  the  extent,  kind,  or  quality  of  it.  The  phrase 
in  this  policy,  '  as  interest  may  appear,'  is  as  applicable  to  Wood,  as 
one  of  the  insured,  as  to  L.  W.  Moore  &  Co.  It  indicates  that  when 
the  policy  was  filled  up  by  the  defendant,  there  was  uncertainty  as  to 
his  interest,  or  that  for  some  reason  it  was  not  thought  best  to  state 
it ;  and  the  use  of  the  phrase  gave  the  right  to  him  to  show  what  the 
fact  was  as  to  it,  whenever  the  time  came  at  which  it  was  for  his  good 
to  show  it.  It  is  a  phrase  anticipatory  of  the  fact  as  it  would  then  be 
showu ;  and  the  use  of  the  phrase  is  as  if  the  recital  of  the  fact,  as  it 
is  afterwards  shown,  was,  at  the  time  of  the  making  of  the  contract, 
written  out  in  full  in  the  policy.  We  must  now  read  that  paper  as  if 
there  was  written  into  it  what  was  Wood's  interest,  which  was  to  be 
saved  by  the  contract,  as  now  ascertained  to  have  then  been  contem- 
plated as  possible.  Doing  that,  it  is  plain  that  the  printed  conditions 
of  the  policy,  above  given,  relied  upon  by  the  defendant,  are  of  no 
avail;  for  then  the  interest  of  Wood  is  '  truly  stated  in  this  policy; 
the  interest  of  the  assured  in  the  property '  being  '  other  than  the 
entire,  unconditional,  and  sole  ownership  of  the  property  f(^r  the  use 
and  benefit  of  the  assured,  is  expressed  in  the  written  part  of  the 
policy.' 

"It  may  be  well  to  say  here  that  this  point  of  the  defendant  arises 
on  the  motion  for  a  nonsuit.     It  was  not  claimed,  on  that  motion,  that 


588  DAKIN  V.  LIVERPOOL,  LONDON  AND  GLOBE  INS.  CO.       [CHAP.  VL 

\the  interest  of  Wood  was  '  not  represented  to  the  compan}'.'  We  spend 
'no  time,  therefore,  on  that  clause  of  the  condition. 

"  It  is  suggested  that  if  it  had  been  proven  that  tlie  company  Icnew 
that  Wood  was  a  mortgagee,  and  with  that  knowledge  issued  the 
policies,  then  effect  and  application  could  be  given  to  these  words  so 
as  not  to  have  the  contract  fail,  and  it  is  urged  that  with  such  proof 
lacking,  that  result  cannot  follow.  But  one  of  the  cases  cited,  Rogers 
V.  Traders'  Ins.  Co.,  supra,  shows  that  under  the  language  there  used 
the  person  who  was  to  be  benefited  need  not  be  known,  at  the  time  of 
the  contract,  to  either  of  the  parties  instrumental  in  making  it.  And 
so  it  is  said  in  the  case  from  11  C.  B.  n.  s.  supra:  'A  very  wide 
extension  has  been  given  to  the  principle  I  have  adverted  to  as  to  the 
parties  to  a  contract  in  respect  of  policies  of  insurance,  viz.  :  that  per- 
sons who  could  not  be  named  or  ascertained  at  the  time  the  policy  is 
effected  are  allowed  to  come  in  and  take  the  benefit  of  the  insurance.' 
There  is  no  reason  then  win',  when  it  is  assumed  that  there  is  an 
insurable  interest  of  some  kind  in  a  person,  that  interest  may  not  be 
coA-ered  by  the  contract,  though  its  exact  nature  and  extent  be  left  to 
future  ascertainment.  The  cases  cited  by  the  defendant  (Bidwell 
r.  N.  W.  Ins.  Co.,  19  N.  Y.  179;  Bidwell  v.  N.  W.  Ins.  Co.,  24 
N.  Y.  302  ;  Pitney  v.  Glens  Falls  Ins.  Co.,  65  N.  Y.  6  ;  Van  Shoick 
r.  Niagara  F.  Ins.  Co.,  G8  N.  Y.  434;  24  N.  Y.  302;  6.5  N.  Y.  6; 
3  Keyes,  87,  436  ;  68  N.  Y.  434)  do  indeed  show  that  there  was  knowl- 
edge by  the  company  when  giving  out  the  policy ;  but  they  do  not 
hold  or  intimate  anything  contrary  to  our  views  above  expressed." 

In  the  complaint  plaintiff  demanded  judgment  for  the  amount  due  to 
him  only.  Upon  the  trial  the  court  allowed  an  amendment  thereof  so 
as  to  demand  judgment  for  the  full  amount  due  on  all  the  policies. 
Held,  no  erior  ;  as  b}'  the  policies  the  whole  loss  was  made  payable  to 
Lyon  &  Dakin,  and  so  far  as  the  contract  of  defendant  was  concerned, 
plaintiff  had  the  right  to  enforce  the  policies  to  tlie  full  amount,  he 
holding  the  residue  over  and  above  his  own  interest,  as  trustee  for 
the  benefit  of  the  others  interested. 

Further  points  were  disposed  of  on  the  facts. 

Erastus  P.  Hart,  for  appellant. 

M.  31.  Mead,  for  respondent. 

Per  Curiam  opinion  for  afHrmance. 

All  concur.  Judgment  affirined} 

•  In  Lasher  v.  St  Jo.seph  F.  &.  M.  Ins.  Co.,  86  N.  Y.  42.3  (1881),  a  policy  insured 
Jane  A.  Lasher  against  loss  by  fire  "on  her  houseliold  furniture  .  .  .  loss,  if  any,  pay- 
al)le  to  Artemas  Sahler  and  William  Lonnsbery  as  their  interest  may  appear."  Mrs. 
Lasher  did  not  own  the  furniture,  but  was  in  possession  under  a  contract  to  purcliase 
it  for  $19,000  fnmi  Sahler  and  Loun.sbery,  the  contract  providing  that  the  title  should 
not  ])ass  until  full  payment  was  made,  and  tliat  Mrs.  Laslier  should  keep  the  furniture 
insured,  loss,  if  any,  payable  to  Saliler  and  Lounsbery  as  their  interest  might  appear. 
At  the  time  of  the  fire  Mrs.  Lasher  iiad  paid  about  $2,680.  Earl,  J.,  for  a  majority 
of  the  court,  .said  :  — 

"The  policy  contained  a  provision  that  it  should  be  void  'if  the  interest  of  the 


SECT.  II.]        DOLLIVER    V.    ST.    JOSEPH    F.    AND   M.    INS.    CO.  589 


^^} 


DOLLIVER   AND   Others   v.    ST.  JOSEPH    FIRE   AND 
MARINE    INS.    CO. 


Supreme  Judicial  Court  of  Massachusetts,  1880.     128  Mass.  315. 

SouLE,  J.  The  plaintiffs  are  the  assignees  in  bankruptcy  of  Abra- 
ham Day,  who,  being  the  owner  in  fee  of  the  buildings  described  in  his 
polic}',  subject  to  certain  mortgages  and  to  a  lease  running  for  about 
three  and  one  half  years,  obtained  the  policy  sued  on  ;  and,  the  build- 
ings having  been  destroyed  by  fire,  bring  this  action  to  recover  the 
amount  for  which  the}'  were  insured.  The  plaintiffs  were  appointed 
assignees  after  the  loss.  The  defendant  contended,  and  the  Chief 
Justice  at  the  trial  ruled,  that  the  action  could  not  be  maintained, 
because  no  mention  is  made  in  the  polic}'  of  the  encumbrances  on  the 
title  to  the  property  destroyed.  Tliis  ruling  was  based  on  the  fol- 
lowing provision  of  the  policy:  "4.  If  the  interest  of  tlie  assured 
in  the  property  be  any  other  than  the  entire,  unconditional,  and  sole 
ownership  of  the  property,  for  the  use  and  benefit  of  the  assured,  or 
if  the  building  insured  stands  on  leased  ground,  it  must  be  so  repre- 
sented to  the  compan}',  and  so  expressed  in  the  written  part  of  this 
policy,  otherwise  the  polic}'  shall  be  void."  This  provision  is  in  the 
bod}'  of  the  policy,  and  is  inserted  for  the  benefit  of  the  insurer.  It 
is  to  be  construed  strictly  against  it,  and  liberally  in  behalf  of  the 
assured.  If,  therefore,  its  terms  can  be  satisfied  by  a  construction 
which  will  save  the  policy,  and  at  the  same  time  accord  with  the  estab- 
lished rules  of  law,  such  construction  must  be  adopted. 

It  has  long  been  settled  in  this  Commonwealth  that,  as  to  all  the 
world  except  the  mortgagee,  a  mortgagor  is  the  owner  of  the  mort- 
gaged lands,  at  least  till  the  mortgagee  has  entered  for  possession. 
Willington  r.  Gale,  7  Mass.  13S  ;  Waltham  Bank  r.  Walthau),  10  Met. 
334  ;  White  v.  Whitney,  3  Met.  81  ;  Ewer  v.  Hobbs,  5  Met.  1  ;  Henry's 
case,  4  Cusb.  257;  Howard  r.  Robinson,  5  Cush.  119;  Buffura  v. 
Bowditch  Ins.  Co.,  10  Cush.  540  ;  Farnsworth  v.  Boston,  126  Mass.  1. 

assured  in  the  property,  whether  as  owner,  trustee,  consignee,  factor,  agent,  mort- 
gagee, lessee,  or  otherwise,  be  not  truly  stated '  in  the  policy.  It  is  claimed  that  this 
provision  in  the  policy  was  violated,  and  we  are  of  that  opinion.  Mrs.  Lasher  was  tiie 
assured,  and  it' was  her  interest  only  which  was  insured.  ...  It  was  the  obvious  pur- 
pose of  the  provision  quoted  to  require  the  assured  to  state  truly  her  interest,  what- 
ever it  was.  This  she  did  not  do.  It  is  true  tliat  she  had  an  interest  which  was 
insurable,  but  what  that  interest  was  she  should  have  truly  stated.  .  .  . 

"  The  necessity  for  a  true  statemeut  of  plaintiff's  interest  in  the  furniture  was  not 
obnated  by  the  clause  making  the  loss  payable  to  Sahler  and  Lounsbery  as  their 
interest  might  appear  .  .  .  That  clause  at  most  implied  that  Sahler  and  Lounsbery 
had  some  lien  upon,  or  some  other  interest  in,  the  furniture  which  was  consistent 
with  title  and  ownership  in  her.  It  was  not  tantamount  to  a  notice  to  the  defendant 
that  Sahler  and  Lounsbery  owned  the  furniture,  and  that  she  had  but  a  small  interest 
therein  under  an  unperformed  contract  of  purchase,  but  simply  to  a  notice  that  they 
had  a  lien  upon  or  interest  in  the  furniture  which  she  owned." — Ed. 


590  DOLLIVER    V.    ST.    JOSEPH   F.    AND    M.    INS.    CO.       [cHAP.  VI. 

This  being  the  law,  and  the  mortgagees  not  being  in  possession  of  the 
premises,  the  plaintiff's  assignor  might  well  be  described  in  a  polic}' 
of  insurance  as  the  owner  of  the  propert}'  insured  ;  and,  inasmuch  as 
his  estate  was  in  fee  simple,  not  an  estate  for  life,  and  not  a  base, 
qualified  or  conditional  fee,  it  miglit  well  be  described  as  the  entire 
and  unconditional  ownership ;  and,  as  he  had  no  joint  tenant  nor 
tenant  in  common,  his  estate  was  well  described  as  the  sole  owner- 
ship. As  between  him  and  tiie  defendant,  the  mortgages  and  the 
lease  were  mere  encumbrances  on  his  title,  not  affecting  its  character 
as  entire,  and  not  changing  it  from  an  absolute  to  a  conditional  estate 
or  ownership.  Even  as  between  him  and  the  mortgagees,  the  mort- 
gagees' estate  was  the  conditional  one,  determinable  by  satisfaction  of 
the  condition  set  out  in  the  mortgage  deed.  There  was  no  joint 
tenanc}'  nor  tenanc}'  in  common  of  the  mortgagor  and  the  mortgagees. 
All  the  characteristics  of  such  tenancies  are  lacking  in  their  relations 
to  the  property'. 

The  lease  for  years  created  only  a  chattel  interest  in  the  premises, 
not  affecting  the  ownership  of  the  fee.  It  was  merely  an  encumbrance. 
It  lias  been  held  b}'  tlie  Supreme  Court  of  the  United  States,  in  a 
recent  case,  that  an  outstanding  lease  did  not  invalidate  a  policy  in 
wliich  the  ownership  of  the  assured  was  described  as  entire,  uncon- 
ditional, and  sole.  Insurance  Co.  v.  Haven,  95  U.  S.  242.  And  we 
do  not  understand  that  the  ruling  in  the  case  at  bar  was  supposed 
to  rest  on  the  existence  of  the  lease. 

The  policy  sued  on  provides,  in  the  condition  numbered  1,  that,  "if 
the  property  be  sold  or  transferred,  or  upon  the  passing  or  entry  of 
a  decree  of  foreclosure,  or  on  a  sale  under  a  deed  of  trust,  or  if  the 
property  be  assigned  under  anj*  bankrupt  or  insolvent  law,  or  anv 
change  takes  place  in  title  or  possession,  ...  or  if  the  interest  of 
the  assured,  whether  as  owner,  trustee,  consignee,  factor,  agent,  mort- 
gagee, lessee,  or  otherwise,  be  not  truly  stated  in  the  policy,  the  policy 
is  void."  It  is  evident  from  the  first  branch  of  this  condition,  that 
the  parties  did  not  intend  that  the  placing  of  a  mortgage  on  tlie 
insured  propert}'  should  be  regarded  as  a  change  of  title,  or  have 
any  effect  on  the  rights  of  the  parties  to  the  contract  of  insurance, 
but  that  the  entry  of  a  decree  for  foreclosure  should  avoid  the  policy, 
although  such  decree  would  not  destro}'  the  insurable  interest  of 
the  mortgagor.  The  language  of  the  second  branch  of  the  con- 
dition excludes  the  idea  that  a  mortgagee  or  a  lessee  is  to  be 
regarded  as  in  an}-  sense  an  "owner"  of  the  property,  and  the 
whole  condition  numbered  1  aids  in  arriving  at  the  construction  of 
the  condition  numbered  4,  on  which  the  defendant  relies.  Jackson  v. 
Massachusetts  Ins.  Co.,  23  Pick.  418.  The  plaintiffs'  assignor  owned 
the  fee.  There  was  no  adverse  interest  in  the  property,  except  that 
of  the  mortgagees  and  the  lessee.  The  policy,  in  its  terms,  indicates 
that  mortgaging  the  property  is  not  intended  to  affect  the  policy, 
though  a  decree  for  foreclosing  a  mortgage  shall  avoid  it.     Further- 


SECT.  II.]        DOLLIVER    V.    ST.    JOSEPH    F.    AND    M.    INS.    CO.  591 

more  tlie  policy  discriminates  between  owners  and  the  holders  of 
encumbrances,  and  nowhere  contains  any  language  which  indicates 
that  mortgagees  or  lessees  arc  to  be  regarded,  for  any  purposes  of 
the  policy,  as  owners  of  tlie  property. 

It  is  to  be  borne  in  mind,  further,  that  the  terms  of  the  condition 
relied  on  by  the  defendant  are  not  those  which  would  naturally  direct 
the  attention  of  the  insured  to  the  question  whether  or  not  his  estate 
is  encumbered.  If  the  defendant  intended  that  the  validity  of  the 
policy  should  be  affected  by  the  failure  to  mention  existing  cncum- 
berances,  that  intention  could  easily  have  been  made  clear  by  insert- 
ing the  word  "  unencumbered,"  or  other  phrase  equivalent  thereto,  in 
the  fourth  condition  of  the  policy,  after  the  word  ''  sole."  It  has 
already  been  held  by  this  court  that  a  requirement  of  the  policy  that 
the  proof  of  loss  should  state  the  "  whole  value  and  ownership  of  the 
property  insured,"  did  not  require  an}'  statement  as  to  encumbrances, 
the  property  being  under  mortgage.  Taylor  v.  ^tna  Ins.  Co.,  120 
Mass.  254.  In  Tennessee,  it  has  been  held  that  the  assured,  who  had 
bought  the  property  and  given  the  seller  a  lien  for  part  of  the  purchase 
money,  was  the  unconditional  and  sole  owner  of  it.  Manhattan  Ins. 
Co.  V.  Barker,  7  Heisk.  503. 

This  case  does  not  require  us  to  consider  whether  a  subsequent 
mortgage  should  be  regarded  as  "a  change  of  title"  which  would 
avoid  a  policy  containing  nothing  to  explain  the  sense  in  which  those 
words  were  used.  See  Edmands  v.  Mutual  Safety  Ins.  Co.,  1  Allen, 
311 ;  Shepherd  v.  Union  Ins.  Co.,  38  N.  H.  232  ;  Commercial  Ins.  Co. 
V.  Spankneble,  52  III.  53  ;  Hartford  Ins.  Co.  v.  Walsh,  54  111.  164. 

On  consideration,  we  are  all  of  opinion  that,  on  the  peculiar  lan- 
guage of  the  policy  sued  on,  the  ruling  that  the  interest  of  the  assured 
was  not  sufficiently  expressed  in  the  policy,  and  that  the  policy  was 
therefore  void,  was  erroneous.     The  case  must  therefore 

Stand /or  trial} 

S.  B.  Ives,  Jr.  &  L.  S.  2\(cJcerman,  for  the  plaintiffs. 

A.  S.  Wheeler,  for  the  defendant. 

1  On  the  effect  of  a  mortgage,  see  "Warner  v.  Middlesex  Mut.  Assur.  Co.,  21  Conn. 
444  (18.52);  Biiffum  v.  Bowditch  Mut.  F.  Ins.  Co.,  10  Cush.  540,  543-544  (1852); 
Washington  F.  Ins.  Co.  v.  Kelly,  32  Md.  421,  439-441  (1870);  Carrigan  v.  Lycoming 
F.  Ins.  Co.,  53  Vt.  418,428-429  (1881);  De  Armand  v.  Home  Ins.  Co.,  28  Fed.  R. 
«03  (U.  S.  C.  C,  W.  D.  Mich.,  1886). 

On  the  effect  of  a  lease,  see  Insurance  Co.  v.  Haven,  95  U.  S.  242  (1877).  — Ed. 


592  MILLER    V.    AMAZON   INS.    CO.  [CHAP.  VL 


MILLER   V.    AMAZON   INSURANCE  CO. 
Supreme  Coukt  of  Michigan,  188L     46  Mich.  463. 

Error  to  Ba\-.     Assumpsit.     Plaintiff  brings  error. 

Shepard  &  Lyon,  for  plaintiff  in  error, 

3IcI>onell  &  Mann,  for  defendant  in  error. 

Graves,  J.  July  17,  1878,  the  insurance  companj'  issued  a  policy 
to  James  J.  Miller,  the  plaintiff's  husband,  to  insure  for  the  term  of 
one  year  in  the  sum  of  $650  a  two-story  framed  building  situated  on 
leased  land  and  standing  on  blocks,  and  not  fixed  to  the  freehold. 
April  27,  1879,  the  building  was  destroyed  by  fire,  and  on  the  first  of 
June  thereafter  the  assured  assigned  his  claim  for  the  loss  to  his  wife, 
the  plaintiff.  The  company  refused  payment  and  Mrs.  Miller  brought 
this  action  to  enforce  it.  The  case  was  tried  by  a  jury  and  they  found 
for  the  defendant  corporation. 

Among  other  stipulations  in  the  policy  it  was  provided  that  it 
should  be  void  "if  the  interest  of  the  assured  be  any  other  than  the 
entire,  unconditional,  free  and  unencumbered  ownership  of  the  propert}' 
and  is  not  so  expi-essed  in  the  written  portion  of  the  polic}-,"  or  "  if 
the  premises  hereby  insured  become  vacated  by  the  removal  of  the 
owner  or  occupant  without  immediate  or  written  notice  to  the  company 
and  consent  thereto  indorsed."  Nothing  was  inserted  to  qualify  the 
scope  or  force  of  the  clause  concerning  title  or  to  show  that  the  interest 
of  the  assured  was  any  other  than  the  entire,  unconditional,  free  and 
unencumbered  ownership.  At  the  time  of  issuing  the  policy  the 
building  was  occupied,  but  it  became  vacant  some  five  days  prior  to 
the  fire,  and  so  remained  until  it  was  destroyed,  and  no  notice  was 
given  to  the  company. 

The  defence  was  based  on  the  foregoing  stipulations,  and  if  the 
facts  were  such  as  to  furnish  an  answer  to  the  action  under  either  of 
them  no  discussion  of  the  other  will  be  necessary.  The  provision  in 
regard  to  title  stands  first  and  is  perhaps  most  important,  and  no  one 
can  fail  to  observe  that  it  is  much  more  sweeping  and  exclusive  than 
the  generalit}'  of  such  conditions,  and  ttie  difference  is  so  well  marked 
that  many  decisions  which  have  been  made  on  stipulations  of  the 
same  general  nature  can  have  no  application. 

The  substantial  facts  respecting  the  state  of  the  title  at  the  time  of 
insurance  are  not  controverted.  In  April,  1876,  the  building  was 
owned  bN*  James  J.  Miller,  the  plaintiff's  husband  and  person  assured. 
His  nephew,  James  J.  Miller,  Jr, ,  had  been  carrying  on  business  in 
the  building  and  had  received  pecuniary  assistance  through  his  uncle 
from  the  plaintiff.  An  arrangement  was  then  made  b}'  which  the 
plaintiff's  husband,  James  J.  Miller,  Sr,,  transferred  an  undivided  half 
of  the  building  to  his  nephew,  James  J,  Miller,  Jr.,  and  the  latter 
gave  to  his  aunt,  the  plaintiff,  a  mortgage  on  said  undivided  half  to 


SECT.  II.]  MILLER    V.    AMAZON    INS.    CO.  593 

secure  her  the  re-payment  of  the  mone}'  she  had  advanced  to  him, 
behig  $500.  The  mortgage  also  covered  other  property,  and  by  its 
terms  $'2oO  were  to  be  paid  by  the  first  day  of  November,  187G,  and 
the  remainder  by  the  first  day  of  November,  1877.  It  has  not  been 
foreclosed. 

August  1-1,  1876,  Miller,  Jr.,  the  nephew,  made  an  assignment  for 
the  benefit  of  his  creditors  to  Charles  Newman,  and  the  undivided  half 
of  the  building  wliich  he  owned  and  which  stood  mortgaged  to  the 
plaintiff  was  included.  Newman  took  possession.  It  hence  appears 
tiiat  at  this  period  the  plaintiff's  husband  owned  one  undivided  half 
of  tlie  propert}',  and  that  the  other  undivided  half  was  in  Newman,  tlie 
assignee,  subject  to  the  encumbrance  upon  it  held  by  the  plaintiff.  In 
this  state  of  things  the  plaintiff's  husband  applied  for  the  insurance, 
and  the  agent  refused  to  entertain  the  application,  and  gave  as  a  reason, 
as  the  plaintiff's  husband  testifies,  that  the  title  "  would  have  to  be 
rectified,"  and  that  he  would  not  insure  the  propertj-  "■  until  I  got  it 
straightened  out."  The  applicant  then  went  away  to  get  the  title 
"  straightened  out  "  and  subsequently  returned  and  informed  the  agent 
that  he  had  succeeded  and  the  policy  was  issued.  The  proceedings 
talvcn  to  concentrate  and  disencumber  tlie  title  were  explained  by 
Miller  on  the  trial  in  this  way  :  He  testified  that  he  called  on  Newman 
and  "got,"  as  he  expressed  it,  "Newman's  right;"  and  that  New- 
man told  him  that  "  it  was  not  worth  his  while  to  go  on;"  that  he 
then  had  a  conversation  with  his  wife,  the  plaintiff,  in  wliich  he  said 
to  her  that  it  was  necessary'  for  hira  to  have  her  interest  in  the  prop- 
erty to  get  it  insured;  and  she  replied,  "All  right;  you  can  have 
it ;  "  and  this  is  substantially  the  plaintiff's  version  of  the  circumstances 
relied  on  to  show  that  at  the  time  of  the  insurance  her  husband  was 
vested  with  the  "  entire,  unconditional,  fx'ee  and  unencumbered  owner- 
ship "  of  the  building. 

There  was  no  writing  to  attest  any  transfer  or  surrender  on  the  part 
of  Newman  or  to  show  a  conveyance  from  the  plaintiff  to  her  husband. 
But  it  was  not  indispensable  that  there  should  be.  For  the  purpose 
of  combining  in  himself  the  entire,  free,  and  unencumbered  ownership 
it  was  necessary  that  the  plaintiff's  husband  should  get  in  the  right 
and  title  possessed  by  Newman  and  the  mortgage  interest  possessed 
liy  tlie  plaintiff,  and  these  results,  althougli  capable  of  being  effected 
without  writing,  could  not  be  worked  out  except  by  transactions  con- 
taining the  elements  necessary  to  make  them  binding,  and  here  occurs 
a  manifest  diflficulty.     There  is  a  total  want  of  consideration. 

If  we  understand  the  plaintiff's  husband  as  testifying  that  Newman 
gave  up  the  assigned  interest  to  him,  then  so  far  as  the  recoi'd  dis- 
closes there  was  no  consideration  to  support  the  arrangement  and  it 
had  no  force.  But  if  Newman  abandoned  the  property  to  the  plaintiff 
as  mortgagee,  her  interest  was  not  increased,  and  could  not  be  except 
through  purchase  on  foreclosure,  and  no  foreclosure  has  been  had. 
The  legal  title  must  have  continued  in  the  assignee.     But  suppose  the 


594  DUPKEAU    V.    HIBERNIA    INS.    CO.  [CHAP.  VI. 

meaning  was  that  the  property  should  be  applied  on  the  mortgage  (a 
view  hardly  possible),  it  seems  not  to  have  been  acted  on.  It  was  not 
applied.  There  has  been  no  recognition  of  anything  of  that  kind. 
But  whether  another  interest  was  or  was  not  added  to  that  held  b>'  the 
plaintiff  under  her  mortgage,  it  was  necessary  that  her  husband  should 
be  positivel}'  vested  with  whatever  interest  she  had.  His  description 
of  the  transaction  relied  upon  as  having  legally  conferred  upon  him 
that  Interest  has  been  noticed,  and  we  observe  that  it  consisted  of 
mere  words.  No  mention  of  any  consideration  was  made,  and  the 
transaction  had  nothing  in  it  to  bind  him  as  vendee  or  assignee  or 
her  as  vendor  or  assignor.  It  follows  that  according  to  the  undis- 
puted facts  the  entire,  unconditional,  free,  and  unencumbered  owner- 
ship of  the  building  was  not  in  the  assured  at  the  time  of  the  insurance, 
and  that  the  policy  was  therefore  not  enforceable  against  the  compan}'. 
The  other  question  becomes  immaterial. 

The  resnlt  reached  below  was  correct,  and  the  judgment  should  be 
affirmed  with  costs. ^ 


DUPREAU  V.  HIBERNIA  INSURANCE  CO. 
Supreme  Court  of  Michigan,  1889.     76  Mich.  615. 

Error  to  Saginaw.     Gage,  J. 

Assumpsit  on  an  insurance  polic}-.  Defendant  brings  error.  The 
facts  and  points  of  counsel  passed  upon  by  the  court  are  stated  in  the 
opinion. 

Wilber  &  Urucker,  for  appellant. 

Durand  &  Brewer,  for  plaintiff. 

Long,  J.  Defendant  issued  its  policy  of  insurance  to  plaintiff  on 
May  15,  1888,  for  the  sum  of  $500,  —  $400  upon  his  dwelling-house, 
and  $100  on  his  barn. 

The  application  was  verbal,  and  was  made  to  Schoeneberg  &  Knight, 
at  East  Saginaw,  this  state,  who  were  the  local  agents  of  the  defendant 
company  there.  The}'  were  required  to  make  their  reports  and  remit- 
tances to  John  Naghten  &  Co.,  general  agents  of  the  western  depart- 
ment at  Chicago,  Illinois. 

The  policy  was  issued  and  delivered  to  the  plaintiff  on  the  above 
date,  and  a  premium  of  $7.50  duly  paid,  the  policy  to  continue  in  force 
for  three  years  from  May  15,  1888. 

July  16,  1888,  the  property  was  totally  destroyed  by  fire.  Notice 
was  duly  given  of  the  fire  and  loss,  and  on  the  twentv-seventh  da\'  of 
July,  1888,  the  defendant  compan}-,  by  its  general  agent,  refused  pay- 
ment by  reason  of  the  fact,  then  claimed  by  it,  that  the  plaintiff  was 
not  the  owner  of  the  property  at  the  time  of  taking  the  insurance. 

'  See  Schroedel  v.  Humboldt  F.  Ins.  Co.,  158  Pa.  459  (1893).  — Ed. 


SECT.  II.]  DUPREAU    V.    HIBERNIA    INS.    CO.  595 

The  cause  was  tried  in  the  Saginaw  Circuit  Court,  before  a  jur}', 
where  the  phiintiff  had  verdict  and  judgment  for  the  amount  of  the 
policy  and  interest.     Defendant  brings  error. 

The  polic}-  contained,  among  other  conditions,  the  following :  — 

"This  entire  polic}',  unless  otherwise  provided  b}-  agreement  in- 
dorsed hereon,  or  added  hereto,  shall  be  void,  if_the_iuterest  of  the 
insured  be  other  than  unconditional  and  sole  ownership,  or  if  the  sub- 
JecroTinsurance  be  a  building  on  ground  not  owned  by  the  insured  in 
fee-simple,  or  if  the  subject  of  insurance  be  personal  property,  and  be 
or  become  encumbered  by  chattel  mortgage." 

It  appears  that  the  plaintiff  held  the  premises  upon  which  the  build- 
ings were  situate,  and  the  buildings,  under  a  land  contract  of  purchase, 
dated_May^l5,  1888.  This  contract  specifically  describes  the  property, 
and  provides  for  the  annual  payments  of  $100  until  the  whole  amount 
ofHie  purchase  money  ($500)  is  paid  ;  $100  being  paid  down  at  the  time 
of  the  purchase^  The  plaintiff  went  into  the  actual  possession  of  tBe 
premises  immediately  upon  the  execution  of  this  contract.  Upon  the 
payment  of  $100  additional,  the  contract  provided  for  the  execution 
and  deliver^'  of  a  deed  of  the  premises  to  the  plaintiff.  The  contract 
itself  provided  for  the  taking  of  possession  of  the  premises  by  the 
plaintiff. 

On  the  trial  in  the  court  below  the  court  charged  the  jury  that  the 
clause  in  the  policy  relative  to  the  title  would  not  violate  the  polic}',  as 
it  appeared  that  the  plaintiff  was  the  equitable  owner  in  fee  of  the 
premises.  The  court  thereupon  directed  a  verdict  in  favor  of  the 
plaintiff. 

It  does  not  appear  that  an}'  representations  as  to  title  and  owner- 
ship were  made  by  the  plaintiff  at  the  time  of  taking  the  policj',  but 
counsel  for  the  defendant  contend  that,  by  the  terms  of  the  policy  itself 
upon  which  the  action  is  brought,  the  plaintiff  cannot  recover,  as  he 
has  no  such  title  in  fee  as  contemplated  b}'  the  contract.  The  land 
contract,  under  which  the  plaintiff  held,  provided  that  he  should  keep 
the  buildings  thereon  insured  against  loss  and  damage  by  fire  b}"  in- 
surers, and  in  amount  approved  by  the  first  party,  and  should  assign 
the  policy  and  the  certificates  thereof  to  the  first  party. 

The  omission  of  the  owner  of  the  equitable  title  to  state  the  nature 
thereof  will  not  render  the  policy  of  insurance  invalid,  under  a  condi- 
tion therein  forfeiting  the  insurance  in  case  the  interest  is  other  than 
the  entire,  unconditional,  and  sole  ownership,  if  the  fact  is  not  so  rep- 
resented to  the  company.  Farmers',  etc.  Ins.  Co.  v.  Fogelman,  35 
Mich.  481. 

It  is  insisted,  however,  that  by  the  terms  of  the  policy  the  title  must 
be  a  legal  estate  in  fee-simple,  and  that  an  equitable  estate  in  fee  would 
not  satisfy  its  terms ;  and  that  therefore  the  court  was  in  error  in 
directing  the  verdict  in  favor  of  the  plaintiff. 

We  are  satisfied  that  the  court  was  not  in  error.  The  plaintiff  had 
paid  quite  a  sum  of  money  on  the  purchase  price,  and  entered  into  aa 


596         COLLINS    V.    ST.    PAUL   FIRE    AND    MARINE    INS.    CO.       [CHAP.  VL 

undertaking  to  pay  the  balance,  and  was  to  have  immediate  possession 
of  the  premises  under  the  terms  of  the  contract,  and  was  to  keep  the 
buildings  thereon  insured.  He  was  in  actual  possession  at  the  time  of 
taking  the  policy,  and  eq^uitably  TEe  owner  in  fee,  ancTwe  think  he  may 
be  said  at  that  time  to  have  beeti  tiie  entire,  unconditional,  and  sole" 
owner,  within  the  meaning  of  the  terms  of  the  policy.  '• 

We  think  this  doctrine  is  fully  supported  by  numerous  decisions.  If 
loss  occurred,  it  would  fall  upon  the  insured.  He  was  in  possession, 
having  paid  part  of  the  purchase  price,  and  under  a  valid  agreement 
for  the  payment  of  tlie  balance,  and,  hy  the  very  terms  of  his  conti'act, 
the  very  part}'  who  had  the  insurable  interest  in  it.  In  the  case  of 
Imperial  Fire  Ins.  Co.  v.  Dunham,  117  Penn.  St.  462,  475,  12  Atl.  Rep. 
QQ^^  674,  the  language  of  the  polic}'  was: 

"  This  policy  shall  be  void  and  of  no  effect  if,  without  notice  to  this 
company,  and  permission  therefor  in  writing  indorsed  hereon,  the  as- 
sured shall  now  have,  or  hereafter  make  or  procure,  an}'  other  insur- 
ance, whether  valid  or  not,  on  the  property  hereby  insured,  or  any  part 
thereof,  or  if  this  policy  be  assigned  before  a  loss,  or  if  the  interest  of 
the  assured  be  other  than  the  entire,  unconditional,  and  sole  ownership, 
or  if  the  property  insured  be  a  building  standing  on  ground  not  owned 
by  the  assured  in  fee-simple." 

The  court,  in  passing  upon  this  provision  of  the  policy,  said  :  — 

"  He  was  the  equitable  owner  in  fee,  and,  in  respect  to  the  insurance, 
we  think  he  may  be  said  to  have  been  the  entire,  unconditional,  and 
sole  owner.  This  provision  of  the  polic}'  does  not  necessarily  distin- 
guish between  the  legal  and  the  equitable  estate." 

This  seems  to  be  the  settled  doctrine  in  most,  if  not  all,  of  the  states. 

We  find  no  error  in  the  record.  The  judgment  of  the  court  below 
must  be  affirmed,  with  costs.'^ 


COLLINS   V.   ST.    PAUL   FIRE  AND   MARINE  INS.    CO. 
Supreme  Court  of  Minnesota,  1890.     44  Minn.  440. 

Appeal  by  defendant  from  an  order  of  the  District  Court  for  Sibley 
County,  Edson,  J.,  presiding,  granting  a  new  trial  after  verdict  directed 
for  defendant,  in  an  action  to  recover  $600  on  the  policy  mentioned  in 
the  opinion. 

John  D.  G'BHen^  for  appellant. 

R.  A.  t&  F.  C.  Irwin,  for  respondent. 

1  Ace:  Loventhal  v.  Home  Ins.  Co.,  112  Ala.  108  (1896). 

See  Swift  v.  Vermont  Mut.  F.  Ins.  Co.,  18  Vt.  305  (1846)  ;  Pelton  i'.  Westchester 
F.  Ins.  Co.,  77  N.  Y.  60.')  (1879)  ;  Capital  City  Ins.  Co.  v.  Caldwell  Bros.,  95  Ala.  77, 
88-S9  (1891). 

Compare  Hiuman  v.  Hartford  F.  Ins.  Co.,  36  VYis.  159,  167  (1874).  — Ed. 


SECT.  II  ]       COLLINS    V.    ST.    PAUL    FIRE    AND    MARINE    IXS,    CO.  597 

GiLKiLLAN,  C.  J.  This  is  an  action  on  a  policy-  of  insurance  upon 
a  dwelling-liouse  and  log  barn,  and  sheds  connected  tlierewith,  situate 
on  section  31,  township  114,  range  25.  Upon  the  trial  the  court 
lielow  directed  a  verdict  for  the  defendant,  and  after  such  verdict,  upon 
plaintiffs  motion,  granted  a  new  trial,  and  from  the  order  o-rantinc^  it 
defendant  appeals.  On  the  case  made  at  the  trial  it  was  impossible 
for  the  plaintiff  to  recover,  for  two  reasons:  First.  The  house,  barn, 
and  sheds,  for  a  loss  upon  which  a  recover}-  is  sought,  were  not  on 
section  31  ;  but  plaintiff  claimed  at  the  trial,  and  gave  some  evidence 
tending  to  show,  that  it  was  the  intention  to  insure,  h\  the  polic)-, 
similar  buildings  on  section  32,  and  that  section  31  was  inserted  in  the 
policy  through  mistake.  If  this  were  true  it  would  be  good  cause  for 
reforming  the  policy  by  inserting  section  32  instead  of  section  31,  but, 
until  so  reformed,  no  recoyery_cotLld_be_Jiadjfoi'  loss  to  the  buiUl^ 
ings  orTsecTfon  "327  Second.  Even  if  so  reformed,  no  recovery  coulcT 
be  had,  for  the  policy  provides  that  the  company  shall  not  be  liable 
"if  the^Tirterest  of  the  assured  in  the  property-  is  not  cue  of  absolute 
and  sole  ^ownership,"  and  it  appeared  beyond  controversy  that  tFe 
plain ti ft"  hald  only  a  life-estate  in  the  property.  Of  course  she  had 
an  iiTsurabte  mterest,  but  that  interest  was  not  insured.  The  policy 
expressl}-  excluded  from  its  operation  any  interest  other  than  the 
absolute  and  sole  ownership.^  Order  reversed. 

J  In  Garver  v.  Hawkeve  Ins.  Co.,  69  Iowa,  202  (1886),  the  application  for 
insurance  on  a  barn  and  contents,  in  section  36,  stated  that  the  applicant  was  "  the  sole 
and  undisputed  owner  of  said  land  and  the  property  to  be  insured."  The  application 
was  by  its  own  terms  and  by  the  policy  made  a  warranty.  In  fact  tlie  applicant  had 
a  life-estate  in  the  realty.  It  was  held  that  there  could  be  no  recovery  for  a  loss  by 
fire.  Seevees,  J.,  for  the  majority  of  the  court,  said  :  "  Tlie  precise  question  we  are 
re  luired  to  determine  is  whether  the  owner  of  a  life-estate  is  the  'sole  and  undis- 
puted owner'  of  real  estate.  .  .  .  Now,  what  does  'sole  owner'  mean,  or  wliat  did 
the  parties  understand  thereby  ?  Evidently,  we  think,  they  meant,  and  must  have 
understood,  that  the  assured  had  the  fee-simple  title.  '  Sole  owner '  must  mean,  it 
seems  so  to  us,  that  no  one  else  has  or  owns  an  interest  in  the  real  estate.  If  one  should 
state  that  he  was  the  sole  owner  of  real  estate,  describing  it,  the  hearer  would  under- 
stand that  he  owned  all  there  was  or  could  be  owned  ;  that  no  one  else  had  any 
interest  therein.  If  one  should  covenant  in  a  deed  that  he  was  the  sole  owner  of  the 
real  estate,  such  a  covenant  would  be  broken  if  lie  owned  a  life-estate  only.  There 
is  no  distinction  between  'sole  owner'  and  the  owner  of  an  'absolute  interest'  in 
real  estate.  A  sole  interest  and  absolute  interest  mean  the  .same  thing." 
Compare  Allen  v.  Charlestown  Mat.  F.  Ins.  Co.,  5  Gray,  384  (1853). 
On  conditions  as  to  ownership  at  the  inception  of  the  contract,  in  general,  see 
also :  — 

Smith  V.  Bowditch  Mut.  F.  Ins.  Co.,  6  Cush.  448  (1850) ; 

Phillips  V.  Knox  County  Mut.  F.  Ins.  Co.,  20  Ohio,  174,  182-184  (1851)  ; 

Hope  Mut.  Ins.  Co.  v.  Brolaskey,  35  Pa.  282  (I860) ; 

South  Australian  Ins.  Co.  v.  Randell,  L.  E.  3   P.  C.  101  (1869) ; 

Citizens'  F.  Ins.  S.  &  L.  Co.  v.  Doll,  35  Md.  89  (1871)  ; 

Manhattan  Ins.  Co.  v.  Barker,  7  Heisk.  (Tenn.)  503  (1872)  ; 

Noyes  v.  Hartford  F.  Ins.  Co.,  54  N.  Y.  668  (1873)  ; 

Fowle  V.  Springfield  F.  &  M.  Ins.  Co.,  122  Mass.  191,  197-198  (1877)  ; 

Franklin  F.  Ins.  Co.  v.  Martin,  40  N.  J.  L.  568  (1878) ; 


598        COLLINS   V.   ST.   PAUL   FIKE   AND   MAEINE   INS.    CO.      [CHAP.  VL 

Walsh  V.  Fire  Association,  127  Mass.  383  (1879)  ; 

Castner  v.  Farmers'  Mut.  F.  Ins.  Co.,  46  Mich  1.5  (ISSl) ; 

Southwick  ..  Atlantic  F.  &  M.  Ins.  Co.,  133  Mass.  457  (1882) ; 

Martin  v.  State  Ins.  Co.,  44  N.  J.  L.  485,  490  (1882) ;  ,     .  71   Tpv 

Crescent  Ins.  Co.  ..  Camp,  64  Tex.  521  (1885) ;  s.  c.  at  a  later  stage,  71  Tex. 

We'ed  I' Won  &  Lancashire  F.  Ins.  Co.,  116  N.  Y.  106,  113-115  (1889) ; 
Davis  V.  Pioneer  Furniture  Co.,  102  Wis.  394  (1899). -Ed. 


cECT.  II.]  LANE   V.    MAINE    MUTUAL    FIKE    INS.    CO.  599 


SECTION   II.    (continued). 

(F)     Conditions  prohibiting  Alienation. 

(a)   Alienation'  sale,'  conceyance  •  transfer. 

LANE   V.  MAINE   MUTUAL    FIRE  INS.    CO. 

Supreme  Court  of  Maine,  1835.     12  Me.  44. 

This  was  an  action  of  assumpsit  ou  a  policy  of  insurance,  wlieiein 
tlie  deft' ncUiuts  insured  the  plaintiff  against  fire  to  the  amount  of  two 
iuuidred  dollars  on  his  store,  and  the  like  sura  on  the  goods  in  said 
store,  for  six  years  from  the  17th  day  of  January,  1832,  promising, 
*■'  according  to  the  provisions  of  their  act  of  incorporation,  to  pay  the 
plaintiff  the  said  sum  within  three  months  next  after  said  buildings,  etc. 
should  be  burnt."  The  store  and  its  contents  were  consumed  by  fire 
on  the  night  of  the  7th  of  June,  1834. 

In  the  «th  section  of  the  act  of  incorporation,  referred  to  in  the  [jolicy, 
is  the  following  provision,  viz.  :  '•  When  the  property  insured  shall  _be 
alienated  bv  sale  or  otherwise,  the  policy  shall  thereupon  be  void',  »nd  _ 
be  sni  rendered  to  the  directors  of  said  company  to  be  cancelled  ;  and^ 
upon  such  surrenjlei^he  assured^  shall  be  entitled  tT)  receive  liIi""(Teposit " 
iif;Fp;TT^nnJ1iejinA;iiicnt  of  his  proportion  of  all  losses  and  expc^ises 
tlTat  have  accrued  prior  to  such  surrender."  ~" 

It  was^proved,  that  one  James  Dunn  hired  the  store  of  the  plaintifl[", 
and  purchased  all  the  goods  therein  in  May,  1833  —  put  his  son  into 
the  store,  who  traded  there  and  continued  to  hold  exclusive  possession 
until  November  of  the  same  year,  when  the  plaintiff  took  back  the 
store  and  goods  under  an  agreement  with  Dunn  to  allow  him  a  certain 
sum  for  his  services,  and  to  pay  the  debts  and  receive  the  dues  of  tlie 
store.  From  this  time,  the  plaintiff  continued  in  the  exclusive  occupa- 
tion of  the  store,  and  traded  therein  until  it  was  burned. 

The  defendants  contended,  that  this  was  such  an  alienation  as 
rendered  the  policy  void,  both  as  to  the  store  and  the  goods.  But 
Parris,  J.,  ruled  otherwise,  and  a  verdict  was  returned  for  the  plaintiff, 
subject  to  the  opinion  of  the  whole  court  upon  the  facts  here  reported. 

The  defendants  also  filed  a  motion  in  arrest  of  judgment,  because,  — 

1.  The  plaintiff  had  not  alleged  in  his  declaration  that  he  was  the 
owner  of  the  store  and  goods  at  the  time  they  were  burned.  2.  That 
he  had  not  alleged  the  value  of  said  store  and  goods  at  the  time. 

Longfelloio,  for  the  defendants. 

S.  &  W.  P.  Fessenden,  for  the  plaintiff. 

Parrts,  J.  Thejrstqnesjtion  presented  for  our  decision  is,  whctlicr 
the  hiring  and  occupatIonl)f  thestorejjy  Dunn,  from  May  to  Novem- 


600  LANE    V.    MAINE    MUTUAL   FIRE    INS.    CO.  [CIIAP.  VI. 

ber,  waa^^ucb.  an  alienation  of  the  property  insured  as  rendered  the 
poHcj'  void  under  the  9tli  section  of  the  act  of  incorporation  therein 
referred  to. 

In  the  construction  of  tliis  language  we  should  have  regard  to  the 
circumstances  under  which  it  was  used,  and  the  situation  and  object  of 
the  parties  using  it.  The  insured  was  the  owner  of  the  store,  and  for 
the  purpose  of  securing  his  interest  against  the  peril  of  fire,  became  a 
member  of  the  compan}',  assuming  the  obligations  of  membership  by 
the  payment  of  money  and  depositing  his  note,  tliereby  giving  the 
company  a  lien,  for  the  payment  of  such  note,  on  the  building  insured. 

The  insurers,  in  assuming  the  risk,  provide  for  tlie  continuance  of 
the  interest  of  the  assured  in  the  property'  covered,  so  long  as  their 
liability  continues.  In  other  words,  they  guard  against  its  becoming  a 
gaming  or  wager  policy  in  anj-  event.  Accordingly  so  long  as  the 
property  covered  belongs  to  the  insured,  whether  it  be  in  his  posses- 
sion, or  that  of  Iiis  agent,  servant,  or  lessee,  the  company's  lien  contin- 
ues, and  an  insurable  interest  remains.  But  when  the  property  is 
alienated,  that  is,  when  the  insured  is  divested  of  title  b3"  sale  or  in 
any  other  manner,  the  lien  of  the  company"  ceases,  and  the  insured 
is  no  longer  a  member  of  the  compan}-.  If  a  loss  then  happen  it  is  not 
his  loss,  for  as  he  had  no  propertj'  he  could  sustain  no  loss,  and  con- 
sequently could  be  entitled  to  no  satisfaction.  The  party  insured 
must,  in  all  cases  of  fire  insurance,  have  an  interest  or  propert}'  at  the 
time  of  insuring  and  at  the  time  the  fire  happens.  But  he  need  not 
have  an  absolute  and  unqualified  or  even  immediate  interest  in  the 
property  insured.  A  trustee,  mortgagee,  reversioner,  a  factor  or  agent 
of  goods  to  be  sold  on  commission,  ma}'  legall}'  insure  their  respective 
interests,  subject  to  the  rules  of  the  office  in  which  the  insurance  is 
effected.  Upon  general  principles  applicable  to  fire  insurance,  the 
person  insured  cannot  convey  the  estate  insured  and  assign  the  policy, 
so  as  to  render  it  valid  in  favor  of  tlie  grantee  and  assignee,  unless  by 
consent  of  the  insurer.  Mutual  offices  should  have  the  power  of  exer- 
cising a  discretion  in  the  selection  of  persons  whom  they  may  admit  to 
membership,  and  whose  property  they  may  insure.  The  character  of 
the  person  insured  may  be  a  subject  of  importance. 

If  by  conveyance  of  the  estate  and  assignment  of  the  policy,  the 
purchaser  would  stand  in  the  place  of  the  insured  and  be  entitled  to 
indemnity  under  the  policy,  the  office  might  be  defeated  of  this  right 
of  selection. 

Under  these  views  of  the  law  relating  to  fire  insurance,  we  think  the 
occupation  of  the  store  bj-  Dunn,  who,  having  no  lease  in  writing,  was 
at  most  only  tenant  at  will,  was  not  an  alienation  of  the  property 
insiu-ed  within  the  true  meaning  and  intent  of  the  act  of  incorporation. 
The  language  is,  "  when  the  property  insured  shall  be  alienated  by 
sale  or  otherwise,"  etc.  The  word  alien  or  alienate  extends  not  only 
to  alienations  of  land  in  deed  but  also  to  alienations  in  law.  A  trans- 
fer of  title  by  devise,  descent,  or  by  levy  would  be  as  technically  an 


SECT.  II.]  LANE    V.   MAINE    MUTUAL    FIRE   INS.    CO.  601 

alienation  as  a  transfer  by  deed.  Blackstone,  speaking  of  title  by 
alienation,  Book  2,  eh.  19,  says,  "The  most  usual  and  universal 
method  of  acquiring  a  title  to  real  estate  is  that  of  alienation,  convey- 
ance or  purchase  in  its  limited  sense  ;  under  which  may  be  comprised 
any  n\ethod  by  which  estates  are  voluntarily  resigned  b^"-  one  man,  and 
accepted  by  another;  whether  that  be  effected  by  sale,  gift,  marriao-e, 
settlement,  devise,  or  other  transmission  of  property  by  the  mutual 
consent  of  the  parties."  Alienation  is  defined  in  Jacob's  Law  Dic- 
tionary to  be  a  transferring  Vac  2)roperty  of  a  thing  to  another. 

The  object  of  the  statute  was,  without  doubt,  to  render  certain  by 
positive  enactment  what  would  otherwise  have  depended  upon  common 
law  principles  and  judicial  decisions,  viz.  that  the  policies  of  the  com- 
pany should  not  be  obligatory  any  longer  than  the  property  insured 
continued  in  the  individual  named  in  the  policy,  as  the  owner;  and 
that  by  a  transfer  of  his  interest  the  policy  should  be  void.  This  con- 
struction is  believed  to  be  in  accordance  with  general  usage,  and  the 
intention  and  understanding  of  the  parties. 

As  to  the  goods,  we  are  clear  that  the  policy  was  intended  to  cover 
and  did  cover  whatever  goods  the  plaintiff  might  have  in  his  store,  at 
any  time  during  the  continuance  of  the  risk,  not  beyond  the  amount 
actualh-  insured. 

A  construction  limiting  the  policy  to  the  goods  actually  in  the  store 
at  the  time  the  insurance  was  effected  would  defeat  the  very  object  of 
the  insured,  and  so  must  have  been  understood  by  the  insurer.  The 
plaintiffs  business  was  trade,  the  vending  of  goods  from  his  store. 
According  to  the  construction  put  upon  tliis  policy  by  the  company, 
the  plaintiff  has  no  security  except  upon  the  goods  actually  in  the 
store  when  the  policy  was  issued,  and  when  those  were  disposed  of, 
tlieir  liability  was  at  an  end.  We  cannot  listen,  for  a  moment,  to  such 
a  suggestion.  A  policy  of  insurance  being  a  contract  of  indemnity, 
must  receive  such  a  construction  of  the  words  employed  in  it  as  will 
make  the  protection  it  affords  coextensive,  if  possible,  with  the  risks  of 
the  assured.  Dow  i\  The  Hope  Ins.  Co.,  1  Hall,  66.  The  risk  of  the 
assured  was  to  continue  six  years,  and  the  assurers  assumed  that  risk 
to  the  amount  of  two  hundred  dollars  on  the  goods  in  the  store.  Both 
parties  must  have  understood  this  to  mean  on  goods  which  may  be  in 
the  store  at  any  time  during  tlie  continuance  of  the  policy.  If  the 
assured  had  goods  to  an  amount  exceeding  two  hundred  dollars,  the 
undertaking  of  the  company  was  limited  by  that  amount.  If,  by  sale, 
the  quantity  was  reduced  below  that  sum  in  value,  the  insurers  were 
so  far  l)enefited,  as  their  risk  was  diminished  below  that  paid  for  by  the 
premium,  and  if  the  whole  were  sold,  the  insurers  were  benefited  to  a 
still  greater  degree  by  a  suspension  of  the  risk.  And  it  was  a  mere 
suspension,  for  uuon  filling  up  againjbe  risk  revived ;  ancnve^seeno 
difference  in  principle  between  the  case  where  the  quantitv  is  dimin- 
ished by  a  partial  sale  and  then  replenished,  and  where  the  whole  js 
sold"ana^arreatire  new  stock  purchased.     In  either  case  there  is  a  risk, 


602  HOFFMAN   AND   PLACE    V.    ^TNA   FIRE   INS.    CO.       [cHAP.  VI. 

limited  in  amount  b}'  the  contract,   which  has  been  assumed  by  the 
insurer,  and  for  which  the  insured  has  paid  the  stipulated  premium. 

We  are  clear  that  it  is  a  continuing  risk,  to  the  amount  specified, 
upon  such  goods  as  the  insured  ma}'  have  in  tlie  store  within  the  term 
covered  by  the  policy,  and  not  confined  to  sucJi  as  were  there  at  the 
time  of  assuming  the  risk.^  .   .   . 

There  must  bejudgrnejit  on  the  verdict.^ 


HOFFMAN   AND   PLACE   v.   ^TNA   FIRE   INS.    CO. 
Court  of  Appeals  of  New  York,  I860.     32  N.  Y.  405, 

The  action  was  on  a  policy  of  insurance  for  f6,000,  issued  in  Febru- 
ary, 1861,  to  Hoffman,  Place  &  Co.,  of  New  York,  covering  their 
stock  of  merchandise,  including  not  only  their  own  goods,  but  those 
held  by  them  in  trust  or  on  commission,  or  sold  but  not  delivered,  in 
their  brick  and  marble  store  in  Broadway.  The  policy  contained, 
among  other  things,  a  printed  proviso  that  it  should  be  null  and  void, 
"  if  the  said  property  shall  be  sold  or  conveyed."  The  insurance  was 
renewed  in  February,  1862.  On  the  7th  of  March  following,  Silvcr- 
nail,  one  of  the  partners,  retired  from  the  business,  selling  out  his 
interest  to  Hoffman  and  Place,  by  whom  the  business  was  continued. 
They  subsequent!}',  with  the  written  consent  of  the  compan}',  removed 
the  business  and  stock  to  their  new  brick  and  marble  store  in  Duane 
Street.  The  loss  occurred  on  the  9th  of  April ;  and  the  company 
declining  to  pay,  the  present  action  was  bi'ought. 

It  was  tried  in  the  Superior  Court  before  Judge  ]\Ionell,  and  tlie 
jur}'  found  a  verdict  for  the  plaintiffs.  The  judgment  was  affirmed  on 
appeal,  and  the  present  appeal  is  from  that  decision. 

The  principal  questions  of  law  raised  on  the  trial  were,  whether  tlie 
transfer  avoided  the  sale,  and  if  not,  whether  goods  afterwards  added 
to  the  stock  were  within  the  protection  of  the  policy. 

John  H.  Meijnolds,  for  the  appellants. 

Qrosvenor  P.  Lowrey,  for  the  respondents. 

Porter,  J.  The  weight  of  judicial  authority  in  this  state  is  against 
the  doctrine  that  a  policy  issued  to  a  firm  is  forfeited  b\'  a  transfer  of 
interest  as  between  the  parties  assured.  As  a  contrary  opinion  has  pre- 
vailed to  some  extent,  it  may  be  well  briefly  to  retrace  the  historj-  of 
this  question  in  our  courts.^  .  .  . 

1  The  remaintler  of  the  opinion  dealt  with  the  questions  as  to  pleading.  —  Ed. 

2  Ace. :  Tower  c.  Ocean  Ins.  Co.,  19  La.  28  (1841).  —  Ed. 

8  Here  were  cited,  frequently  with  discussion,  McMasters  v.  Westchester  County 
Mut.  Ins.  Co.,  23  Wend.  379  (1841) ;  Howard  v.  Albany  Ins.  Co.,  3  Denio,  301  (1846) ; 
Murdock  v.  Chenango  County  Mut.  Ins.  Co.,  2  N.  Y.  210  (1849) ;  Tillou  v.  Kingston 
Mut.  Ins.  Co.,  7  Barb.  570  (1850) ;  s.c.  in  the  Court  of  Appeals,  5  N.  Y.  405  (1851) ; 


SECT.  II.]        HOFFMAN    AND   PLACE   V.   ^ETNA    FIKE    INS.    CO. 


603 


It  is  quite  apparent,  tlierefore,  tliat,  in  this  state,  there  is  a  decisive 
preponderance  of  judicial  authority  against  the  recognition  of  a  sale  by 
one  to  another  of  the  assured,  as  cause  of  forfeiture  within  the  mean- 
ino-  of  the  proviso.  But  if  the  authorities  were  in  equipoise,  and  the 
solution  of  the  question  depended  on  general  reasoning  and  the  appli- 
cation of  settled  and  familiar  principles  of  law,  our  conclusion  would 
be  in  accordance  with  that  of  the  court  below. 

The  terms  of  the  proviso  are,  that  the  policy  shall  be  null  and  void, 
"if  the  said  property  shall  be  sold  and  conveyed."  But  these  words 
are,  themselves,  vague  and  indeterminate.  Are  they  to  be  understood 
in  their  largest  sense,  without  restriction  or  limitation?  Clearly  not; 
for  we  find,  on  referring  to  other  portions  of  the  policy,  that  it  was 
issued  to  the  assured  as  merchants,  and  that  it  covered  a  stock  of 
goods  which  it  was  their  business  to  sell  from  day  to  day.  Is  the 
proviso  applicable  to  the  particular  goods  in  the  store  at  the  date  of 
the  insurance?  Such  a  construction  would  not  only  defeat  the  purpose 
of  protecting  a  fluctuating  stock,  but  it  would  annul  the  policy  at  once, 
for  it  would  bring  the  first  mercantile  sale  at  the  counter  within  the 
terms  of  the  condition.  "What  description  of  sales  and  conveyances, 
then,  did  the  parties  contemplate  when  this  provision  was  framed? 
Evidently  such,  and  such  only,  as  would  transfer  the  proprietary  inter- 
est of  those  with  whom  the  insurers  contracted,  to  others  with  whom 
they  had  not  consented  to  contract.  They  testified  their  confidence  in 
each  of  the  assured,  by  issuing  to  them  the  policy ;  but  they  did  not 
choose  to  repose  blind  confidence  in  others  who  might  succeed  to  the 
ownership.  If  the  assured  parted  with  the  possession,  as  well  as  the 
title  of  the  goods,  the  insurers  knew,  of  course,  that  their  liability 
would  cease  ;  but  they  were  aware  that,  in  the  exigencies  incident  to 
business,  parties  often  retain  the  control,  possession,  and  apparent 
ownership  of  goods,  after  parting  with  all  their  title.  To  guard  against 
such  contingencies,  they  chose  to  provide  for  the  forfeiture  of  the 
policy  on  the  transfer  of  the  title  to  others,  even  though  the  business 
should  continue  to  be  conducted  by  the  assured. 

It  is  suggested  that  the  proviso  may  have  been  designed  to  secure 
the  continuance  in  the  firm  of  the  only  member  in  whom  the  insurers 
reposed  confidence.*  The  only  evidence  of  their  confidence  in  either  is 
the  fact  that  they  contracted  with  all ;  and  the  theory  is  rather  fanciful 
than  sound  that  they  may  have  intended  to  conclude  a  bargain  with 
rogues,  on  the  faith  of  a  proviso  that  an  honest  man  should  be  kept  in 
the  firm  to  watch  them.  Certainly,  nothing  appears  in  the  present  case 
to  indicate  that  all  the  assured  were  not  equally  worthy  of  confidence  ; 
and  it  is  not  to  be  presumed  that,  in  any  case,  underwriters  would 
deliberately  insure  those  whose  integrity  they  had  reason  to  distrust. 

Wilson  V.  Genesee  Mut.  Ins.  Co.,  16  Barb.  511  (185.3);  s.c  in  the  Court  of  Appeals, 
14  N.  Y.  418  (1856) ;  Dey  v.  Poughkeepsie  Mut.  Ins.  Co.,  23  Barb.  623,  627  (1857) ; 
Grosvenor  v.  Atlantic  F.  Ins.  Co.,  17  N.  Y.  391,  399  (1858) ;  and  Buffalo  Steam  Engine 
Works  V.  Sun  Mut.  Ins.  Co.,  17  N.  Y.  401,  412  (1858).  — Ed. 


604  HOFFMAN   AND   PLACE    V.   ^ETNA.   FIRE   INS.    CO.       [CHAP.  VI. 

The  policy  in  question  having  been  issued  to  a  mercantile  firnij  the 
company  must  be  deemed  to  have  had  in  view  tlie  fluctuating  nature  of 
a  partnership  business,  and  the  changes  of  relative  interest  incident  to 
that  relation.  These  might  be  very  important  to  the  assured,  though 
wholly  immaterial  to  the  risk.  It  is  manifest  that  mere  variations  m 
the  character  and  amounts  of  the  interests  of  the  assured  as  between 
themselves  did  not  constitute  the  mischief  at  which  the  proviso  was 
aimed.  If  the  applicants  had  originally  objected  to  the  form  of  the 
polic}',  on  the  ground  that  the  effect  of  the  clause  might  be  to  prevent 
the  increase  by  a  partner  of  his  interest  from  one-fourth  to  one-third 
of  the  business,  by  purchase  from  the  other  members  of  the  firm,  the 
answer  would  undoubtedly  have  been  that  such  a  change  was  not 
within  the  operation  or  intent  of  the  proviso.  There  is  probably  not 
a  business  firm  in  tlie  state  which  would  accept,  at  the  usual  rates,  a 
policy  declaring  in  terms  that  the  premium  should  be  forfeited  and  the 
insurance  annulled,  by  a  mere  change  of  interest  as  between  the  part- 
ners. In  this  instance  there  is  no  such  declaration  ;  and  an  im2)lica- 
tio?i  so  repugnant  to  the  evident  design  of  the  contract  is  not  to  be 
deduced  from  the  unguarded  use  of  general  words,  if  they  can  be  fairly 
limited  to  the  appropriate  and  obvious  sense  in  which  they  were 
employed  by  the  parties. 

The  design  of  the  provision  was,  not  to  interdict  all  sales,  but  only 
sales  of  proprietary-  interests  by  parties  insured  to  parties  not  insured. 
If  the  words  were  taken  literall}-,  a  renewal  of  the  policy  would  be 
required  at  the  close  of  each  day's  sales.  Indeterminate  forms  of 
expression,  in  such  a  case,  are  to  be  understood  in  a  sense  subservient 
to  the  general  purposes  of  the  contract.  It  is  true  that  the  language 
of  the  proviso  against  sales  was  not  guarded  by  a  special  exclusion 
of  changes  of  interest  as  between  the  assured,  or  of  the  sales  of  mer- 
chandise in  the  usual  course  of  their  business  ;  but  this  was  for  the 
obvious  reason  that  there  was  nothing  in  the  tenor  of  the  instrument 
to  denote  that  the  apiMcation  of  the  clause  to  such  a  case  was  within 
the  contemplation  of  the  underwriters.^  .  .  . 

Reading  the  proviso  as  it  was  read  by  the  parties,  it  is  easy  to  dis- 
cern the  purpose  of  its  insertion.  It  was  to  protect  the  company  from 
a  continuing  obligation  to  the  assured,  if  the  title  and  beneficial  inter- 
est should  pass  to  others,  whom  they  might  not  be  equally  willing  to 
trust.   .   .   . 

The  terms  of  the  policy  were  not  such  as  would  naturally  suggest 
even  a  query  in  the  minds  of  the  assured,  whether  a  transfer  of  interest 
as  between  themselves  would  work  a  forfeiture  of  the  insurance,  and 
relieve  the  company  from  its  promise  to  indemnify  both,  —  the  buyer  as 
well  as  the  seller,  —  the  premium  being  paid  in  advance,  and  the  risk 
remaining  unchanged.  One  or  two  joint  payees  of  a  non-negotiable 
note  would  hardly  be  more  surprised  to  be  met  with  a  claim,  that  b}- 

1  Here  and  elsewhere  in  the  opinion  it  has  seemed  necessary  to  omit  passages 
dealing  principally  with  general  rules  of  construction.  —  Ed. 


SECT.  II.]  BLACKWELL    V.    INSURANCE   COMPANY.  605 

buying  the  interest  of  his  associate  he  had  extinguished  the  obligation 
of  the  malier  to  both.   .   .   . 

The  appellants  seetn  to  suppose  that  there  is  a  teclmical  embar- 
rassment on  the  question  of  damages,  growing  out  of  the  fluctuating 
character  of  the  stock,  and  the  continuance  of  the  .business  bj-  the  re- 
maining members  of  the  firm,  who  succeeded,  under  the  transfer,  to 
tlie  interest  of  the  retiring  partner.  Looking  to  the  nature  and  design 
of  the  contract  of  insurance,  we  find  no  such  embarrassment.^  .   .  .. 

The  plaintiffs  were  parties  to  the  contract  made  with  the  defendant. 
The}'  were  conducting  the  business  contemplated  hy  the  terms  of  the 
policy.  The  insurance  was  intended  to  cover  the  mercantile  stock  of 
which  the  assured  were  proprietors,  stored,  from  time  to  time,  in  the 
building  in  which  that  business  was  conducted.  There  was  no  sub- 
stantial change  material  to  the  risk,  and  clearly  none  within  the  intent 
of  the  proviso.  Each  member  of  a  partnership  firm,  as  Lord  Hard- 
wiCKE  said,  is  "  seized  per  my  et  per  tout  "  of  the  common  stock  and 
effects.  (West  i'.  Skip,  1  Vesey  Sen.  242.)  This  interest  of  each 
and  all  the  policy  in  question  was  designed  to  protect ;  and  its  lan- 
guage, fairly  construed,  is  in  harmony  with  this  intent.  There  is  no 
reason  why  the  full  measure  of  agreed  indemnity  should  be  withheld 
from  the  plaintiffs,  who  were  owners  at  the  date  of  the  insurance,  and 
sole  owners  at  the  time  of  the  loss.  Hooper  v.  Hudson  River  Ins. 
Co.,  17  N.  Y.  425,  426  ;  Wilson  v.  Genesee  Mut.  Ins.  Co.,  16  Barb. 
511 ;  Jefferson  Ins.  Co.  v.  Cotheal,  7  Wend.  73;  Code,  §  HI. 

The  judgment  should  be  affirmed,  with  costs. 

Judgment  affirmed? 


BLACKWELL   v.   INSURANCE   COMPANY. 
SuPKEME  Court  of  Ohio,  1891.     48  Ohio  St.  533. 

Error  to  the  Superior  Court  of  Cincinnati. 

The  plaintiff"  in  error  brought  an  action  in  the  Superior  Court  of 
Cincinnati  against  the  defendant  in  error,  upon  a  policy  of  insurance 
issued  by  it  to  him  upon  a  stock  of  dry  goods,  notions,  etc.,  owned  by 
him  in  said  city. 

The  defendant  admitted  issuing  the  policy  and  the  loss  of  the  goods 
by  fire,  and  set  up  in  bar  of  a  recovery  for  the  loss,  that  the  policy  con- 
tained a  provision  that  it  should  become  "null  and  void "  if  the 
property  insured  should  be  sold  or  transferred  by  the  assured  ;  and 
averring  that,  in  violation  of  this  condition,  after  the  policy  was  issued 
and  before  the  fire,  he  sold  and  transferred  the  goods  and  business  to 

1  Here  was  quoted  a  passage  from  Harper  v.  Hudson  River  F.  Ins.  Co.,  17  N.  Y. 
424,  425  (1858).  — Ed. 

2  Ace. :  Powers  i-.  Guardian  F.  &  L.  Ins.  Co.,  135  Mass.  108  (1883).  —  Ed. 


606  BLACKWELL   V.   INSURANCE   COMPANY.  [CHAP.  VI. 

a  firm  composed  of  himself  and  one  Horman,  and  that  at  the  time  of 
the  loss  the  goods  were  owned,  and  the  business  was  conducted,  b}' 
said  firm,  by  which  sale  and  transfer  the  policy  became  forfeited  and 
void. 

The  plaintiflT  interposed  a  demurrer  to  this  defence,  and  upon  its 
being  overruled,  declined  to  plead  further,  and  suffered  judgment  to  be 
entered  against  him.  This  judgment  was  aflSrmed  by  the  Superior 
Court  in  General  Term  ;  whereupon  this  proceeding  was  brought  to 
reverse  both  judgments. 

Joseph  W.  O'JIara,  for  plaintiff  in  error. 

Ramsey,  3IaxweU  &  Ramsey,  for  defendant  in  error. 

Bradbury,  J.  The  record  in  this  case  raises  two  questions,  both  of 
which  must  be  determined  in  favor  of  the  plaintiff  in  error,  to  entitle 
him  to  relief. 

1.  Did  the  act  of  the  assured,  who  before  was  a  sole  trader,  in 
receiving  a  partner,  constitute  a  sale  and  transfer  of  the  insured 
property,  within  the  meaning  of  the  policy,  and  the  poUc}'  thereby 
rendered  void? 

2.  If  it  was  not  such  a  sale  as  to  render  the  policy  void,  may  the 
plaintiff  maintain  an  action  on  the  policy  in  his  own  name  to  recover 
for  the  loss  ? 

There  is  some  conflict  among  the  authorities  upon  the  first  question. 
It  is  discussed  by  May  in  his  work  on  Insurance,  and  b}-  the  courts  of 
a  number  of  the  states ;  notably  in  Dix  et  al.  v.  The  Mercantile  Insur- 
ance Co.,  22  111.  272  ;  Finley  et  al.  v.  The  Lycoming  County  Mutual 
Ins.  Co.,  30  Penn.  St.  311 ;  The  Hartford  Fire  Ins.  Co.  v.  Ross  et  al., 
23  Ind.  179  ;  The  Western  Mass.  Ins.  Co.  v.  Riker  et  al.,  10  Mich. 
279 ;  Drennan  et  al.  v.  London  Assurance  Corp.,  20  Fed.  Rep.  657 ; 
Malley  v.  Atlantic  Ins.  Co.,  51  Conn.  222  ;  Scanlon  v.  The  Union  Fire 
Ins.  Co.,  4  Biss.  511 ;  Cowan  v.  The  Iowa  State  Ins.  Co.,  40  Iowa,  551 ; 
Hathaway  v.  State  Ins.  Co.,  64  Iowa,  229;  Keeler  v.  Niagara  Fire 
Ins.  Co.,  16  Wis.  523 ;  Wood  v.  Rutland  Ins.  Co.,  31  Vt.  552. 

An  examination  of  the  cases  above  cited  will  disclose  that  the  con- 
ditions in  ftie  policies,  where  forfeiture  for  alienation  was  sustained, 
were  materially  different  from  the  one  involved  in  this  action,  except 
perhaps  in  the  cases  in  30  Penn.  St.  311,  and  that  in  16  Wis.  523, 
where  the  language  of  the  condition  was  very  similar  to  that  now 
under  consideration.  In  the  other  cases  sustaining  the  forfeiture,  the 
condition  contained  a  provision  forfeiting  the  policy,  not  merely  for  a 
"  sale  or  transfer"  of  the  property,  but  in  case  of  "  a  change  of  title  " 
or  the  sale  of"  any  undivided  interest  therein"  (23  Ind.  179)  ;  in  case 
of  a  "  change  of  title"  (10  Mich.  279)  ;  "  or  any  change  took  place  in 
the  title  or  possession"  (51  Conn.  222  ;  20  Fed.  Rep.  657)  ;  and  there- 
fore they  cannot  be  rightfully  claimed  as  direct  authorities  for  the  in- 
surance company  in  the  case  at  bar.  In  the  case  in  40  Iowa,  551,  the 
condition  against  alienation  was  very  similar  to  those  above  quoted, 
but  the  Supreme  Court  of  Iowa  held  "  that  nothing  less  than  a  sale  of 


SECT.  II.]  BLACKWELL   V.   INSUEANCE   COMPANY. 


607 


the  entire  interest  of  the  party  insured  would  defeat  the  policy."     This 
ductrine  was  maintained  by  Ukummond,  J.,  in  4  Biss.  411. 

Heretofore  this  precise  question  has  not  been  before  this  court,  and 
in  the  conflict  of  authorities  respecting  it,  we  feel  at  liberty  to  adopt 
that  rule  upon  the  subject  which  most  nearly  accords  witli  the  policy  of 
our  decisions  and  the  presumed  intention  of  the  juarties.  It  is  the 
policy  of  this  court  to  strictly  construe  those  clauses  in  an  insurance 
policy  which  forfeit  the  indemnity  provided  for  the  assured.  West 
et  ai.  V.  The  Citizens'  Insurance  Company,  27  Ohio  St.  1.  In  this 
case,  on  i)age  10,  Johnson,  J.,  refers  with  approval  and  in  the  follow- 
ing language  to  tlie  views  on  the  subject  contained  on  page  74  of  May 
on  Insurance:  '^  Exceptions  in  a  policy  should  be  strictly  construed, 
and  where  there  are  two  interpretations  equally  fair,  lliat  which  gives 
the  greater  indemnity  should  prevail."  And  on  page  13  (27  Ohio  St.) 
the  same  learned  jurist  says :  "  Stipulations  in  a  contract  providing  for 
disabilities  or  forfeitures,  are  to  receive,  when  the  intent  is  doubtful,  a 
strict  construction  against  those  for  whose  benefit  they  are  introduced." 

Let  us  recur  to  the  exact  words  of  forfeiture  as  they  are  set  forth  iu 
the  defendant's  answer.  "  If  .  .  .  said  assured  should  sell  or  trans- 
fer the  property  thereby  insured,  that  said  policy  should  become  null 
and  void."  It  was  competent  for  the  policy  to  provide,  expressly,  that 
a  sale  of  a  part  of  the  property  or  of  an  interest  therein  should  avoid 
the  policy  ;  this  they  did  not  do.  The  absence  of  a  specific  provision 
to  that  effect  when  it  could  have  been  so  easily  inserted,  together  with 
the  rule  before  referred  to  that  conditions  which  defeat  a  policy  should 
be  construed  strictly  against  the  forfeiture,  leads  us  to  hold  that  a  sale 
of  the  entire  interest  of  the  party  insured  was  necessary  to  avoid  the 
policy. 

In  a  strict  legal  sense,  perhaps,  wherever  one  engaged  in  business 
alone,  takes  a  partner  into  his  business,  or  a  firm  receives  a  new  mem- 
ber, or  a  member  goes  out,,  the  transaction  results  in  the  formation  of 
a  new  concern,  accompanied  by  a  sale  and  transfer  of  all  the  property 
of  the  old  estal)lishment  to  the  new  one ;  but  it  is  at  least  doubtful 
whether  this  strict  legal  result  is  contemplated  by  the  business  world 
generallv.  That  the  parties  in  the  case  before  us  intended  the  policy 
should  be  avoided,  in  case  the  assured  received  a  partner  into  his 
business,  is  uncertain  ;  that  the  plaintiff  understood  the  transaction  to 
be  a  sale  of  an  undivided  half  of  the  property  and  business  to  Horman, 
rather  than  a  sale  of  the  whole  of  it  to  a  firm  composed  of  himself  and 
Horman,  is  quite  probable.  It  was  competent  for  the  parties  to  pro- 
vide in  unambiguous  terms  that,  if  the  assured  received  into  the  busi- 
ness, without  the  consent  of  the  insurer,  a  partner,  the  policy  should 
become  void.  This  was  not  done,  and  we  think  the  principles  already 
announced  require  us  to  hold  that  the  sale  and  transfer  resulting  from 
the  reception  of  a  partner  did  not  avoid  the  policy. 

Notwithstanding  the  transaction  the  plaintiff  retained  a  sul)stantial 
and  insurable  interest  in  the  property  covered  by  the  policy,  while  to 


COS        BKOWN    V.   COTTON,   ETC.    MANUF'HS'    MUT.    INS.    CO.       [CHAP.  VI. 

avoid    the   policy   on    accouut   of  tlie    provision  against  alienation  it 
should  have  divested  him  of  his  entire  interest. 

The  defendant  contends  that  this  construction  disregards  the  rule 
that,  in  construing  an  instrument,  effect  should  be  given  to  all  its 
parts  ;  and  that  to  hold  that  the  plaintiff  must  divest  himself  of  his 
entire  interest  to  avoid  the  policy  renders  the  provision  against  aliena- 
tion nugatory,  because,  if  the  policy  contained  no  such  provision,  yet 
he  could  not  recover  for  a  loss  that  occurred  after  he  had  sold  his  en- 
tire interest,  as  in  that  event  he  suffered  no  injury,  and  the  contract  of 
insurance  is  one  of  indemnity.  Whether  the  construction  we  have 
adopted  renders  the  provision  against  alienation  nugatory  or  not,  or 
whether  circumstances  may  not  arise  under  which  it  might  be  opera- 
tive, we  do  not  deem  it  necessary  to  inquire,  for  the  rule  thus  urged 
upon  our  consideration  is  only  one  of  many  rules  applied  by  courts  to 
ascertain  the  meaning  of  the  words  adopted  by  parties  to  express  their 
intentions,  and  in  many  instances  it  readily  yields  to  other  rules  of  con- 
struction, as  we  think  it  should  in  the  case  now  under  consideration. 

The  remaining  question  presents  no  difficulty.  Section  4,993, 
Kevised  Statutes,  requires  an  action  to  be  brought  in  the  name  of  the 
real  party  in  interest.  Here  the  plaintiff,  alone,  is  interested  in  the 
policy  of  insurance  set  forth  by  him  in  his  petition  ;  the  contract  it 
contains  is  to  indemnify  him ;  be  can  recover,  of  course,  only  to  the 
extent  he  has  been  damaged  ;  but,  as  no  question  is  before  us  as  to 
its  proper  measure,  it  will  not  receive  consideration. 

Judgment  reversed. 


BROWN     V.    COTTON    AND    WOOLEN     MANUFACTURERS' 
MUTUAL   INSURANCE   COMPANY. 

Supreme  Judicial  Court  of  Massachusetts,  1892.     156  Mass.  587. 

Holmes,  J.  This  is  an  action  on  a  policy  of  insurance  against  fire, 
issued  by  the  defendant,  a  Massachusetts  company,  in  1885,  upon  the 
plaintiff's  woollen  factory  in  Connecticut.  So  far  as  material,  the 
policy  was  in  the  Massachusetts  standard  form,  with  a  rider.  Pub. 
Sts.  c.  119,  §  139.^  At  the  trial,  tlie  judge  directed  a  verdict  for  the 
defendant,  and  reported  the  case  to  this  court.  When  the  policy  was 
issued,  the  plaintiff  had  the  legal  title,  probably  as  mortgagee  in 
equity,  by  conveyance  from  her  husband  through  a  third  person.  We 
assume  her  title  to  have  been  sufficient  without  discussion.  The 
defences  relied  on  are,  that  before  the  fire  she  had  broken  tlie  condi- 
tion against  sale,  that  she  no  longer  had  an  insurable  interest,  and 

1  The  form  provided  that  "this  policy  shall  be  void  if  .  .  .  without  the  assent  in 
writing  or  in  print  of  the  company  .  .  .  the  said  property  shall  be  sold."  —  Ed. 


SECT.  II.]         BKOWN   V.   COTTON.   ETC.    MANUF'RS'    INS.    CO.  609 

tliat  she  had  broken  the  condition  against  the  factory  ceasing  opera- 
tion for  more  than  thirty  days.  It  also  is  set  up  that  the  plaintiff  had 
not  rendered  a  statement  in  writing  setting  forth  the  value  of  tlie 
property  insured,  etc.,  as  required  by  the  policy.  The  plaintiff' replies 
to  this  last  defence  that  it  was  waived,  and  we  shall  give  it  no  con- 
sideration. For  the  purposes  of  our  decision,  we  assume  that,  if  it 
had  stood  alone,  the  plaintifl"  at  least  would  have  had  a  right  to  go  to 
the  jiuy. 

The  sale  relied  on  was  a  conveyance  by  the  plaintiff"  four  days  before 
the  fire  to  the  trustee  in  insolvency  of  her  husband's  estate,  by  a  deed 
which  purported  to  be  for  valuable  considerations,  but  for  which  the 
plaintiff"  testified  that  she  received  nothing.  The  plaintiff  proved 
against  her  husband's  estate,  and  her  claim  was  allowed,  but  she 
received  nothing  upon  it.  It  is  argued  that  her  position  as  a  creditor 
preserved  for  her  an  insurable  interest  in  the  factory  after  the  transfer, 
and  that  the  conveyance  was  not  a  sale. 

In  tlie  opinion  of  a  majority  of  the  court,  the  conveyance  was  a 
broach  of  condition.  We  are  of  opinion,  in  the  first  place,  that  it 
makes  no  difl'erence  whether  the  consideration  of  the  conveyance 
is  of  substantial  value,  or  is  merely  the  technical  consideration  which 
is  said  to  be  imported  by  the  execution  of  a  deed.  If  the  plaintiffs 
conveyance  was  in  other  respects  a  breach  of  the  condition,  the  fact 
that  .she  received  nothing  for  it  will  not  save  it.  Essex  Savings  Bank 
V.  Meriden  Ins.  Co.,  57  Conn.  335,  338. 

But  it  is  said  that  the  plaintiff"  did  not  alienate  her  whole  interest, 
because  she  retained  an  insurable  interest  after  the  transfer,  as  one  of 
the  creditors  for  whom  her  grantee  held  the  property  in  trust.  We 
will  assume  that  it  is  true  that  a  creditor  has  an  insurable  interest 
in  the  estate  of  his  debtor  when  conveyed  to  an  assignee  in  insolvency. 
Eastern  Railroad  v.  Relief  Ins.  Co.,  98  Mass.  420,  423;  Rohrbach  v, 
Germania  Ins.  Co.,  62  N.  Y.  47,  53.  But  we  think  that  an  interest 
of  that  kind  would  not  be  a  continuation  of  the  former  interest  of  the 
plaintiff".  By  her  conveyance  the  plaintiff"  parted  with  the  whole  legal 
title,  and,  as  her  grantee  already  owned  her  husband's  equity,  she 
cxtingnislied  her  mortgage.  In  whatever  words  we  express  the  fact, 
she  luit  an  end  to  her  preferred  right  to  satisfy  her  debt  out  of  this 
land  before  other  creditors  could  touch  it.  Her  right  afterwards  was 
not  created  by  or  reserved  or  excepted  out  of  her  conveyance.  It 
arose  from  the  independent  circumstances  that  her  grantee  was  an 
assignee  in  insolvency,  and  that  the  land  became  part  of  the  fund 
held  by  him  as  such.  It  was  a  right,  in  common  with  other  creditors, 
to  share  in  the  fund,  and  in  the  land  only  in  so  far  as  it  was  part  of 
the  fund.  We  are  of  opinion  that  the  condition  against  sale  was 
broken.  Dadmun  Manuf.  Co.  v.  Worcester  Ins.  Co.,  11  Met.  429,  435  ; 
Oakes  v.  Manufacturers'  Ins.  Co..  131  Mass.  164,  165  ;  Dailey  v. 
Westchester  Ins.  Co.,  131  Mass.  173;  Grevemeyer  o.  Southern  Ins. 
Co.,  62  Penn.  St.  340,  342  ;  Adams  v.  Rockingham  Ins.  Co.,  29  Maine, 

39 


610  BAKNES    i'.UNION    MUTUAL   INS.    CO.  [cHAP.  VI. 

292,  296,  297  ;  Hazard  v.  Franklin  Ins.  Co.,  7  R.  I.  429.  See  further, 
Young  V.  Eagle  Ins.  Co.,  14  Gray,  150,  152,  153.  We  express  no 
opinion  whether  there  was  a  breach  of  the  condition  against  the 
factory  ceasing  operation. 

Judgment  on  the  verdict. 

L.  S.  Dahney  S  E.  M  Parker,  for  the  plaintiff". 

J.  JSf.  Ilarshall  {G.  J.  Burns  with  him),  for  the  defendant. 


(b)    Sale^  transfer^  or  change  in- title  or  jyossession. 

BARNES   V.   UNION   MUTUAL   INS.    CO. 

Supreme  Court  of  Maine,  1863.     51  Me.  110.  ^ 

Reported  from  Nisi  Frius  by  Davis,  J. 

This  was  an  action  on  a  policy  of  insurance,  to  recover  for  loss 
insured  against. 

F.  0.  J.  Smith,  for  the  plaintiff. 

T.  M.  Hayes,  for  the  defendants. 

The  facts  in  the  case,  bearing  on  the  questions  considered,  are 
fully  indicated  in  the  opinion  of  the  court,  which  was  drawn  up  by 

Davis,  J.  The  plaintiff  applied  for  insurance  on  ''one  half,  in 
common  and  undivided,"  of  certain  buildings,  and  household  furniture 
therein.  In  answer  to  the  question,  "Who  owns  and  occupies  the 
buildings?"  he  answered,  "The  applicant  owns  and  occupies  the 
property."  A  fair  construction  of  this  representation  of  title  is,  that 
the  applicant  was  the  owner  of  an  undivided  half  of  the  property 
described,  and  the  sole  owner  of  the  property  to  he  insured.  This 
representation  was  true. 

The  b3^-laws  of  the  company  are  expressly  made  a  part  of  the  policy, 
as  conditions  of  the  insurance.  By  the  sixteenth  article,  it  is  provided 
that  "when  the  title  of  any  property  insured  shall  be  changed,  by 
sale,  mortgage,  or   otherwise,  the  policy  shall  thereupon  be  void." 

The  insurance  in  this  case  was  for  six  years.  The  policy  was  dated 
Nov.  15,  1851.  Upon  a  petition  for  partition,  duly  prosecuted  by  the 
other  tenant  in  common,  upon  which  judgment  was  rendered  Jan.  20, 
1857,  the  premises  were  divided,  and  the  plaintiff  became  the  owner  of 
a  particular  half  thereof,  in  severalty.  The  buildings  were  destroyed 
by  fire,  April  1,  1857. 

■  The  partition  of  the  property  may  not  have  been  an  alienation,  as 
understood  in  matters  of  insurance.  But  when  a  by-law  provides  that 
any  alteration  or  change  in  the  title  shall  make  the  policy  void,  any 
material  change  in  the  title  will  have  that  effect,  though  it  is  not  by  an 
alienation.  Edmands  v.  Mutual  Safety  Fire  Ins.  Co.,  1  Allen,  311 ; 
Campbell  v.  Hamilton  Mutual  Ins.  Co.,  51  Me.  69. 


SECT.  II.]  LOY    V.    HOME    INS.    CO.  611 

The  title,  in  the  case  at  bar,  was  materially  changed  b}'  the  partition. 
The  effect  was  equivalent  to  an  alienation,  and  a  purchase.  The 
plaintiff  no  longer  owned  an}-  interest  in  the  entire  property,  while  he 
did  own  the  entire  interest  in  a  part  of  it.  It  was  the  same  as  if  he  had 
given  his  co-tenant  a  deed  of  his  interest  in  a  specific  part,  and  had 
received  from  him  such  a  deed  of  the  other  part.  His  title  no  longer 
corresponded  with  the  policy,  in  nature  or  quantity.  He  insured  but 
one  undivided  half  of  the  part  which  he  owned  after  it  was  divided. 
And,  after  the  division,  he  owned  no  part  of  the  other  half.  If  he 
could  recover  at  all,  which  he  cannot  do,  it  would  be  for  only  one- 
foarth  part  of  the  whole,  —  or,  for  an  undivided  half  of  the  part  which 
he  continued  to  own  after  the  partition. 

The  furniture  was  separately  valued  in  the  policy  ;  and  it  is  claimed 
that  the  plaintiff  is  entitled  to  recover  for  the  loss  of  that,  if  he  fails  to 
recover  for  the  loss  of  the  buildings.  But  the  provision  in  the  by-laws 
is  that,  if  the  title  is  changed,  the  policy  shall  be  void.  And  besides, 
it  has  been  decided  b}-  this  court,  that  such  a  contract  of  insurance  is 
indivisible,  and,  if  rendered  void  b}-  the  assured  in  any  of  the  items  of 
property  insured,  the  whole  policy  is  void.  Lovejo}'  u.  Augusta  M.  F. 
Ins.  Co.,  45  Me.  472 ;  Gould  v.  York  County  Mut.  Fire  Ins.  Co., 
47  Me.  403  ;  Day  v.  Charter  Oak  Ins.  Co.,  51  Me.  91. 

Plaintiff  nonsuit.'^ 

Appleton,  C.  J.,  Kent,  TValtox,  and  Dickerson,  JJ.,  concurred. 

(Kent,  J.,  held  that  the  representation  of  the  plaintiff,  as  to  oc- 
cupancy of  the  building,  was  either  a  misstatement  or  a  concealment 
of  a  material  fact.) 


LOY  V.  HOME  INSURANCE  CO. 
■    ■     Supreme  Court  of  Minnesota,  1877.     24  Minn.  315. 

Appeal  by  defendant  from  an  order  of  the  District  Court  for  Olmsted 
County,  Mitchell,  J.,  presiding,  denying  a  motion  for  a  new  trial  in  an 
action  on  a  policy  of  insurance. 

Henry  C.  Butler.^  for  appellant. 

Start  &  Gove  and  P.  M.  Tolbert,  for  respondent. 

Cornell,  J.  The  policy  on  which  this  action  is  brought  contains 
the  following  among  other  conditions  :  — 

''If  the  property  be  sold  or  transferred,  or  any  change  takes  place 
in  title  or  possession  (except  by  reason  of  the  death  of  the  insured), 
whether  by  legal  process  or  judicial  decree,  or  voluntary  transfer  or 
conveyance,  .  .   .  this  policy  shall  be  void." 

The  property  insured  consisted  of  a  dwelling-house,  and  certain  fur- 
niture  and  wearing  apparel  therein  contained,  situate   upon  premises 

1  Ace:  Trabue  r.  Dwelling-House  Ins.  Co.,  121  Mo.  75  (1894).  — Ed. 


612 


LOY    V.    HOME   INS.    CO.  [CHAP.  VI, 


belonging  to  the  respondent.  After  the  issuance  of  the  policy  the  re- 
sponifenr  mortgaged  the  premises,  and  the  same  were  sold  under  a 
power  of  sale,  upon  a  foreclosure  of  the  mortgage  by  advertisement, 
pursuant  to  the  statute.  After  the  sale,  and  before  the  period  for  re- 
demption had  expired,  the  loss  occurred,  the  respondent  still  being  in 
possession  of  the  premises. 

The  question  for  consideration  is,  whether  this  foreclosure  sale  was 
''a  sale,  transfer,  or  change  in  title,"  within  the  meaning  of  the  fore- 
going condition,  such  as  avoided  the  policy. 

In  construing  a  condition  of  this  character,  if,  upon  a  consideration 
of  the  whole  contract,  it  is  uncertain  whether  the  language  of  the  stip- 
ulation is  used  in  an  enlarged  or  restricted  sense,  or  if  it  is  fairly 
open  to  two  constructions,  one  of  which  will  uphold  and  the  other  de- 
feat the  claim  of  the  insured  to  the  indemnity  whicli  it  was  his  object 
in  making  the  insurance  to  obtain,  that  should  be  adopted  which  is 
most  favorable  to  the  insured,  and  most  in  harmony  with  such,  the 
main  purpose  of  the  contract  on  his  part.  The  reasons  for  this  are 
twofold  :  the  tendency  of  any  such  stipulation  is  to  narrow  the  range 
and  limit  the  force  of  the  underwriter's  principal  obligation.  It  is  also 
inserted  by  him  for  his  own  benefit  and  in  language  of  his  own  choice. 
If  any  doubt  arises  as  to  its  meaning  the  fault  is  his  in  not  making  use 
of  more  definite  terms  in  which  to  express  it ;  hence  the  rule  of  strict 
construction  against  him,  and  the  liberal  one  in  favor  of  the  assured, 
which  prevail  under  such  circumstances.  Hoffman  v.  JEtnsx  Ins.  Co., 
32  N.  Y.  405  ;  Westfall  v.  Hudson  Riv.  Ins.  Co.,  2  Duer,  495  ;  Ins. 
Co.  V.  Wright,  1  Wall.  456  ;  West.  Ins.  Co.  v.  Crapper,  32  Pa.  St.  351. 

Applying  these  principles,  a  correct  interpretation  of  this  condition 
of  the  policy  would  seem  to  be  attended  with  but  little  difficult}'.  In 
the  first  place  it  makes  a  sale  or  transfer  of  the  property  a  cause  for 
avoiding  the  policy.  Within  the  meaning  of  the  stipulation  this  refers 
to  an  absolute  and  completed,  and  not  a  conditional  or  incomplete,  sale 
or  transfer ;  in  other  words,  a  sale  that  wholly  divests  the  owner  of  the 
property  of  all  insurable  interest  therein. 

The  succeeding  clause,  which  g^ves  a  like  effect  to  any  "  change  in 
title,  .  .  .  whether  by  legal  process,  judicial  degree,  or  voluntary 
transfer  or  conveyance,"  has  reference  to  an  absolute  transfer  of  the 
legal  title  in  one  of  these  ways,  though  such  transfer,  as  in  the  case  of 
a  conveyance  in  trust,  or  by  a  deed,  absolute  in  terms,  but  intended 
merely  as  a  security,  might  not  operate  to  divest  the  owner  of  the 
property  of  all  his  insurable  interest  therein. 

In  our  judgment  notliing  short  of  a  complete  transfer  of  the  legal 
title  comes  within  the  prohibition  of  this  stipulation.  The  mere  crea- 
tion of  a  lien  or  encumbrance  upon  the  property  insured  cannot  be  re- 
garded as  affecting  "  any  change  in  title,"  either  in  the  legal  sense  or 
according  to  the  ordinary  and  popular  understanding.  "  In  legal  ac- 
ceptation," says  Allen,  J.,  in  S.  F.  &  M.  Ins.  Co.  v.  Allen,  43  N.  Y. 
389,  "  title  has  respect  to  that  whicli  is  the  subject  of  ownership,  and 


SECT.  II.]  LOT   V.    HOME    INS.    CO.  613 

is  that  which  is  the  foundation  of  ownership  ;  and  with  a  change  of 
lille,  the  right  of  propert}',  the  ownership,  passes."'  As  applied  to  real 
estate,  it  is  defined  to  be  "  the  means  wiiereby  the  owner  of  lands  or 
other  real  property  has  the  just  and  legal  possession  and  enjoyment  of 
it;"  "the  lawful  cause  or  ground  of  possessing  that  which  is  ours." 
(2  Bouv.  Law  Diet.  986.) 

In  this  sense,  which  is  also  the  ordinary  and  popular  one  in  which 
the  word  is  used,  a  "  change  in  title  "  is  a  change  in  owncrsliip,  whiLh 
carries  the  legal  right  of  possession  and  property,  and  it  is  in  this  sen.-,e 
-we  must  understand  the  word  as  having  been  used  in  this  clause. 

Although  within  the  meaning  of  the  registry  laws  a  m(jrtgage  of  real 
estate  is  defined  to  be  a  conveyance,  yet  under  our  laws  it  is  not 
deemed  a  conveyance  in  the  sense  of  passing  any  estate  or  interest  in 
lands,  or  transferring  any  legal  title  thereto.  The  only  interest  which 
a  mortgagee  acquires  is  a  lien  upon  the  land  in  way  of  security,  which, 
prior  to  the  foreclosure  of  the  right  of  redemption,  is  treated  as  per- 
sonal property  that  goes  to  the  administrator  or  executor,  and  not  to 
the  heirs.  The  legal  title,  with  the  right  of  possession,  remains  with 
the  mortgagor  until  a  completed  foreclosure  is  had  by  sale,  and  the 
same  becomes  absolute  by  the  expiration  of  the  period  for  redemption. 
Until  this  time  expiresthe  purchaser  at  the  sale  has  only  a  cliattel  and 
equitable  interest.  He  has  no  legal  title  to  the  lands,  nor  any  couvey- 
able  estate  therein.  The  character  of  his  interest  is  the  same  as  that 
of  a  mortgagee  before  foreclosure  sale.  Gen.  St.  c.  52,  §11 ;  Id.  c.  75, 
§11  ;  Donnelly  v.  Simonton,  7  Minn.  110  (1G7)  ;  Hortou  v.  Maffitt,  14 
Minn.  290-292. 

Neither  is  a  foreclosure  by  advertisement  "  legal  process  "  or  a  '-judi- 
cial decree."  The  proceedings  in  this  kind  of  a  foreclosure  are  carried 
on  wholly  outside  of  court,  and  without  the  aid  of  its  process  or  decree. 
It  is  obvious,  then,  that  neither  the  giving  of  the  mortgage  nor  the  sale 
of  the  premises  on  foreclosure,  the  time  for  redemption  not  having  ex- 
pired, effected  any  change  in  title  or  possession  in  respect  to  the  piop- 
erty  insured,  and  did  not,  therefore,  avoid  the  policy. 

Order  affirmed.^ 

1  See  McKissick  v.  Mill  Owners'  Mut.  F.  Ins.  Co.,  50  Iowa,  116  (1878)  ;  Commer- 
cial Union  Assurance  Co.  v.  Scammon,  102  111.  46  (1882);  Hopkins  IVIfg  Co.  v. 
Aurora  F.  &  M.  Ins.  Co.,  48  Mich.  148  (1882) ;  Marts  v.  Cumberland  Mut.  F.  Ins.  Co., 
44  N.  J.  L.  478,  481-482  (1882) ;  Haight  v.  Continental  Ins.  Co.,  92  N.  Y.  51.(1883)  ; 
Hanover  F.  Ins.  Co.  v.  Brown,  77  Md.  64  (1893). 

Compare  iMcIntire  v.  Norwich  F.  Ins  Co.,  102  Mass.  230  (1869). 

In  Hanover  F.  Ins.  Co.  v.  Brown,  supra,  Bryax,  J.,  for  the  court,  said :  — 

"  The  passing  or  entry  of  a  decree  of  foreclosure  is  one  of  the  causes  which  accord- 
iii"-  to  the  terms  of  the  policy  would  make  it  void  ;  and  it  is  maintained  by  the  defend- 
ant that  the  proceedings  for  a  sale  under  the  mortgage  were  equivalent  to  the  entry  of 
such  a  decree  within  the  meaning  of  the  policy.  A  mortgage  is  in  law  a  conditional 
sale.  The  mortgagor  in  consideration  of  so  much  money  sells  the  property  to  the 
mortgagee,  upon  the  condition,  however,  that  the  sale  is  to  be  void,  ])rovided  by  a 
given  day  the  mortgagor  repays  the  money  with  interest.  If  the  mortgagor  fails  to 
repay  the  money  with  interest  at  the  time  stipulated,  the  mortgagee's  title  to  the 


614  LOY   V.    HOME    INS.  CO.  [CHAP.  VI, 

property  becomes  absolute  at  law,  because  the  condition  subsequent  which  was  to  de- 
feat it  has  not  been  performed.  But  courts  of  equity  give  to  the  mortgagor  what  is 
called  the  equity  of  redemption  ;  that  is,  they  allow  him  to  redeem  his  forfeited  mort- 
gage by  repaying  notwithstanding  the  default  the  sum  mentioned  therein.  And  the 
only  way  for  the  mortgagee  to  prevent  this  redemption  is  to  file  a  bill  in  equity  iu 
which  he  calls  upon  the  mortgagor  to  repay  the  money,  or  be  forever  foreclosed  of  his 
equity  of  redemption.  The  court,  in  due  course,  passed  a  decree  appointing  a  day  for 
the  money  to  be  paid,  and  declaring  that  if  it  is  not  paid  at  or  before  that  time  the 
mortgagor's  right  of  redemption  shall  be  forever  taken  away.  Upon  tlie  failure  to  pay 
at  the  designated  timethe  decree  is  made  final  and  absolute.  This  i.s  a  decree  of  fore- 
closure, and  it  was  the  ordinary  proceeding  iu  behalf  of  mortgagees  before  the  Act  of 
Assembly,  which  authorized  courts  of  equity  to  decree  that  the  property  should  be 
sold.  The  decree  for  foreclosure  has  disappeared  from  our  practice,  being  entirely 
superseded  by  the  more  convenient  decree  for  sale,  which  is  however  sometimes,  though 
inaccurately,  called  a  foreclosure  decree.  The  proceeding  in  this  case  was  not  a  de- 
cree of  any  kind,  but  an  advertisement  and  sale  under  a  power  contained  in  a  mort- 
gage. To  be  sure  the  sale  under  such  a  power  would  be  as  effective  as  a  sale  under 
a  decree  of  a  court  of  equity,  and  so  would  any  other  sale  lawfully  made.  But  if  we 
could  consider  it  as  equivalent  within  the  meaning  of  the  policy  to  a  decree,  we  could 
not  disregard  the  difference  between  a  decree  for  a  sale  and  a  decree  of  foreclosure. 
A  sale  under  a  decree  does  not  pass, the  title  unless  it  is  ratified  and  confirmed.  The 
court  is  the  vendor  acting  through  its  agent  the  trustee  who  has  been  appointed  to 
make  the  sale.  He  reports  to  the  court  the  offer  of  the  bidder  for  the  property ;  if 
the  offer  is  accepted,  the  sale  is  ratified,  and  thereupon,  and  not  sooner,  the  contract  of 
sale  becomes  complete.  Before  ratification  the  transaction  is  merely  an  offer  to  pur- 
chase whicli  has  not  been  accepted.  On  the  other  hand  a  decree  of  foreclosure  ipso 
facto  extinguishes  the  mortgagor's  right  of  redemption  and  vests  the  entire  title  in 
the  mortgagee. 

"  Another  cause  which  would  render  the  policy  void  is  a  sale  under  a  deed  of  trust, 
or  any  change  in  the  title  or  possession  of  the  property.  It  was  necessary  that  the 
sale  made  by  the  attorney  named  in  the  mortgage  should  be  reported  to  a  court  of 
equity,  and  when  it  was  reported,  the  same  proceedings  were  required  as  if  it  had 
been  made  by  a  trustee  under  a  decree.  Code,  Article  66,  section  9,  Public  General 
Laws.  We  have  seen  that  the  sale  was  not  a  complete  contract,  and  that  when 
reported,  it  was  merely  an  offer  to  make  a  purchase  which  had  not  been  accepted  by 
the  only  authority  competent  to  accept  it ;  that  is  to  say,  the  court.  If  we  read  the 
whole  of  this  clause  containing  the  causes  of  forfeiture  it  is  evident  that  the  purpose 
was  to  provide  that  the  insurance  should  cease  to  be  effective  as  soon  as  tb.e  title  of 
the  insured  came  to  an  end.  It  was  not  intended  that  he  should  have  a  right  of  re- 
covery for  the  destruction  of  property  which  he  did  not  own.  But  it  could  not  have 
been  the  purpose  to  forfeit  the  policy  while  his  ownership  continued.  The  sale  under 
a  deed  of  trust  mentioned  in  the  policy  means  a  consummated  transaction  by  which 
the  interest  of  the  insured  was  divested.  The  sale  made  by  the  attorney  was  finally 
ratified  by  the  court  after  the  fire  had  occurred.  Before  tliis  ratification  the  pro- 
ceeding was  merely  an  unaccepted  proposition  for  a  purchase  and  no  change  had  taken 
place  in  the  title.  The  property  was  occupied  by  a  tenant  of  Hammond,  the  insured, 
and  his  occupancy  was  in  law  the  possession  of  his  landlord,  and  it  continued  to  be 
vested  in  him  until  the  change  of  title  had  been  accomplished."  —  Ed. 


SECT,  n.]  HATHAWAY   V.    STATE   INS.    CO.  615 


HATHAWAY  et  al.  v.   STATE   INSURANCE    CO. 
Supreme  Court  of  Iowa,  1884.     64  Iowa,  229.^ 

Appeal  from  Fayette  Circuit  Court. 

The  action  was  upon  a  polic}'  insuring  the  firm  of  Hathaway  & 
Smith,  composed  of  plaintiff  and  E.  P.  Smitli,  against  loss  by  fire  on 
a  stock  of  goods.  The  polic}'  provided  that  "  if  the  title  of  the  prop- 
erty is  transferred,  incumbered,  or  changed,  ...  or  if  the  polic}-  is 
assigned,  .  .  .  the  policj"  shall  be  void."  Before  the  loss,  the  partner- 
ship was  dissolved,  and  Hathaway  bought  the  interest  of  Smith  in  the 
property  and  in  the  policy.  The  defendant  asked  instructions  that 
there  was  such  a  change  of  title  as  avoided  the  polic\'.  The  court 
refused  these  instructions,  and  charged  the  jury  that  they  were  simply 
to  determine  whether  the  goods  had  been  damaged  by  fire,  and,  if  so, 
what  was  the  amount  of  such  damage.  Verdict  and  judgment  for 
plaintiff.     Defendant  appealed. 

Fouke  &  Lyon,  Ainsicorth  &  Hobsoti,  and  tT.  B.  Johnson^  for 
appellant. 

John  Hutchinson,  and  Iloyt  &  Hancock,  for  appellee. 

D.  W.  Clements,  for  intervenor. 

Reed,  J.*^  .  .  .  Whether  the  sale  by  Smith  of  his  interest  has  the 
effect  claimed  by  defendant  depends  upon  the  construction  which 
shall  be  placed  on  the  words  of  the  provision  of  the  policy  quoted 
above.  The  question  as  to  the  effect  on  the  contract  of  insurance  of 
the  sale  bv  one  joint  owner  to  another  of  his  interest  in  the  joint 
propert3',  when  the  policy  contains  a  provision  against  alienation,  has 
often  been  before  the  courts ;  and  the  numerical  weight  of  authority 
is  probably  in  favor  of  the  proposition  that  a  sale  b}-  one  partner  to 
his  co-partner  of  his  interest  in  the  partnership  property  does  not  have 
the  effect  to  terminate  a  polic\'  of  insurance  which  contains  a  provision 
against  the  sale  or  transfer  of  the  propert}'.  The  case  of  Hoffman  i\ 
iEtna  Ins.  Co.,  32  N.  Y.  405,  is  probably  the  leading  case  holding  this 
doctrine.  The  policy  in  that  case  provided  that  it  should  be  null  and 
void,  "  if  the  said  property  shall  be  sold  or  convej-ed."  The  policy 
was  issued  to  a  partnership,  one  member  of  which  sold  his  interest  in 
the  property  to  his  co-partner  before  the  loss,  and  it  was  held  that  this 
did  not  have  the  effect  to  avoid  the  polic}' ;  and  this  holding  is  followed 
in  Dermani  v.  Ins.  Co.,  26  La.  Ann.  69  ;  Pierce  v.  Ins.  Co.,  50  N.  H. 
297;  Burnett  v.  Ins.  Co.,  46  Ala.  11,  and  West  r.  Ins.  Co.,  27  Ohio 
St.  1 ;  in  each  of  which  cases  the  polic}'  contained  substantially  the 
same  provision.  The  ground  upon  which  the  holding  is  put  is,  that 
the  alienation  against  which   the   parties  provided  by  the  provision 

1  The  statement  has  been  drawn  from  the  opinion.  —  Ed. 

2  After  stating  the  case.  —  Ed. 


QIQ  HATHAWAY  V.    STATE  INS.  CO.         [CHAP.  VI. 

was  of  the  whole  of  the  insured  property,  and  not  merely  a  portion 
of   it,  or  some  interest  in  it  less  than  the   whole ;    and  that   a   sale 
of  his  interest  by  one  partner  to  his  co-partner  was  not  such  a  dis- 
position of  the   property   as    was  contemplated  by   the   parties  when 
they  framed   the  provision  ;  that  what   was  intended    to  be  guarded 
against  was  such  a  transfer  of  the  property  as  would  change  the  pro- 
prietary interest  therein  of  the  parties  with  whom  the    insurers  con- 
tracted, and  substitute  others  with  wliom  they  had  not  consented  to 
contract ;  but  that  the  sale  of  his  interest  by  one  partner  to  his  co- 
partner did  not  have  the  effect  to  introduce  a  stranger  to  the  contract, 
or  to  make  any  change  in  the  condition  or  situation  of  the  pioperty  or 
risk.     In  Cowan  v.  The  State  Ins.  Co.,  40  Iowa,  551,  the  policy  was 
issued  to  plaintiff,  but  before  the  loss  he  sold  the  insured  property  to 
a  partnership  of  which  he  was  a  member.     It  contained  a  similar  pro- 
vision against  alienation,  and  it   was   held  by  this   court  that,  as  he 
retained  an  insurable   interest  in   the   property,   the  policy-  was    not 
avoided  by  the  sale;  that,  while  the  clause    in  the  policy  prohibited 
the  alienation  of  the  insufed    propert}',   it  did  not  forbid  the  sale  of 
an  interest  therein  less  than  the  whole,  and,  as  long  as  the  plaintiff 
retained  an  insurable  interest  in  the  property,  the  policy  attached  to 
and  protected  that  interest.     We  think  it  clear  that  tliis  case  does  not 
sustain  the  position  of  appellee  in  the  case  now  before  us.     The  facts 
of  tlie  two  cases,  and  the  questions  involved,  are  essentially  different. 
In  the  one,  the  party  seeking  to  enforce  the  contract  was  an  original 
party  to  it,  and  the  question  involved  was  whether  his  right  of  recov- 
ery was  defeated  by  his  sale  of  an  interest  in  the  insured  property-, 
while,  in  this  case,  plaintiff  is  not  personally  a  party  to  the  contract, 
and  the  question  is  whether  he  acquired  a  right  of  action  on  the  policy 
by  his  purchase  of  an  additional  interest  in  the  property.     Nor  do  we 
think  that  the  other  cases  cited  above  are  conclusive  of  the  question 
here  involved.     The  provisions  of  the  policies  involved  in  tliose  cases 
were  that  the  policies  should  be  null  and  void  if  the  property  was  sold 
or  conveyed,  while  the  provision  in  this  case  is  that,  "if  the  title  of 
the  property  is  transferred,  incumbered,  or  changed,  .  .  .  the   policy 
shall  be  void."     The  effect  of  this  language  is  materially  different  from 
that  used  in  the  policies  in  the  other  cases.     The  title  of  the  property 
would  be  transferred  by  a  sale  or  conveyance  of  it  to  another  person. 
If  the  word  "changed"  had  not  been  inserted  in  the  provision,  the 
effect  of  the  language  would  have  been  the  same  as  that  used  in  the 
other  policies,  and  the  same  construction  which  was  put  upon  the  pro- 
visions in  those  cases  could    fairly  have  been  put  upon  it.     But  the 
parties,  having  inserted    in  their  contract  words  whicli    fully  express 
the  provision  that  the  policy  would  be  avoided  by  a  sale  or  conveyance 
of  the  property  to  a  stranger,   have  also  inserted  another  word,  by 
which  the  same  consequence  is  made  to  follow  a  change  of  the  title 
to  the  property.     It  is  certainly  true  that  by  a  transfer  of  the  title  to 
the  whole  of  the  property  to  a  stranger  the  title  would  be  changed,  but 


SECT.  II.]  HATHAWAY   V.   STATE    INS.   CO.  617 

we  cannot  presume  that  the  parties  Intended  to  express  that  provision 
by  the  use  of  the  word  "changed,"  for,  as  we  have  seen,  they  had 
already  exinessed  it  by  the  words  which  precede  it  in  the  contract. 

This  latter  word  was  deliberately  used  by  the  parties,  and  we  can- 
not reject  it  in  construing  the  contract,  and,  as  it  neither  limits  nor 
qualifies  those  which  precede  it,  we  are  bound  to  presume  that  the 
parties  intended  by  its  use  to  express  some  provision  or  condition  of 
their  contract  which  was  not  otherwise  expressed. 

The  effect  of  the  provision  is,  then,  that  the  policy  would  be  avoided, 
either  by  a  transfer  of  the  title  of  the  property  insured  to  a  stranger, 
or  by  a  change  of  the  title  to  it.  This  conclusion  can  be  avoided,  as 
we  think,  only  by  disregarding  the  elementary  rules  of  construction. 

The  case  turns,  then,  upon  the  question  whether  a  change  of  the 
title  of  the  property  occurred  upon  the  dissolution  of  the  partnership 
and  the  sale  by  Smith  to  plaintiff  of  all  of  his  interest  in  the  property, 
and  it  seems  to  us  there  can  be  but  one  answer  to  this  question. 
During  the  existence  of  the  partnership  it  cannot  be  said  that  plainlilf 
bad  title  to  any  specific  share  or  interest  in  the  property.  His  claim 
was  to  the  proportion  of  the  residue  which  should  be  found  to  be  due 
to  him  upon  the  final  balance  of  the  accounts  of  the  firm,  after  the  con- 
version of  the  assets  and  the  liquidation  of  its  debts.  But,  upon  the 
dissolution  of  the  partnership,  and  the  purchase  by  him  of  Smith's 
interest,  he  was  vested  with  the  absolute  title  to  the  whole  of  the 
property.  We  think,  therefore,  that  the  Circuit  Court  erred  in  refus- 
ing to  give  the  instructions  asked  by  defendant. 

The  conclusion  we  reach  is  sustained  by  the  following  authorities : 
Keeler  v.  Niagara  Ins.  Co.,  16  Wis.  523;  Hartford  Fire  Ins.  Co.  v. 
Ross,  23  Ind.  179;  Dix  v.  Mercantile  Ins.  Co.,  22  111.  272;  Wood  u. 
Rutland  Ins.  Co.,  31  Vt.  552.  Beoersed.' 

1  Ace:  Girard  F.  &  M.  Ins.  Co.  v.  Hebard,  95  Pa.  45  (1880);  Oldham  v.  Anchor 
F.  Ins.  Co.,  90  Iowa,  225  (1894). 

Contra:  Virginia  F.  &  M.  Ins.  Co.  v.  Vaughan,  88  Va.  832,  835-837  (1892);  Phe- 
ui.x  Ins.  Co.  u.  Holcombe,  57  Xeb.  622  (1899). 

See  Dreher  i-.  ^tna  Ins.  Co.,  18  Mo.  128  (1853);  Jones  v.  Phoenix  Ins.  Co.,  97 
Iowa,  275  (1896). 

In  West  V.  Citizens'  Ins.  Co.,  27  Ohio  St.  1  (1875),  there  was  issued  to  H.  F.  West 
&  Co.,  a  firm  of  four  members,  a  policy  covering  the  firm's  stock  of  goods,  and  provid- 
ing that  "  if  this  policy,  or  any  interest  therein,  shall  be  assigned,  .  .  .  these  presents 
shall  be  .  .  .  void."  One  of  the  partners  retired  from  the  firm,  and  assigned  to  his 
co-partners  his  interest  in  the  stock  of  goods  and  in  the  policy.  It  was  held  that  the 
policv  was  not  avoided,  either  wholly  or  in  part,  and  that  the  partners  continuing 
the  business  could  recover  the  whole  damage  subsequently  suffered  by  them,  up  to 
the  amount  of  the  policy.  —  Ed. 


618  BARRY   V.    HAMBURG-BREMEN   FIRE   INS.    CO.        [cHAP.  VI. 


BARRY,  Appellant,  v.  HAMBURG-BREMEN  FIRE 
INS.   CO.,  Respondent. 

Court  of  Appeals  of  New  York,  1888.     110  N.  Y.  1. 

Appeal  from  judgment  of  the  General  Term  of  the  Superior  Court 
of  the  city  of  New  York,  entered  upon  an  order  made  May  6,  1886, 
which  affirmed  a  judgment  in  favor  of  defendant,  entered  upon  an 
order  nonsuiting  plaintiff  on  trial.  (Reported  below,  21  J.  &  S.  249.) 
This  action  was  brought  upon  a  policy  of  fire  insurance  issued  by 
defendant  upon  a  dwelling-house. 

The  material  facts  are  stated  in  the  opinion. 
W.  E.  Osborn,  for  appellant. 
Edward  Salomon,  for  respondent. 

RcGER,  C.  J.  It  was  assumed  upon  the  trial  that  the  property  de- 
scribed in  the  insurance  policy,  upon  which  this  action  was  brought, 
had  been  destroyed  by  fire,  and  the  policy  had  become  payable,  by  its 
terras,  to  the  plaintiff,  except  for  the  alleged  breach  of  a  condition  of 
the  policy  set  up  as  an  affirmative  defence  by  the  answer. 

The  condition  referred  to  was  a  clause  reciting  substantially  that 
"if  the  property  shall  be  sold  or  transferred,  or  any  change  take 
place  in  the  title  or  possession,  whether  by  legal  process,  judicial 
decree,  or  voluntary  transfer  or  conveyance,  .  .  .  without  the  consent 
of  this  company  written  hereon,  .  .  .  then  .  .  .  this  policy  shall  be 
void."  The  property  referred  to  consisted  of  real  estate,  and  it  was 
admitted  on  the  trial  that  no  change  of  possession  thereof  had  taken 
place  within  the  meaning  of  the  above  condition.  It  was  alleged, 
however,  that  the  property  had  been  sold  or  transferred  and  a  change 
of  title  had  been  effected,  which,  it  was  claimed,  avoided  the  policy. 

To  support  this  issue  the  defendant  gave  in  evidence  two  deeds, 
both  absolute  in  terms,  and  each  purporting  to  convey  the  property, 
one  from  Maria  Sleight,  the  owner,  to  one  Michael  Moloughney,  Jr., 
and  another  from  Moloughney  to  John  H.  Corwin,  which  were  each 
executed  subsequent  to  the  date  of  the  policy,  and  were,  respectively, 
duly  recorded  in  the  clerk's  office  of  the  county  where  the  property 
was  situated.  This  evidence  established  a  prima  facie  case  for  the 
defendant.  To  obviate  the  effect  of  this  evidence  the  plaintiff  offered 
to  prove  that  the  deed  to  Molouglwey  was  given  under  a  parol  agree- 
ment to  secure  an  existing  indebtedness  from  Mrs.  Sleight  to  Molough- 
ney, and  that  a  subsequent  agreement  was  made  between  Mrs.  Sleight 
and  Moloughney,  whereby  Moloughney  relinquished  his  security  and 
conveyed  the  property  to  Corwin,  as  security  for  a  debt  owing  by  Mrs. 
Sleight  to  the  latter. 

The  defendant's  counsel,  for  the  purposes  of  the  motion,  admitted 
the  truth  of  the  facts  stated  in  the  plaintiff's  offer,  and  thereupon 
moved  the  court  to  nonsuit  the  plaintiff,  and  the  court  granted  the 


SECT.  II.]  BARRY   V.   HAMBURG-BREMEN    FIRE    INS.    CO.  619 

motion,  to  which  ruling  the  plaintiff  duly  excepted.  The  General 
Term,  upon  appeal  to  that  court,  affirmed  the  judgment,  and  the 
plaintiff  appeals  to  this  court.  For  the  purpose  of  our  decision  it 
must,  therefore,  be  assumed  that  the  deeds  in  question  were  given  as 
security.  We  are  of  the  opinion  that  the  courts  below  have  erred  in 
their  views  of  this  case,  and  that  the  question  presented  b}-  the  excep- 
tion has  been  repeatedly  adjudged  in  favor  of  the  plaintiff  by  the 
courts  of  this  state.  There  is  no  ambiguity  in  the  terras  of  the  con- 
dition of  the  policy,  and  no  question  of  construction  arises  over  the 
true  meaning  and  intent  of  the  provision.  If  the  property  has,  in 
fact,  been  sold  or  transferred  or  any  change  has  taken  place  in  the 
title  or  possession,  then  the  policy  by  its  terms  becomes  void.  In 
determining  this  question  we  can  only  inquire  whether  any  transaction 
has  taken  place  which,  in  law,  transferred  the  title  of  the  property. 
The  parties  must  be  assumed  to  have  contracted  with  full  knowledge 
of  the  law  and  to  have  used  the  terms  employed  in  the  policy  with 
reference  to  the  character  which  the  law  attaches  to  them. 

It  is  not  contended  by  the  defendant  that  the  giving  of  a  mortgage 
by  Mrs.  Sleight  upon  the  property  would  have  effected  a  sale  or 
transfer  thereof  or  a  change  of  title  within  the  meaning  of  the  con- 
dition, but  it  is  claimed  that  because  the  defeasance  was  not  written  in 
the  deeds  put  in  evidence  they  operated  as  a  legal  transfer  of  the  title 
so  far  as  the  defendant  was  concerned,  and  thus  came  within  the  terms 
of  the  polic}'.  The  precise  and  only  question  in  the  case  is  what 
effect  does  the  law  give  to  a  deed,  absolute  in  form,  but  which,  in 
fact,  is  given  as  security  for  a  debt.  Is  it  a  convej-ance  of  title  or 
simply  a  chattel  interest  incapable  of  affecting  the  title,  except  through 
legal  proceedings  to  enforce  the  collection  of  a  debt  ? 

It  seems  to  us  that  the  courts  below  have  failed  to  appreciate  the 
effect  produced  by  the  abolition  of  the  distinction  between  law  and 
equit}',  and  the  more  recent  decisions  in  this  state  depriving  a  mort- 
gage of  the  characteristics  of  a  conve3'ance.  The  cases  are  very 
numerous  in  our  reports,  and  so  familiar  to  the  profession  that  we 
are  surprised  at  the  necessity,  at  this  date,  of  referring  to  them  at 
all.  We  will,  however,  cite  a  few  of  the  cases  showing  that  it  has 
been  the  settled  law  for  many  years  that  a  deed,  though  absolute  in 
form,  if  given  as  security  for  a  debt,  is,  to  all  intents  and  purposes, 
both  at  law  and  in  equity,  a  mortgage  only.^  .  .   . 

It  follows,  from  these  authorities,  that   the  legal  position  of  Mrs. 
Sleight,  as  the  owner  of  the  propertj',   was  not  changed  or  affected 
b}'  the  deeds  referred  to,  and  that  such  instruments  did  not  bring  the* 
transaction  within  either  the  letter  or  the  spirit  of  the  contract.  ) 

The  interest  of  Mrs.  Sleight  in  the  propert}'  remained  the  same  after 
as  before  the  delivery.     It  is  true,  that,  through  a  course  of  legal  pro- 

1  Here  were  stated  or  quoted  Murray  v.  Walker,  31  N.  Y.  399  (1865)  ;  Horn  v. 
Keteltas,  46  N.  Y.  605  (1871) ;  Carry.  Carr,  52  N.  Y.  251  (1873) ;  Shattuck  v.  Bascom.- 
'  105  N.  Y.  39  (1887) ;  and  Hodges  v.  Tennessee  Ins.  Co.,  8  N.  Y.  416  (1853). 


620  BAKRY   V.   HAMBUKG-BREMEN   FIRE   INS.   CO.        [CUAI'.  YI. 

ceedings,  the  title  to  the  property  might  finally  be  acquired  by  some 
one,  if  the  debt  was  not  paid,  but  this  would  be  equally  true  if  Mrs. 
Slei<5-ht  had  given  to  Moloughney  her  note  of  hand  for  the  debt  and 
it  had  been  followed  by  judgment  and  a  sale  of  the  land  under 
execution. 

The  circumstance  that  Moloughney  or  Corwin  might,  by  a  conveyance 
to  a  bona-Jide  purchaser,  have  given  a  good  title  under  the  recording 
acts,  does  not  affect  the  question  as  to  whether  Mrs.  Sleiglit  was  tlie 
legal  owner  of  the  property  at  the  time  of  the  trial.  She  could,  of 
course,  estop  herself  by  her  conduct  as  against  certain  persons,  from 
proving  the  truth  as  to  her  title,  but  this  does  not  show  that  she  is  not 
the  holder  of  the  legal  title,  and  there  is  nothing  in  this  case  to  bar 
her  from  controverting  the  truth  of  the  defendant's  evidence  tending 
to  show  that  she  had  transferred  the  title  of  the  property. 

We  think  the  judgments  of  the  courts  below  should  be  reversed  and 
a  new  trial  ordered,  with  costs  to  abide  the  event. 

All  concur.  Judgment  reversed.^ 

1  Ace. :  German  lus.  Co.  v.  Gibe,  162  111.  251  (1896)  ;  Bank  of  Glasco  v.  Spring- 
field F.  &  M.  Ins.  Co.,  5  Kan.  App.  388  (1897) ;  Peck  v.  Girard  F.  &  M.  Ins.  Co.,  16 
Utah,  121  (1897). 

Contra  :  Western  Massachusetts  Ins.  Co.  v.  Hiker,  10  Mich.  270  (1862). 

See  Bryan  i>.  Traders'  Ins.  Co.,  145  Mass.  389  (1888). 

Compare  Foote  v.  Hartford  F.  Ins.  Co.,  119  Mass.  259  (187G). 

In  Judge  V.  Connecticut  F.  Ins.  Co.,  132  Mass.  521  (1882),  a  fire  insurance  policy 
on  a  stock  in  trade  provided  that  "  if  the  property  be  sold  or  transferred,  or  upon  the 
passing  or  entry  of  a  decree  of  foreclosure,  or  upon  a  sale  under  a  deed  of  trust,  or 
any  cliange  take  place  in  title  or  possession  (except  in  case  of  succession  by  reason  of 
the  death  of  the  assured),  whether  by  legal  process  or  judicial  decree  or  voluntary 
transfer  or  conveyance,  .  .  .  this  policy  shall  be  void."  Chattel  mortgages  were 
subsequently  executed;  but  possession  was  not  taken  under  them,  and  the  sums 
secured  were  not  due  at  the  time  of  the  fire.     Devens,  J.,  for  the  court,  said  :  — 

"  That  a  subsequent  mortgage  is  not  to  be  treated  as  an  alienation  of  the  estate 
under  the  clause  forbidding  alienation,  has  been  repeatedly  held.  Jackson  v.  Mass.  Ins. 
Co.,  23  Pick.  418.  Tomlinson  v.  Monmouth  Ins.  Co.,  47  Maine,  232;  Smith  v.  Mon- 
moutli  Ins.  Co.,  58  Maine,  96  ;  Shepherd  v.  Union  Ins.  Co.,  38  N.  II.  232  ;  Commercial 
Ins.  Co.  V.  Spankneble,  52  111.  53.  Nor  is  there  in  this  respect  any  distinction  between 
real  and  personal  property,  where  the  goods  mortgaged  are  not  taken  possession 
of.  Rice  V.  Tower,  1  Gray,  426  ;  Van  Deuseu  v.  Charter  Oak  Ins.  Co.,  1  Rob.  (X.  Y.) 
55  ;  Hartford  Ins.  Co.  v.  Walsh,  54  111.  164.  But  even  if  there  was  not  an  alienation 
of  the  property,  or  any  part  of  it,  it  may  be  contended  that  there  was  a  change  in 
title  or  interest  which  would  avoid  these  policies.  .  .  . 

"  Had  it  been  intended  to  include  mortgages  among  those  changes  in  title  which 
would  avoid  the  policies,  it  would  seem  that  they  would  have  been  specified  in  express 
terms.  When  a  policy  eimmerates  changes  in  title  in  particular  ways,  by  which  it  is  to 
be  avoided,  a  change  otherwise  made  cannot  have  this  effect,  where  at  least  it  does  not 
amount  to  an  alienation  of  the  property.  All  the  ways  enumerated  are  alienations  of  the 
property,  which  a  mortgage  is  not.  If  it  is  an  alteration  or  change  in  the  title,  it  is  one 
of  an  entirely  different  character  from  those  specified.  Mortgages  are  not  sales,  trans- 
fers, or  conveyances,  in  the  usual  acceptation  of  those  words.  They  are  securities  for  the 
payment  of  money.  Ewer  v.  Hobbs,  5  Met.  1  ;  ]S*orcross  v.  Norcross,  105  IMass.  265. 
The  words  which  follow  "  change  in  title,"  &c.,  contemplate  that  the  party  making 
the  sale  or  transfer  is  to  part  with  his  interest  in  whole  or  in  part.  They  apply  to  the 
termination  of  that  interest.     The  mortgagor  is  still  interested  to  the  full  value  of 


SECT.  II.]  GEEMANIA   FIKE    INS.    CO.    V.    HOME   INS.    CO.  621 


GERMANIA   FIRE   INS.   CO.,  Appellant,  v.  HOME    INS.   CO., 

Respondent. 

Court  of  Appeals  of  New  York,  1894,     144  N.  Y.  195.^ 

The  Home  Insurance  Co.  insured  J.  A.  D.  Verdier  on  a  stock  of 
hardware.  The  poUc}-  provided  that  "  if  the  propert}-  be  sold  or 
transferred,  or  an}-  change  takes  place  in  title  or  possession  .  .  . 
this  polic}-  shall  be  void."  Verdier  took  in  a  partner,  Brown,  trans- 
ferring to  hira  a  three-tenths  interest  in  the  propert\'  insured.  For 
a  subsequent  loss,  action  was  brought  by  the  Germania  Fire  Ins.  Co.  as 
assignee  of  Verdier  &  Brown.  Upon  an  agreed  statement  of  facts, 
the  Special  Term  of  the  Superior  Court  of  the  city  of  New  York  gave 
judgment  for  the  defendant.  The  General  Term  affirmed  this  judg- 
ment, as  reported  in  4  N.  Y.  Misc.  443.     The  plaintiff  appealed. 

G.  W.  Cotterill,  for  appellant. 

George  Richards^  for  respondent. 

Bartlett,  J.^  .  .  .  The  question  presented  by  this  appeal  is  whether 
the  fact  of  the  insured  having  taken  in  a  partner  rendered  the  policy 
void. 

It  was  stated  on  the  argument  that  this  precise  point  had  never 
been  presented  to  this  court,  but  it  is  insisted  that  the  trend  of  some 
of  our  decisions  is  in  favor  of  plaintiffs  contention  that  the  policy  is 
not  avoided  b}'  taking  in  a  new  partner.'  ... 

None  of  these  cases  deals  with  the  question  now  under  consid- 
eration. 

We  think  it  perfectl}'  clear  on  principle  that  the  sale  of  an  interest 
in  the  insured  property  by  Verdier  to  Brown  and  the  formation  of  a 
co-partnership  between  the  two  rendered  the  policj*  void. 

The  contract  of  insurance  is  peculiarly  personal  in  its  nature,  and 
the  success  of  the  business  of  underwriting  depends  largely  upon  what 
is  known  as  the  moral  hazard. 

It  is  a  well-established  principle  of  the  common  law  that  ever}-  man 
has  the  right  to  determine  with  whom  he  will  cuter  into  contract 
obligations. 

An  insurance  company  is  induced  to  issue  or  withhold  its  polic}'  after 
carefulh'  scrutinizing  the  character  of  the  applicant  for  insurance. 

the  property  ;  he  makes  no  such  change  in  title  or  interest  as  would  be  effected  by 
the  transactions  enumerated.  .  .  . 

"  We  are  therefore  of  opinion  that  there  was  no  such  change  in  title  and  interest  as 
avoided  the  policies."  —  Ed. 

1  Tlie  statement  has  been  rewritten.  —  Ed. 

2  After  stating  the  case.  —  Ed. 

8  Here  were  summarized  Hoffman  i-.  yEtna  F.  Ins.  Co.,  ante,  p.  602  (186.5)  ;  Walton 
V.  Agricultural  Ins.  Co.,  116  X.  Y.  317,  326  (1889)  ;  and  Walradt  i-.  Phcenix  Ins.  Co., 
post,  p.  625  (1893.)  — Ed. 


622  GERMANIA    FIKE    INS.-  CO.    V.   HOME    INS.    CO.       [CHAP.  VI. 

It  is  of  the  utmost  importance  to  the  company  to  ascertain  who  is 
to  be  vested  with  the  title  and  possession  of  the  property  sought  to  be 
insured. 

It  would  be  a  harsh  and  indefensible  rule  that  required  the  under- 
writer, who  had  insured  an  individual  on  a  stock  of  goods  in  a  store, 
to  continue  the  insurance  after  the  insured  had  taken  in  two  partners 
and  formed  a  Grm  wherein  each  partner  was  vested  with  an  undivided 
third  interest  in  the  property  covered  by  the  policy,  without  having 
been  afforded  the  opportunity  to  examine  into  the  moral  and  business 
characters  of  two  strangers  to  the  original  contract. 

The  right  of  the  insurance  company  was  in  nowise  invaded  when 
this  court  held  that  a  sale  by  one  partner  to  another  of  his  interest, 
where  both  were  insured,  did  not  avoid  the  policy. 

It  is  onl}-  when  a  stranger  is  to  be  brought  into  contractual  relations 
with  the  insurance  company  that  the  consent  of  the  latter  is  essential. 

This  right  of  the  company  has  been  upheld  in  other  jurisdictions. 
Drennen  v.  London  Assurance  Corporation,  20  Fed.  Rep.  657 ;  Card 
V.  Phoenix  Ins.  Co.,  4  Mo.  App.  424;  Malley  v.  Atlantic  Fire  and 
Marine  Ins.  Co.,  51   Conn.   222,  250,  251. 

The  appellant  urges  that  the  protection  of  the  policy  should  be 
extended  to  the  new  partner  by  virtue  of  the  following  words  con- 
tained therein,  viz.  :  "  And  the  said  Home  Insurance  Company 
hereby  agree  to  make  good  unto  the  said  assured,  his  executors, 
administrators,  and  assigns,  all  such  immediate  loss,"  etc.  It  is 
argued  that  the  word  "assigns"  extends  the  insurance  to  the  new 
partner's  interest. 

The  policy  is  capable  of  no  such  construction  ;  the  clause  in  question 
is  merely  a  covenant  on  the  part  of  the  company  with  the  insured  to 
pay  to  him,  or  his  legal  representatives  or  assigns,  the  amount  of  the 
loss  that  may  become  due  to  him  under  the  terms  of  the  policy. 

The  judgment  and  order  appealed  from  should  be  affirmed,  with 
cost. 

All  concur.  Judgment  accordingly.^ 

1  See  Card  v.  Phoeuix  Ins.  Co.,  4  Mo.  App.  424  (1877).  — Ed. 


SECT.  II.]   farmers'  and  MERCHANTS'  INS.  CO.  V.   JENSEN.     623 

PHCENIX  INS.    CO.   V.   ASBURY. 
Supreme  Court  of  Georgia,  1897.     102  Ga.  565. 

Action  on  insurance  policy.      Before  Judge    Sheffield.     Terrell 
Superior  Court.     Ma}'  term,  1896. 

Mt/natC  &  Willcoxon  and  31.  C.  Edicards.,  Jr.^  for  plaintiff  in  error. 

J.  H.  Guerry  and  J.  A.  Laing,  contra. 

Cobb,  J.  1.  Wlien  this  case  was  here  at  the  March  term,  1895  (95 
Ga.  792)  it  was  held  that  a  conveyance  under  section  1969  of  the  Code 
of  1882  (Civil  Code,  §  2771)  was  an  alienation  of  the  property  passing 
title  to  the  grantee,  and  that  consequently  the  making  of  such  a  con- 
veyance by  the  insured  vitiated  a  policy  stipulating  that  it  should  be 
void  "if  the  property-  should  be  sold,  or  the  title  or  possession  of  the 
propert}-,  or  any  part  thereof,  transferred  or  changed,  whether  by  legal 
process,  judicial  decree,  conveyance,  or  otherwise."  At  the  trial  now. 
under  review  it  was  affirmatively  and  conclusively  shown  that  the  deed 
made  by  tlie  plaintiff  below  was  void  for  usurj'.  This  being  so,  it  did 
not  pass  title  out  of  him,  and  therefore  presented  no  obstacle  to  a 
recovery  by  him  from  the  company.  2.  This  case  is  controlled  by 
what  is  above  stated  ;  the  trial  judge  committed  no  error  in  instructing 
the  jury  that  the  companj-  was  liable,  leaving  them  to  fix  the  amount ; 
and  it  appearing  that  the  verdict  as  to  amount  was  sufficiently  sup- 
ported by  the  evidence,  there  is  no  cause  for  granting  another  hearing. 
Judgment  affirmed.,  all  the  justices  concurring. 


FARMERS'   AND  MERCHANTS'   INS.  CO.  v.  JENSEN. 

Supreme  Court  of  Nebraska,  1898.     56  Neb.  284. 

Error  from  the  District  Court  of  Saunders  County.  Tried  below 
before  Sedgwick,  J. 

The  opinion  contains  a  statement  of  the  case. 

Halleck  F.  Rose  and  Wellingt07i  H.  England,  for  plaintiff  in  error. 

Clark  &  AUen,  contra. 

Ragan,  Com.  This  is  an  error  proceeding  instituted  in  this  court 
by  the  Farmers'  and  Merchants'  Insurance  Company  to  review  a  judg- 
ment of  the  District  Court  of  Saunders  County  pronounced  against  it 
in  favor  of  Iver  Jensen.  Jensen  in  his  petition  declared  upon  an 
ordinary  fire  insurance  policy.  The  insurer  interposed  as  a  defence 
to  the  action  that  the  contract  of  insurance  provided  that  it  should 
cease  to  be  in  force  "'in  case  any  change  shall  take  place  in  the  title 
.  .  .  of  the  assured  in  the  above  mentioned  property"   without  the 


624        farmers'  and  merchants'  ins.  co.  v.  jensen.     [chap.  VI. 

consent  of  the  insurer  thereto  indorsed  on  the  policy  ;  that  after  the 
delivery  of  the  policy'  the  insured,  his  wife  joining  therein,  conve3'ed 
the  real  estate  on  which  the  insured  property  was  situate,  by  ordinary 
warranty  deed,  to  one  John  H.  Jensen,  and  tliat  the  latter  afterward 
b}'  an  ordinary  warranty  deed  conveyed  the  insured  property  to  the 
wife  of  the  insured,  all  without  the  knowledge  or  consent  of  the  insurer. 
The  insured  attempted  to  meet  this  defence  by  a  reply  admitting  the 
conveyance  of  the  title  by  the  insured  to  John  H.  Jensen  and  hy  him 
to  the  wife  of  the  insured,  but  alleging  that  these  conveyances  were 
made  in  pursuance  of  an  agreement  between  the  insured  and  bis 
wife  that  the  latter  sliould  and  would  hold  the  title  to  the  property 
for  the  use  and  benefit  of  the  insured  and  subject  to  his  direction  and 
control. 

The  judgment  of  the  District  Court  cannot  stand.  The  provision  in 
the  policy  that  it  should  cease  to  be  in  force  if  a  change  sliould  take 
place  in  the  title  of  the  insured  without  the  consent  of  the  insurer  is  a 
valid  and  reasonable  provision.  An  insurance  contract  is  a  personal 
one  between  the  insured  and  the  insurer.  An  insurance  company 
might  be  ver}-  wiUing  to  guarantj-  A  against  loss  or  damage  of  his 
property  b}'  fire,  but  unwilling  to  furnish  such  a  guaranty  to  A's  ven- 
dee ;  and  it  is  for  this  reason  that  such  a  provision  as  the  one  under 
consideration  is  inserted  in  fire  insurance  policies,  so  that  in  case  the 
insured  shall  transfer  his  title  the  iusui'er  may  have  notice  thereof  and 
an  opportunity  to  elect  whether  it  will  keep  the  policy  in  force  in  favor 
of  the  grantee  or  vendee  ;  and  it  is  because  the  courts  recognize  such 
a  provision  in  an  insurance  policy  to  be  a  personal  contract  between 
the  insurer  and  the  insured  that  the}'  hold  that  the  violation  thereof  by 
the  insured  terminates  the  contract  of  insurance.  Milwaukee  Me- 
chanics' Mutual  Ins.  Co.  v.  Ketterlin,  24  111.  App.  188;  Langdon  v. 
Minnesota  Farmers'  Mutual  Fire  Ins.  Ass'n,  22  Minn.  192  ;  Oakes 
V.  Manufacturers'  Fire  &  Marine  Ins.  Co.,  131  Mass.  164;  Ehrsam 
Machine  Co.  v.  Phenix  Ins.  Co.,  43  Neb.  554. 

Counsel  for  the  defendant  in  error  insist  that  since  the  wife  of  the 
insured  holds  the  legal  title  to  the  insured  propert}'  in  trust  for  him 
there  has  been  no  violation  of  the  provision  of  the  policy  under  consid- 
eration b}'  the  assured.  This  contention  we  think  untenable.  The 
provision  of  the  policj-  is  that  if  any  change  should  take  place  in  the 
title  of  the  assured,  the  policy  should  cease  to  be  in  force.  Certainly 
the  execution  and  delivery  of  the  warrant}'  deed  b}'  the  assured  and  his 
wife  to  John  H.  Jensen  vested  the  latter  with  the  legal  title  to  these 
premises  ;  and  the  execution  and  delivery  by  the  latter  of  the  warranty 
deed  to  the  wife  of  the  assured  vested  her  with  the  legal  title  to  these 
premises.  There  has  been,  then,  a  change  in  the  title  of  the  assured. 
The  authorities  cited  b}'  counsel  for  defendant  in  error  do  not  sustain 
their  contention.  One  of  these  cases  is  Grable  v.  German  Ins.  Co., 
32  Neb.  645.  In  that  case  the  assured,  without  the  knowledge  or 
consent  of  the  insurer,  entered  into  a  contract  in  writing,  agreeing  to 


SECT.  II.]  WALRADT   V.   PHCENIX   INS.    CO.  625 

sell  the  insured  property  and  make  a  conveyance  thereof  upon  the  pay- 
ment of  certain  sums  of  money  in  future  by  the  purchaser.  This  con- 
tract was  interposed  as  a  defence  to  a  suit  on  the  insurance  poUcy  ; 
but  the  insurance  company  was  held  liable  upon  the  ground  that  the 
contract  agreeing  to  sell  and  convey  was  not  an  alienation  of  the  tille 
to  the  property.  Another  case  cited  is  Bailey  v.  American  Central  Ins. 
Co.,  13  Fed.  Rep.  250.  In  that  case  the  policy  was  issued  to  a  mort- 
gagee. He  subsequently  became  the  owner  of  the  insured  property, 
after  which  it  was  destroyed  by  fire.  In  a  suit  upon  the  policy  the 
insurance  company  interposed  the  defence  of  a  change  of  title  without 
its  knowledge  or  consent ;  but  the  court  held  that  a  mere  increase  of 
his  interest  in  the  insured  property  was  not  a  change  of  title  within  the 
meaning  of  the  contract. 

The  judgment  of  the  District  Court  is 

Reversed  and  the  cause  remanded.^ 


(c)     Change  in  interest^  title,  or  jyossession. 

WALRADT,   AS   Assignee,   etc.,   RespoNDENT,   v.   PHCEXIX 
INSURANCE  CO.,  Appellant. 

Court  of  Appeals  op  New  York,  1893.     136  N.  Y.  375. * 

Action  upon  a  policy  for  $1,500  insuring  the  plaintiff's  assignor 
against  loss  by  fire  to  a  certain  stock  of  goods  described  as  then  in  a 
brick  store  in  the  village  of  Theresa,  N.  Y.,  for  one  year  from  April  13, 
1889.  The  policy  provided  that  "  this  entire  policy  .  .  .  shall  be  void 
...  if  any  change,  other  than  by  the  death  of  an  insured,  take  place 
in  the  interest,  title,  or  possession  of  the  subject  of  insurance  (except 
change  of  occupants  without  increase  of  hazard)  whether  by  legal 
process  or  judgment  or  by  voluntary  act  of  the  insured  or  otherwise." 
On  Feb.  18,  1890,  a  judgment  for  $1,019.13  was  recovered  against  the 
insured.  On  April  2,  1890,  an  execution  was  issued  upon  this  judg- 
ment. On  April  3  the  execution  was  delivered  to  the  sherifl'.  Oa 
April  4  the  sheriff  levied  upon  the  goods,  caused  the  store  to  be 
closed,  and  took  the  keys.  About  midnight  the  property  —  worth 
about  $11,000  — was  entirely  destroyed  by  fire.  On  April  5  the 
assured  made  a  general  assignment  to  the  plaintiff  for  the  benefit 
of  creditors. 

1  Ace. :  Walton  v.  Agricultural  Ins.  Co.,  116  N.  Y.  317  (1SS9). 

See  Oakes  v.  Manufacturers'  F.  &  M.  Ins.  Co.,  131  Mass.  164  (1881). 

Compare  Kyte  v.  Commercial  Union  Assurance  Co.,  144  Mass.  43  (1887).— Ed. 

2  The  statement  has  been  rewritten,  upou  the  basis  of  the  opinion,  and  with  the  aid 
of  the  report  in  64  Hun,  129  (1892).  — Ed. 

40 


626  WALRADT   V.    PHCENIX    INS.    CO.  [CHAP.  VL 

The  defendant,  at  the  close  of  the  evidence,  moved  for  a  nonsuit. 
The  court  refused  ;  and  the  defendant  excepted.  The  jury  having 
found  a  verdict  for  the  plaintiff,  and  the  General  Term  of  the  Supreme 
Court  having  affirmed  an  order  denying  a  motion  for  a  new  trial,  the 
defendant  company  brought  this  appeal. 

A.  H.  Suicyer,  for  appellant. 

C.  W.  Thompson,  for  respondent. 

O'Brien,  J.^  .  .  .  The  defendant  insists  that,  upon  these  facts,  there 
was  such  a  change  of  interest  and  change  of  the  possession  as  avoids 
the  policy,  within  the  meaning  of  the  above  conditions.  If  there  was 
a  change  of  interest,  within  the  meaning  of  the  policy,  that  result  was 
produced  by  the  delivery  of  the  execution  to  the  sheriff,  as  the  goods 
of  the  debtor  are  bound  from  that  time  (Code,  §  1405).  The  levy  was 
not  necessary  to  work  such  change,  and  the  only  effect  it  had  was  to 
change  the  possession.  We  must  first  determine  what  the  parties  to 
the  contract  intended  when  thej^  made  use  of  the  terms,  "  change  in 
the  interest,  title,  or  possession  of  the  subject  of  insurance."  The 
interest  which  a  person  may  have  in  property  is  affected  in  many  ways 
without  producing  a  change  in  such  interest,  as  that  term  is  generall}" 
understood  ;  when  he  contracts  a  debt  or  incurs  an  obligation  this,  in 
a  broad  sense,  may  affect  such  interest,  as  the  property  constitutes  the 
means  of  paj'ment,  and  his  pecuniary  condition,  in  a  general  sense, 
depends  upon  what  he  has  left  after  discharging  all  his  debts  and 
obligations.  The  debt  assumes  another  form  by  the  recover}'  of  a 
judgment,  and  the  execution  is  the  process  which,  when  delivered  to 
the  officer,  clothes  him  with  authority  to  enforce  the  collection  of  the 
debt.  That  is  the  foundation  of  all  the  subsequent  steps,  and  while  each 
event  in  the  progress  of  proceedings  for  collection  may  bring  the  debtor 
and  creditor  into  closer  relations  and  press  nearer  upon  the  property  of 
the  debtor,  3'et  his  title  or  interest  in  the  property  is  not  divested  or 
transferred  until  a  sale  is  made  which  operates  in  law  to  transfer  his 
interest  to  another.  By  the  delivery  of  the  execution  and  the  levy 
thereunder  the  officer  has  simply  obtained  authoritj',  at  some  future 
time  and  in  the  mode  prescribed  b}'  law,  to  expose  the  propert}*  of  the 
debtor  for  sale,  and  that  is  the  final  act  which  changes  the  title  and 
interest  of  the  debtor.  The  officer  has,  no  doubt,  in  law  and  from  the 
necessity  of  the  case,  a  sufficient  interest  in  the  property  levied  upon  to 
enable  him  to  protect  it  by  insurance  or  against  the  acts  of  wrongdoers, 
otherwise  the  proceedings  for  collection  of  the  debt  might  be  defeated ; 
but  still  the  owner  retains  the  title  in  the  same  sense  that  he  did  after 
he  made  default  in  the  pa3'ment  of  the  debt,  which,  as  we  have  seen,  is 
the  basis  of  every  step  in  the  process  of  enforcement.  His  interest  is, 
no  doubt,  affected  b}-  the  issuing  of  the  execution  and  the  levj-,  but 
that  is  also  true,  though  perhaps  in  a  more  remote  sense,  by  contract- 
ing the  debt.  The  words  "  change  of  interest,"  as  used  in  the  policy, 
are  substantially  synonymous  with  the  words  "  change  of  title,"  and 

1  After  stating  the  case.  — Ed. 


SECT.  II.]  WALRADT    V.    PHCEXIX   INS.    CO.  627 

neither  event  occurs  until  the  sale  upon  the  execution.  It  ma}'  be 
asked  what  effect  is,  under  such  construction,  to  be  given  to  the  word 
interest,  as  used  in  the  condition.  It  must  be  borne  in  mind  that  the 
standard  policy  now  in  use  is  so  framed  as  to  contain  words  suitable 
and  applicable  to  every  subject  of  insurance,  but  all  the  provisions  are 
not  necessarily  applicable  in  ever}'  case.  That  must  always  be  so 
whenever  a  contract  in  the  same  form  and  expressed  in  the  same 
language  is  sought  to  be  applied  to  different  things,  or  to  different 
classes  of  propert}'.  The  subject  of  insurance,  its  condition  and  situa- 
tion and  the  surrounding  circumstances,  ma}-  vary  so  as  to  render  words 
and  phrases  contained  in  the  polic}'  not  strictly  applicable.  There  is 
a  large  class  of  risks,  however,  to  which  the  word  ''interest,"  as  used 
in  the  condition  under  consideration,  is,  no  doubt,  applicable.  Policies 
are  frequently  written  in  favor  of  parties  who  have  a  claim  upon  prop- 
erty in  the  nature  of  a  lieu  to  secure  the  payment  of  a  debt  and  perhaps 
for  other  purposes. 

When  the  debt  is  paid  or  transferred  the  interest  of  the  insured  in 
the  subject  of  insurance  is  changed,  and  the  indemnity  of  the  policy 
cannot  inure  to  the  benefit  of  another  in  the  absence  of  express  pro- 
vision or  consent  of  the  company.  In  such  cases  the  word  can  have 
full  effect  and  a  perfectly  natural  and  appropriate  application.  It  is 
manifest  that  the  parties  to  this  contract  knew  and  intended  that  in 
some  respects  the  interest  of  the  insured  in  the  property  covered  by 
the  insurance  would  be  changing  from  day  to  day.  The  insured  was  a 
country  merchant,  who,  after  he  had  effected  the  insurance,  was  at 
liberty  to  carry  on  trade  in  the  goods,  to  buy  and  sell  and  contract 
debts  as  before  ;  and,  under  such  circumstances  to  say  that  whenever 
an  execution  was  delivered  to  the  sheriff,  or  even  the  town  constable, 
for  any  sum  no  matter  hew  insignificant,  the  policy'  was  thereb}-  avoided, 
would  be  to  give  to  this  condition  a  very  harsh  and  narrow  construc- 
tion, and  one  which,  it  seems  to  me,  was  never  within  the  contemplation 
of  the  parties.  The  fair  and  reasonable  constructioi)  which  we  are 
bound  to  give  to  the  contract  does  not  require  us  to  go  as  far  as  that. 
Quinlaa  v.  Providence  W.  Ins.  Co.,  133  X.  Y.  365.  There  are  cases 
where  it  has  been  held  that  the  recovery  of  a  judgment  and  the  levy  of 
an  execution  avoided  a  policy,  but  that  was  in  consequence  of  an 
express  provision  to  that  effect  in  the  policy.  These  provisions  have 
been  omitted  from  this  policy,  and  the  same  result  cannot  be  accom- 
plished by  a  condition  against  a  change  of  interest. 

That  there  was  no  such  change  of  interest  in  this  case,  as  is  fairl}- 
coatemplated  by  the  policy,  has  been  conclusively  settled  against  the 
defendant's  contention  b}'  a  decision  of  this  court.  In  Green  v.  Home- 
stead Fire  Ins.  Co.,  82  N.  Y.  517,  the  policy  contained  a  condition 
rendering  it  void  "if  the  interest  of  the  insured  be  changed  in  any 
manner,  whether  by  act  of  the  insured  or  by  operation  of  law."  The 
subject  of  the  insurance  was  real  property,  and  a  mechanics'  lien  had 
been  filed  and  took  effect  thereon  within  the  life  of  the  policy  and 


628  WALRADT    V.    PIICENIX    INS.    CO.  [CIIAP.  VI 

before  the  loss.  It  was  urged  by  the  defendant  that  there  could  be  no 
recovery  in  the  case  for  the  reason  that  there  was  a  breach  of  the 
condition  against  any  change  of  interest.  Judge  Rapallo,  giving 
the  opinion  of  the  court,  disposed  of  the  question  in  a  single  sentence, 
in  which  he  said,  "  The  notice  filed  in  pursuance  of  the  mechanics'  lien 
law  clearly  did  not  affect  any  change  of  interest  in  the  property  in- 
sured," and  the  plaintiff  recovered.  I  am  unable  to  perceive  that 
there  is  any  satisfactory  distinction  to  be  made  between  the  filing  of  a 
mechanics'  lien  upon  real  estate  and  the  delivery  of  an  execution 
against  personal  property,  followed  by  a  levy.  So  that  upon  authority 
and  reasonable  construction,  as  to  the  intention  of  the  parties,  there 
was  no  change  of  interest  in  the  case  at  bar.  92  N.  Y.  .54  ;  71  id. 
508. 

The  change  of  possession  produced  by  the  levy  and  the  action  of  the 
sheriff  remains  to  be  considered.  The  policy  is  not  avoided,  by  the 
terms  of  the  condition  referred  to,  by  every  change  of  possession  that 
may  take  place  in  the  property.  A  change  of  occupants,  without 
increasing  the  hazard,  is  excepted  from  the  operation  of  the  condition 
and  does  not  invalidate  the  insurance.  The  learned  counsel  for  the 
defendant  argues  that  the  exception  in  the  condition  does  not  apply 
when  personal  property  is  the  subject  of  the  insurance,  and  does  not 
apply  in  this  case,  as  there  cannot  be  an  occupant  of  goods  in  a  store, 
consistent  with  the  ordinary  and  appropriate  use  of  language.  The 
General  Term  has  shown  that  the  word  occupant  is  sometimes  used 
with  reference  to  personal  property.  When  the  subject  of  insurance 
is  a  ship,  a  building  not  attached  to  the  soil,  so  as  to  become  part  of 
the  realty,  or  other  things  of  like  character,  the  term  "  change  of 
occupants"  would  be  appropriate.  When  it  is  used  in  reference  to 
goods  in  a  store  its  fitness  is  not  so  apparent.  But  as  the  words  of 
the  policy  were  used  to  meet  all  cases  we  have  no  right  to  say  that  the 
exception  in  the  condition  was  not  designed  to  apply  when  goods  were 
the  subject  of  insurance,  merely  because  the  term  "  change  of  occu- 
pants "  does  not  seem  to  be  tlie  most  natural  and  appropriate.  A  large 
part  of  the  contracts  of  insurance  now  entered  into  relate  to  personal 
property,  and  to  hold  that  such  an  important  exception,  as  that  now 
under  consideration,  to  the  broad  terms  of  a  condition,  had  no  applica- 
tion to  such  contracts,  would  make  the  rights  of  the  parties  turn  upon 
the  literal  meaning  of  a  word.  What  the  parties  intended  was  that  a 
change  in  the  control  and  dominion  over  the  property  should  not  avoid 
the  policy,  unless  such  change  rendered  the  risk  more  hazardous.  A 
change  in  the  possession  of  a  store  of  goods  must,  moreover,  refer  to 
tlie  place  where  the  goods  are  situated.  In  this  case  they  are  described 
as  situated  in  a  brick  store.  The  place  where  the  goods  were  kept, 
though  not  the  subject  of  insurance,  was  an  important  element  in  the 
risk,  and  it  was  natural  and  proper  for  the  parties  to  provide  against  a 
more  hazardous  change  in  the  occupancy  of  that  place,  and  hence  the 
parties  agreed  that  in  case  the  possession  of  the  goods  changed  that 


SECT.  II.]  GIBB   V.    PHILADELPHIA    FIRE    INS.    CO.  629 

fact  alone  would  not  avoid  the  policy  unless  the  occupancy  of  the  place 
where  they  were  was  also  changed  in  such  a  manner  as  to  become  more 
hazardous.  In  this  wa}-  the  words  of  the  exception  can  be  given  their 
ordinary  and  natural  meaning  and  the  exception  itself  can  have  effect. 
It  is  only  in  a  plain  case  that  we  are  warranted  in  saying  that  the 
parties  have  used  language  not  intended  to  have  any  application  to  the 
subject-matter  of  the  contract.  Whether  the  change  of  possession  that 
was  shown  in  this  case,  followed  by  a  change  of  occupants,  was  or  was 
not  more  hazardous,  depended  upon  the  circumstances  shown,  and  pre- 
sented a  question  of  fact,  which  the  learned  trial  judge  properly  sub- 
mitted to  the  jur}-,  and  was  determined  in  favor  of  the  plaintiff.^  .  .  . 

The  judgment  should  be  affirmed. 

All  concur,  except  Earl,  Peckham,  and  Gray,  JJ.,  dissenting. 

Judgment  affirmed.^ 


GIBB  ET  AL.    V.   PHILADELPHIA  FIRE   INS.    CO. 

Supreme  Court  of  Minnesota,  1894.     59  Minn.  267.^ 

Appeal  from  a  judgment  of  the  District  Court  of  Hennepin  County. 

Kitchel^  Cohen  &  Shmc,  for  appellant. 

Fred  W.  Eeed,  for  respondents. 

Canty,  J.  On  February  29,  1892,  the  plaintiff  Gibb  was  the  owner 
in  fee  simple  of  the  premises  in  question,  subject  to  a  mortgage  of 
Si, 200,  held  by  the  plaintiff  Hilles.  On  that  day  defendant  issued 
a  polic}'  of  insurance  insuring  Gibb  to  the  amount  of  $2,000,  for  three 
years  from  and  after  that  day,  against  loss  by  fire  to  the  buildings  on 
the  premises,  loss,  if  an}',  payable  to  Hilles  as  her  interest  may  appear ; 
but  providing  that  if,  in  case  of  loss,  the  insurer  is  not  liable  to  the 
mortgagor  or  owner,  it  shall  be  subrogated  to  the  rights  of  the  mort- 
gagee under  her  mortgage,  and,  upon  paying  the  full  amount  due  on 
the  mortgage,  shall  receive  an  assignment  of  it.  This  mortgage  clause 
also  provided  that  the  policy  should  not  be  invalidated  as  to  the  mort- 
gagee by  any  act  of  the  owner,  or  b}'  any  change  in  the  title  or  owner- 
ship of  the  premises. 

On  Fel)ruary  28,  1893,  there  was  a  loss  by  fire  amounting  to 
$1,462.62.  The  plaintiffs  brought  this  action  to  recover  this  loss. 
The  case  was  tried  b}'  the  court  without  a  jury,  and  judgment  was 
ordered  in  favor  of  Hilles  for  $1,200,  the  amount  of  her  mortgage, 
and  in  favor  of  Gibb  for  the  balance  of  said  amount  of  the  loss.  From 
the  judgment  entered  thereon,  defendant  appeals. 

1  The  remainder  of  the  opinion  dealt  principally  with  arguments  from  analogy — 
Ed. 

-  Ace.  :  Herman  v.  Katz,  101  Tenn.  118  (1898). 

Compare  Carey  v.  German  American  Ins.  Co.,  84  Wis.  80,  85-86  (1893).  — Ed. 

3  The  reporter's  statement  has  been  omitted.  —  Ed. 


630  GIBB    V.    PHILADELPHIA    FIRE    INS.    CO.  [cHAP.  VL 

The  appellant  concedes  that  the  plaintiff  Hilles  is  entitled  to  recover, 
but  contends  that  a  breach  occurred,  prior  to  the  fire,  which  avoided 
the  policy  as  to  Gibb  ;  that  he  is  not  entitled  to  recover ;  and  that 
defendant  is  entitled,  on  payment  to  Hilles  of  the  amount  of  her 
mortgage,  to  be  subrogated  to  her  rights  under  the  mortgage.  The 
policy  contains  the  following  provisions:  "This  entire  policy,  unless 
otherwise  provided  by  agreem'ent  indorsed  hereon  or  added  hereto, 
shall  be  void  ...  if  any  change  other  than  by  the  death  of  an  insured 
take  place  in  the  interest,  title,  or  possession  of  the  subject  of  insur- 
ance (except  change  of  occupants  without  increase  of  hazard),  whether 
by  legal  process  or  judgment,  or  by  voluntary  act  of  the  insured,  or 
otherwise." 

It  is  found  by  the  court:  That  on  March  23,  1892,  plaintiff  made 
a  contract  in  writing  with  one  Maggie  J.  Kelly,  whereby  he  sold  and 
agreed  to  convey  to  her  the  premises,  consisting  of  five  lots,  by  deed 
of  warranty,  on  prompt  and  full  performance  by  her  of  the  agree- 
ment, and  she  agreed  to  pay  therefor  the  sum  of  S2,500,  —  $300  cash, 
and  $1,000  in  instalments  of  $50  every  sixty  days  thereafter  until  paid, 
the  balance  to  be  paid  by  her  in  assuming  said  mortgage,  —  she  to 
have  possession  of  the  premises  until  default  in  payment ;  and  in  case 
of  such'  default  she  agreed  to  surrender  possession  on  demand,  and 
that  the  agreement  should  be  void  at  the  option  of  the  vendor.  That 
at  and  from  the  time  of  making  the  policy  of  insurance,  until  the  time 
of  making  the  contract  of  sale,  the  buildings  had  been  unoccupied,  and 
that,  on  the  making  of  said  contract  of  sale,  said  Kelly  entered  into 
the  possession  of  the  buildings  and  premises,  and  occupied  the  same 
until  the  time  of  the  fire,  and  made  all  her  payments  during  that  time, 
and  was  not  in  default  in  any  manner  upon  said  contract. 

It  is  contended  by  appellant  that,  by  the  transactions  with  Kelly, 
there  took  place  a  change  in  the  interest,  title,  and  possession  of 
Gibb,  and  the  condition  against  any  such  change  was  broken,  and 
the  policy  avoided  as  to  him.  It  seems  to  us  that  there  was  a  breach 
in  the  condition  against  any  change  of  interest.  It  is  not  claimed  by 
respondents  that  there  was  any  waiver  of  this  condition,  and  the 
authorities  cited  by  counsel  are  nearly  all  cases  where  the  bieacli 
claimed  was  not  of  a  condition  against  a  change  of  interest,  but  o. 
change  of  title.  It  is  held  by  the  great  weight  of  autiiority  that, 
where  the  condition  is  against  any  change  in  the  title,  there  is  no 
breach  unless  there  is  a  change  in  the  legal  title,  —  that,  as  long  as 
the  insured  retains  the  legal  title  and  an  insurable  interest  in  the 
premises,  the  policy  is  not  avoided  by  a  transfer  of  the  equitable  title 
or  of  equitable  interests  ;  but  we  cannot  apply  this  doctrine  to  a  con- 
dition against  any  change  of  interest.  The  terms  are  not  synonymous, 
as  contended  by  counsel.  The  word  "  interest"  is  broader  than  the 
word  "  title  "  and  includes  both  legal  and  equitable  rights.  It  is  not 
necessary  to  consider  the  question  of  the  change  of  possession,  except 
so  far  as  it  has  an  influence  on  the  change  of  interest  by  strengthen- 


SECT.  II.J  GIBB   V.    PHILADELPHIA   FIRE    INS.    CO.  631 

ing  and  fortifying  the  interest  acquired  by  Kell3^     This  disposes  of 
the  case. 

The  plaintiff  Hilles  is  entitled  to  judgment  for  the  sum  awarded  her, 
but  upon  payment  of  the  same  the  defendant  is  entitled  to  be  subro- 
gated to  her  rights  under  her  mortgage,  and  the  defendant  is  entitled 
to  judgment  against  the  plaintiff  Gibb  that  he  take  nothing  by  this 
action.  The  judgment  appealed  from  should  be  reversed,  with  direc- 
tions to  enter  judgment  in  conformity  with  this  opinion. 

iSo  ordered.^ 

1  Contra:  Grahle  v.  German  Ins.  Co.,  32  Neb.  645  (1891). 

See  Hill  V.  Cumberland  Valley  Mut.  Protection  Co.,  59  Pa.  474  (1868)  ;  Savage  v, 
Howard  Ins.  Co.,  52  N.  Y.  502  (1873)  ;  Germond  v.  Home  Ins.  Co.,  2  Hun,  540  (1874) ; 
Browning  v.  Plome  Ins.  Co.,  71  N.  Y.  508  (1877)  ;  Priugle  v.  Des  Moines  Ins.  Co.,  107 
Iowa,  742  (1898)  ;  Arkansas  F.  Ins.  Co.  i'.  Wilson,  67  Ark.  553  (1900). 

In  Washington  F.  Ins.  Co.  v.  Kelly,  32  Md.  421  (1870),  Beekman  and  Reeder  pro- 
cured insurance  upon  a  building  and  afterwards  made  a  contract  for  the  sale  of  the 
insured  property,  under  which  contract  part  payment  was  made,  but  possession  was 
not  taken.  For  a  loss  subsequently  occurring,  it  was  held  that  there  could  be  a 
recovery,  notwithstanding  a  provision  that  the  policy  should  be  void  "  if  the  said 
property  shall  he  sold  or  conveyed."     Miller,  J.,  at  pp.  453-455,  said :  — 

"  On  the  11th  of  February,  1868,  Beekman  and  Reeder  entered  into  a  written  agree- 
ment with  Budd,  by  which  they  '  agree  to  sell '  to  the  latter  the  grounds,  '  with  the 
buildings  and  improvements  thereon  erected,'  for  $462,000,  which  Budd  agrees  to 
pay  —  SIO.OOO  in  cash,  $52,000  on  delivery  of  the  deed,  to  assume  payment  of  the 
mortgage  debts,  amounting  to  $350,000,  and  to  execute  a  mortgage  on  the  premises 
to  secure  the  balance  of  $50,000,  the  deed  and  necessary  papers  to  be  delivered  on  or 
before  the  1st  of  April,  1868.  On  the  same  day,  Bndd  assigned  this  contract  to  the 
appellee,  and  directed  the  conveyance  to  be  made  to  him.  The  $10,000  was  paid,  but 
possession  was  not  given,  nor  was  anything  else  done  under  the  contract  before  the 
fire.  On  the  5th  of  March,  three  days  after  the  fire,  the  deed  was  executed  and 
delivered  to  the  appellee,  and  the  grantors  on  the  same  day  agreed,  in  writing,  to 
collect  the  amounts  due  on  the  insurance  policies  and  apply  the  same  for  the  benefit 
of  the  appellee.  A  formal  written  assignment  of  the  policies,  and  of  the  claims 
arising  thereon,  was  subsequently,  on  the  1st  of  June  following,  executed  to  the 
appellee.  On  tliis  state  of  facts,  one  of  tlie  positions  of  the  appellant,  presented  by 
its  fifth  prayer,  is,  tliat  the  contract  of  the  11th  of  Fel)rnary  was  a  sale  or  conveyance 
of  the  property  before  loss,  within  the  meaning  and  purpose  of  the  provision  in  the 
body  of  the  policy,  making  it  void  if  the  insured  property  '  shall  be  sold  or  conveyed ' 
without  the  assent  of  tiie  company.  Without  any  such  provision  against  alienation, 
a  sale  of  the  property  insured,  by  a  fire  polic}-,  by  which  the  assured  parts  with  his 
whole  inteest  therein,  and  is,  tlicrefore,  deprived  of  all  interest  in  its  preservation, 
will  prevent  a  recovery  for  a  sulisequent  loss.  The  law  requires  he  should  have  an 
insurable  interest  at  the  time  of  loss.  Most  policies,  however,  guard  against  this 
contingency  by  an  express  sti|>al:ition  instead  of  relying  solely  upon  the  rule  of  law. 
Hence,  clauses  against  alienation,  couclied  in  different  phraseologj',  are  constantly 
to  be  met  with,  sometimes  in  different  parts  of  the  policy,  and  sometimes  in  the 
same  provision,  and  in  immediate  connection  with  that  relating  to  the  assignment  of 
tiie  policy  itself.  The  latter  fact  does  not  seem  to  have  been  regarded  as  of  import- 
ance, or  as  warranting  any  different  construction  than  if  it  stood  as  a  separate  clause. 
The  provision  in  this  policy  is  in  the  simplest  and  least  stringent  form  prohibiting  a 
sale  or  conveyance,  terms  of  equivalent  import  with,  and  certainly  not  more  compre- 
hensive than,  '  alienation  by  sale  or  otherwise.'  The  decided  weight  of  authority 
upon  the  construction  of  clauses  thus  expressed  is,  that  to  call  them  into  action 
or  preclude  the  riglit  to  enforce  the  insurance,  there  must  be  an  actual  and  complete 
alienation,  and  hence  a  contract  of  sale  will  not  fall  within  its  terms  so  long  as  the 


632  WOOD   V.   AMERICAN    FIRE   INS.    CO. ,  [CIIAP.  VI. 


WOOD,  Respondent,  v.  AMERICAN  FIRE  INS.  CO., 
Appellant. 

Court  of  Appeals  of  New  York,  1896.     149  N.  Y.  382. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  third  judicial  department,^  entered  upon  an  order  made  JNIay 
8,  1894,  which  affirmed  a  judgment  in  favor  of  plaintiti'  entered  upon 
a  decision  of  the  court  on  trial  at  Circuit  without  a  jury. 

The  nature  of  the  action  and  the  facts,  so  far  as  material,  are  stated 
in  the  opinion. 

Michael  H.  Cardozo  and  Shedden  cb  Booth,  for  appellant. 

T.  F.  Conway,  for  respondent. 

O'Brien,  J.  The  plaintitT  recovered  upon  a  policy  of  insurance,  of 
■which  she  was  the  assignee,  issued  by  the  defendant,  upon  a  building 
used  as  a  store,  January  9,  1891,  and  whicli  was  destroyed  by  fire 
March  31,  1891.  The  only  defences  interposed  by  the  answer,  which 
■were  proven  and  found  at  the  trial,  were:  (1)  That  Wood  Bros.,  a 
firm  composed  of  six  brothers,  ■which  owned  the  property  and  pro- 
cured the  insurance,  had  not,  at  the  time,  the  sole  and  unconditional 
title  or  ownership  of  the  property  ;  and  (2)  that  the  property  covered 
by  the  policy  had  been  sold  upon  judgment  and  execution  against  the 
firm  some  days  before  the  loss.  The  contract  was  made  by  means  of 
what  is  known  as  the  standard  polic}',  which  contained  the  condition  that 
it  "  shall  be  void  .  .  .  if  the  interest  of  the  insured  shall  be  other  than 
uncontlitional  and  sole  ownership,  or  .  .  .  if  any  change,  other  than 
by  the  death  of  an  assured,  take  place  in  the  interest,  title,  or  posses- 
sion of  the  subject  of  the  insurance  .  .  .  whether  b}'  legal  process  or 
judgment,  or  b}'  the  voluntary  act  of  the  insured  or  otherwise." 

With  respect  to  the  defence  first  referred  to,  it  appeared  that  in 
the  ^ear  1885  one  of  the  individuals  composing  the  firm  made  a 
general  assignment  of  his  individual  property  for  the  benefit  of  his 
creditors,  and  also  of  his  interest  in  the  firm.     That  in  1888  his  assignee 

vendor  retains  the  legal  title  and  continues  to  have  an  interest  in  the  preservation  of 
the  premises,  as  security  for  the  payment  of  the  purchase  money,  or,  at  all  events, 
until  the  terms  of  sale  are  so  far  fulfilled  as  to  invest  the  vendee  with  the  full  equita- 
hle  ownership,  and  entitle  him  to  the  immediate  possession  of  the  property  sold. 
2  Amer.  Lead.  Cases  (notes  by  Hare  &  Wallace),  626,  and  cases  there  cited ;  also, 
Hitchcock's  Case,  26  N.  Y.  Rep.,  68,  and  Smitli's  Case,  50  Maine,  96.  I  rest  my 
opinion  on  this  point  entirely  upon  the  weight  of  authority  witliin  which  the  present 
case  clearly  falls.  The  contract  ■was  executory,  nothing  having  been  done  under 
it  at  the  time  of  loss  save  payment  of  the  SI  0,000;  possession  had  not  been  delivered, 
and,  by  its  terms,  could  not  have  been  demanded  until  the  deed  was  executed.  Plac- 
ing my  opinion  upon  this  ground,  it  becomes  unnecessary  to  inquire  what  rights  the 
parties  to  this  contract  might  have  had  in  a  Court  of  Equity,  or  in  what  light  that 
court  would  have  regarded  the  transaction,  or  ho^w  it  would  have  deemed  the  title  to 
the  property  as  affected  thereby."  —  Ed. 
1  Keportedin  78  Hun,  109  (1894). —Ed. 


SECT.  II.]  AVOOD    V.    AMEKICAN    FIRE    INS.    CO.  633 

sold  whatever  interest  in  the  firm  property  that  passed  to  him  by  the 
assignment  to  a  third  party,  and  before  the  policy  was  issued  had 
accounted  and  been  discharged.  The  assignee  had  no  accounting 
with  the  firm  in  order  to  ascertain  what  interest  the  assignor  had,  if 
an}-,  in  the  surplus,  if  any,  and  no  claim  was  ever  made  upon  the  firm 
for  anything  passing  by  the  assignment.  It  appeared  by  the  proofs 
and  findings  that  the  defendant's  agents,  who  were,  as  may  be  fairl}' 
inferred,  general  agents,  knew,  at  the  time  of  issuing  the  policy  and 
before,  all  the  facts  and  circumstances  with  respect  to  the  individual 
assignment  and  the  transfer  of  that  interest  as  above  stated. 

The  answer  to  the  defence,  based  upon  these  facts,  is  twofold:  (1) 
That  since  the  title  to  the  real  estate  held  by  a  partnership  is  in  the 
firm  and  not  in  the  individual  members  of  it,  the  transfer  of  the  interest 
of  one  of  the  members,  before  the  insurance,  had  no  effect  upon  the 
unconditional  and  sole  ownership  of  the  firm.  That  an  assignment 
by  one  partner  of  his  share  in  the  partnership  stock  simply  transfers 
any  interest  he  may  have  in  any  surplus  remaining  after  payment  of 
the  firm  debts  and  the  settlement  of  the  firm  accounts.  Whether  the 
purchaser  of  such  an  interest  takes  anything  whatever  b}-  the  transfer 
cannot  be  known  until  all  the  partncrsliip  affairs  have  been  settled  and 
adjusted.  Menagli  v.  "NVhitwell,  52  N.  Y.  146.  The  title  to  the  real 
property,  which  was  the  subject  of  the  insurance,  was  in  the  partner- 
ship firm,  and  was  not  affected  by  the  assignment  of  one  of  the 
members.  It  still  remained  firm  property,  since  the  assignee  had  no 
interest  in  it  as  such,  and  whether  the  sale  or  transfer  by  the  individual 
member  was  anything  more  than  a  mere  form,  or  conveyed  anything 
to  the  assignee,  must  depend  upon  the  existence  of  a  surplus  after  the 
partnership  affairs  are  adjusted.  It  does  not  even  appear  in  this  case 
that  there  would  then  be  any  surplus  to  divide,  though  that  cir- 
cumstance cannot  be  regarded  as  material  upon  the  question  whether 
such  a  transfer  by  a  member  afl!ects  or  changes  the  estate  or  interest 
which  the  firm  has  in  the  partnership  realty.^  .  .  . 

It  appears  from  the  findings  that  on  the  20th  of  March,  1891,  about 
ten  days  before  the  fire,  the  real  estate  which  was  the  subject  of  the 
insurance  was  sold  by  the  sheriff  under  an  execution  duly  issued  to  him 
against  the  firm  and  a  certificate  of  sale  in  due  form  delivered  by  him 
to  the  purchaser,  one  Aurclia  O.  Wood,  and  the  remaining  and  perhaps 
most  important  question  is  whether  this  sale  worked  such  a  change  in 
the  interest,  title,  or  possession  of  the  property  as  to  avoid  the  policy 
within  the  meaning  of  the  conditions  to  which  reference  has  been 
made.  In  "Walradt  v.  Phoenix  Ins.  Co.,  136  N.  Y.  375,  we  held  that 
when  the  subject  of  the  insurance  was  personal  propert}',  that  the  con- 
ditions of  the  policy  were  not  violated  by  the  mere  levy  of  an  execution 
upon  the  goods  insured.  The  reasoning  of  that  case,  however,  plainly 
leads  to  the  conclusion  that  it  would  be  otherwise  in  case  the  levy  had 
been  followed   by  a   sale.     The  sale   of  personal  property  upon   an 

1  The  omitted  passage  held  that  this  defence  was  overthrown  by  waiver.  —  Ed. 


634  WOOD   V.    AMERICAN    FIRE    INS.    CO.  [CHAP.  VI. 

execution  divests  the  owner  of  his  title  to  the  property  sold  £xnd 
transfers  it  to  another.  But  what  was  said  in  that  case  with  respect 
to  the  effect  of  a  sale  upon  execution  applies  to  personal  property. 
There  was  no  question  in  the  case  with  respect  to  the  effect  of  a  sale 
of  real  estate,  and  nothing  was  decided  upon  that  question.  The 
effect  of  a  sale  of  real  estate  upon  execution  is  declared  by  statute, 
and  no  other  effect  can  be  given  to  it.  The  judgment  debtor,  or  his 
assignee,  or  his  creditors,  may  redeem  the  same  within  fifteen  months 
thereafter,  and  the  right  and  title  of  the  judgment  debtor  is  not 
divested  by  the  sale  until  the  expiration  of  the  period  for  redemption. 
(Code  C.  P.  §  1440.)  During  that  time  the  debtor  is  entitled  to  the 
possession  and  use  or  the  rents  and  profits.  At  the  time,  therefore, 
that  the  property  in  question  was  destroyed  by  fire,  the  interest,  title, 
or  possession  of  the  insured  had  not  been  changed.  The  statute  had 
operated  to  postpone  the  effect  of  the  sale  upon  the  interest,  title,  or 
possession  of  the  owners  until  the  expiration  of  the  period  for  redemp- 
tion. In  Browning  v.  Home  Ins.  Co.,  71  N.  Y.  508,  the  policy  con- 
tained a  provision  that  if  the  property  be  sold  or  transferred,  or  any 
change  take  place  in  the  title  or  possession,  then  in  either  such  case 
the  policy  shall  be  void.  The  insured  entered  into  a  contract  in 
writing  for  the  sale  of  the  premises,  and  this  court  held  that  the  con- 
ditions of  the  policy  were  not  violated.  It  was  said  that  an  executory 
contract  for  the  sale  of  the  property  without  change  of  possession  did 
not  work  a  breach  of  the  conditions  against  a  sale  or  transfer  or 
change  in  title  or  possession.  That  such  a  condition  applies  only  to  a 
legal  transfer  which  divests  the  insured  of  title  to  or  control  over  the 
property.  Before  we  could  assent  to  the  proposition  that  in  this  case 
there  was  a  breach  of  the  conditions  of  the  policy  by  the  sheriff's  sale 
we  would  be  compelled  to  overrule  numerous  cases  in  this  court  which, 
in  principle,  decide  otherwise.  Baley  v.  Homestead  Fire  Ins.  Co., 
80  N.  Y.  21  ;  Cone  v.  Niagara  Fire  Ins.  Co.,  60  N.  Y.  619  ;  Haight 
V.  Cont.  Ins.  Co.,  92  N.  Y.  51,  55 ;  Green  v.  Homestead  F.  Ins.  Co., 
82  N.  Y.  517. 

The  judgment  must,  therefore,  be  affirmed,  with  costs. 

All  concur,  except  Gray,  J.,  who  dissents  upon  the  ground  that  the 
policy  was  avoided  by  the  change  of  interest  effected  by  the  sale  of 
the  property.  Judgment  affirmed^ 

1  As  to  the  effect  of  a  judicial  sale,  see  the  authorities  cited  ante,  p.  613,  n.;  and 
also  Collins  v.  London  Assurance  Corporation,  165  Pa.  298,  306-309  (1895);  and 
Greenlee  v.  North  British  &  Mercantile  Ins.  Co.,  102  Iowa,  427  (1897).  —  Ed. 


SECT.  II.]       LAMPA.SAS  HOTEL  AND  PAEK  CO.  r.  PHiENIX  INS.  CO.        635 


LAMPASAS   HOTEL   AND   PARK   CO.   v.   PHCENIX 
INSURANCE   CO. 

Court  of  Civil  Appeals  of  Texas,   1896.     38  S.  W.  Rep.  361.^ 

This  was  an  action  upon  a  policj'  insuring  a  hotel.  The  defence 
was  that  the  assured  corporation  had  made  a  deed  of  trust  in  breach 
of  a  condition  contained  in  the  policy.  The  polic}-  was  of  the  New 
York  standard  form,  and  contained  this  condition:  — 

"This  entire  policy  shall  be  void  ...  if  the  interest  of  the  insured 
be  other  than  unconditional  and  sole  ownership,  or  if  the  subject  of  the 
insurance  be  a  building  on  ground  not  owned  by  the  insured  in  fee 
simple,  or  if  the  subject  of  the  insurance  be  personal  propert}-,  and  be 
or  become  incumbered  by  a  chattel  mortgage,  or  if,  with  the  knowledge 
of  the  insured,  foreclosure  proceedings  be  commenced,  or  notice  given 
of  sale  of  any  property  covered  b}-  this  polic}-  by  virtue  of  any 
mortgage  or  trust  deed,  or  if  any  change  other  than  by  the  death  of 
the  insured  ^  take  place  in  the  interest,  title,  or  possession  of  the  sub- 

1  The  statement  has  been  ba.sed  upon  the  opinion.  —  Ed. 

2  In  Burbank  r.  Eockingham  Mut.  F.  Ins.  Co.,  24  N.  H.  .550  (1852'),  the  insurance 
■was  on  a  grist-mill,  and  there  was  a  provision  that  "  when  any  house  or  other  build- 
ing shall  be  alienated  by  sale  or  otherwise,  the  policy  shall  thereupon  be  void."  A 
loss  occurred  after  the  death  of  the  assured,  intestate.  It  was  held  that  there  could 
be  a  recovery. 

In  Lappin  v.  Charter  Oak  F.  &  M.  Ins.  Co.,  58  Barb.  325  (1870),  a  policy  on  a 
dwelling-house  and  furniture  promised  "to  make  good  unto  the  said  assured,  his 
executors,  administrators,  and  assigns,  all  such  immediate  loss  ...  as  shall  happen 
by  fire  to  the  property,"  and  there  was  a  provision  that  "  in  case  of  any  sale,  transfer, 
or  change  of  title,  in  the  property  insured  .  .  .  ,  or  of  any  interest  therein,  such  insur- 
ance shall  be  void  and  cease."  A  loss  occurred  after  the  death  of  the  assured,  intes- 
tate.    It  was  held  that  there  could  be  no  recovery. 

In  Sherwood  v.  Agricultural  Ins.  Co.,  73  N.  Y.  447  (1878),  the  insurance  was  on  a 
dwelling-house  and  furniture,  and  there  was  a  provision  that  "  if  without  the  written 
consent  of  this  company  first  had  and  obtained,  the  said  property  shall  be  sold  or  con- 
veyed, or  the  interest  of  the  parties  therein  be  changed  in  any  manner,  whether  by 
act  of  the  parties  or  by  operation  of  law,  .  .  .  this  policy  shall  be  null  and  void."  A 
loss  occurred  after  the  death  of  the  assured,  testate.  It  was  held,  affirming  the  de- 
cision of  the  General  Term  of  the  Supreme  Court,  reported  in  10  Hun,  593  (1877), 
that  there  could  be  no  recovery. 

In  Hine  v.  Woolworth,  93  N.  Y.  75  (1883),  a  policy  on  a  dwelling-house  and  furni- 
ture promised  "to  make  good  unto  the  said  insured,  his  heirs,  executors,  administra- 
tors, and  assigns,  all  such  loss  or  damage  ...  as  shall  happen  by  fire  or  lightning 
to  the  property,"  and  contained  a  provision  that  "  if  the  interest  of  the  insured  therein 
be  changed  in  any  manner,  whether  by  act  of  the  insured  or  by  operation  of  law,  .  .  . 
this  policy  shall  be  null  and  void  until  the  written  consent  of  the  company  ...  is 
obtained."  A  loss  occurred  after  the  death  of  the  assured,  intestate.  It  was  held, 
affirming  the  decision  of  the  General  Term  of  the  Supreme  Court,  reported  sub  nom. 
Hine  v.  Homestead  F.  Ins.  Co  ,  29  Han,  84  (1883),  that  there  could  be  no  recovery. 

In  Richardson  v.  German  Ins.  Co.,  89  Ky.  571  (1890),  a  policy  on  a  dwelling-hou.se 
and  furniture  promised  "  to  make  good  unto  the  said  assured,  his  executors,  adminis- 


636      LAMPASAS  HOTEL  AND  PARK  CO.  V.  PHCENIX  INS.  CO.      [CHAP.  VL 

ject  of  insurance  (except  change  of  occupants  without  increase  of 
hazard),  whether  by  legal  process,  or  judgment,  or  by  voluntary  act 
of  the  insured,  or  otherwise." 

The  policy  was  for  one  year.  It  was  issued  on  July  25,  1894. 
There  was  then  a  deed  of  trust  on  the  property.  On  December  26, 
1894,  the  assured  company  executed  another  deed  of  trust  on  the  prop- 
ert}',  to  secure  a  debt  of  $29,500,  of  which  about  $25,000  covered  the 
debt  and  interest  secured  b}'  the  first  deed  of  trust  and  the  remainder 
covered  money  borrowed  for  running  expenses.  The  propert}  was 
destroyed  by  fire  on  February  10,  1895. 

In  the  District  Court  of  Harris  County  there  was  judgment  for  the 
defendant.     The  plaintiff  appealed. 

ITukhisofi,  Campbell^  and  Sears,  for  appellant. 

Win.  Thompson,  for  appellee. 

Fly,  J.^  .  .  .  There  is  authority  to  sustain  the  proposition  that  a 
renewal  of  a  mortgage  that  was  known  by  the  insurer  to  exist  when 
the  policy  was  issued  will  not  forfeit  the  policy.  Insurance  Co.  v. 
Saindon  (Kan.),  35  Pac.  15;  s.  c.  36  Pac.  983;  Bowlus  t;.  Insurance 
Co.  (Ind.  Sup.),  32  N.  E.  319.  The  new  mortgage  given  was  more  than 
a  renewal  of  the  former  mortgage.  It  was  given  not  only  to  secure  the 
original  debt  and  accrued  interest,  but  was  given  as  securitj'  for  other 
debts,  not  connected  with  the  original  debt.  The  original  mortgage 
was  given  to  secure  a  debt  due  to  the  Commercial  National  Bank  of 
Houston,  and  the  last  one  was  given  to  secure  the  debt  of  the  bank  and 
one  of  George  Sealey.  The  last  mortgage  was  given  without  the 
knowledge  or  consent  of  appellee,  and  must  be  viewed  as  though  the 
first  had  never  existed.  ... 

We  should  conclude  that  the  language  of  the  polic}'  shows  that  it 
was  not  intended  that  a  mortgage  given  on  real  propert}'  should  vitiate 
the  policv,  and  will  call  attention  to  those  portions  of  the  policy  which 
indicate  this.  There  is  no  clause  in  the  policy  requiring  the  disclosure 
of  the  existence  of  any  mortgage,  and,  of  course,  had  there  been  no 
disclosure  relating  thereto,  no  forfeiture  could  have  been  claimed  on 
that  ground.  It  would  seem  that  there  was  no  attempt,  therefore,  in 
the  policy  to  guard  against  existing  mortgages.  ...  As  if  to  empha- 

trators,  and  assigns,  all  Kuch  immediate  loss  or  damage  ...  as  shall  happen  by 
fire  or  lightning  to  the  property,"  and  contained  a  provision  that  "  if  the  property,  or 
any  part  thereof,  shall  be  sold,  conveyed,  incumbered  by  mortgage  or  otherwise,  or 
any  change  takes  place  in  the  title,  use,  occupation,  or  possession  thereof  whatever, 
or  if  foreclosure  proceedings  shall  be  commenced,  or  if  the  interest  of  the  insured  in 
said  property,  or  any  part  thereof,  now  is  or  shall  become  any  other  or  less  than  a 
perfect  legal  and  equitable  title  or  ownership,  free  from  any  lien  whatever,  .  .  .  this 
policy  shall  be  void."  A  loss  occurred  after  the  death  of  the  assured,  intestate.  It 
Avas  held  that  there  could  be  a  recovery. 

And  see  Forest  City  Ins.  Co.  v.  Ilardesty,  182  111.  39  (1899).  — Ed. 

1  The  passages  omitted  here  and  elsewhere  in  the  opinion  were  devoted  principally 
to  stating  the  case  and  quoting  from  Walradt  r.  Phoenix  Ins.  Co.,  ante,  p.  625  (1893), 
and  Green  v.  Homestead  F.  Ins.  Co.,  82  N.  Y.  517  (1880).  — Ed. 


SECT.  II.]       LAMPASAS  HOTEL  AND  PARK  CO.  V.  PHCENIX  INS.  CO.         637 

size  this  line  of  action,  and  to  show  clearl}'  that  mortgages  on  insured 
real  estate  were  not  prohibited,  it  is  speciallj-  provided  that,  '-'  if  the 
subject  of  insurance  be  personal  property*,  and  be  or  become  incum- 
bered by  a  chattel  mortgage,"  then  the  polic}-  should  become  void. 
Tlie  language  used  seems  to  exclude  the  idea  that  it  was  contemplated 
that  the  execution  of  a  mortgage  on  real  property  would  work  a  for- 
feiture of  the  policy.  If  the  words  "any  change  of  interest"  would 
include  mortgages  on  real  estate,  wh\-  would  it  not  include  mortgages 
on  personal  property?  ...  It  was  not  claimed  by  appellee  in  the  lower 
court,  nor  is  it  claimed  here,  that  the  execution  of  the  mortgage  would 
operate  as  a  forfeiture  ])}•  virtue  of  an\-  other  than  the  provision  in 
regard  to  cliange  of  interest.  It  is  not  claimed  that  the  risk  was 
increased  b\-  the  execution  of  the  mortgage,  but,  on  the  other  hand,  it 
was  agreed  by  appellee  in  the  lower  court  that  the  mortgage  did  not  "  in 
an}'  wa}'  increase  the  hazard  or  the  risk  of  the  insurance  compan}," 
and  that  it  did  not  lessen  the  plaintiff's  vigilance  and  care  in  preventing 
the  destruction  or  loss  of  the  property  b}'  fire. 

It  is  contended  In-  appellee  that  the  case  of  Insurance  Co.  v.  Clarke, 
79  Tex.  23,  15  S.  "W.  16G,  is  decisive  of  this,  but  we  are  of  the  opinion 
that  the  decision  in  that  case  is  not  applicable  to  the  contract  of  insur- 
ance in  this  case.  In  that  case  it  was  provided  in  the  policy  that  the 
insured  warranted  that  there  was  no  mortgage,  trust  deed,  or  lien  upon 
the  property  insured,  or  any  part  of  the  same,  and  that  the  policy 
would  become  void  "  if  the  interest  of  the  assured  in  the  property-, 
whether  as  owner,  trustee,  consignee,  agent,  mortgagee,  or  lessee,  or 
otherwise,  is  not  trul}-  stated  in  this  polic}',  or  if  an}-  change  take 
place  in  the  title,  location,  interest,  or  possession  (except  in  case  of 
succession  by  reason  of  death  of  the  assured),  whether  b}-  sale,  trans- 
fer, or  conveyance,  in  whole  or  in  part,  or  by  legal  process,  or  by  judi- 
cial decree."  The  sole  defence  was  that  the  insured  had,  witliout  the 
knowledge  or  consent  of  the  insurer,  executed  a  mortgage  on  the 
propert}-.  There  was  no  attempt  to  pass  upon  what  constituted  a 
change  of  interest,  but  it  was  held  that  the  execution  and  delivery  of 
a  mortgage  operated  a  forfeiture  of  the  policy,  because  a  mortgage 
was  a  "  conveyance  "  within  the  terms  of  the  contract.  There  was  in 
that  contract  a  special  provision  requiring  disclosure  of  the  fact  that  a 
mortgage  existed  when  the  polic}-  existed.  There  was  no  special  pro- 
vision as  to  the  execution  of  mortgages  on  personal  property,  and  there 
was  a  provision  that  a  change  of  interest  b}'  a  conveyance  of  the  prop- 
ert}'  in  whole  or  in  part  should  render  the  contract  void.  We  are,  how- 
ever, construing  other  and  different  language  from  that  employed  in 
the  policy  in  that  case,  and  what  is  said  in  it  is  not  applicable  to  this. 
It  ma}-  be  well  to  note  that  the  case  of  Insurance  Co.  v.  Clarke  is  in. 
conflict  with  the  construction  placed  by  a  number  of  the  ablest  courts 
in  America  upon  the  identical  language  construed  in  it.  Judge  v.  In- 
surance Co.,  132  Mass.  521,  and  authorities  therein  cited.  .  .  .  As  has 
been  so  often  said  by  courts,  forfeitures  are  not  favored  by  the  law,  and 


638      LAMPASAS  HOTEL  AND  PARK  CO.  V.  PHCENIX  INS.  CO.      [CITAP.  VL 

the  language  of  an  insurance  policy  will  not,  by  judicial  construction,  be 
given  sufficient  elasticity  to  encompass  a  forfeiture,  but  the  language 
used  must  plainly  show  that  a  forfeiture  was  intended  by  the  parties  to 
the  contract  to  result  in  certain  contingencies.  We  are  of  the  opinion 
that  under  the  facts  appellant  was  entitled  to  a  judgment,  and  the  judg- 
ment of  the  District  Court  is  therefore  reversed,  and  judgment  here  ren- 
dered in  favor  of  appellant  for  the  amount  sued  for,  as  well  as  interest 
and  costs. ^ 

1  Ace:  Sun  Fire  Office  v.  Clark,  53  Ohio  St.  414  (1895);  Koshland  v.  Hartford 
Ins.  Co.,  31  Ore.  402  (1897)  ;  Peck  v.  Girard  F.  &  M.  Ins.  Co.,  16  Utah,  121  (1897). 

Contra:  Edmands  v.  Mutual  Safety  F.  Ins.  Co.,  1  Allen,  311  (1861);  Sossainan  v. 
Pamlico  Banking  &  Ins.  Co.,  78  N.  Car.  145  (1878). 

See  Ayres  v.  Hartford  F.  Ins.  Co.,  17  Iowa,  176  (1864). 

In  Sun  Fire  Office  v   Clark,  supra,  Minshall,  C.  J.,  for  the  court,  said  :  — 

"  It  seems  well  settled  in  this  state  and  elsewliere,  that  the  making  of  a  mortgage 
does  not  violate  a  provision  in  a  policy  of  insurance,  that  any  ciiauge  in  the  title, 
interest,  or  possession  of  the  assured  in  the  property,  without  the  assent  of  the  insurer, 
shall  avoid  the  policy. 

"The  mortgage  being  simply  a  security  for  the  debt,  is  extinguished  by  its  payment 
without  any  re-conveyance.  The  mortgage  of  itself  does  not  make  the  mortgagee  a 
freeholder,  and  a  judgment  recovered  against  hira  does  not  become  a  lien  on  the  land, 
nor  is  it  liable  to  the  dower-rights  of  his  wife.  It  has  none  of  the  incidents  of  a  legal 
or  equitable  title.  True,  upon  foreclosure  and  sale,  the  mortgagee  may  by  purchase 
at  tlie  sale  become  the  owner  of  the  land  ;  but  this  is  a  right  he  enjoys  in  common  with 
all  others.  It  is  also  true,  that  as  between  the  mortgagor  and  mortgagee,  the  latter, 
on  condition  broken,  is  regarded  as  the  legal,  but  not  as  the  equitable  owner.  The 
mortgagor  remains  the  equitable  owner  until  the  property  is  sold  under  the  order  of 
the  court.  Until  then,  he  may,  by  paying  the  debt,  redeem  the  land.  So  that  his 
insurable  interest  in  the  property  remains  the  same — which  is  the  interest  meant  by 
the  use  of  the  word  in  the  language  of  the  policy,  where  it  occurs.  If  lost^by  fire  he 
remains  liable  on  the  debt,  and  has,  by  reason  of  the  loss,  so  much  the  less  property 
with  which  to  pay  it.  Hence,  he  has  the  same  interest  in  its  preservation  after  as 
before  making  the  mortgage  ;  and  the  moral  hazard  of  the  insurer  is  not  increased. 
Byers  v.  Insurance  Co.,  35  Ohio  St.  606;  Kronk  v.  Insurance  Co.,  91  Pa.  St.  300 
Insurance  Co.  v.  Stinson,  103  U.  S.  25,  29;  Barry  v.  Insurance  Co.,  110  N.  Y.  1 
Judge  V.  Insurance  Co.,  132  Mass.  521  ;  Bryan  v.  Insurance  Co.,  145  Mass.  389;  In 
surance  Co.  v.  Spankneble,  52  111.  53 ;  Insurance  Co.  v.  Lawrence,  2  Peters  Rep.  25 
Jecko  V.  Insurance  Co.,  7  Mo.  App.  308 ;  Guest  v.  Insurance  Co.,  66  Mich.  98 ;  May 
on  Insurance,  sec.  272. 

"  Tha  general  current  of  authority  is  in  accordance  with  these  cases ;  and  while  a 
different  view  has  been  taken  by  the  courts  of  some  of  the  states,  it  will  be  found 
that,  as  a  rule,  this  has  proceeded  from  the  old  conception  that  a  mortgage  is  to  be 
regarded  as  a  conveyance ;  or  from  a  more  rigid  adherence  to  the  terms  of  the  policy, 
in  disregard  of  the  rule  that  provisions  imposing  forfeitures  should  be  strictly 
construed. 

"  In  giving  effect  to  the  language  of  any  instrument,  regard  must  be  had  to  its 
purpose.  A  mere  change  in  title,  where  the  owner  retains  the  same  actual  interest  in 
the  property  —  the  same  insurable  interest  —  is  not  within  the  reason  of  the  language 
employed.  The  object  of  the  provision  containing  the  language  was  to  protect  the 
insurer  against  a  possible  change  in  the  owner's  insurable  interest  in  the  property  by 
a  sale,  transfer,  or  conveyance,  wliereby  the  hazards  of  the  contract  into  which  he 
had  entered  might  be  increased  without  his  consent.  Hence,  the  generality  of  the 
language  employed  must  be  restrained  to  the  reason  and  object  of  its  use  by  the  par- 
ties.   To  do  otherwise  would  be  to  stick  in  the  letter  of  the  language  employed  by 


SECT.  II.]      LAMPASAS  HOTEL  AND  PARK  CO.  V.  PHCENIX  INS.  CO.        639 

the  parties  to  express  their  meaning,  without  regard  to  its  spirit.     Mav  on  Insur-iuce. 
sec.  273  ;  Avres  v.  Insurance  Co.,  17  Iowa,  176,  18.5." 
On  alienation  and  the  like,  in  general,  see  also:  — 

Adams  t:  Kockiughara  iMut.  F.  Ins.  Co.,  29  Me.  292  (1849) ; 

Pitney  r.  Glens  Falls  Ins.  Co.,  65  N.  Y.  6,  26-27  (187.5)  ; 

Keeney  v.  Home  Ins.  Co.,  71  N.  Y.  396  (1877) ; 

Manufacturers'  F.  &  M.  Ins.  Co.  v.  Western  Assurance  Co.,  U5  Mass.  419  (1888)  ; 

Brown  v.  Cotton  and  Woolen  Mfrs.'  Mut.  Ins.  Co.,  156  Mass  587  (1892) ; 

Geriing  v.  Agricultural  Ins.  Co.,  39  W.  Va.  689,  698-701  (1892J ; 

Lodge  V.  Capital  Ins.  Co.,  91  Iowa,  103,  106-107  (1894); 

Orr  V.  Hanover  F.  Ins.  Co.,  158  El.  149  (1895) ; 

Milwaukee  Trust  Co.  v.  Lancashire  Ins.  Co.,  95  Wis.  192  (1897) ; 

Pioneer  S.  &  L.  Co.  v.  St.  Paul  F.  &  M.  Ins.  Co.,  68  Minn.  170  (1897)  j 

Westchester  F.  lus.  Co.  v.  Jenniugs,  70  111.  App.  539  (1897).  —Ed. 


G40  NIGHTINGALE   V.   STATE   MUTUAL   LIFE   INS.   CO.      [CHAP.  YL 

SECTION  III. 
Life  Insurance.^ 

NIGHTINGALE  and  Another,  Executors,  v.  STATE  MUTUAL 

LIFE   INS.  CO. 

Supreme  Court  of  Rhode  Island,  1857.     5  R.  I.  38.^ 

Assumpsit  bj'  the  executors  of  the  Rt.  Rev.  J.  P.  K.  Henshaw, 
Bishop  of  Rhode  Island,  to  recover  the  amount  of  a  policy  upon  the 
testator's  life.  The  policj'  took  effect  April  1,  1848,  and  the  annual 
premiums  were  paid  until  the  testator's  death,  which  occurred  July  20, 
1852.  The  policy  provided  that:  "The  person  whose  life  is  thus  as- 
sured may  reside  constantly  anywhere  within  the  limits  of  New  Eng- 
land, or  of  the  states  of  New  York,  New  Jersey,  Pennsylvania,  and 
Ohio ;  ...  if  such  person  .  .  .  shall,  between  the  first  day  of  July 
and  the  fifteenth  day  of  October,  go  into  any  other  portion  of  the 
United  States,  beyond  the  limits  of  constant  residence  permitted 
herein,  and  be  in  such  other  portions  of  the  United  States  more  than 
five  days,  .  .  .  this  polic}'  shall  be  void,  and  all  payments  thereon 
forfeited  to  the  compau}' ;  but  in  case  of  forfeiture  from  the  above  or 
any  other  cause,  the  part\^  interested  shall  have  the  benefit  of  such 
equitable  adjustment  as  ma}-,  from  time  to  time,  be  provided  for  by 
the  board  of  directors." 

In  July,  1852,  the  testator  went  to  Maryland,  to  exercise  temporaril}' 
the  episcopal  functions  of  an  absent  bishop.  After  being  thus  engaged 
for  about  ten  days,  he  was  stricken  with  apoplexy,  and  died.  The  death 
was  neither  caused  nor  hastened  b\'  change  of  climate,  but  was  due 
exclusively'  to  constitutional  causes.  The  executors  applied  to  the 
board  of  directors  for  the  whole  or  some  portion  of  the  sum  insured, 
as  a  matter  of  equitable  adjustment.  The  directors  voted  to  pa}'  the 
office  value  for  surrender  of  the  policy,  viz.  $169.65.  The  executors 
did  not  accept  this  offer,  but  brought  action  for  $1,500,  the  amount 
of  the  policy.  By  agreement,  the  case  was  submitted  to  the  court  both 
as  to  law  and  as  to  facts. 

T.  A  Jenckes,  for  the  plaintiffs. 

Abraham  Payne,  for  the  defendants. 

Ames,  C.  J.  It  is  admitted  that  the  late  Bishop  Henshaw  did, 
without  consent  of  the  defendant  company  issuing  this  policy,  "■  first 
had  and  indorsed  thereon,"  and  between  the  1st  day  of  July  and  the 
15th  day  of  October,  1852,  go  into  the  state  of  Maryland,  a  portion  of 

1  For  express  conditions  avoiding  the  contract  because  of  misstatements  in  the 
application,  see  ante,  Chap.  V.,  sect.  III.  —  Ed. 

2  The  statement  has  been  rewritten.  —  Ed. 


SECT.  III.]       HAMMOND    V.    AMERICAN   MUTUAL    LIFE    INS.    CO.  641 

the  United  States  beyond  the  limits  of  constant  residence  permitted  by 
the  policy,  and  there  remain  more  than  five  days,  to  wit,  about  ten 
days,  at  the  end  of  which  period,  and  about  the  20th  day  of  July  of 
that  year,  he  died.  The  holy  errand  on  which  he  went,  the  absence  of 
all  connection  between  his  going  and  remaining,  and  the  cause  of  his 
deathTai'G  not  permitted  to  swerve  our  judgment  TT'om  the  legal  effect 
ot"so  pTaJhTirbreach  of  a  condition  oflhls  poli(oviipj3ji_the_occumng  of 
which  j^t  is^by  its  own  tei;ms,  '^  to  be  void,  and  all  payments  thereon 
to  be  forfeited  to  the  company."  It  is  true,  that  by  the  qualifying 
clause  of  the  condition  of  forfeitureTthe  executors  of  the  assured  would 
have  been  entitled  to  the  benefit  of  any  equitable  adjustment  provided 
for  by  existing  rules  established  by  the  directors,  or  accorded  by  their 
special  act.  Whether  such  rules  should  be  established,  or  such  special 
dispensation  from  the  forfeiture  should  be  granted,  was,  as  it  seems  to 
us,  left  by  this  qualifying  clause  wholly  to  the  discretion  of  the  direct- 
ors, who  "  from  time  to  time  "  might  act  in  the  matter  ;  except  indeed, 
that  they  would  not  be  permitted  to  change,  to  the  injury  of  the  as- 
sured, an  established  rule  of  adjustment  existing  at  the  time  of  the 
act  or  omission  of  forfeiture.  The  construction  which  supposes  that 
such  discretion  was  designed  by  both  parties  to  the  contract  to  be 
reposed  in  the  directors,  as  fair  arbiters  for  all  interested,  borrows  sup- 
port from  the  fact,  that,  under  the  charter  of  this  company,  the  direct- 
ors are  elected  b}"  the  joint  votes  of  the  assured  and  holders  of  the 
guaranty  stock,  and  are  to  be  chosen  in  moieties,  out  of  these  two 
classes  of  the  members  of  the  corporation.  No  rule  of  equitable  ad- 
justment applicable  to  the  case  at  bar  appears  to  have  been  established 
by  the  directors  of  this  company,  and  the  request  made  to  tliem  by  the 
claimants  for  special  action  in  their  favor  was,  upon  full  consideration, 
rejected.  We  cannot  interfere  with  their  discretion  in  this  matter  with- 
out doing  violence  to  the  contract  upon  which  we  are  called  to  adjudi- 
cate, and  must  therefore  render 

Judgment  for  the  defendants} 


HAMMOND   y.    AMERICAN  MUTUAL   LIFE   INS.    CO. 

Supreme  Judicial  Court  of  Massachusetts,   1858.     10  Gray,  306. 

Action  of  contract  upon  a  policT  of  insurance,  insuring  the  life  of 
John  Hammond,  in  consideration  of  a  premium  "to  be  paid  annually 
in  advance,  during  the  term  of  this  policy,  or  half  or  quarter  yearly  in 
advance,  with  interest  on  each  portion  deferred  ; "  and  payable  to  the 
plaintiff  "  within  ninetj,'  days  after  proof  of  the  death  of  the  said  Jolin 
Hammond,  provided  this  policy  is  then  in  force."     The  pohcy  upon  its 

1  See  Hathaway  v.  Trenton  Mut.  L.  &  F.  Ins.  Co.,  11  Cush.  448  (1853).  —Ed. 

41 


642  HAMMOND    V.    AMERICAN    MUTUAL   LIFE   INS.    CO.       [CHAP.  Vl. 

face  declared  that  "in  case  the  premium  charged  hereon  shall  not  be 
paid  aniiually  in  advance,  or  half  or  quarter  yearly  in  advance,  on  or 
before  the  day,  at jipon,  on  whicli  the  same  shalMjecome  due  and  pay- 
able,"  it  should  '^  cease  and  terminate,  and  neither  Uie  whole  nor  an)' 
^arF^ofThe  sum  herein  agreed  to^^ j)aid_sball  be  due  or  tjayajde ;  " 
and  that  the  policy  was  "  granted  and  accepted  in  reference  to  all  the 
conditions  herein  contained,"  and  others  annexed.  The  "  conditions  of 
insurance"  annexed  to  the  policy,  provided  that  "  policies  are  null  and 
void  during  the  nonpayment  of  any  premium  due  ;  but  the  company 
will,  at  their  discretion,  receive  a  payment  after  due,  and  continue 
the  polic}',  if  satisfied  that  the  party  remains  in  perfect  health." 

Upon  the  back  of  the  policy  were  these  words  :  "  Premiums  payable 
1st  January;  or  1st  January  and  1st  July;  or  1st  January,  1st  April, 
1st  Jul}-,  and  1st  October,  at  noon." 

The  parties  submitted  the  case  to  the  decision  of  the  court  upon  the 
policy  and  the  following  facts  :  John  Hammond  paid  the  premiums  quar- 
ter yearly,  as  provided  by  the  policy,  and  was  taken  sick  on  the  24th 
of  September,  and  afterwards  confined  to  his  house,  but  not  thought  to 
be  past  recoverxjintil-tke_morning_of_Suuday,  October  1st,  1854,  and 
onthatjia}',  between  the  hours  of  two  and  Jourjn  the  afternnnn,  diod, 
without  having  paid  the  prenaiuia  for_the_g[uarter  which  began  on  that 
dayl  Tlie'TTefendants'  oflSce  was  not  open  on  Sunday,  and  no  one  w^as 
there  to  receive  the  premium,  but  this  was  not  known  to  the  plaintiflf, 
and  no  attempt  was  made  to  pa}-  it  until  Monda}-,  October  2d,  in  the 
forenoon,  when  it  was  tendered  and  refused.  The  death  of  the  assured 
was  notified  by  the  plaintiff  to  the  defendants  on  the  18th  of  Decem- 
ber, 1854. 

X.  Mason,  for  the  plaintiff. 

H.  A.  Scudder,  for  the  defendants. 

Dewey,  J.  There  can  be  no  doubt  as  to  the  character  of  this  con- 
tract, and  that  the  policy  would  be  forfeited  and  avoided  b}-  the  neglect 
of  the  assured  to  pay  the  premium  chargeable  thereon  at  any  quarter 
day  when  the  same  became  due  and  pa\-able.  The  policy  was  granted 
by  the  one  party  and  accepted  by  the  other  with  a  recital  therein  that 
the  same  was  to  be  taken  "in  reference  to  all  the  conditions  herein 
contained."  Among  those  conditions  it  is  provided  that  "  in  case  the 
premium  charged  hereon  shall  not  be  paid  annually  in  advance,  or  half 
or  quarter  yearly  in  advance,  on  or  before  the  day,  at  noon,  on  which 
the  same  shall  become  due  and  payable,"  then  the  same  shall  "cease 
and  terminate,  and  neither  the  whole  nor  any  part  of  the  sum  agreed 
to  be  paid  shall  be  due  or  payable." 

The  whole  inquiry  is  reduced  to  this  point,  "When  was  the  quarter 
yearly  payment  for  the  quarter  succeeding  that  commencing  on  the  1st 
of  July,  1854,  due,  and  by  law  required  to  be  paid?  Adopting  the 
proper  division  of  the  year  into  four  quarters,  and  commencing  on  the 
1st  of  April,  1854,  the  third  quarter  would  commence  on  the  1st  of 
October,  and  the  premium  to  be  paid  for  that  quarter,  irrespectively 


SECT.  III.]       HAMMOND    V.    AMERICAN   MUTUAL   LIFE    INS.    CO.  643 

of  the  circumstance  that  the  first  da}-  of  October  occurred  on  Sunday, 
would  be  required  to  be  paid  on  that  day.  The  assured  had,  however, 
until  the  1st  of  October  at  noon  to  paj*  the  premium.  He  was  not  in 
default  before  that  time,  unless  it  be  that  in  case  the  1st  of  October 
occurring  on  Sunday,  he  was  required  to  pay  the  premium  on  the 
Saturday  preceding.  The  only  question  in  the  case  seems  to  be  whether 
Sunday  is  to  be  excluded  as  a  day  of  payment,  and  the  payment  prop- 
erl}'  postponed  till  Monday,  or  whether  the  part}-,  to  save  his  policy 
from  being  forfeited,  must  make  his  quarterly  payment  on  or  before 
Saturda}-,  when  the  quarter  day  falls  on  Sunday. 

We  have  on  the  one  hand  the  rule  as  to  commercial  paper,  or  nego- 
tiable notes  payable  with  grace,  requiring  pa3-ment  to  be  made  on 
Saturday  where  the  third  day  of  grace  falls  on  Sunday  ;  and  on  the 
other  a  rule,  generally  adopted  as  to  other  contracts  to  pay  money  or 
perform  other  specific  duties  on  a  certain  day  named,  that  if  such  day 
falls  on  Sunday  the  day  of  performance  is  postponed  till  Monday. 
Salter  v.  Burt,  20  Wend.   205. 

In  reference  to  notes  payable  on  a  certain  da}-,  but  entitled  to  three 
days'  grace,  it  is  said  that  in  such  case  the  note  by  its  terms  would  be 
due  and  payable  two  days  earlier  than  Saturday,  and  that  what  was 
originally  a  mere  indulgence  to  casualty  or  oversight  should  not  be 
extended,  and  therefore  if  the  last  of  three  days  of  grace  falls  on  Sun- 
day, the  payment  must  be  made  on  Saturday,  and  that  it  was  more 
reasonable  to  take  from  than  to  add  to  a  period  of  time  thus  originally 
allowed  as  mere  grace  and  favor.  But  as  to  other  contracts,  which  by 
the  face  of  the  instrument  required  a  payment  on  a  day  which  proves 
to  be  Sunday,  to  discharge  litcmlj}:  the  promise  or  duty,  the  law  seems 
to  sanction  tJie_postponement  of  the  time  for  doing  the  same  till  the 
Mondav  fpllo^ningi.  In  other  words7^unday  is  not  a  legal  day  for  the 
performance  of  contracts  and  doing  secular  business.  The  statute 
law  forbids  all  such  acts.  The  party  paying  and  the  party  receiving 
money  on  that  day  in  discharge  of  a  contract  would  subject  themselves 
to  a  penalty  for  so  doing.  Sunday  was  not  a  day  contemplated  by 
the  parties  as  embraced  in  the  stipulation  to  pay  a  quarterly  premium 
on  the  first  day  of  October  in  each  and  every  year  during  the  life  of  the 
party  assured.  The  defendants  had  no  ofliice  open  on  that  day,  and 
were  under  no  obligation  to  receive  the  payment  of  the  premium  on 
that  day,  if  the  same  had  been  tendered  by  the  assured.  Such  being 
the  case,  the  assured  was  under  no  obligation  to  do  what  would  have 
been  not  only  an  illegal  act,  but  also  one  which  the  other  party  was 
not  bound  to  recognize.  In  this  view  of  the  case  there  was  no  such 
default  on  the  part  of  the  assured,  in  not  paying  the  premium  fully  due 
on  the  1st  of  October,  as  should  be  held  to  terminate  the  policy. 

It  is  urged  on  the  part  of  the  defendants  that  this  was  not  an  ordi- 
nary contract  to  be  performed  on  a  day  certain,  and  that  the  assured 
was  under  no  legal  obligation  to  pay  subsequent  premiums  after  the 
expiration  of  a  quarter  of  a  year ;  but  such  payment  was  a  voluntary 


644  V7ILLIAMS    V.    WASHINGTON    LIFE    INS.    CO.  [CHAP.  VI. 

act,  to  be  done  or  not  done  at  bis  election  ;  and  therefore  that  the  rule 
of  law  applied  to  a  contract  binding  a  party  to  do  some  act  at  some 
future  named  period,  which  proved  to  be  Sunday,  has  no  proper  appli- 
cation here.  But  we  think  the  rule  as  to  the  time  of  making  the  pay- 
ment is  the  same  in  both  cases.  It  was  the  purpose  of  the  assured  to 
obtain  a  policy  to  continue  during  his  life.  Such  policy  was  issued  to 
liim,  but  upon  condition  that  he  should  make  his  quarter  yearly  pay- 
ments regularly  in  advance.  It  was  obligatory  on  him  to  pay,  if  he 
would  continue  the  policy  in  force.  The  day  of  payment  was  on  this 
occasion  the  first  day  of  October.  That  day,  as  it  appears,  fell  on 
Sunday  ;  and  this  being  so,  he  was  entitled  to  the  ordinary  privilege 
of  discharging  his  obligation  on  the  Monday  following.  The  quarter 
yearly  payment,  it  is  true,  in  terms  became  payable  on  Sunday  noon  ; 
but  tiiat  day  was  not  a  day  for  secular  business,  and  therefore,  legally 
speaking,  Sunday  was  not  the  day  "at  which  the  same  become  pa}-- 
able  ;  "  and  so,  by  the  very  provisions  of  the  policy,  properly  construed, 
the  quarterly  premium  was  seasonabl}-  tendered  on  Monda3\ 

Judrjment  for  the  plaintiff.^ 


WILLIAMS   V.   WASHINGTON   LIFE   INS.   CO. 

Supreme  Court  of  Iowa,  1871.     31  Iowa,  541. ^ 

Appeal  from  Dubuque  Circuit  Court. 

The  action  was  upon  a  policy  of  insurance  procured  by  Mary  F. 
Williams  upon  her  own  life  for  the  benefit  of  her  daughter,  Isabella 
Williams.  After  paying  an  initial  premium  of  $16.66  and  one  quar- 
terly premium  of  $16.67,  Mary  F.  Williams  surrendered  the  policy  in 
consideration  of  the  receipt  of  $40.00.  She  died  shorth'  after  the  next 
quarterly  premium  would  have  been  payable ;  but  it  was  not  paid. 
The  action  was  brought  by  Isabella  Williams.  Under  instructions  the 
jury  found  for  the  plaintiff.     The  defendant  appealed. 

/SMras,  Van  Duzee  &  Henderson,  for  the  appellant. 

Adams  <fc  Robinson,  for  the  appellee. 

Cole,  J.  The  court  instructed  the  jury  that,  "  b}-  the  terms  of  the 
polic}',  a  mere  omission  to  pay  the  premiums  when  due  would  not  alone 
work  a  forfeiture ;  if  a  forfeiture  of  the  policy  is  claimed  for  the  non- 
payment of  premiums,  it  must  be  shown  that  an  agent  of  the  compan\' 
presented  a  receipt  for  the  i)remiums  to  a  person  liable  to  pay  it,  and 
such  person  refused  or  neglected  to  make  the  payment  thereof."  This 
is  assigned  as  error. 

The  language  of  the  policy  is  :  "If  the  said  premiums  shall  not  be 

1  Ace:  Campbell  v.  International  L.  Ass.  Co.,  4  Bosworth,  298  (1859).  — Ed. 

2  The  statement  has  been  rewritten.  —  £d. 


SECT.  III.]  NEW   YORK   LIFE   INS.   CO.   V.  STATHAM.  G45 

paid  on  or  before  the  days  above  mentioned  for  the  paj-ment  thereof, 
at  the  office  of  the  company  in  the  city  of  New  York  (unless  otlierwise 
expressly  agreed  in  writing),  or  to  the  agents  when  they  produce 
receipts  signed  by  the  president  and  secretary,  then,  and  in  every  such 
case,  the  company  shall  not  be  liable  for  the  payment  of  the  sum 
insured  or  any  part  thereof,"  etc.  In  our  view,  the  true  construction 
of  this  clause  of  the  policy  is,  that  the  premiums  are  to  be  paid  on  the 
days  fixed  by  the  policy  (as  amended  by  tlie  agreement  for  quarterh' 
payments)  in  any  event ;  and  the  assured  might  pay,  on  those  days, 
either  at  the  office  of  the  company  in  New  York,  or  to  agents  ;  but  the 
payment  could  only  be  made  to  such  agents  as  should  have  and  pro- 
duce receipts  therefor  signed  by  the  president  or  secretary  —  the 
receipts  thus  signed  being  evidence  of  the  authority  of  the  agents  to 
receive  the  premiums. 

This  construction  is  in  accord  with  the  plain  and  ordinary  meaning 
of  the  language  used,  with  the  uniform  rule  of  insurance,  requiring 
prompt  and  advance  payments,  andwith  even  a  technical  construction  of 
the  language.  The  policy  fixes  the  time  for  payment,  and  then  says  it 
may  be  made  to  the  company  or  to  agents  when  they  produce  receipts, 
etc.*  TF7ien  means  at  tohich  time  {Bouv.  Law  Die).  Payment  ma}-, 
therefore,  be  made  to  the  company  at  the  time  fixed,  or  to  agents  at 
u-hich  time,  to  wit :  the  time  fixed  in  the  policj'  for  the  payment,  they 
producing  receipts,  etc. 

It  being  conceded  that  the  premiums  due  on  September  1  and  Decem- 
ber  1 ,  1869,  were  without  excuse  not  paid  nor  offered  t^  bepaid,  it  is  fatal 
to  plaintiff's  case.  We  need  not,  therefore,  inquire  whether  the  mother 
could  or  could  not  for  a  consideration  surrender  or  cancel  the  policy. 
It  having  been  done,  and  no  objection  made  to  it,  no  premiums  paid 
or  act  done  or  claim  made  under  the  policy  until  after  the  death  of 
the  assured,  the  plaintiff  cannot  recover.  It  was  error  to  give  the 
instruction.  Keversed. 


NEW  YORK   LIFE  INS.   CO.   v.    STATHAM   et  al. 

SAME   V.   SEYMS. 

MANHATTAN  LIFE  INS.   CO.   v.   BUCK,   Executor. 

Supreme  Court  of  the  United  States,  1876.     93  U.  S.  24. 

The  first  of  these  cases  is  here  on  appeal  from,  and  the  second  and 
third  on  writs  of  error  to,  the  Circuit  Court  of  the  United  States  for 
the  Southern  District  of  Mississippi. 

The  first  case  is  a  bill  in  equity,  filed  to  recover  the  amount  of  a 
policy  of  life  assurance,  granted  by  the  defendant  (now  appellant)  in 
1851,  on  the  life  of  Dr.  A.  D.  Statham,  of  Mississippi,  from  the  pro- 
ceeds  of  certain  funds  belonging   to  the  defendant  attached  in  the 


g46  NEW   YORK   LIFE   INS.    CO.    V.    STATHAM.  [CHAP.  VI. 

hands  of  its  agent  at  Jackson,  in  that  state.  It  appears  from  the 
statements  of  the  bill  that  the  annual  premiums  accruing  on  the  policy 
were  all  regularly  paid,  until  the  breaking  out  of  the  late  civil  war, 
but  that,  in  consequence  of  that  event,  the  premium  due  on  the  8th  of 
December,  1861,  was  not  paid;  the  parties  assured  being  residents 
of  Mississippi,  and  the  defendant  a  corporation  of  New  York.  Dr. 
Statham  died  in  July,  18G2. 

The  second  case  is  an  action  at  law  against  the  same  defendant  to 
recover  the  amount  of  a  policy  issued  in  1859  on  the  life  of  Henry  S. 
Seyms,  the  husband  of  the  plaintiff.  In  this  case,  also,  the  premiums 
had  been  paid  until  the  breaking  out  of  the  war,  when,  by  reason 
thereof,  they  ceased  to  be  paid,  the  plaintiff  and  her  husband  being 
residents  of  Mississippi.     He  died  in  May,  18G2. 

The  third  case  is  a  similar  action  against  the  Manhattan  Life  lusnr- 
ance  Company  of  New  York,  to  recover  the  amount  of  a  policy  issued 
b}'  it  in  1858,  on  the  life  of  C.  L.  Buck,  of  Vicksburg,  Miss.  ;  the  cir- 
cumstances being  substantially  the  same  as  in  the  other  cases. 

Each  polic}'  is  in  the  usual  form  of  such  an  instrument,  declaring 
that  the  company,  in  consideration  of  a  certain  specified  sum  to  it  in 
hand  paid  by  the  assured,  and  of  an  annual  premium  of  the  same 
amount  to  be  paid  on  the  same  day  and  month  in  ^ver^'  j-ear  during 
the  continuance  of  the  policy,  did  assure  the  life  of  the  party  named, 
in  a  specified  amount,  for  the  term  of  his  natural  life.  Each  contained 
various  conditions,  upon  the  breach  of  which  it  was  to  be  null  and 
void;  and  amongst  others  the  following:  "That  in  case  the  said 
[assured]  shall  not  pa}'  the  said  premium  on  or  before  the  several 
days  hereinbefore  mentioned  for  the  payment  thereof,  then  and  in 
every  such  case  the  said  company  shall  not  be  liable  to  the  payment 
of  the  sum  insured,  or  in  any  part  thereof,  and  this  policy  shall  cease 
and  determine."  The  Manhattan  policy  contained  the  additional  pro- 
vision, that,  in  every  case  where  the  policy  should  cease  or  become 
null  and  void,  all  previous  payments  made  thereon  should  be  forfeited 
to  the  company. 

The  non-payment  of  the  premiums  in  arrear  was  set  up  in  bar  of  the 
actions  ;  and  the  plaintiffs  respectively  relied  on  the  existence  of  the 
war  as  an  excuse,  offering  to  deduct  the  premiums  in  arrear  from 
the  amounts  of  the  policies. 

The  decree  and  judgments  below  were  against  the  defendants. 

Mr.  31att.  H.  Carpenter  and  Mr.  James  A.  Garfield,  for  the  appel- 
lant in  the  first  case,  and  for  the  plaintiff  in  error  in  the  second.  The 
third  case  was  submitted  by  Mr.  Alfred  Pitman  for  the  plaintiff  in 
error. 

Mr.  Clinton  L.  Rice^  for  the  appellees  in  the  first  case,  and  Mr. 
Joseph  Casey^  for  the  defendant  in  error  in  the  second.  The  third 
case  was  submitted  by  Mr.   W.  P.  Harris,  for  the  defendant  in  error. 

Mr.  Justice  Bradley,  after  stating  the  case,  delivered  the  opinion 
of  the  court. 


SECT.  III.]  NEW   YORK   LIFE   INS.   CO.    V.   STATHAM.  647 

We  agree  with  the  court  below,  that  the  contract  is  not  an  assurance 
for  a  single  3'ear,  with  a  privilege  of  renewal  from  year  to  3'ear  b}'  pav- 
ing the  annual  premium,  but  that  it  is  an  entire  contract  of  assurance 
for  life,  subject  to  discontinuance  and  forfeiture  for  non-paj'ment  of 
au}^  of  the  stipulated  premiums.  Such  is  the  form  of  the  contract,  and 
such  is  its  character.  It  has  been  contended  that  the  payment  of  each 
premium  is  the  consideration  for  insurance  during  the  next  following 
year,  —  as  in  fire  policies.  But  the  position  is  untenable.  It  often 
happens  that  the  assured  pays  the  entire  premium  in  advance,  or  in 
five,  ten,  or  twenty  annual  instalments.  Such  instalments  are  clearl}^ 
not  intended  as  the  consideration  for  the  respective  yeai's  in  which 
they  are  paid ;  for,  after  they  are  all  paid,  the  policy  stands  good  for 
the  balance  of  the  life  insured,  without  any  further  payment.  Each 
instalment  is,  in  fact,  part  consideration  of  the  entire  insurance  for 
life.  It  is  the  same  thing,  where  the  annual  premiums  are  spread  over 
the  whole  life.  The  value  of  assurance  for  one  3-ear  of  sC  man's  life 
when  he  is  young,  strong,  and  healthy,  is  manifestly  not  the  same  as 
when  he  is  old  and  decrepit.  There  is  no  proper  relation  between  the 
annual  premium  and  the  risk  of  assurance  for  the  year  in  which  it  is 
paid.  This  idea  of  assurance  from  j-ear  to  year  is  the  suggestion  of 
ingenious  counsel.  The  annual  premiums  are  an  aunuitj',  the  present 
value  of  which  is  calculated  to  correspond  with  the  present  value  of 
the  amount  assured,  a  reasonable  percentage  being  added  to  the  pre- 
miums to  cover  expenses  and  contingencies.  The  whole  premiums  are 
balanced  against  the  whole  insurance. 

But  whilst  this  is  true,  it  must  be  conceded  that  promptness  of  pav- 
ment  is  essential  in  the  business  of  life  insurance.  All  the  calculations 
of  the  insurance  company  are  based  on  the  hypothesis  of  prompt  pay- 
ments. They  not  only  calculate  on  the  receipt  of  the  premiums  when 
due,  but  on  compounding  interest  upon  them.  It  is  on  this  basis  that 
they  are  enabled  to  offer  assurance  at  the  favorable  rates  the}-  do. 
Forfeiture  for  non-payment  is  a  necessary  means  of  protecting  them- 
selves from  embarrassment.  Unless  it  were  enforceable,  the  business 
would  be  thrown  into  utter  confusion.  It  is  like  the  forfeiture  of 
shares  in  mining  enterprises,  and  all  other  hazardous  undertakijigs. 
There  must  be  power  to  cut  off  unprofitable  members,  or  the  success  of 
the  whole  scheme  is  endangered.  The  insured  parties  are  associates 
in  a  great  scheme.  This  associated  relation  exists  whether  the  com- 
pany be  a  mutual  one  or  not.  Each  is  interested  in  the  engagements 
of  all ;  for  out  of  the  coexistence  of  many  risks  arises  the  law  of  aver- 
age, which  underlies  the  whole  business.  An  essential  feature  of  this 
scheme  is  the  mathematical  calculations  referred  to,  on  which  the 
premiums  and  amounts  assured  are  based.  And  these  calculations, 
again,  are  based  on  the  assumption  of  average  mortalit}',  and  of 
prompt  payments  and  compound  interest  thereon.  Delinquencv  can- 
not be  tolerated  nor  redeemed,  except  at  the  option  of  the  companv. 
This  has  always  been  the  understanding  and  the  practice  in  this  de- 


648 


NEW    YOKK    LIFE    INS.    CO.    V.    STATHAM.  [CIIAP.  VI. 


partment  of  business.  Some  companies,  it  is  true,  accord  a  grace  of 
thirty  days,  or  otlier  fixed  period,  witliin  wliicli  the  premium  in  arrear 
may  be  paid,  on  certain  conditions  of  continued  gootl  health,  &c.  But 
this  is  a  matter  of  stipulation,  or  of  discretion,  on  the  part  of  tlie  par- 
ticular company.  When  no  stipulation  exists,  it  is  the  general  under- 
standing that  time  is  material,  and  that  the  forfeiture  is  absolute  if  the 
premium  be  not  paid.  The  extraordinary  and  even  desperate  efforts 
sometimes  made,  when  an  insured  person  is  in  extremis,  to  meet  a 
premium  coming  due,  demonstrates  the  common  view  of  this  matter. 

The  case,  therefore,  is  one  in  which  time  is  material  and  of  the 
essence  of  the  contract.  Non-payment  at  the  day  involves  absolute 
forfeiture,  if  such  be  the  terms  of  the  contract,  as  is  the  case  here. 
Courts  cannot  with  safety  vary  the  stipulation  of  the  parties  by 
introducing  equities  for  the  relief  of  the  insured  against  their  own 
negligence. 

But  thet!ourt  below  bases  its  decision  on  the  assumption  that,  when 
performance  of  the  condition  becomes  illegal  in  consequence  of  the  prev- 
alence of  public  war,  it  is  excused,  and  forfeiture  does  not  ensue.  It 
supposes  the  contract  to  have  been  suspended  during  the  war,  and  to 
have  revived  with  all  its  force  when  the  war  ended.  Such  a  suspension 
and  revival  do  take  place  in  the  case  of  ordinary  debts.  But  have  they 
ever  been  known  to  take  place  in  the  case  of  executory  contracts  in  which 
time  is  material?  If  a  Texas  merchant  had  contracted  to  furnish  some 
Northern  explorer  a  thousand  cans  of  preserved  meat  by  a  certain  day, 
so  as  to  be  ready  for  his  departure  for  the  North  Pole,  and  was  pre- 
vented from  furnishing  it  by  the  civil  war,  would  the  contract  still  be 
good  at  the  close  of  the  war  five  years  afterwards,  and  after  the  return 
of  the  expedition  ?  If  the  proprietor  of  a  Tennessee  quarry  had  agreed, 
in  1860,  to  furnish,  during  the  two  following  years,  ten  thousand  cul:)ic 
feet  of  marble,  for  the  construction  of  a  building  in  Cincinnati,  could 
he  have  claimed  to  perform  the  contract  in  1865,  on  the  ground  that 
the  war  prevented  an  earlier  performance  ? 

The  truth  is,  that  the  doctrine  of  the  revival  of  contracts  suspended 
during  the  war  is  one  based  on  considerations  of  equity  and  justice, 
and  cannot  be  invoked  to  revive  a  contract  which  it  would  be  unjust 
or  inequitable  to  revive. 

In  the  case  of  life  insurance,  besides  the  materiality  of  time  in  the 
performance  of  the  contract,  another  strong  reason  exists  why  the 
policy  should  not  be  revived.  The  parties  do  not  stand  on  equal 
ground  in  reference  to  such  a  revival.  It  would  operate  most  unjustly 
against  the  company.  The  business  of  insurance  is  founded  on  the 
law  of  averages  ;  that  of  life  insurance  eminently  so.  The  average 
rate  of  mortality  is  the  basis  on  which  it  rests.  By  spreading  their 
risks  over  a  large  number  of  cases,  the  companies  calculate  on  this 
average  with  reasonable  certainty  and  safety.  Anything  that  in- 
terferes with  it  deranges  the  security  of  the  business.  If  every 
policy  lapsed  by  reason  of  the  war  should  be  revived,   and  all  the 


SECT.  III.]  NEW   YOKE    LIFE    INS.    CO.    V.    STATHAM.  649 

back  premiums  should  be  paid,  the  companies  would  have  the  bene- 
tit  of  this  average  amount  of  risk.  But  the  good  risks  are  never 
heard  from  ;  only  the  bad  are  sought  to  be  revived,  where  the  person 
insured  is  either  dead  or  dying.  Those  in  health  can  get  new  policies 
cheaper  than  to  pay  arrearages  on  the  old.  To  enforce  a  revival  of 
the  bad  cases,  whilst  the  company  necessarily  lose  the  cases  which 
are  desirable,  would  be  manifestly  unjust.  An  insured  person,  as 
before  stated,  does  not  stand  isolated  and  alone.  His  case  is  con- 
nected with  and  co-related  to  the  cases  of  all  others  insured  by  the 
same  company.  Tlie  nature  of  the  business,  as  a  whole,  must  be 
looked  at  to  understand  the  general  equities  of  the  parties. 

We  are  of  opinion,  therefore,  that  an  action  cannot  be  maintained 
for  the  amount  assured  on  a  policy  of  life  insurance  forfeited,  like 
those  in  question,  by  non-payment  of  the  premium,  even  though  the 
payment  was  prevented  by  the  existence  of  the  war. 

The  question  then  arises,  Must  the  insured  lose  all  the  money  which 
has  been  paid  for  premiums  on  their  respective  policies?  If  they 
must,  the}'  will  sustain  an  equal  injustice  to  that  which  the  companies 
-would  sustain  by  reviving  the  policies.  At  the  very  first  blush,  it 
seems  manifest  that  justice  requires  that  they  should  have  some  com- 
pensation or  return  for  the  mone}'  already  paid,  otherwise  the  com- 
panies would  be  the  gainers  from  their  loss  ;  and  that  from  a  cause 
for  which  neither  party  is  to  blame.  The  case  may  be  illustrated 
thus:  Suppose  an  inhabitant  of  Georgia  had  bargained  for  a  house, 
situated  in  a  Northern  city,  to  be  paid  for  by  instalments,  and  no 
title  to  be  made  until  all  the  instalments  were  paid,  with  a  condition 
that,  on  the  failure  to  pay  any  of  the  instalments  when  due,  the  con- 
tract should  be  at  an  end,  and  the  previous  payments  forfeited  ;  and 
suppose  that  this  condition  was  declared  by  the  parties  to  be  abso- 
lute and  the  time  of  payment  material.  Now,  if  some  of  the  instal- 
ments were  paid  before  the  war,  and  others  accruing  during  the  war 
were  not  paid,  the  contract,  as  an  executory  one,  was  at  an  end. 
If  the  necessities  of  the  vendor  obliged  him  to  avail  himself  of  the 
condition,  and  to  resell  the  property  to  another  party,  would  it  be 
just  for  him  to  retain  the  money  he  had  received?  Perhaps  it  might 
be  just  if  the  failure  to  pay  had  been  voluntarj',  or  could,  by  possi- 
bility, have  been  avoided.  But  it  was  caused  by  an  event  beyond 
the  control  of  either  party, — an  event  which  made  it  unlawful  to 
pav.  In  such  case,  whilst  it  would  be  unjust,  after  the  war,  to  en- 
force the  contract  as  an  executory  one  against  the  vendor,  contrary 
to  his  will,  it  would  be  equally  unjust  in  him,  treating  it  as  ended, 
to  insist  upon  the  forfeiture  of  the  money  already  paid  on  it.  An 
equitable  right  to  some  compensation  or  return  for  previous  payments 
would  clearh'  result  from  the  circumstances  of  the  case.  The  money 
paid  by  the  purchaser,  subject  to  the  value  of  any  possession  which 
he  may  have  enjoyed,  should,  ex  ceguo  et  bono,  be  returned  to  him. 
This  would  clearly  be  demanded  by  justice  and  right. 


650  NEW   YORK   LIFE    INS.    CO.    V.    STATIIAM.  [CHAP.  VI. 

And  so,  m  the  present  case,  whilst  the  insurance  company  has  a 
rio-ht  to  insist  on  the  materiality  of  time  in  the  condition  of  payment 
of  premiums,  and  to  hold  the  contract  ended  by  reason  of  non-pay- 
ment, they  cannot  with  any  fairness  insist  upon  the  condition,  as  it 
reo-ards  the  forfeiture  of  the  premiums  already  paid  ;  that  would  be 
clearly  uujust  and  inequitable.  The  insured  has  an  equitable  right 
to  have  this  amount  restored  to  him,  subject  to  a  deduction  for  the 
value  of  the  assurance  enjoyed  by  him  whilst  the  policy  was  in  exist- 
ence ;  in  other  words,  he  is  fairly  entitled  to  have  the  equitable  value 
of  his  polic}'. 

As  before  suggested,  the  annual  premiums  are  not  the  consideration 
of  assurance  for  the  year  in  which  they  are  severally  paid,  for  they  are 
equal  in  amount;  whereas,  the  risk  in  the  early  years  of  life  is  much 
less  than  in  the  later.  It  is  common  knowledge,  that  the  annual  pre- 
miums are  increased  with  the  age  of  the  person  applying  for  insurance. 
According  to  approved  tables,  a  person  becoming  insured  at  twenty- 
five  is  charged  about  twenty  dollars  annual  premium  on  a  policy  of 
one  thousand  dollars,  whilst  a  person  at  forty-five  is  charged  about 
thirty-eight  dollars.  It  is  evident,  therefore,  that,  when  the  younger 
person  arrives  at  forty-five,  his  policy  has  become,  by  reason  of  his 
previous  payments,  of  considerable  value.  Instead  of  having  to  pay, 
for  the  balance  of  his  life,  thirt3--eight  dollars  per  annum,  as  he  would 
if  he  took  out  a  new  policy  on  which  nothing  had  been  paid,  he  has 
only  to  pay  twenty  dollars.  The  difference  (eighteen  dollars  per 
annum  during  his  life)  is  called  the  equitable  value  of  his  policy. 
The  present  value  of  the  assurance  on  his  life  exceeds  by  this  amount 
what  he  has  yet  to  pay.  Indeed,  the  company,  if  well  managed,  has 
laid  aside  and  invested  a  reserve  fund  equal  to  this  equitable  value,  to 
be  appropriated  to  the  payment  of  his  policy  when  it  falls  due.  This 
reserve  fund  has  grown  out  of  the  premiums  already  paid.  It  belongs, 
in  one  sense,  to  the  insured  who  has  paid  them,  somewhat  as  a  deposit 
in  a  savings-bank  is  said  to  belong  to  the  person  who  made  the  de- 
posit. Indeed,  some  life-insurance  companies  have  a  standing  regula- 
tion by  which  they  agree  to  pay  to  any  person  insured  the  equitable 
value  of  his  policy  whenever  he  wishes  it ;  in  other  words,  it  is  due 
on  demand.  But  whether  thus  demandable  or  not,  the  poUcy  has  a 
real  value  corresponding  to  it,  —  a  value  on  which  the  holder  often 
realizes  money  by  borrowing.  The  careful  capitalist  does  not  fail  to 
see  that  the  present  value  of  the  amount  assured  exceeds  the  present 
value  of  the  annuity  or  annual  premium  yet  to  be  paid  by  the  assured 
party.  The  present  value  of  the  amount  assured  is  exactly  repre- 
sented by  the  annuity  which  would  have  to  be  paid  on  a  new  policy ; 
or,  thirty-eight  dollars  per  annum  in  the  case  supposed,  where  the 
party  is  forty-five  years  old  ;  whilst  the  present  value  of  the  premiums 
yet  to  be  paid  on  a  policy  taken  by  the  same  person  at  twenty-five 
is  but  little  more  than  half  that  amount.  To  forfeit  this  excess,  which 
fairly  belongs  to  the  assured,  and  is  fairly  due  from  the  company,  and 


SECT.  III.]  NEW   YORK   LIFE   INS.    CO.   V.   STATHAM. 


651 


which  the  latter  actually  has  in  its  coffers,  and  to  do  this  for  a  cause 
beyond  individual  control,  would  be  rank  injustice.  It  would  be  tak- 
ing away  from  the  assured  that  which  had  already  become  substan- 
tially his  property.  It  would  be  contrary  to  the  maxim,  that  no  one 
should  be  made  rich  by  making  another  poor. 

We  are  of  opinion,  therefore,  first,  that  as  the  companies  elected 
to  insist  upon  the  condition  in  these  cases,  the  policies  in  question 
must  be  regarded  as  extinguished  by  the  non-payment  of  the  pre- 
miums, though  caused  by  the  existence  of  the  war,  and  that  an  action 
will  not  lie  for  the  amount  insured  thereon. 

Secondly,  that  such  failure  being  caused  by  a  public  war,  without 
the  fault  of  the  assured,  they  are  entitled  ex  mquo  et  bono  to  recover 
the  equitable  value  of  the  policies  with  interest  from  the  close  of  the 
war. 

iu  results  from  these  conclusions  that  the  several  judgments  and 
the  decree  in  the  cases  before  us,  being  in  favor  of  the  plaintiffs  for 
the  whole  sum  assured,  must  be  reversed,  and  the  records  remanded 
for  further  proceedings.  We  perceive  that  the  declarations  in  the 
action  at  law  contain  no  common  or  other  counts  applicable  to  the 
kind  of  relief  which,  according  to  our  decision,  the  plaintiffs  are 
entitled  to  demand  ;  but  as  the  question  is  one  of  first  impression, 
in  which  the  parties  were  necessarily  somewhat  in  the  dark  with 
regard  to  their  precise  rights  and  remedies,  we  think  it  fair  and  just 
that  they  should  be  allowed  to  amend  their  pleadings.  In  the  equi- 
table suit,  perhaps,  the  prayer  for  alternative  relief  might  be  sufHcient 
to  sustain  a  proper  decree  ;  but,  nevertheless,  the  complainants  should 
be  allowed  to  amend  their  bill,  if  they  shall  be  so  advised. 

In  estimating  the  equitable  value  of  a  policy,  no  deduction  should 
be  made  from  the  precise  amount  which  the  calculations  give,  as  is 
sometimes  done  where  policies  are  voluntarily  surrendered,  for  the 
purpose  of  discouraging  such  surrenders ;  and  the  value  should  be 
taken  as  of  the  day  when  the  first  default  occurred  in  the  payment  of 
the  premium  by  which  the  policy  became  forfeited.  In  each  case  the 
rates  of  mortality  and  interest  used  in  the  tables  of  the  company  will 
form  the  basis  of  the  calculation. 

The  decree  in  the  equity  suit  and  the  judgments  in  the  actions 
at  lavj  are  reversed,  and  the  causes  resjyeetively  remanded  to 
be  proceeded  with  according  to  law  and  the  directiojis  of  this 
opinion.^ 

Mr.  Chief  Justice  Waite.  I  agree  with  the  majority  of  the  court  in 
the  opinion  that  the  decree  and  judgments  in  these  cases  should  be 

1  Other  cases  on  war  are.  O'Reily  v.  Mutual  Life  Ins.  Co.,  2  Abb.  Pr.  n.  s.  167 
(1866) ;  Robinson  v.  International  L.  Ass.  Soc,  42  N.  Y.  54  (1870)  ;  New  York  L.  Ins. 
Co.  V.  Clopton,  7  Bush,  179  (1870) ;  Manhattan  L.  Ins.  Co.  v.  Warwick,  20  Gratt.  614 
(1871) ;  Dillard  i\  Manhattan  L.  Ins.  Co.,  44  Ga.  119  (1871)  ;  Statham  v.  N.  Y.  Life 
Ins.  Co.,  45  Miss.  581  (1871) ;  Hamilton  v.  Mutual  Life  Ins.  Co.,  9  Blatch.  234  (1871); 


552  NEW   YORK   LIFE    INS.    CO.    V.    STATHAM.  [CHAP.  VI. 

reversed,  and  that  the  failure  to  pay  the  annual  premiums  as  they 
matured  put  an  end  to  the  poUcies,  notwithstanding  the  default  was 
occasioned  by  the  war ;  but  I  do  not  think  that  a  default,  even  under 
such  circumstances,  raises  an  implied  promise  by  the  company  to  pay 
the  assured  what  his  policy  was  equitably  worth  at  the  time.  I  there- 
fore dissent  from  that  part  of  the  judgment  just  announced  which 
remands  the  causes  for  trial  upon  such  a  promise. 

Mr.  Justice  Strong.  While  I  concur  in  a  reversal  of  these  judg- 
ments and  the  decree,  I  dissent  entirely  from  the  opinion  filed  by  a 
majority  of  the  court.  I  cannot  construe  the  poUcies  as  the  majority 
have  construed  them.  A  policy  of  life  insurance  is  a  peculiar  con- 
tract. Its_obligations^re_iLnilateraL_._ It  contains  no  undertaking  of 
the  assured  to'pay  premiums ;  it  merely  gives  him  anT^ptjon  to  pay  or 
not,  and  thus  to  continue  the  obligation  of  the  insurcrs,~or^L^i miwc.U-ir- 
at  his  pleasure.  It  follows  that  the  consideration  for  tile  assum|)tion  of 
tTie^msurers  can  in  no  sense  be  considered  an  annuit^^onsisting  of  the 
annual  premiums.  In  my  opinion,  the  true  meainng  of  the  contract  is, 
that  the  applicantjoifinsurance,  by  paying  theTirst  premium,  obtjuns 
an  insurance  for  one  year,  together  with  a  right  to  have  the  insurance 

New  York  L.  Ins.  Co.  v.  White,  2  lus.  L.  J.  917  (Va.  Special  Court  of  Appeals,  1872), 
s.  c.  4  Bigelow's  L.  &  A.  Ins.  Rep.  471  ;  Colieu  v.  New  York  Mut.  L.  Ins.  Co.,  50 
N.  Y.  61o'(1872);  Sands  v.  New  York  L.  Ins.  Co.,  50  N.  Y.  626  (1872);  Martina  v. 
International  L.  Ins.  Co.,  53  N.  Y.  339  (1873) ;  Hancock  v.  New  York  L.  Ins.  Co.,  11 
Fed.  Cas.  402  (1873) ;  Tait  v.  New  York  L.  Ins.  Co.,  1  Flippin,  288  (1873)  ;  Mutual 
Benefit  L.  Ins.  Co.  v.  Atwood,  24  Gratt.  497  (1874) ;  Mutual  Benefit  L.  Ins.  Co.  u.  Hill- 
yard,  37  N.  J.  L.  (8  Vroom)  444  (1874) ;  AVorthington  r.  Charter  Oak  L  Ins.  Co.,  41 
Conn.  372  (1874) ;  Bird  v.  Penn  Mutual  L.  Ins.  Co.,  3  Fed.  Cas  430  (1876) ;  Smith  v. 
Charter  Oak  L.  Ins.  Co.,  64  Mo.  330  (1876);  Insurance  Co.  v.  Davis,  93  U.  S.  425 
(1877) ;  Owen  v.  New  York  L.  Ins.  Co.,  1  Hughes,  322  (1877) ;  Diboll  v.  JEtnA  L.  Ins. 
Co.,  32  La.  Ann.  179,  182  (1880) ;  Ellis  v.  Connecticut  Mut.  L.  Ins.  Co.,  19  Blatch. 
383'(1881);  Abellr.  Penn  Mut.  L.  Ins.  Co.,  18  W.  Va.  400,  422-440  (1881);  Clem- 
mitt  V.  New  York  Life  Ins.  Co.,  76  Va.  355  (1882). 

In  Roehner  v.  Knicl^erbocker  Life  Ins.  Co.,  63  N.  Y.  160,  167-168  (1875),  Folger, 
J.,  for  the  court,  said  :  — 

"  The  contract  of  life  insurance  is  snl  generis.  It  is  one-sided.  By  a  strict  observ- 
ance of  the  conditions  of  it,  the  insured  may  hold  the  insurers  to  their  contract,  while 
they  have  not  the  power  or  the  right  to  compel  him  to  remain  in  contract  rel.-itions 
with  them  longer  than  he  chooses.  Thus  it  differs  widely  from  a  lease.  For  this  rea- 
son the  clauses  of  forfeiture  in  policies  of  life  insurance  have  lieen  construed  literally, 
and  on  breach  of  condition  the  policies  have  been  held  avoided  in  favor  of  the  insurers 
without  demand  or  other  notice  of  election  on  their  part." 

In  Thompson  v.  Insurance  Co.,  104  U.  S.  252,  260  (1881),  Bradley,  J.,  for  the 

court,  said :  — 

"  Courts  do  not  favor  forfeitures,  but  they  cannot  avoid  enforcing  them  when  the 
party  by  whose  default  they  are  incurred  cannot  show  some  good  and  stable  ground 
in  the  "conduct  of  tlie  other  party,  on  which  to  base  a  reasonable  excuse  for  tlie  de- 
fault. .  .  .  We  do  not  accejit  the  position  that  the  payment  of  the  annual  premium  is 
a  condition  precedent  to  the  continuance  of  the  policy.  That  is  untrue.  It  is  a  condi- 
tion subsequent  only,  the  non-performance  of  wliich  may  incur  a  forfeiture  of  the 
policy,  or  may  not,  according  to  the  circumstauces.  It  is  always  open  for  the  insured 
to  show  a  waiver."  —  Ed 


SECT.  III.]  KLEIN    V.   INSURANCE    COMPANY.  653 

continued  from  year  to  j^ear  during  his  life,  upon  paj-ment  of  the  same 
annual' premTuln,  if  paid  in  advance.  Whetlier~he  will  avatt~trim^TjK 
of  the  refusal  of  the  insurers,  or  uotTls  optional  with  him.  The  pa}*- 
ment  ad  diem  of  the  second  or  any  subsequent  premium  is,  therefore, 
condition  precedent  to  continued  liability  of  the  insurers.  The  assured 
ma_y  perform  it  or  not,  at  his  option.  In  such  a  case,  the  doctrine 
that  accident,  inevitable  necessity,  or  the  act  of  God,  may  excuse 
performance,  has  no  existence.  It  is  for  this  reason  that  I  think  the 
policies  upon  which  these  suits  were  brought  were  not  in  force  after  the 
assured  ceased  to  pay  premiums.  And  so,  though  for  other  reasons, 
the  majority  of  the. court  holds;  but  they  hold,  at  the  same  time,  that 
the  assured  in  each  case  is  entitled  to  recover  the  surrender,  or  what 
they  call  the  "equitable,  value  of  the  policy.  This  is  incomprehensible 
to  me.  I  think  it  has  never  before  been  decided  that  the  surrender 
value  of  a  policy  can  be  recovered  by  an  assured,  unless  there  has  been 
at  agreement  between  the  paities  for  a  surrender ;  and  certainly  it 
has  not  before  been  decided  that  a  supervening  state  of  war  makes 
a  contract  between  private  parties,  or  raises  an  implication  of  one. 

Mr.  Justice  Clifford,  with  whom  concurred  Mr.  Justice  Hunt, 
dissenting. 

Where  the  parties  to  an  executory  money-contract  live  in  different 
countries,  and  the  governments  of  those  countries  become  involved 
in  public  war  with  each  other,  the  contract  between  such  parties  is 
suspended  during  the  existence  of  the  war,  and  revives  when  peace 
ensues  ;  and  that  rule,  in  my  judgment,  is  as  applicable  to  the  contract 
of  life  insurance  as  to  any  other  executory  contract.  Consequently,  I 
am  obliged  to  dissent  from  the  opinion  and  judgment  of  the  court  in 
these  cases. 


KLEIN  V.  INSURANCE  COMPANY. 
Supreme  Court  op- the  United  States,  1881.     104  U.  S.  88. 

Appeal  from  the  Circuit  Court  of  the  United  States  for  the  Northern 
District  of  Illinois. 

The  facts  are  stated  in  the  opinion  of  the  court. 

Mr.  Hiram  Barber,  Jr.,  for  the  appellant. 

Mr.  Francis  H.  Kales,  contra. 

Mr.  Justice  Woods  delivered  the  opinion  of  the  court. 

On  Sept.  1,  1866,  a  policy  of  insurance  was  issued  by  the  New  York 
Life  Insurance  Company  upon  the  life  of  Frederick  W.  Klein,  in  the 
sum  of  85,000,  payable  to  his  wife,  Caroline  Klein,  within  sixty  days 
after  his  death  and  due  notice  and  proof  thereof. 


654  KLEIN    V.    INSURANCE    COMPANY.  [CHAP.  VI. 

The  policy  is  in  the  usual  form.  The  consideration  for  its  issue  was 
the  payment  to  the  company  by  Caroline  Klein  of  an  annual  premium 
of  $173,  in  semi-annual  instalments  of  $86.50  each,  on  the  first  clay  of 
September  and  the  first  day  of  March  of  every  year  during  the  life  of 
Frederick  W.  Klein. 

The  policy  contains  the  following  provision  :  "  And  it  is  also  under- 
stood and  agreed  by  the  within  assured  to  be  the  true  intent  and  mean- 
ing hereof  that  ...  in  case  the  said  Caroline  Klein  shall  not  pay  the 
said  premiums  on  or  before  the  several  days  herein  mentioned  for  the 
payment  thereof,  with  any  interest  that  may  be  due  thereon,  then  and 
in  every  such  case  the  said  company  shall  not  be  liable  for  the  payment 
of  the  sum  assured  or  an}'  part  thereof,  and  this  policy  shall  cease  and 
determine." 

The  premiums  were  punctually  paid  until  March,  1871,  when  default 
was  made  in  the  payment  of  the  semi-annual  instalment  which  matured 
on  the  first  day  of  that  month,  and  it  remained  unpaid  until  the  death 
of  Frederick  W.  Klein,  which  occurred  March  18,  1871. 

The  agent  of  the  company,  after  proof  of  the  death  of  Klein,  offered 
to  pay  Caroline  Klein  the  surrender  value  of  the  policy.  She  declined 
to  accept  any  sum  less  than  the  amount  of  the  insurance,  and  on  the 
company'  then  insisting  upon  the  absolute  forfeiture  of  the  policy,  ac- 
cording to  its  terras,  she  filed  this  bill. 

She  therein  alleges  as  the  ground  of  relief  that  the  policy  was  taken 
out  by  Frederick  W.  Klein  without  her  knowledge  ;  that  she  had  re- 
ceived no  information  of  its  terms  or  conditions  until  after  his  death ; 
that  about  February  1  he  was  taken  down  by  the  illness  of  which  he 
died  ;  that  for  about  twenty  days  prior  to  March  1,  and  thence  up  to 
the  time  of  his  death,  he  was,  in  consequence  of  his  sickness,  deranged 
in  mind  and  incapable  of  attending  to  any  matter  of  business  whatever, 
and  for  that  reason,  and  that  alone,  failed  to  pay  the  premium  when  it 
was  due,  and  that  she  failed  to  pay  it  because  she  was  ignorant  of  the 
existence  of  the  policy  and  of  its  terms. 

The  prayer  of  the  bill  is  as  follows  :  "  That  the  said  New  York  Life 
Insurance  Company  may  be  prevented  from  insisting  upon  and  taking 
advantage  of  the  alleged  forfeiture  of  said  policy  of  insurance,  and  that 
your  oratrix  may  be  relieved  from  said  alleged  default  upon  her  part, 
and  the  accidental  default  of  the  said  Frederick  W.  Klein  in  the  non- 
payment of  said  semi-annual  premium  maturing  March  1,  1871,  and 
that  the  said  New  York  Life  Insurance  Company  may  be  decreed  to 
pay  to  your  oratrix  the  said  sum  of  $5,000,"  &c. 

The  answer  of  the  company  denies  its  liability  upon  the  policy  of  in- 
surance, and  insists  that  the  contract  ceased  and  determined  by  reason 
of  the  non-payment  of  the  premium  due  March  1,  1871,  and  denies  the 
equity  of  the  bill. 

The  bill  was  dismissed  upon  final  hearing.  The  cause  was  then 
brought  to  this  court  for  review,  by  the  appeal  of  the  complainant.        • 

Conceding,  for  the  sake  of  argument,  that  the  case  made  by  the  bill 


SECT.  III.]  KLEIN   V.    INSURANCE    COMPANY.  655 

is  sustained  by  the  evidence,  the  question  is  presented  whetlier,  upon 
tlie  facts,  tlie  appellant  was  entitled  to  the  relief  prayed  for. 

In  New  York  Life  Insurance  Co.  v.  Stathani,  93  U.  S.  24,  it  was 
held  by  this  court,  Mr.  Justice  Bradley  delivering  its  opinion,  that  a 
life  insurance  pohcy  "  is  not  a  contract  of  insurance  for  a  single  year, 
with  the  privilege  of  renewal  from  year  to  year  by  paying  the  annual 
premium,  but  that  it  is  an  entire  contract  for  assurance  for  life,  subject 
to  discontinuance  and  forfeiture  for  non-payment  of  any  of  the  stip- 
ulated premiums." 

But,  in  the  same  case,  the  court  further  said :  *'  In  policies  of  life 
insurance  time  is  material  and  of  the  essence  of  the  contract,  and  non- 
payment at  the  day  involves  absolute  forfeiture,  if  such  be  the  terms  of 
the  contract." 

While  conceding  this  to  be  the  rule  which  would  apply  if  an  action  at 
law  were  brought  upon  the  polic}',  the  appellant  insists  that  she  is  en- 
titled to  be  relieved  in  equity  against  a  forfeiture,  by  reason  of  the 
excuses  for  non-payment  of  the  premium  set  out  in  the  bill,  and  this 
contention  raises  the  sole  question  in  this  case. 

We  cannot  accede  to  the  view  of  the  appellant.  Where  a  penalty  or 
a  forfeiture  is  inserted  in  a  contract  merely  to  secure  the  performance 
or  enjoyment  of  a  collateral  object,  the  latter  is  considered  as  the  prin- 
cipal intent  of  the  instrument,  and  the  penalty  is  deemed  only  as  ac- 
cessory. Sloman  v.  Walter,  1  Bro.  Ch.  418  ;  Sanders  v.  Pope,  12  Ves. 
Jr.  282  ;  Davis  v.  West,  id.  475  ;  Skinner  v.  Dayton,  2  Johns.  (N.  Y.) 
Ch.  526. 

But  in  every  such  case  the  test  by  which  to  ascertain  whether  relief 
can  or  cannot  be  had  in  equity,  is  to  consider  whether  compensation 
can  or  cannot  be  made. 

In  Rose  v.  Rose,  Amb.  331,  332,  Lord  Hardwicke  laid  down  the  rule 
thus :  "  Equity  will  relieve  against  all  penalties  whatsoever ;  against 
non-payment  of  money  at  a  day  certain  ;  against  forfeitures  of  copy- 
holds :  but  they  are  all  cases  where  the  court  can  do  it  with  safety  to 
the  other  party  ;  for  if  the  court  cannot  put  him  in  as  good  condition  as 
if  the  agreement  had  been  performed,  the  court  will  not  relieve." 

A  life  insurance  policy  usually  stipulates,  first,  for  the  payment  of 
premiums  ;  second,  for  their  payment  on  a  day  certain  ;  and,  third,  for 
the  forfeiture  of  the  policy  in  default  of  punctual  payment.  Such  are 
the  provisions  of  the  policy  which  is  the  basis  of  this  suit. 

Each  of  these  provisions  stands  on  precisely  the  same  footing.  If 
the  payment  of  the  premiums,  and  their  payment  on  the  day  they  fall 
due,  are  of  the  essence  of  the  contract,  so  is  the  stipulation  for  the  re- 
lease of  the  company  from  liability  in  default  of  punctual  payment.  No 
compensation  can  be  made  a  life  insurance  company  for  the  general 
want  of  punctuality  on  the  part  of  its  patrons. 

It  was  said  in  New  York  Life  Insurance  Co.  v.  Stathara,  supra^  that 
"  promptness  of  payment  is  essential  in  the  business  of  life  insurance. 
All  the  calculations  of  the  insurance  company  are  based  on  the  hypothe- 


656  KLEIN    V.   INSURANCE   COMPANY.  [CHAP.  VI. 

sis  of  prompt  pa3-ments.  The}'  not  only  calculate  on  the  receipt  of 
premiums  when  due,  but  upon  compounding  interest  upon  them.  It  is 
on  this  basis  that  they  are  enabled  to  offer  insurance  at  the  favorable 
rates  the}'  do.  Forfeiture  for  non-paj'ment  is  a  necessary  means  of 
protecting  themselves  from  embarrassment.  Delinquenc}'  cannot  be 
tolerated  or  redeemed  except  at  the  option  of  the  company." 

If  the  assured  can  neglect  payment  at  maturity'  and  yet  suffer  no  loss 
or  forfeiture,  premiums  will  not  be  punctually  paid.  The  companies 
must  have  some  efficient  means  of  enforcing  punctuality.  Hence  their 
contracts  usually  provide  for  the  forfeiture  of  the  pohcy  upon  default  of 
i^rorapt  payment  of  the  premiums.  If  they  are  not  allowed  to  enforce 
this  forfeiture  they  are  deprived  of  the  means  which  they  have  reserved 
by  tlieir  contract  of  compelling  the  parties  insured  to  meet  their  engage- 
ments. The  provision,  therefore,  for  the  release  of  tiie  company  from 
liability  on  a  failure  of  the  insured  to  pay  the  premiums  when  due  is  of 
the  very  essence  and  substance  of  the  contract  of  life  insurance.  To 
hold  the  company  to  its  promise  to  pay  the  insurance,  notwithstanding 
the  default  of  the  assured  in  making  punctual  payment  of  the  premiums, 
is  to  destro}'  tlie  very  substance  of  the  contract.  This  a  court  of  equity 
cannot  do.  Wheeler  v.  Connecticut  Mutual  Life  Insurance  Co.,  82 
N.  Y.  543.  See  also  the  opinion  of  Judge  Gholson  in  Robert  v.  New 
England  Life  Insurance  Co.,  1  Disney  (Ohio),  355. 

It  might  as  well  undertake  to  release  the  assured  from  the  payment 
of  premiums  altogether  as  to  relieve  him  from  forfeiture  of  his  policy  in 
default  of  punctual  payment.  The  company  is  as  much  entitled  to  the 
benefit  of  one  stipulation  as  the  other,  because  both  are  necessary  to 
enable  it  to  keep  its  own  obligations. 

In  a  contract  of  life  insurance  the  insurer  and  assured  both  take 
risks.  The  insurance  company  is  bound  to  pay  the  entire  insurance 
money,  even  though  the  party  whose  life  is  insured  dies  the  day  after 
the  execution  of  the  policy,  and  after  the  payment  of  but  a  single 
premium. 

The  assured  assumes  the  risk  of  paying  premiums  during  the  life  on 
which  the  insurance  is  taken,  even  tliough  their  aggregate  amount 
should  exceed  the  insurance  money.  He  also  takes  the  risk  of  the 
forfeiture  of  his  policy  if  the  premiums  are  not  paid  on  the  day  they 
fall  due. 

The  insurance  company  has  the  same  claim  to  be  relieved  in  equity- 
from  loss  resulting  from  risks  assumed  b}'  it  as  the  assured  has  from 
loss  consequent  on  the  risks  assumed  b}'  him. 

Neither  has  any  such  right. 

The  bill  is,  therefore,  based  on  a  misconception  of  the  powers  of  a 
court  of  equity  in  such  cases. 

There  is  another  answer  to  the  case  made  by  the  bill.  The  engage- 
ment of  the  insurance  company  was  with  Caroline  Klein,  and  not  with 
Frederick  "VV.  Klein.  It  entered  into  no  contract  with  the  latter.  It 
agreed  to  pay  Caroline  Klein  the  insurance,  provided  she  paid  with 


SECT.  III.]  KLEIN    V.   INSURANCE    COMPANY.  657 

punctuality  the  premiums.  She  was  never  incapacitated  from  making 
payment.  The  alleged  fact  that  she  had  no  knowledge  of  the  exist- 
ence and  terras  of  the  policy  does  not  relieve  her  default.  If  the  fact 
be  true,  her  ignorance  resulted  from  the  neglect  of  her  husband,  who, 
in  respect  to  this  contract  of  insurance,  was  her  agent,  in  not  inform- 
ing her  about  the  insurance  upon  his  life  and  the  terms  of  the  polic}'. 
The  bill  is,  therefore,  an  effort  by  her  to  obtain  relief  in  equity  against 
the  appellee  from  the  consequences  of  the  carelessness  or  neglect  of  her 
own  agent. 

We  are  of  opinion  that  the  decree  of  the  Circuit  Court  is  right,  and 
should  be  Affirmed} 

1  Ace:  Wheeler  i'.  Connecticut  Mut.  L.  Ins.  Co.,  82  X.  Y.  543  (1880);  Yoe  v. 
Benjamin  C.  Howard  Masonic  Mut.  B.  Assn.,  63  Md.  86  (1884);  Carpenter  v.  Cen- 
tennial Mut.  L.  Assn.,  68  Iowa,  453  (1886)  ;  Hawkshaw  v.  Supreme  Lodge,  29  Fed.  K. 
770  (U.  S.  C.  C,  N.  D.  111.,  1887)  ;  Titts  v.  Hartford  Life  and  Annuity  Ins.  Co.,  66 
Conn.  376  (1895). 

In  Robert  r.  New  England  Mut.  L.  Ins.  Co.,  1  Disn.  355,  361-365,  368-369  (Cincin- 
nati Superior  Court,  special  term,  1857),  Gholson,  J.,  said:  — 

"  As  a  general  rule,  when  the  terms  of  a  contract  between  parties  are  ascertained, 
what  those  terms  require  is  the  law  of  the  case  and  must  determine  the  rights  in- 
volved. .  .  . 

"  To  the  strict  and  rigorous  rule  of  the  common  law%  as  to  the  construction  and 
enforcement  of  contracts  and  conditions,  an  exception  has  been  established  by  which 
relief  is  given,  in  certain  cases,  upon  principles  of  equity,  against  penalties  and  for- 
feitures. In  some  cases  this  relief  has  been  obtained  in  a  court  of  law ;  in  others,  an 
application  to  a  court  of  equity  has  been  required.  .  .  . 

"  It  is  the  intention  of  the  parties  which  is  to  be  looked  at,  to  ascertain  whether,  in 
a  particular  case,  there  be  a  proper  ground  for  relief ;  whether  the  case  be  one  of  the 
exaction  of  a  forfeiture,  or  the  relief,  if  granted,  would  destroy  the  substance  of  the 
contract,  according  to  the  real  intention  of  the  parties.  And  this  intention  is  to  be 
ascertained  from  the  nature  of  the  agreement  rather  than  from  the  language  of  the 
contract.  Price  v.  Green,  16  M.  &,  W.  346,  354.  Of  this  the  cases  as  to  liquidated 
damages  present  an  obvious  illustration.  ...  I  proceed  to  the  direct  question, 
whether  there  can  be  relief  against  the  prescribed  consequence,  in  a  policy  of  life 
insurance,  of  the  non-payment  of  the  premium  at  the  time  it  becomes  payable,  ac- 
cording to  the  contract  between  the  parties.  .  .  . 

"I  shall,  therefore,  inquire,  in  the  first  place,  as  to  the  ordinary  annual  premium, 
in  a  life  policy,  whether  its  non-payment  at  the  stipulated  day  really  forfeits  any 
further  right,  or  whether  the  condition  requiring  such  payment  is  a  mere  penalty, 
as  to  which  relief  will  be  given  (m  the  payment  of  interest,  and  thus  though,  while 
the  premium  remained  unpaid,  the  assured  died.  To  tlie  proposition  thus  generally 
and  simply  stated,  there  can,  I  think,  be  but  one  answer;  and  until  it  was  presented  in 
the  examination  of  the  case,  I  had  never  supposed  there  could  be  any  doubt  but  that, 
from  the  very  nature  of  the  contract  of  life  insurance,  the  prompt  and  punctual  pay- 
ment of  the  premiums  was  of  the  very  substance  of  the  contract. 

"  An  attempt  was  made,  in  an  early  case,  to  assimilate  the  conditions  in  a  life  policy, 
requiring  the  payment  of  the  premium,  to  the  condition  annexed  to  a  deed  conveying 
real  estate.  But  the  court  said  that  the  analogy  did  not  hold,  and  that  the  rules  appli- 
cable to  conditions  with  respect  to  lands  did  not  apply.  '  This  is  a  contract  of  assur- 
ance, and  must  be  construed  according  to  the  meaning  of  the  parties,  expressed  in  the 
deed  or  policy.'     "Want  v.  Blunt,  12  East,  183.  .  .  . 

"  There  is,  however,  to  my  mind,  a  still  stronger  reason  w-hy,  as  to  the  ordinary  annual 
premium  in  a  life  policy,  there  can  be  no  relief  in  case  of  its  non-payment  on  the  day 
specified.     The  contract  is  of  the  description  which  is  termed  unilateral.     To  have  it 

42 


658  KLEIN   V.   INSURANCE   COMPANY.  [CHAP.  VI. 

continue  from  year  to  year  is  in  tlie  nature  of  a  privilege,  secured  by  the  agreement  of 
the  company.  It  may  be  waived  or  abandoned  by  the  party,  and  the  company  has 
no  right  to  thrust  it  upon  him  without  his  consent,  expressed  in  tlie  mode  and  at  the 
time  appointed,  and  the  very  nature  of  the  business  of  the  company  requires  that  they 
should  know,  at  the  time,  whether  their  agreement  is  to  contiime.  The  principle  upon 
which  relief  has  been  refused,  in  the  case  of  a  privilege  of  purchase,  fully  applies. 
Davis  V.  Thomas,  I  Russ.  &  M.  506.  .  .  . 

"  If  the  breach  of  such  a  condition  is  a  good  defence  at  law,  the  absence  of  any  case 
in  which  relief  has  been  given  in  equity,  upon  the  general  ground  of  the  jurisdiction 
to  relieve  against  forfeitures,  is  a  forcible  objection  to  the  propriety  of  extending  that 
branch  of  the  jurisdiction  to  such  cases.  .  .  .  There  are,  to  my  mind,  serious  objec- 
tions to  any  such  relief  in  this  case.  .  .  . 

"  The  contract  of  life  insurance  is  one  of  a  peculiar  nature.  The  company,  for  ex- 
ample, is  called  ou,  in  this  case,  for  the  consideration  of  $90.40,  to  pay  88,000.00.  If 
such  demands  are  enforced,  as  they  undoubtedly  may  be  when  tiiere  has  been  a  com- 
pliance with  the  terms  of  contract,  in  what  mode  is  the  loss  to  be  made  up  unless  by 
tlie  receipt  of  premiums  and  tlie  judicious  investment  and  use  of  the  money  received? 
It  is  very  justly  said,  in  the  printed  form  of  tiie  application  of  the  company,  which  is  a 
mutual  insurance  company,  that  the  '  stability  and  permanence  of  such  a  company  de- 
pends:  I.  Upon  an  adequate  premium  being  demanded.  2.  Upon  its  being  paid,  or 
suliiciently  secured,  so  that  the  company  shall  not  run  a  risk  on  lives  any  further  than 
each  one  contributes  his  just  proportion  to  the  funds  of  the  company.'  To  carry  out 
and  enforce  this  principle  is,  in  my  opinion,  the  object  of  the  clause  which,  in  effect^ 
makes  the  continuance  of  any  interest  in  the  funds  dependent  on  a  strict  compliance 
with  the  obligation,  as  assumed,  to  contribute  to  them." 
On  the  topic  of  this  section,  see  also  :  — 

Want  V.  Blunt,  12  East,  183  (1810) ; 

Simpson  v.  Accidental  Death  Ins.  Co.,  2  C.  B.  n.  s.  257  (1857); 

Notman  v.  Anchor  Assurance  Co.,  4  C.  B.  n.  s.  464  (1858) ; 

easier  v.  Connecticut  Mut.  L.  Ins.  Co.,  22  N.  Y.  427  (1860) ; 

Pitt  V.  Berkshire  L.  Ins.  Co.,  100  Mass.  500  (1868) ; 

McAllister  v.  New  England  Mut.  L.  Ins.  Co.,  101  Mass.  558  (1869)  ; 

Stone  V.  United  States  Casualty  Co.,  34  N.  J.  L.  (5  Vroom)  371,  373  (1871) ; 

Welts  V.  Connecticut  Mut.  L.  Ins.  Co.,  48  N.  Y.  34  (1871)  ; 

Ayer  v.  New  England  Mut.  L.  Ins.  Co.,  109  Mass.  430  (1872)  ; 

Currier  v.  Continental  L.  Ins.  Co.,  53  N.  H.  538,  547-549  (1873) ; 

Chickering  v.  Globe  Mut.  L.  Ins.  Co.,  116  Mass.  321  (1874)  ; 

Connecticut  Mut.  L.  Ins.  Co.  v.  Home  Ins.  Co.,  17  Blatch.  142  (1879)  ; 

Holly  I'.  Metropolitan  L.  Ins.  Co.,  105  N.  Y.  437  (1887) ; 

D'Orlu  V.  Bankers'  and  Merchants'  Mut.  L.  Assn.,  46  Fed.  E.  355  (1891).  — Ed. 


SECT.  I.]  ROHL   V.   PARR. 


659 


CHAPTER   VII. 
THE  PERIL. 


SECTION   I. 

Marine  Insurance. 
(A)  The  Kixd  of  Peril  insured  against. 

ROHL   r.  PARR. 

Nisi  Prius,  King's  Bench,  1796.     1  Esp.  444. 

Case  on  a  policy  of  insurance  on  the  ship  "  Zumbee,"  from  St.  Bar- 
tholomew to  the  river  Gombroon  on  the  coast  of  Africa,  and  from 
thence  to  the  West  Indies,  during  her  stay.  There  was  a  memoran- 
dum, "to  be  free  from  average,  under  ten  per  cent,  for  loss  in  boats, 
and  from  five  per  cent  for  loss  from  insurrection." 

The  ship  sailed  from  St.  Bartholomew  on  the  1st  of  September,  1792, 
arrived  safe  on  the  coast  of  Africa,  and  began  to  trade.  In  the  month 
of  September  following,  there  was  an  insurrection  of  the  slaves  on 
board  the  ship.  They  had  then  forty-nine  on  board,  and  seven  were 
killed,  and  one  died  by  accident  in  consequence  of  a  fall. 

After  this,  being  about  to  return,  it  was  found  that  the  worm 
had  taken  her  bottom,  and  had  destroyed  it  so  effectually,  that  the 
ship  could  barely  get  to  Cape  Coast,  where  she  was  condemned  as 
irreparable. 

Cpontliese  facts  two  points  arose  in  the  case,  first,  whether  this  was 
a  total  loss  arising  from  the  perils  of  the  sea  ;  or,  secondly,  a  partial 
loss  above  five  per  cent,  for  which  the  plaintiff  was  entitled  to  recover. 
Gibbs,  for  the  plaintiflF,  contended,  that  the  destruction  of  the  ship's 
bottom  frorn_tlie_WQrms_having  arisen  in  the  course  of  her  voyage,  was 
a  peril  of  the  sea.  If  the  ship  had  struck  against  a  rock  under  water, 
and  her  bottom  been  destroyed,  that  would  have  been  clearly  within 
the  policy  ;  there  it  proceeded  from  an  inanimate  substance  striking 
against  the  ship's  bottom.  The  present  case  was  that  of  an  animated 
substance  moving  to  destroy  it. 

Erskine,  contra.,  insisted  it  could  not  come  under  that  description  of 
loss,  as  not  arising  from  any  peril  of  the  sea. 


660  KOHL    V.    PAER.  [chap.  VII. 

Lord  Kenyon  said,  ^hlit-ii-i^iiieaicil- taimii  a  q^ugstiQa_of.fact  rather 
than  of  liiw,  such  as  the  jury  were  couipeteiit  to  decide  on,  from  the 
opinion  on  the  subject  adopted  b}-  the  underwriters  and  merchants. 

The  jur}'  (which  was  a  special  one)  found,  that  this  was  not  a  loss 
within  the  term  of  "■  perils  of  the  sea  "  in  policies  of  insurance,  and  ol' 
course  that  tlie  plaintiff  couKl  not  recover  for  a  total  loss.^   .   .   . 

Lord  Kenyon  expressed  his  assent  to  the  finding  of  the  jur}'  on  l)oth 
points.^  The  plaintiff  ]uul  a  verdict  for  an  average  loss. 

Gibbs^  Smith,  and  -Park,  for  the  plaintiff. 

Erskine  and  Garrow,  for  the  defendant. 

1  Passages  as  to  the  partial  loss  have  been  omitted.  —  Ed. 

2  Ace:  Martin  v.  Salem  Marine  Ins.  Co.,  2  Mass.  420  (1807). 

In  Lovell  v.  McMillan,  Faculty  Decisions,  1808-1810,  p.  341  (Court  of  Session, 
Scotland,  1809),  s.  0.  Morison's  Dictionary,  1808-1812,  p.  9,  Lords  Cullen  and  Glen- 
lee  "  stated  that  they  considered  destruction  by  worms  not  to  be  one  of  those  perils 
of  the  sea  undertaken  by  the  underwriters  ;  perils  are  what  we  term  casualties.  But 
destruction  by  worms  is  not  a  casualty  or  a  thing  that  happens  by  chance,  but  may  be 
foreseen  and  guarded  against." 

In  Hazard  v.  New  England  Ins.  Co.,  8  Pet.  557,  583-585  (1834),  McLean,  J.  for  the 
court,  approving  an  instruction  that  "  if  the  jury  should  find  that  in  the  Pacific  Ocean 
worms  ordinarily  assail  and  enter  the  bottoms  of  vessels,  then  the  loss  of  a  vessel  de- 
stroyed by  worms  would  not  be  within  the  policy,"  said,  after  citing  Rohl  r.  Parr :  — 

"  It  was  well  remarked  by  Lord  Kenyon,  that  whether  a  destruction  by  worms  be 
within  the  policy  was  a  question  of  fact  rather  than  of  law,  and  could  be  best  ascer- 
tained by  a  jury  from  the  opinion  of  underwriters  and  merchants.  This  was  a  nisi 
prius  decision ;  but  it  gave  such  general  satisfaction  to  both  merchants  and  under- 
writers and  all  others  concerned,  as  never  to  have  been  questioned  in  England.  It 
was  the  establishment  of  a  usage  by  the  opinions  of  those  most  competent  to  judge  of 
its  reasonableness  and  propriety ;  and  the  approbation  which  has  since  been  given  to  it 
in  England  by  acquiescence,  may  well  constitute  it  a  rule  in  that  country  by  which 
contracts  of  insurance  are  governed.  And  independent  of  the  fact  of  its  having  been 
adopted  by  tlie  Supreme  Court  of  Massachusetts,  is  not  the  decision  entitled  to  great 
consideration  in  this  country?  It  comes  from  the  same  source  from  which  the  princi- 
ples of  our  commercial  law  are  derived,  and  to  some  extent,  the  forms  of  our  commer- 
cial contracts.  Would  it  not  be  reasonable  to  suppose  that  these  contracts  are  entered 
into  with  a  knowledge  of  the  rule  by  which  they  ai-e  construed  in  the  most  commercial 
country,  if  our  own  courts  had  adopted  no  rule  on  the  subject?  But  in  the  present 
case,  the  opinion  of  Lord  Kenyon  having  been  adopted  in  Massachusetts,  the  rule 
must  certainly  apply  to  all  contracts  made  and  to  be  executed  in  that  State. 

"  The  court,  in  their  instruction,  did  not  lay  down  the  rule  broadly,  that  a  destruc- 
tion by  worms  was  not  within  the  policy;  but  the  jury  were  told,  that  if,  'in  the 
Pacific  Ocean,  worms  ordinarily  assail  and  enter  the  bottoms  of  vessels,  then  the  loss  of 
a  vessel  destroyed  by  worms  would  not  be  a  loss  within  the  policy.'  In  other  words, 
if  the  vessel  was  lost  by  an  ordinary  occurreuce  in  the  Pacific  Ocean,  it  was  a  loss 
against  which  the  underwriters  did  not  insure.  In  an  enlarged  sense,  all  losses  which 
occur  from  maritime  adventures  may  be  said  to  arise  from  the  perils  of  the  sea;  but 
tlie  underwriters  are  not  bound  to  this  extent.  They  insure  against  losses  from  ex- 
traordinary occurrences  only;  such  as  stress  of  weather,  winds  and  waves,  lightning, 
tempests,  rocks,  &c.  These  are  understood  to  be  the  'perils  of  the  sea'  referred  to 
in  the  policy,  and  not  those  ordinary  perils  which  every  vessel  must  encounter. 

"  If  worms  ordinarily  perforate  every  vessel  which  sails  in  a  certain  sea,  is  not  a 
risk  of  injury  from  them,  as  common  to  every  vessel  which  sails  on  that  sea,  as  the 
ordinary  wear  and  decay  of  a  vessel  on  other  seas?  The  progress  of  the  injury  may 
be  far  more  rapid  in  the  one  case  than  in  the  other;  but  do  they  not  both  arise  from 
causes  peculiar  to  the  different  seas,  and  wliich  affect,  in  the  .same  way,  all  vessels 


SECT.  lJ  FURTADO   V.   RODGERS.  661 


FURTADO   V.   RODGERS. 
Common  Pleas,  1802.     3  B.  &  P.  191.^ 

Assumpsit  on  a  policy  of  insurance  dated  Oct.  19,  1792,  on  the  ship 
'^  Petronelli,"  "at  and  from  Bayonne  to  Martinique,  and  at  and 
from  thence  to  return  to  Bayonne."  The  declaration  averred  that  on 
November  12,  1793,  while  the  ship  was  at  Martinique,  the  island  was 
attacked  by  the  English  and  the  ship  was  captured  as  a  prize.  The 
general  issue  was  pleaded.  Before  Lord  Alvanley,  C.  J.,  a  verdict 
was  found  for  the  plaintiff,  subject  to  the  opinion  of  the  court  upon 
a  case  stating  that  the  plaintiff,  the  owner  of  the  ship,  was  a  French 
subject,  resident  in  France,  and  that  France  and  Great  Britain  were  in 
amity  when  the  policy  was  effected  and  until  February,  1793. 

Bayley,  Serjt.,  for  the  plaintiff.  The  question  is  whether,  after 
the  cessation  of  hostilities  between  England  and  France,  a  Frenchman 
is  entitled  to  recover  in  tlie  English  courts  upon  a  policy  of  insurance 
effected  in  England  before  the  commencement  of  hostilities  for  a  loss 
by  British  capture  during  the  war. 

Jiest,  Serjt.,  for  the  defendant. 

Cvr.  adr.  vidt. 

The  opinion  of  the  court  was  now  delivered  b}' 

Lord  Alvanley,  C.  J.  As  it  is  of  infinite  importance  to  the 
parties  that  this  case  should  be  decided  as  speedih'  as  possible,  and 
as  we  entertain  no  doubts  upon  the  subject,  we  think  it  right  to  deliver 
the  judgment  of  the  court  without  any  further  delay  ;  at  the  same 
time  considering  the  magnitude  of  the  question,  we  shall  allow  the 
parties  to  convert  this  case  into  a  special  verdict,  in  order  that  the 
opinion  of  the  highest  court  in  this  kingdom  maj-  be  taken,  if  it  should 
be  thought  necessary.  There  are  two  questions  for  our  consideration  : 
First,  whether  it  be  lawful  for  a  British  suliject  to  insure  an  enemy 
from  the  effect  of  capture  made  b}'  his  own  government?  Secondly, 
whether,  if  that  be  illegal,  the  insurance  in  this  case  having  been 
made  previous  to  the  commencement  of  hostilities  will  make  any 
difference?  As  to  the  first  point,  it  has  been  understood  for  some 
years  past  to  have  been  the  opinion  of  all  "Westminster  Hall,  and  I 

that  enter  into  them?  In  one  sea.  the  aggregation  of  marine  substances  which  attach 
to  the  bottom  of  the  vessel  may  possibly  produce  a  loss ;  in  another,  a  loss  may  l)e 
more  likely  to  occur  through  the  agency  of  worms.  Can  either  of  these  losses  be  said 
to  have  been  produced  by  extraordinary  occurrences?  Does  not  the  cause  of  the 
injury  exist  in  each  sea,  though  in  different  degrees,  and  against  which  it  is  as  neces- 
sary to  guard  as  to  prevent  the  submersion  of  a  ship  by  having  its  seams  well 
closed? 

"  In  the  form  in  which  the  instruction  under  consideration  was  given,  this  court 
think  there  is  no  error.  If  it  be  desirable  to  be  insured  against  this  active  agent 
which  infests  Southern  seas,  it  may  be  specially  named  in  the  policy."  —  Ed. 

1  The  statement  has  been  rewritten.  —  Ed. 


662  FURTADO  V.    RODGERS.  [CHAP.  VII. 

believe  of  the  nation  at  large,  that  such  insurances  are  not  strictly 
legal  or  capable  of  being  enforced  in  a  court  of  justice.^  .  .  .  B}-  the 
terms  of  the  policy  the  underwriters  certainly  undertake  to  indemnifj' 
the  plaintiff  against  all  captures  and  detentions  of  princes,  without 
any  exception  in  respect  of  the  acts  of  the  government  of  their  own 
nation.  The  question  then  is,  whether  the  law  does  not  make  that 
exception,  and  whether  it  be  competent  to  an  English  underwriter  to 
indemnif}'  persons  who  ma}'  be  engaged  in  war  with  his  own  sovereign 
against  the  consequences  of  that  war?  We  are  all  of  opinion  that  on 
the  principles  of  the  English  law  it  is  not  competent  to  any  subject  to 
enter  into  a  contract  to  do  any  thing  which  may  be  detrimental  to  the 
interests  of  his  own  countr}' ;  and  that  such  a  contract  is  as  much 
prohibited  as  if  it  had  been  expressl}'  forbidden  by  act  of  Parliament. 
It  is  admitted  that  if  a  man  contract  to  do  a  thing  which  is  afterwards 
prohibited  by  act  of  Parliament,  he  is  not  bound  by  his  contract.  This 
was  expressly  laid  down  in  Brewster  v.  Kitcliell,  1  Salk.  198.  And  on 
the  same  principle,  where  hostilities  commence  between  the  country  of 
the  underwriter  and  the  assured,  the  former  is  forbiddeu  to  fulfil  his 
contract.  With  respect  to  the  expediency  of  these  insurances,  it  seems 
only  necessary  to  cite  a  single  line  from  Bynkershoek,  Qusest.  Juris. 
Pub.  lib.  1,  c.  21,  Marshall,  p.  31,  and  part  of  a  passage  in  Valin, 
p.  32,  Marshall,  p.  32.  The  former  saj-s,  "  Hostium  joericula  in  se 
suscipere  quid  est  aliucl  quani  eoruin  commercia  maritima promovere," 
and  the  latter,  speaking  of  the  conduct  of  the  English  during  the  war 
of  1756,  who  permitted  these  insurances,  says,  "  The  consequence  was, 
that  one  part  of  that  nation  restored  to  us  by  the  effect  of  insurance 
what  the  other  took  from  us  by  the  rights  of  war."  .  .  .  We  are  all  of 
opinion  that  to  insure  enemies'  propert}-  was  at  common  law  illegal, 
for  the  reasons  given  b}'  the  two  foreign  jurists  to  whom  1  have 
referred.  If  this  be  so,  a  contract  of  this  kind  entered  into  previous 
to  the  commencement  of  hostilities  must  be  equally  unavailable  in  a 
court  of  law,  since  it  is  equally  injurious  to  the  interests  of  the 
country  ;  for  if  such  a  contract  could  be  supported,  a  foreigner  might 
insure  previous  to  the  war  against  all  the  evils  incident  to  war  But 
it  is  said  that  the  action  is  suspended,  and  that  the  indemnity  comes  so 
late  tliat  it  does  not  strengthen  the  resources  of  the  enemy  during  the 
war.  The  enemy,  however,  is  very  little  injured  by  captures  for  which 
he  is  sure  at  some  period  or  other  to  be  repaid  b}'  the  underwriter. 
Since  the  case  of  Bell  v.  Potts,^  it  has  been  universally  understood  that 
all  commercial  intercourse  with  the  enemy  is  to  be  considered  as 
illegal  at  common  law  (though  previous  to  that  case  a  very  learned 
judge*  appears  to  have  entertained  doubts  on  that  subject),  and  that 
consequently  all   insurances  founded  upon  such   intercourse   are  also 

1  In   reprinting  the  opinion,  the  discussion  of   the  English  authorities  has  been 
omitted.  —  Ed. 

-  Eeported,  sub  nom.     Potts  v.  Bell,  ante,  p.  502  (1800).  —Ed. 

8  Mr.  Justice  Bullek  in  Bell  f.  Gilson,  1  B.  &  P.  345  (1798).  —  Rep 


SECT.  I.]  THOMPSON  V.  whitmore:.  663 

illegal.  Why  are  they  illegal?  Because  they  are  in  contravention  of 
His°  MajeslY's  object  in  making  war,  which  is  by  the  capture  of  the 
enemies'  property,  and  by  the  prohibition  of  any  beneficial  intercourse 
between  them  and  his  own  subjects  to  cripple  thcir_commerce.  The 
same  reasoning"which Inluenced  the  Court  of  KlngT Bench^in  their 
decision  in  Bell  v.  Potts,  seems  decisive  in  the  present  case.  For  it 
being  determined  that  during  war  all  commercial  intercourse  with  the 
enemy  is  illegal  at  common  law,  it  follows  that  whatever  contract 
tends  to  protect  the  enemy's  property  from  the  calamities  of  war, 
though  effected  antecedent  to  the  war,  is  nevertheless  illegal.  .  .  . 
The  ground  upon  which  we  decide  this  case  is,  that  when  a  British 
subject  insures  against  captures,  the  law  infers  that  the  contract 
contains  an  exception  of  captures  made  by  the  government  of  his  own 
country  ;  and  that  if  he  had  expressly  insured  against  British  capture, 
such  a  contract  would  t)e  abrogated  by  the  law  of  England.  With 
respect  to  the  argument  insisted  upon  by  way  of  answer  to  the  public 
inconvenience  likel}'  to  arise  from  permitting  such  contracts  to  be 
enforced,  viz.  that  all  contracts  made  with  an  enemy  enure  to  the 
benefit  of  the  King  during  the  war,  and  that  he  may  enforce  payment 
of  any  debt  due  to  an  alien  enemy  from  any  of  his  subjects,  we  think 
it  is  not  entitled  to  much  weight.  Such  a  course  of  proceeding  never 
has  been  adopted  ;  nor  is  it  very  probable  that  it  ever  will  be  adopted, 
as  well  from  the  difficulties  attending  it,  as  the  disinclination  to  put  in 
force  such  a  prerogative.  The  plaintiff,  I  am  sorry  to  sa^',  is  not 
entitled  to  a  return  of  premium,  because  the  contract  was  legal  at  the 
time  the  risk  commenced,  and  was  a  good  insurance  against  all  other 
losses  but  that  arising  from  capture  by  the  forces  of  Great  Britain. 

Judgment  f 01'  the  defendant} 


THOMPSON   V.   WHITMORE. 

Common  Pleas,  1810.     3  Taunt.  227. 

This  was  an  action  upon  a  policy  of  assurance  effected  upon  the  ship 
"  Collingwood,"  lost  or  not  lost,  at,  and  from,  and  to  all  ports  and 
places  whatsoever  and  wheresoever,  at  sea  and  in  port,  and  in  all  and 
every  service  the  ship  might  be  ordered,  for  six  calendar  months,  from 
the  8th  of  Februar}',  1809,  to  the  7th  day  of  August,  1809,  to  return  20.s. 
per  month  for  every  uncommenced  month,  on  being  discharged  govern- 
ment service.  The  plaintiff  averred  that  the  ship,  hy  the  waves,  winds, 
and  perils  of  the  sea,  was  bilged,  strained,  broken,  and  destroyed. 
Upon  the  trial  of  this  cause,  at  the  Sittings  at  Guildhall,  after  Trinity 

1  See  Gist  v.  Mason,  1  T.  R.  88  (1786)  ;  Brandon  v.  Xesbitt,  6  T.  R.  2.3,  28  (1794) ; 
Bell  V.  Gilson,  1  B.  &  P.  345,  354  (1798)  ;  Brandon  v.  Curling,  4  East,  410,  416-41S^ 
(1803).  — Ed. 


664  THOMPSON   V.   WHITMORE.  [CHAP.  VII. 

Term,  1810,  before  Mansfield,  C.  J.,  it  was  proved  that  the  vessel, 
which  was  in  the  employ  of  government  as  a  transport,  and  was  a 
narrow-floored  vessel  of  244  tons,  burthen,  had,  under  the  direction  of 
the  officers  of  the  transport  board,  been  carefully  laid  down  on  Gosport 
Beach  to  be  cleaned  and  caulked,  in  a  situation  where  vessels  equalh- 
narrow-floored,  and  also  vessels  of  a  much  greater  bulk,  therefore  much 
more  liable  to  injury,  even  of  the  burthen  of  800  tons,  had  usually  been 
laid  down  with  safety  for  the  same  purpose.  The  ship  lay  there  easy 
on  the  first  day,  when  the  tide  left  her ;  but  she  was  found  on  the  fol- 
lowing day  full  of  water,  which  rose  in  her  with  the  rising  of  the  cir- 
cumambient tide  :  and  upon  examination  it  appeared,  that  the  planks 
of  her  side  on  which  she  lay,  had  given  wa}-,  and  that  some  of  her  foot- 
hooks  were  broken.  Shepherd,  Serjt.,  for  the  defendant,  objected,  that 
this  was  not  a  loss  occasioned  bj-  any  perils  of  the  sea,  and  cited  a  case 
of  Rowcroft  V.  Dunsmore,  B.  R.,  tried  in  1801,  before  Lord  Kenyon, 
C.  J.,  in  which  Lord  Erskine  was  of  counsel  for  the  plaintiff:  the  ship 
was  hove  down,  and  while  heaving  down,  she  could  not  bear  the  strain  : 
she  was  drawn  on  the  land,  where  she  bilged ;  and  the  question  was 
made,  whether,  it  being  necessar}'  to  perform  this  operation  on  her, 
this  damage  was  occasioned  b}'  a  peril  of  the  sea.  Lord  Kenyon  thought 
it  was  not  a  loss  by  a  peril  of  the  sea,  but  an  accident  that  happened  ; 
so  in  the  present  case,  whether  the  ship  were  laid  down  negligentlj'  or 
not,  she  bilged  :  if  the  blocks  that  supported  her  had  fallen  down,  that 
also  would  have  been  an  accident,  but  certainl}'  would  not  have  been  a 
loss  by  perils  of  the  sea.  Mansfield,  C.  J.,  thought,  that  although 
the  tides  knocked  awa}'  the  shoars  which  supported  the  "  Collingwood," 
and  thereby  occasioned  the  mischief,  and  although  the  ship  was  in  the 
service  of  government  at  the  time,  and  not  under  the  control  of  the 
plaintiff,  yet  as  the  damage  happened  upon  the  land,  it  could  not  be 
considered  as  a  loss  sustained  by  the  perils  of  the  sea,  and  nonsuited 
the  ])laintiff»  with  libert}'  to  move  to  enter  a  verdict  with  £8  41s. 
damages,  if  the  court  should  be  of  opinion  that  the  plaintiff  was,  under 
the  circumstances,  entitled  to  recover. 

Xens,  Serjt.,  on  this  day  moved  to  set  aside  the  nonsuit,  and  enter  a 
verdict  for  the  plaintiff;  but 

The  court  were  unanimous  that  the  direction  of  the  Chief  Justice 
was  right.  Hide  refused.^ 

1  See  Davidson  v.  Burnand,  L.  R.  4  C.  P.  117  (1868). 

Compare  Swift  v.  Union  Mut.  M.  Ins.  Co.,  122  Mass.  573  (1877).  — Ed. 


SECT.  I.]  SMITH  V.   SCOTT.  665 

SMITH  AXD  Others  v.  SCOTT. 
Common  Pleas,  1811.     4  Taunt,  126. 

This  was  an  action  upon  a  policy  of  insurance  upon  the  ships  "  Helena" 
and  "Merlin,"  at  and  from  the  hay  of  Honduras  to  their  port  or  ports 
of  discharge  in  Great  Britain,  and  a  loss  was  averred  to  have  happened 
to  the  "Helena"  by  the  circumstance,  that  while  she  was  proceeding 
on  her  voyage,  a  certain  other  ship  on  the  high  seas,  by  and  through 
the  force  of  the  winds  and  waves,  was  carried  and  sailed  against  the 
"  Helena,"  without  any  neglect  or  default  of  the  persons  on  board  the 
"Helena,"  and  the  "Helena"  became  lost  and  stranded  by  the  perils 
of  the  seas.  Upon  the  trial  of  the  cause,  at  the  London  Sittings  after 
Trinity  Term,  1811,  before  Mansfield,  C.  J.,  the  evidence  was,  that  a 
ship  named  the  "  Margaret "  ran  foul  of  the  "  Helena  "  by  the  grossest 
neglect ;  for  when,  upon  the  shock  being  given,  some  of  the  "  Helena's  " 
crew  went  on  board  the  '-'Margaret,"  they  found  only  one  man  on  the 
deck,  and  he  was  asleep.  Hereupon  it  was  objected  by  the  counsel  for 
the  defendant,  that  the  occasion  of  the  injury  was  not  the  perils  of  the 
seas,  but  the  gross  negligence  of  the  crew  of  the  "Margaret,"  and  that 
this  was  a  fatal  variance  from  the  loss  averred.  The  jur}-,  however, 
found  a  verdict  for  the  plaintiff,  subject  to  this  point,  which  the  Chief 
Justice  reserved. 

Accordingly,  Zens,  Serjt.,  on  this  day  moved  for  a  rule  7iisi  to  set 
aside  the  verdict  and  enter  a  nonsuit,  adding,  that  the  plaintiff  had  his 
remedy  against  the  owners  of  the  "Margaret." 

Mansfield,  C.  J.  I  do  not  know  how  to  make  this^ut  not  to  be  a 
peril  of  the  sea.  What  drove  the  "  Margaret "  against  the  "  Helena  "  ? 
The  sea  !  What  was  the  cause  that  the  crew  of  the  "  Margaret  "  did  not 
prevent  her  from  running  against  the  other,  —  their  gross  and  culpable 
negligence  ?  But  still  the  sea  did  the  mischief.  It  is  reasonable  enough 
that  the  plaintiffs  should  permit  the  defendant  to  use  their  names  as 
plaintiffs  against  the  owners  or  crew  of  the  "Margaret,"  so  as  to 
recover  whatever  the  plaintiffs  would  be  entitled  to  as  against  the 
"Margaret,"  and  to  apply  it  in  diminution  of  their  loss  ;  but  it  would 
lead  to  endless  discussion,  if  it  were  required  that  no  cause  except  the 
cause  of  loss  alleged  in  the  declaration  should  be  conducive  to  the  loss. 

Heath,  J.  If  this  doctrine  were  to  prevail,  it  might  go  still  further, 
and  it  might  be  contended,  that  if  a  master  conducts  his  ship  so  unskil- 
fully as  to  run  it  on  a  rock,  that  is  not  a  peril  of  the  sea,  but  a  peril  of 
the  unskilfulness  of  the  master.  Hule  refused.^ 

1  See  "Wilson  v.  Xantho,  post,  p.  670,  n.  (1)  (H.  L.  1887).  — Ed. 


666  HUNTER   V.    POTTS.  [CHAP.  VIT. 

HUNTER  V.  POTTS. 
Nisi  Prius,  King's  Bench,  1815,     4  Camp.  203. 

This  was  an  action  on  a  policy  of  insurance  on  goods  by  the  ship 
"  Rebecca,"  at  and  from  London  to  Honduras,  wiLli  leave  to  touch  at 
Antigua,  and  discharge  and  take  in  goods. 

The  first  count  laid  the  loss  by  the  perils  of  the  seas.  The  second 
count  alleged,  that  whilst  the  ship  was  sailing  and  proceeding  with  the 
goods  on  board  thereof  upon  her  said  vo3'age,  and  before  her  arrival  at 
Honduras,  and  during  the  course  of  the  said  vo3'age,  to  wit,  on  the 
twenty-fifth  da}'  of  February,  1804,  the  said  ship  and  the  goods  so  on 
board  thereof,  were  by  certain  perils,  losses,  and  misfortunes,  which 
came  to  the  hurt,  detriment,  and  damage  of  the  said  goods  and  the  said 
ship,  broken,  spoiled,  injured,  lost,  and  destroyed,  and  the  said  goods 
thereb}'  became,  and  were  wholly  lost  to  the  proprietors  thereof,  to 
wit,  at,  etc. 

It  appeared  that  the  ship,  having  touched  at  Antigua,  was  detained 
there  for  a  considerable  time  by  the  sickness  of  the  crew,  and  that 
while  she  lay  at  that  island,  the  rats,  which  had,  increased  to  a  great 
extent,  eat  holes  in  her  transoms,  and  other  parts  of  her  bottom.  In 
consequence,  a  survey  was  called,  and  she  was  found  so  much  injured. 

that  she  was  unfit  to  proceed  to  Honduras^ She  was  theienpnn  pnn- 

demned,  and  the  cargo  was  sold.     The  plaintiff  sought  to  recover  a  loss 
oTJ64  165.  Qcl.  per  cent. 

Lord  Ellenborough,  however,  was  clearly  of  opinion,  that  this  was 
not  a  loss  within  any  of  the  perils  insured  against,  and 

The  plaintiff  was  nonsuited.^ 

Garrov.\  A.  G.,  Park,  and  Puller,  for  the  plaintiff. 

Tojyping  and  Pichardson,  for  the  defendant. 

^  Compare  Garrigues  v.  Coxe,  1  Binn.  592  (1809). 

See  Laveroni  v.  Urury,  22  L.  J.  N.  s.  Ex.  2  (1852),  8.  c.  8  Ex.  166. 

In  Hamilton  v.  Pandorf,  12  App.  Cas.  518  (H.  L.  1887),  it  was  held  that,  under  a 
charterparty  and  bills  of  lading  excepting  "  dangers  and  accidents  of  the  seas,"  ship- 
owners are  excused  from  liability  if  rats  gnaw  a  hole  in  a  pipe  and  if  the  result  is  that 
sea  water  enters  and  damages  the  cargo. 

Lord  Halsburt,  L.  C.  (for  whose  language  it  has  seemed  well  to  follow  partly, 
57  L.  T.  Rep.  n.  s.  726),  said:  "One  of  the  dangers  which  both  parties  to  the 
contract  would  have  in  their  mind  would,  I  think,  be  the  possibility  of  the  water  get- 
ting into  the  vessel  from  the  sea  upon  which  the  vessel  was  to  sail  iu  accomplishing 
her  voyage ;  it  would  not  necessarily  be  by  a  storm,  the  parties  have  not  so  limited  the 
language  of  the  contract;  it  might  be  by  striking  on  a  rock,  or  by  excessive  heat,  so  as 
to  open  some  of  the  upper  timbers;  these  and  many  more  contingencies  that  might  be 
suggested  would  let  the  sea  in,  but  what  the  parties,  I  think,  contemplated  was  that 
any  accident  (not  wear  and  tear,  or  natural  decay)  should  do  damage  by  letting 
the  sea  into  the  vessel,  that  that  should  be  one  of  the  things  contemplated  by  the 
contract.  .  .  . 

"Now  cases  have  been  brought  to  your  Lordships'  attention  in  which  the  decision 
has  turned,  not,  I  think,  upon  the  question  of  whether  it  was  a  sea  peril  or  accident, 
but  whether  it  was  an  accident  at  all.     I  think  the  idea  of  something  fortuitous  and 


SECT.  I.]  CULLEN  V.   BUTLER.  667 

CULLEN   V.   BUTLER. 

King's  Bench,  1816.     5  M.  &  S.  461. 

Assumpsit  on  a  policy  of  insurance  for  £200,  upon  goods  on  board 
the  ship  "  Industr}',"  at  and  from  London  to  the  Canary  Islands,  the 
interest  being  averred  in  the  plaintiff.  The  plaintiff  declared  in  the 
first  count,  upon  a  loss  by  the  perils  and  misfortunes  of  the  seas  ;  and 
in  the  second  count,  he  averred,  that  the  ship,  with  the  goods  on  board, 
departed  and  set  sail  from  London  in  prosecution  of  her  intended  voy- 
age, and  before  her  arrival  at  the  Canary  Islands,  to  wit,  on  the  7th  of 

unexpected  is  involved  in  both  words,  '  peril '  or  '  accident ; '  you  could  not  speak  of 
the  danger  of  a  ship's  decay ;  you  would  know  that  it  must  decay,  and  the  destruction 
of  the  ship's  bottom  by  vermin  is  assumed  to  be  one  of  tiie  natural  and  certain  effects 
of  an  unprotected  wooden  vessel  sailing  through  certain  seas. 

"  One  ought,  if  it  is  possible,  to  give  effect  to  all  the  words  that  the  parties  have 
used  to  express  what  this  bargain  is,  and  I  think  in  this  case  it  was  a  danger,  accident, 
or  peril,  in  the  contemplation  of  both  parties,  that  the  sea  might  get  in  and  spoil  the 
rice.  I  cannot  think  it  was  less  sucli  a  peril  or  accident  because  the  hole  through 
which  the  sea  came  was  made  by  vermin  from  within  the  vessel,  and  not  by  a  sword- 
fish  from  without,  —  the  sea  water  did  get  in." 

Lord  Watson  said:  "  If  the  respondents  were  preferring  a  claim  under  a  contract 
of  marine  insurance,  expressed  in  ordinary  terms,  I  should  be  clearly  of  opinion  that 
thev  were  entitled  to  recover,  on  the  ground  that  their  loss  was  occasioned  by  a  peril 
of  the  sea  within  tlie  meaning  of  the  contract.  When  a  cargo  of  rice  is  directly  in- 
jured by  rats,  or  by  the  crew  of  the  vessel,  the  sea  has  no  share  in  producing  the  dam- 
age, which  in  that  case  is  wholly  due  to  a  risk  not  peculiar  to  the  sea,  but  incidental 
to  the  keeping  of  that  class  of  goods,  whether  on  shore  or  on  board  a  voyaging  ship. 
But  in  the  case  where  rats  make  a  hole,  or  where  one  of  the  crew  leaves  a  port-hole 
open,  through  which  the  sea  enters  and  injures  the  cargo,  the  sea  is  tiie  immediate 
cause  of  mischief,  and  it  would  afford  no  answer  to  the  claim  of  the  insured  to  say 
that,  had  ordinary  precaution  been  taken  to  keep  down  vermin,  or  had  careful  hands 
been  employed,  the  sea  would  not  have  been  admitted  and  there  would  have  been  no 
consequent  damage." 

Lord  Bramwell  said :  "  As  I  have  said  elsewhere,  I  think  the  definition  of  Lopes, 
L.  J.,  very  good  :  '  It  is  a  sea  damage,  occurring  at  sea,  and  nobody's  fault.'  What 
is  the  '  peril?  '  It  is  that  the  ship  or  goods  will  be  lost  or  damaged ;  but  it  must  be 
'  of  the  sea.'  '  Fire '  would  not  be  a  peril  of  the  sea  ;  so  loss  or  damage  from  it  would 
not  be  insured  against  by  the  general  words.  So  of  lightning.  In  the  present  case 
the  sea  has  damaged  the  goods.  That  it  might  do  so  was  a  peril  that  tlie  ship  en- 
countered. It  is  true  that  rats  made  the  hole  through  wliich  the  water  got  in,  and 
if  the  question  were  whether  rats  making  a  hole  was  a  peril  of  the  sea,  I  should  say 
certainly  not.  If  we  could  suppose  that  no  water  got  it,  but  tliat  the  assured  sued  the 
underwriter  for  tlie  damage  done  to  the  pipe,  I  should  say  clearly  that  he  could  not 
recover.  But  I  should  equally  say  that  the  underwriters  on  goods  would  be  liable  for 
the  damages  shown  iu  this  case.  Then  I  am  of  opinion  that  '  perils  of  the  seas  '  is  a 
phrase  having  the  same  meaning  in  bills  of  lading  and  charterparties  as  in  policies  of 
insurance.  ...  An  attempt  was  made  to  sliow  that  a  peril  of  the  sea  meant  a  peril  of 
what  I  feel  inclined  to  call  the  sea's  behavior  or  ill-condition.  But  that  is  met  by  the 
argument,  that  if  so,  striking  on  a  sunken  rock,  on  a  calm  day,  or  against  an  iceberg, 
and  con.sequent  foundering,  is  not  a  peril  of  the  sea  or  its  consequence.  No  question 
of  negligence  exists  in  this  case.  The  damage  was  caused  by  the  sea  in  the  course  of 
navigation  with  no  default  in  any  one.  I  am,  therefore,  of  opinion  that  the  damage 
was  caused  by  peril  of  the  sea  within  the  meaning  of  the  bill  of  lading."  —  Ed. 


668  CULLEN    V.   BUTLER.  [CHAP.  VII. 

Juh',  &c.,  in  the  night  of  that  da}-,  the  master  and  crew  of  a  certain 
British  ship  called  the  "  Midas,"  believing  the  ship  in  the  policy  men- 
tioned to  be  an  enemy's  ship,  and  that  the  persons  on  board  thereof 
were  then  and  there  in  a  hostile  manner  about  to  attack  the  "  Midas  " 
and  attempt  to  board  and  take  her  as  prize,  did  then  and  there,  for  the 
purpose  of  defending  themselves  and  the  "  Midas  "  against  such  appre- 
hended attack,  but  without  anj-  fault  committed  or  done  by  the  master 
or  crew  of  the  ship  in  the  polic}'  mentioned,  fire  at  and  against,  and 
strike  and  pierce  with  shot  the  ship  in  the  polic}'  mentioned,  whereby 
the  said  ship,  with  the  goods  on  board,  was  sunk  in  the  sea  and  lost. 
Plea,  non-assumpsit. 

At  the  trial  before  Lord  Ellenborough,  C.  J.,  at  the  London  Sittings 
after  last  Hilary  Term,  the  jur}-  found  that  the  ship  and  cargo  were  lost 
in  the  manner,  and  under  the  circumstances  stated  in  the  second  count. 
And  they  found  a  general  verdict  for  the  whole  subscription,  subject  to 
the  opinion  of  the  court  upon  a  case  stating  the  above  facts.  And  the 
question  was,  whether  this  was  a  loss  covered  bj-  the  policy,  under  the 
words,  "perils  of  the  seas,"  or  under  the  general  words,  "all  other 
perils,  losses,"  &c.  The  case  was  argued  at  Serjeant's  Inn  before  this 
term,  by  Parke  for  the  plaintiff,  and  Burneioall  for  the  defendant. 

Cur.  adv.  vult. 

Lord  Ellenborough,  C.J.,  now  delivered  the  judgment  of  the  court. 

As  the  court  is  of  opinion  that  the  plaintiff  is  entitled  to  recover 
upon  the  second  count  of  this  declaration,  framed  upon  the  special  cir- 
cumstances of  tills  case,  which  clearly  seem  to  fall  within  the  general 
and  comprehensive  words  in  the  policy  subjoined  to  the  particular 
causes  of  loss  therein  specified,  viz.  "  all  other  perils,  losses,  and  mis- 
fortunes which  had  or  should  come  to  the  hurt,  detriment,  and  damage 
of  the  said  goods  and  merchandises,  and  ship,  &c.  or  any  part  thereof," 
it  becomes  less  material  to  consider  whether  the  plaintiff  would  be  en- 
titled to  recover  as  for  a  loss  "  b}'  perils  of  the  sea,"  in  the  proper  and 
strict  sense  of  the  words,  i.  e.  ex  marince  tempestatis  discrimine,  as 
described  b}'  Emerigon  ;  which  loss  b}'  perils  of  the  sea  is  the  specific 
loss  stated  in  the  first  count.  If  it  be  a  loss  b}'  perils  of  the  sea, 
merel}'  because  it  is  a  loss  happening  upon  the  sea,  as  has  been  con- 
tended, all  the  other  causes  of  loss  specified  in  the  policy  are,  upon 
that  ground,  equall}'  entitled  so  to  be  considered  ;  and  it  would  be  un- 
necessary as  to  them  ever  to  assign  an}'  other  cause  of  loss  than  a  loss 
by  perils  of  the  sea.  But  as  that  has  not  been  the  understanding  and 
practice  on  the  subject  hitherto,  and  inasmuch  as  the  very  insertion  of 
the  general  or  sweeping  words,  as  they  are  called,  in  the  policy  after 
the  special  words,  imports  that  the  special  words  were  not  understood 
to  include  all  perils  happening  on  the  sea,  but  that  some  more  general 
words  were  required  to  be  added,  in  order  to  extend  the  responsibility 
of  the  underwriters  unequivocally  to  other  risks  not  included  within  the 
proper  scope  of  any  of  those  enumerated  perils,  I  shall  think  it  necessary 
only  to  advert  shortly  to  some  of  the  reasons  upon  which  we  think  that 


SECT.  I.]  CULLEN    V.    BUTLER.  669 

the  general  words,  tlius  inserted,  comprehend  a  loss  of  this  nature. 
The  extent  and  meaning  of  the  general  words  have  not  yet  been  the 
immediate  subject  of  any  judicial  construction  in  our  courts  of  law. 
As  they  must,  however,  be  considered  as  introduced  into  the  polic}'  in 
furtherance  of  the  objects  of  marine  insurance,  and  may  have  the  effect 
of  extending  a  reasonable  indemnity  to  many  cases  not  distinctly  cov- 
ered by  the  special  words,  the}'  are  entitled  to  be  considered  as  material 
and  operative  words,  and  to  have  the  due  effect  assigned  to  them  in  the 
construction  of  this  instrument ;  and  which  will  be  done  by  allowing 
them  to  comprehend  and  cover  other  cases  of  marine  damage  of  the 
like  kind  with  those  which  are  specially  enumerated  and  occasioned  by 
similar  causes.  Emerigon,  in  c.  12,  s.  1,  p.  3G0.  of  his  Treatise  on 
Insurances,  in  discussing  the  general  rule,  that  assurers  answer  for  all 
loss  and  damages  that  happen  on  the  sea,  says,  that  it  is  to  prevent 
doubts  and  vain  disputes,  that,  in  the  printed  formulas  (of  policies)  the 
following  words  have  been  inserted  ;  and  then  he  instances  the  general 
words  to  be  found  in  the  formulas  of  most  of  the  principal  commercial 
ports  on  the  Continent:  "All  inconveniences,  perils,  and  cas  fortuits 
(which  may  be  translated  as  misfortunes,  accidents,  &c.)  which  may 
happen,"  and  generally  of"  all  perils  and  fortunes  which  may  happen 
in  what  manner  soever,  and  which  can  be  imagined,"  is  the  provision 
to  be  found  in  the  formulas  of  Bourdeaux  and  Antwerp.  Generally  of 
'•  all  perils,  fortunes,  or  accidents  which  ma}'  happen,  in  what  manner 
soever,  foreseen  or  unforeseen,"  is  the  formula  of  Nantes.  And  that  of 
Rouen  and  Genoa, ''generallv  of  all  inconveniences,  foreseen  or  unfore- 
seen." The  formula  of  Hamburgh  is  of  all  Cogitatis  vel  imaginatis, 
usitatls  vtl  innsitatis,  nullis  exceptis.  But  although  there  be  an  express 
exclusion  of  any  exception  by  the  terms  of  the  last-mentioned  polic}', 
the  reason  of  the  thing  ingrafts  an  implied  exception,  even  upon  these 
words,  general  as  they  are,  that  is,  in  the  case  of  damage  occasioned 
b}'  the  fault  of  the  assured  ;  as  to  which  the  rule  is.  Si  casus  evenerit 
culpa  assecurati,  non  teaeiitur  assecuratores.  And  Emerigon  (s.  2. 
p.  361)  say's,  "This  is  a  general  rule,  from  which  it  is  not  allowed  to 
derogate  by  a  pact  to  the  contrary  ;  "  Nulla  pactione  ejjici  potest  ut 
dolus  prcestetur ;  and  he  quotes  Pothier,  where  he  says,  "I  cannot 
effectually  {oalahlement)  contract  with  any  one  that  he  shall  charge 
himself  with  the  faults  which  I  shall  commit."  But  this  is  a  case  in 
which  the  assured  is,  by  the  terms  of  the  declaration  and  finding  there- 
upon, expressly  exempted  from  the  imputation  of  blame  in  respect  to 
the  loss  in  question.  It  is  no  objection  to  the  plaintiff's  right  to  re- 
cover against  the  underwriters  in  this  case,  that  he  ma}'  have  also  a 
right  to  recover  against  the  persons  by  whose  immediate  act  the  dam- 
age was  occasioned.  That  has  been  decided  in  the  case  of  a  damage  at 
sea  by  collision.  The  only  inconvenience  which  can  be  suggested  as 
likely  to  arise  from  a  limited  construction  of  the  words  "perils  of  the 
seas,"  occurring  in  policies  of  assurance,  and  from  the  effect  attributed 
to  the  general  words,  is,  that  in  doubtful  cases  the  plaintiff  will  feel  it 


(J70  CULLEN    V.   BUTLER.  [CHAP.  VTL 

necessary  to  introduced  a  special  count,  stating  the  particular  circum- 
stances by  which  the  loss  was  occasioned,  instead  of  relying  upon  a 
count  framed  upon  the  special  head  of  loss  in  the  policy,  viz.  by  perils 
of  the  seas,  or  the  like.  But  this  inconvenience  will  be  well  compen- 
sated to  the  assured,  by  the  advantage  of  certainty,  by  which  the  risk 
of  nonsuit  at  the  trial,  and  the  expenses  attendant  thereupon,  will  be 
avoided.  Judgment  for  the  plaintiff } 

1  See  Davidson  v.  Buruand,  L.  R.  4  C.  P.  117  (1868). 

Ill  Wilson  V.  Xautho,  12  App  Cas.  503  (H.  L.  1887),  it  was  held  that  foundering 
caused  by  tlie  negligence  of  another  vessel  is  within  a  bill  of  lading's  exception  of 
"  dangers  and  accidents  of  the  sea." 

Lord  Hekschell  said  :  "  I  think  it  clear  that  tlie  term  '  perils  of  the  sea,'  does  not 
cover  every  accident  or  casualty  which  may  hajipeii  to  the  sul)ject-matter  of  the  in- 
surance on  the  sea.  It  nmst  he  a  peril  'of  the  sea.  Again,  it  is  well  settled  that  it 
is  not  every  loss  or  damage  of  which  the  sea  is  the  immediate  cause  that  is  covered  by 
these  words.  They  do  not  protect,  for  example,  against  that  natural  and  inevitable 
action  of  the  winds  and  waves,  wliich  results  in  what  may  he  described  as  wear  and 
tear.  There  must  be  some  ca,sualty,  sometliing  which  could  not  be  foreseen  as  one  of 
the  uecessafy"Tncigeiits~of  the  adventure,  ihe  purljose^prThtTpolicy  is  to_s_ecure  an 
indemnity  against  accidents  which  may  happen,  no^jgainst_eyents  which  nmst  hap- 
^i^  IF  was  contended  that  those  losses  only^were  losses  by  perils  of  the  sea,  which 
were  occasioned  by  extraordinary  violence  of  the  winds  or  waves.  I  think  this  is  too 
narrow  a  construction  of  the  words,  and  it  is  certainly  not  supported  by  the  authorities, 
or  by  common  understanding.  It  is  beyond  question,  that  if  a  vessel  strikes  upon  a 
sunken  rock  in  fair  weather  and  sinks,  this  is  a  loss  by  perils  of  the  sea.  And  a  loss 
by  foundering,  owing  to  a  vessel  coming  into  collision  with  another  vessel,  even  when 
the  collision  results  from  the  negligence  of  that  other  vessel,  falls  within  the  same 
category.  Indeed,  I  am  aware  of  only  one  case  which  throws  a  doubt  upon  the  prop- 
osition "that  every  loss  by  incursion  of  the  sea,  due  to  a  vessel  coming  accidentally 
■  (using  that  word  in  its  popular  sense)  into  contact  with  a  foreign  body,  wliich  pene- 
trates it  and  causes  a  leak,  is  a  loss  by  a  peril  of  the  sea.  I  refer  to  the  case  of  CuMen 
V.  Butler,  where  a  ship  having  been  sunk  by  another  ship  firing  upon  her  in  mistake 
for  an  enemy,  the  court  inclined  to  the  opinion  that  this  was  not  a  loss  by  perils  of 
the  sea.  I  think,  however,  this  expression  of  opinion  stands  alone,  and  has  not  Ijeeu 
sanctioned  by  subsequent  cases." 

Lord  Bramwell  said  :  '  Was  it  by  a  peril  of  the  sea  that  the  defendants'  sliip 
foundered?  The  facts  are,  that  the  sea-water  flowed  into  her  through  a  hole,  and 
flowed  in  such  quantities  that  slie  sank.  It  seems  to  me  that  tlie  bare  statement  shows 
she  went  to  the  bottom  through  a  peril  of  the  sea.  If  the  hole  had  been  small, 
there  being  a  piece  of  bad  wood,  a  plank  starting,  or  a  similar  cause,  it  would  be 
called  a  leak,  and  no  one  would  doubt  that  she  foundered  from  a  peril  of  the  sea. 
Does  it  make  any  difference  that  the  hole  was  large,  and  occasioned  by  collision?  I 
cannot  think  it  does.  It  is  admitted  that  if  the  question  had  arisen  on  an  insurance 
against  loss  by  perils  of  the  sea  this  would  have  been  within  the  policy  a  loss  by  perils 
of  the  sea.  Are  the  words  to  have  different  meanings  in  the  two  instruments?  Why 
should  they?  Different  consequences  may  follow.  The  insurer  may  be  unable  to 
defend  himself  on  the  ground  that  the  loss  was  brought  about  by  the  negligence  of 
the  crew,  while  the  freighter  may  maintain  an  action  on  the  ground  that  it  was.  But 
how  is  the  loss  a  loss  by  perils  of  the  sea  in  one  case  and  not  in  the  other?  The  argu- 
ment is,  that  wind  and  waves  did  not  cause  the  loss,  but  negligence  in  some  one. 
But  surely,  if  that  were  so,  a  loss  by  striking  in  calm  weather  on  a  sunken  rock  not 
marked  on  the  chart  would  not  be  a  loss  by  perils  of  the  seas  within  the  bill  of  lading  ; 
or  striking  on  a  rock  from  which  the  Mght  had  been  removed,  or  an  iceberg,  or  a  ves- 
sel witliout  lights.  I  cannot  bring  myself  to  see  that  such  cases  are  not  losses  by 
perils  of  the  sea.  Is  not  the  chance  of  being  run  against  by  a  clumsy  rider  one  of  the 
perils  of  hunting?  "  —  Ed. 


SECT.  1.]         WATERS   V.   MERCHANTS'   LOUISVILLE   INS.   CO.  671 

WATERS  V.   MERCHANTS'   LOUISVILLE  INS.   CO. 
Supreme  Court  of  the  United  States,  1837.     11  Pet.  213.^ 

Ox  a  certificate  of  division  from  tlie  Circuit  Court  for  the  District  of 
Kentucky. 

Tlie  questions  certified  were  as  to  tlie  sufficiency  of  six  pleas,  wliich 
were  to  the  effect  that  the  officers  and  crew  of  the  insured  vessel  man- 
aged the  cargo  so  negligently  that  there  was  an  explosioUj^causing  the 
loss  ;  and,  more  specificallj-,  tliat  the  officers  and  crew,  or  some  of 
them,  negligently  carried  a  lighted  candle  or  lamp  into  the  hold,  where 
cargo  was  stored,  and  thus  caused  the  explosion  ;  and  further,  that 
the  risk  was  increased  by  having  gunpowder  on  board. 

Crittenden,  for  the  defendants. 

No  counsel  contra. 

Mr.  Justice  Story  delivered  the  opinion  of  the  court. 

This  is  a  case  certified  to  us  from  the  Circuit  Court  for  the  District 
of  Kentucky  upon  certain  questions  upon  which  the  judges  of  that 
court  were  opposed  in  opinion. 

The  action  was  brought  bj'  Waters,  the  plaintiff,  on  a  policy  of 
insurance  underwritten  by  the  Merchants'  Louisville  Insurance  Com- 
pany, whereby  they  insured  and  caused  to  be  insured,  the  plaintiff 
"  lost  or  not  lost,  in  the  sum  of  6,000  dollars,  on  the  steamboat 
'  Lioness,'  engine,  tackle,  and  furniture,  to  navigate  the  western 
waters  usually  navigated  by  steamboats,  particularly  from  New  Orleans 
to  Natchitoches  on  Red  River,  or  elsewhere,  the  Missouri  and  Upper 
Mississippi  excepted  (Captain  "Waters  having  the  privilege  of  placing 
competent  masters  in  command  at  anytime,  6,000  dollars  being  insured 
at  New  Albany,  Indiana),  whereof  William  Waters  is  at  present 
masfer ;  beginning  the  adventure  upon  the  said  steamboat,  from  the 
12th  of  September,  1832,  at  twelve  o'clock  meridian,  and  to  continue 
and  endure  until  the  12th  of  September,  1833,  at  twelve  o'clock, 
meridian  (twelve  months)."  The  policy  further  provided,  that  "  It 
shall  be  lawful  for  the  said  steamboat,  during  said  time,  to  proceed  to, 
touch,  and  stay  at,  any  point  or  points,  place  or  places,  if  tiiereunto 
obliged  by  stress  of  weather  or  other  unavoidable  accidents,  also  at  the 
usual  landings  for  wood  and  refreshments,  and  for  discharging  freight 
and  passengers,  without  prejudice  to  this  insurance.  Touching  the 
adventures  and  perils,  which  the  aforesaid  insurance  compan}-  is  con- 
tented to  bear,  the}*  are,  of  the  rivers,  fire,  enemies,  pirates,  assailing 
thieves,  and  all  other  losses  and  misfortunes,  which  shall  come  to  the 
hurt,  detriment,  or  damage  of  the  said  steamboat,  engine,  tackle,  and 
furniture,  according  to  the  true  intent  and  meaning  of  this  policy." 
The  premium  was  nine  per  cent.     The  declaration  avers  a  total  loss ; 

1  The  reporter's  statement  has  been  omitted.  —  Ed. 


672  WATERS   V.   merchants'   LOUISVILLE   INS.   CO.      [CHAP.  VII, 

and  that  the  said  steamboat  and  appurtenances  insured  "  were,  by  the 
adventures  and  perils  of  fire  and  the  river,  exploded,  sunk  to  the  bottom 
of  Red  River  aforesaid,  and  utterly  destroyed." 

The  defendants  pleaded  six  several  pleas,  to  which  a  demurrer  was 
put  in  by  the  plaintiff ;  and  in  the  consideration  of  the  demurrer,  the 
following  questions  and  points  occurred  : 

1 .  Does  the  policy  cover  a  loss  of  the  boat  by  a  fire,  caused  by  the 
barratry  of  the  master  and  crew?        (yCO 

2.  Does  the  policy  cover  a  loss  of  the  boat  by  fire,  caused  by  the 
negligence,  carelessness,  or  unskilfulness  of  the  master  and  crew  of 
the  boat,  or  any  of  them?  ui/^ 

3.  Is  the  allegation  of  the  defendants  in  their  pleas,  or  either  of 
them,  to  the  effect  that  the  fire,  by  which  the  boat  was  lost,  was  caused 
by  the  carelessness,  or  the  neglect,  or  unskilful  conduct  ot  the  master 
and  crew,  a  defence  to  this  action  ? 

4.  Are  the  said  pleas,  or  either  of  them,  sufficient? 

These  questions  constituted  the  points  on  which  the  division  of 
the  judges  took  place  in  the  court  below  ;  and  they  are  those  upon 
which  we  are  now  called  to  deliver  our  opinion  upon  the  argument 
had  at  the  bar. 

As  we  understand  the  first  question,  it  assumes  that  the  fire  was 
directl}'  and  immediately  caused  b}'  the  barratry  of  the  master  and 
crew,  as  the  efficient  agents ;  or,  in  other  words,  that  the  fire  was 
communicated  and  occasioned  by  the  direct  act  and  agency  of  the 
master  and  crew,  intentionally  done  from  a  barratrous  [)urpose.  In 
this  view  of  it,  we  have  no  hesitation  to  say,  that  a  loss  b}-  fire  caused 
by  the  barratry-  of  the  master  or  crew  is  not  a  loss  within  the  polic}^ 
Such  a  loss  is  properly  a  loss  attributable  to  the  barratry-,  as  its 
proximate  cause,  as  it  concurs  as  the  efficient  agent,  with  the  element, 
eo  iiistanii,  when  the  injur\'  is  produced.  If  the  master  or  crew 
should  barratrously  bore  holes  in  the  bottom  of  the  vessel,  an^  the 
latter  should  thereby  be  filled  with  water  and  sink,  the  loss  would 
properly  be  deemed  a  loss  by  barratry,  and  not  by  a  peril  of  the  seas 
or  of  rivers,  though  the  flow  of  the  water  should  co-operate  in  pro- 
ducing the  sinking. 

The  second  question  raises  a  different  point,  whether  a  loss  by  fire, 
remotely  caused  by  the  negligence,  carelessness,  or  unskilfulness  of 
the  master  and  crew  of  the  vessel,  is  a  loss  within  the  true  intent  and 
meaning  of  the  policy.  By  unskilfulness,  as  here  stated,  we  do  not 
understand  in  this  instance,  a  general  unskilfulness,  such  as  would  be 
a  breach  of  the  implied  warranty  of  competent  skill  to  navigate  and 
conduct  the  vessel,  but  only  unskilfulness  in  the  particular  circum- 
stances remotely  connected  with  the  loss.  In  this  sense,  it  is  equiva- 
lent to  negligence  or  carelessness  in  the  execution  of  duty,  and  not 
to  incapacit}'. 

This  question  has  undergone  many  discussions  in  the  courts  of 
England  and  America,  and  has  given  rise  to  opposing  judgments  in 


SECT.  I.]         WATERS   V.   MERCHANTS'    LOUISVILLE    INS.    CO.  673 

the  two  countries.  As  applied  to  policies  against  fire  on  land,  the 
doctrine  has  for  a  great  length  of  time  prevailed,  that  losses  occa- 
sioned b}-  the  mere_f ault  or  negligence  ^_lli&, assured  or,  Ms^servants, 
unaffected  bj-  fraud  or  design,  are  within  the  protection  of  the  poli- 
cies ;  and  as  such  recoverable  from  the  underwriters.  It  is  not  certain 
upon  what  precise  grounds  this  doctrine  was  originall}-  settled.  It 
may  have  been  from  the  rules  of  interpretation  applied  to  such  poli- 
cies containing  special  exceptions,  and  not  excepting  this  ;  or  it  may 
have  been,  and  more  probabl}-  was,  founded  upon  a  more  general 
ground,  that  as  the  terms  of  the  policy,  covered  risks  by  fire  gene- 
rally, no  exception  ought  to  be  introduced  by  construction,  except  that 
of  fraud  of  the  assured,  which,  upon  the  principles  of  public  policy  and 
morals,  was  always  to  be  implied.  It  is  probable,  too,  that  the  con- 
sideration had  great  weight,  that  otherwise  such  policies  would  practi- 
cally be  of  little  importance,  since,  comparative!}-  speaking,  few  losses 
of  this  sort  would  occur  which  could  not  be  traced  back  to  some  care- 
lessness, neglect,  or  inattention  of  the  members  of  the  family. 

Be  the  origin  of  it,  however,  what  it  ma}',  the  doctrine  is  now 
firmly  established  both  in  England  and  America.  We  had  occasion 
to  consider  and  decide  the  point  at  the  last  term,  in  the  case  of  the 
Columbia  Insurance  Company  of  Alexandria  v.  Lawrence,  10  Peters' 
R.  517,  518  ;  which  was  a  policy  against  the  risk  of  fire  on  land. 
The  argument  addressed  to  us  on  that  occasion,  endeavored  to  estab- 
lish the  proposition,  that  there  was  no  real  distinction  between  poli- 
cies against  fire  on  land  and  at  sea  ;  and  that  in  each  case  the  same 
risks  were  included  :  and  that  as  the  risk  of  loss  by  fire  occasioned 
by  negligence  was  not  included  in  a  marine  polic}',  unless  that  of 
barratry  was  also  contained  in  the  same  policy,  it  followed,  that  as 
the  latter  risk  was  not  taken  on  a  land  policy,  no  recovery  could  be 
had.  In  repl}'  to  that  argument,  the  court  made  the  comments  which 
have  been  alluded  to  at  the  bar,  and  the  correctness  of  which  it 
becomes  now  necessary  to  decide. 

It  is  certainly  somewhat  remarkable  that  the  question  now  before 
us  should  never  have  been  directly  presented  in  the  American  or 
English  courts  ;  viz.  whether,  in  a  marine  policy  (as  this  ma}'  well 
enough  be  called),  where  the  risk  of  fire  is  taken,  and  the  risk  of 
barratry  is  not  (as  is  the  predicament  of  the  present  case),  a  loss  by 
fire,  remotel}'  caused  by  negligence,  is  a  loss  within  the  polic}'.  But 
it  is  scarcely  a  matter  of  less  surprise,  considering  the  great  length 
of  time  during  which  policies  against  both  risks  have  been  in  con- 
stant use  among  merchants ;  that  the  question  of  a  loss  by  negligence 
in  a  policy  against  both  risks  should  not  have  arisen  in  either  country 
until  a  comparatively  recent  period. 

If  we  look  to  the  question  upon  mere  principle,  without  reference 
to  authority,  it  is  difficult  to  escape  from  the  conclusion,  that  a  loss 
by  a  peril  insured  against,  and  occasioned  b}'  negligence,  is  a  loss 
within   a  marine  policy  ;  unless  there  be  some  other  language  in  it, 

43 


674  WATERS   V.   merchants'    LOUISVILLE    INS.    CO.       [CHAP.  VII. 

which  repels  that  conclusion.  Such  a  loss  is  within  the  words,  and 
it  is  iucum1)eut  upon  those  who  seek  to  make  an}-  exception  from 
the  words,  to  show  that  it  is  not  within  the  intent  of  the  policy. 
There  is  nothing  unreasonable,  unjust,  or  inconsistent  with  public 
polic}',  in  allowing  the  insured  to  insure  himself  against  all  losses  from 
any  perils  not  occasioned  by  his  own  personal  fraud.  It  was  well  ob- 
served b}'  Mr.  Justice  Bayley,  in  delivering  the  opinion  of  the  court 
in  Bush  v.  The  Royal  Exchange  Assurance  Company,  2  Barn,  and 
Aid.  79,  after  referring  to  the  general  risks  in  the  policy,  that  "the 
object  of  the  assured,  certainly,  was  to  protect  himself  against  all  the 
risks  incident  to  a  marine  adventure.  The  underwriter  being  there- 
fore liable,  jyrbna  facie^  by  the  express  terms  of  the  policy-,  it  lies 
upon  him  to  discharge  himself.  Does  he  do  so  by  showing  that  the 
fire  arose  from  the  negligence  of  the  master  and  mariners?'*  "If, 
indeed,  the  negligence  of  the  master  would  exonerate  the  underwriter 
from  responsibility,  in  case  of  a  loss  b}'  fire  ;  it  would  also  in  cases  of 
a  loss  1)3'  capture,  or  perils  of  the  sea.  And  it  would,  therefore, 
constitute  a  good  defence  in  an  action  upon  a  polic}",  to  show,  that 
the  captain  had  misconducted  himself  in  the  navigation  of  the  ship, 
or  that  he  had  not  resisted  an  enemy  to  the  utmost  of  his  power." 
There  is  great  force  in  this  reasoning,  and  the  practical  inconvenience 
of  carving  out  such  an  implied  exception  from  the  general  peril  in  the 
policv,  furnishes  a  strong  ground  against  it ;  and  it  is  to  be  remem- 
bered, that  the  exception  is  to  be  created  b}-  construction  of  the  court, 
and  is  not  found  in  the  terms  of  the  policy.  The  reasons  of  public 
policy,  and  the  presumption  of  intention  in  the  parties  to  make  such  an 
exception,  ought  to  be  very  clear  and  unequivocal,  to  justify  the  court 
in  such  a  course.  So  far  from  an}'  such  polic}'  or  presumption  benig 
clear  and  unequivocal,  it  ma}'  be  aflSrmed  that  they  lean  the  other  way. 
The  practical  inconvenience  of  creating  such  an  exception  would  be 
ver}-  great.  Lord  Tenterden  alluded  to  it  in  Walker  v.  IMaitland,  5 
Barn.  &  Aid.  174.  "  No  decision  (said  he)  can  be  cited,  wherein 
such  a  case  (the  loss  by  a  peril  of  the  sea)  the  underwriters  have  been 
held  to  be  excused  in  consequence  of  the  loss  having  been  remotely 
occasioned  by  the  negligence  of  the  crew.  I  am  afraid  of  laying  down 
any  such  rule.  It  will  introduce  an  infinite  number  of  questions,  as  to 
the  quantum  of  care,  which,  if  used,  might  have  prevented  the  loss. 
Suppose,  for  instance,  the  master  were  to  send  a  man  to  the  mast-head 
to  look  out,  and  he  falls  asleep,  in  consequence  of  which  the  vessel 
runs  upon  a  rock,  or  is  taken  by  the  enemy  ;  in  that  case  it  might  be 
argued,  as  here,  that  the  loss  was  imputable  to  the  negligence  of  one 
of  the  crew,  and  that  the  underwriters  are  not  liable.  These,  and  a 
variety  of  other  such  questions,  would  be  introduced,  in  case  our 
opinion  were  in  favor  of  the  underwriters."  His  lordship  might  have 
stated  the  argument  from  inconvenience,  even  in  a  more  general  form. 
If  negligence  of  the  master  or  crew  were  under  such  circumstances  a 
good  defence,  it  would  be  perfectly  competent  and  proper  tj  examine 


SECT.  I.]         WATEES   V.    MERCHANTo"    LOUIaVILLE    INS.    CO.  675 

on  the  trial  any  single  transaction  of  the  whole  voyage,  and  every 
incident  of  the  navigation  of  the  whole  voyage,  whether  there 
was  due  diligence  in  all  respects,  in  hoisting  or  taking  in  sail,  in 
steering  the  course,  in  trimming  the  ship,  in  selecting  the  route,  in 
stopping  in  port,  in  hastening  or  retarding  the  operations  of  the 
voyage ;  for  all  these  might  be  remotely  connected  with  the  loss.  If 
there  had  been  more  diligence,  or  less  negligence,  the  peril  might 
have  been  avoided  or  escaped,  or  never  encountered  at  all.  Under 
such  circumstances,  the  chance  of  a  recovery  upon  a  policy  for  any 
loss,  from  an}*  peril  insured  against,  would  of  itself  be  a  risk  of  no 
inconsiderable  hazard. 

This  is  not  all :  we  must  interpret  this  instrument  according  to  the 
known  principles  of  the  common  law.  It  is  a  well-established  prin- 
ciple of  that  law,  that  in  all  cases  of  loss  we  are  to  attribute  it  to  the 
proximate  cause,  and  not  to  an}'  remote  cause :  causa  proxima  non 
remota  spectatur :  and  this  has  become  a  maxim,  not  only  to  govern 
other  cases ;  but,  (as  will  be  presently  shown)  to  govern  cases  arising 
under  policies  of  insurance.  If  this  maxim  is  to  be  applied,  it  dis- 
poses of  the  whole  argument  in  the  present  case  ;  and  why  it  should 
not  be  so  applied  we  are  unable  to  see  any  reason. 

Let  us  now  look  to  the  authorities  upon  the  point.^  .  .  . 

The  third  and  fourth  questions  are  completely  answered  by  the 
reasoning  already  stated.  Those  pleas  contain  no  legal  defence  to  the 
action,  in  the  form  and  manner  in  which  they  are  pleaded  ;  and  are  not 
sufficient  to  bar  a  recovery  by  the  plaintiff. 

Some  suggestion  was  made  at  the  bar,  whether  the  explosion,  as 
stated  in  the  pleas,  was  a  loss  b}'  fire,  or  by  explosion  merely.  We 
are  of  opinion,  that  as  the  explosion  was  caused  by  fire,  the  latter 
was  the  proximate  cause  of  the  loss.  The  fifth  plea  turns  upon  a 
diflferent  ground.  It  is  that  the  taking  of  gunpowder  on  board  was 
an  increase  of  the  risk.  If  the  taking  of  the  gunpowder  on  board 
was  not  justified  by  the  usage  of  the  trade,  and  therefore  was  not 
contemplated  as  a  risk  by  the  policy,  there  might  be  great  reason  to 
contend,  that  if  it  increased  the  risk,  the  loss  was  not  covered  by  the 
policy.  But  in  our  opinion  the  facts  are  too  defectively  stated  in 
the  fifth  plea,  to  raise  the  question. 

Our  opinion  will  be  certified  to  the  Circuit  Court  accordingly.  On 
the  first  question,  in  the  negative  ;  on  the  second  question,  in  the  affir- 
mative ;  and  on  the  third  and  fourth  questions,  in  the  negative.- 

1  Here  were  discussed  Busk  v.  Royal  Exchange  Assurance  Co.,  2  B.  &  Aid.  7."? 
(1818) ;  Walker  v.  Maitland,  5  B.  &  Aid.  171  (18?1) ;  Bishop  v.  Pentland,  7  B.  &  C. 
219  (1827) ;  Patapsco  Ins.  Co.  v.  Coulter,  .3  Pet.  222  (1830)  ;  and  Columbia  Ins.  Co.  v. 
Lawrence,  10  Pet.  507  (1836),  s.  c,  but  not  s.  p.,  ante,  p.  247.  —  Ed. 

'■^  Ace:  Dixon  v  Sadler,  ante,  p.  475  (1839),  s.  c.  sub  nom.  Sadler  v.  Dixon,  8  M. 
&  W  895  (Ex.  Ch.  1841) ;  Richelieu  &  Ontario  Navigation  Co.  v.  Boston  M.  Ins.  Co., 
26  Fed.  R.  596,  602  (U.  S.  C.  C,  E.  D.  Mich.  1886)  ;  Crescent  Ins.  Co.  v.  Packet  Co., 
69  Miss.  208  (1891). 

In  Trinder  v.  Thames  and  Mersey  M.  Ins.  Co.,  '98,  2  Q.  B.  114  (C.  A.),  the  action 


676  STARBUCK    V.    NEW    ENGLAND    MARINE    INS.    CO.       [CHAP.  VIL 

STARBUCK   V.    NEW   ENGLAND   MARINE   INS.    CO. 
Supreme  Judicial  Court  of  Massachusetts,  1837.     19  Pick.  198. 

Assumpsit  on  a  policy  of  insurance,  dated  November  1,  1832,  on 
the  ship  "  Loper,"  of  Nantucket,  and  her  outfits,  bound  on  a  whaling 
voyage. 

At  the  trial,  before  Putnam,  J.,  it  appeared  that  the  '* Loper"  sailed 
from  Nantucket,  on  the  24th  of  November,  1832,  and  pursued  her 
voyage  into  the  Pacific  Ocean  ;  that  while  there,  in  November,  1833, 
she  experienced  a  violent  shock,  which  caused  her  to  tremble,  and 
created  much  alarm  among  her  crew;  that  she  continued,  however, 
wlialing  until  the  8th  of  March,  1835,  when  she  put  into  Talcahuana, 
to  prepare  for  her  homeward  voyage  ;  tliat  she  did  not  leak  more  than 
sliips  frequently  do  ;  that  su(;h  repairs  were  made  upon  the  vessel,  at 
Talcahuana,  as  the  master  supposed  to  be  necessary,  but  tliat  her 
bottom  was  not  repaired  or  examined ;  and  that,  on  the  24th  of  March, 
she  sailed  from  Talcahuana  for  Nantucket,  and,  on  the  20th  of  the 
following  May,  foundered  and  was  abandoned  by  her  crew,  and  the 
whole  property  insured  was  lost. 

In  order  to  show  adequate  cause  for  the  foundering  of  the  vessel,  the 
plaintiff  introduced  evidence  tending  to  prove  that  it  was  occasioned  b}' 
a  blow  received  by  some  horned  fish  in  November,  1833. 

The  defendants  contended,  that  the  plaintiff  was  not  entitled  to 
recover,  inasmuch  as  the  ship,  after  receiving  such  blow,  and  during 
the  existence  of  the  defect  caused  thereby-,  put  into  the  port  of  Tal- 
cahuana, where  it  could  have  been  discovered  and  repaired,  but  left 
that  port  without  repairing  it. 

The  jur3-  were  instructed,  that  if  the  vessel  sailed  from  Talcahuana 
with  a  defect  in  her  bottom,  which  afterwards  caused  her  loss,  yet  that 
the  defendants  were  liable  therefor,  unless  the  captain  had  reasonable 
cause  to  suspect  the  existence  of  the  defect  at  the  time  when  the  vessel 
was  at  Talcahuana,  or  had  reasonable  cause  to  believe  that  she  could 
not  proceed  safely  home  without  having  the  same  repaired. 

The  jiu-y  returned  a  verdict  for  the  plaintiff  for  a  total  loss. 

was  brought  in  behalf  of  owners  of  a  vessel,  upon  a  policy  on  freight ;  and  it  was  held 
to  be  no  ])ar  to  recovery  that  the  vessel  was  stranded  by  the  negligence,  not  wilful, 
of  one  of  the  owners,  who  was  the  master. 

In  Trinder  v.  North  Queensland  Ins.  Co.,  '98,2  Q.  B.  114,  129  (C.  A.),  the  action 
was  brought  upon  a  policy  on  a  sliip,  in  behalf  of  the  part  owner —  the  master  — 
for  whose  sole  benefit  the  insurance  was  effected  ;  and  affirming  the  judgment  of 
Kennedy,  J.,  in  the  Commercial  Court,  2  Commercial  Cas.  216  (1897),  s.  C.  66  L.  J. 
N.  s.  Q  B.  802,  and  77  L.  T.  Eep.  n.  s.  80,  it  was  held  to  be  no  bar  to  recovery  that 
the  loss  was  due  to  the  negligence,  not  wilful,  of  this  part  owner. 

On  barratry,  see  Phyn  v.  Royal  Exchange  Assur.  Co.,  7  T.  R.  50.5  (1798) ;  Earle  v. 
Rowcroft,  6  East,  126  (1806);  Todd  i'.  Ritchie,  Starkie,  240  (1816)  ;  Jones  v.  Nichol- 
son, 10  Exch.28  (1854) ;  Germania  Ins.  Co.  v.  Sherlock,  25  Ohio  St.  33  (1874).—  Ed. 


SECT.  I.]        STARBUCK   V.   NEW    ENGLAND   MARINE   INS.   CO.  677 

If  the  iustructions  given  to  the  juiy  were  erroneous,  the  verdict  was 
to  be  set  aside,  and  a  new  trial  granted  ;  otherwise,  judgment  was  to 
be  rendered  on  the  verdict. 

W.  D.  Sohier,  for  the  defendants. 

C.  P.  Curtis  and  B.  .R.  Curtis,  for  the  plaintiff. 

Per  Curiam.  It  is  suggested  on  the  part  of  the  assured,  that  the 
loss  arose  from  a  blow  received  sixteen  months  before,  which  created 
some  alarm  at  the  time,  but  not  causing  a  leak,  was  not  much  thought 
of  afterwards.  The  loss  was  subsequently  attributed  to  it,  because 
there  was  no  other  apparent  cause.  The  defendants  contend,  that  the 
master  should  have  examined  the  ship  at  Talcahuana,  and  repaired  her. 
The  argument  is,  that  the  assured  is  bound  to  have  the  ship  seaworth}' 
at  the  commencement  of  the  voyage,  and  if  she  is  not,  the  insurers  are 
not  responsible  for  subsequent  loss,  even  if  it  arises  from  another  cause, 
as,  if  she  has  not  proper  papers,  or  is  struck  by  lightning  ;  that  this  is 
a  condition  precedent,  without  which  no  liability  attaches.  This  prin- 
ciple is  correct ;  but  the  defendants  go  further,  and  contend  that  she  is 
to  be  seaworthy,  not  only  at  the  beginning,  but  during  every  stage  of 
the  voyage.  But  the  obligation  of  the  assured  to  keep  her  seaworthj- 
depends  upon  different  considerations  and  imposes  different  duties. 
If  the  assured  does  not  make  her  seaworthy  at  first,  she  is  not  a  vessel, 
not  capable  of  being  navigated  ;  and  the  contract  being  made  under 
mutual  mistake,  the  consequence  follows,  that  the  subject  matter, 
respecting  which  the  insurance  was  made,  did  not  exist,  and  neither 
party  is  l)ound.  But  if  she  meets  with  an  accident  after  the  beginning 
of  a  vovage,  as  theverv  contract  of  insurance  supposes  that  she  may,  it 
IS  the  (Tutv^ifJLhe  assiired  to  make  repairs.  But  the  nature  ""^1  oxtf^nt 
of  this  duty  are  to  depend  on  circumstances  and  have  a  reasonable 
construction ;  and  this  was  the  ground  of  decision  in  Paddock  v. 
Franklin  Ins.  Co.  If  the  ship  become  unseavvorthy  on  the  voyage,  it 
is  the  duty  of  the  owner,  as  soon  as  he  discovers  it,  to  make  her  good ; 
but  he  cannot  do  it  before  he  discovers  it.  If  he  does  not  repair  when 
he  reasonably  ought  to  do  so,  and  a  loss  arises  from  it,  the  assured  can- 
not recover,  because  it  is  not  a  loss  by  any  of  the  perils  insured  against ; 
but  if  the  loss  arises  from  another  cause,  he  may  recover.  Tlie  differ- 
ence is  this :  if  the  vessel  is  not  seaworthy  at  first,  the  policy  never 
attaches  ;  in  the  other  case,  the  insurers,  havnig  become  responsible, 
continue  liable  for  all  losses  not  arising  from  the  fault  of  the  owners. 
There  are  often  latent  defects  at  the  commencement  of  the  voyage,  and 
distressing  cases  happen,  in  consequence,  because  the  policy  does  not 
attach.  The  counsel  for  the  defendants  contend,  that  the  law  is  the 
same  if  the  injur}'  took  place  in  the  course  of  the  voyage ;  but  we  can- 
not accede  to  this  doctrine.  There  is  nothing  in  the  opinion  in 
Paddock  v.  Franklin  Ins.  Co.  that  warrants  the  position.  A  distinc 
tion  is  there  taken  between  unseaworthiness  at  the  beginning,  which  is 
a  breach  of  warranty,  and  a  defect  arising  on  the  voyage,  which  is  not 
repaired  through  the  fault  of  the  owner,  and  for  which  the  owner  is 


678  STARBUCK    V.    NEW    ENGLAND    MARINE    INS.   CO.       [CHAP.  VII. 

responsible  if  the  loss  is  from  that  cause.  But  the  owner,  or  his  agents, 
must  know  of  the  defect  or  there  is  no  fault.  Suppose  an  accident 
occurs  at  sea,  what  is  the  master  to  do?  He  is  to  ascertain,  as  soon  as 
he  can,  the  extent  of  the  damage,  and  to  take  into  consideration  the 
relative  distances  of  ports,  and  where  he  can  repair,  aud  the  course  of 
winds,  trade  winds,  &c.,  and  to  exercise  his  best  judgment,  under  a 
view  of  all  the  circumstances.  If  the  ship  is  sinking,  he  must  go  to  the 
port  he  can  reach  soonest ;  if  not,  it  may  be  most  reasonable  to  go  to  a 
more  distant  port,  where  he  can  get  more  effectual  and  permanent 
repairs.  He  must  exercise  a  sound  judgment,  for  the  best  interests  of 
all  concerned. 

The  question  then  is,  whether  the  instructions  to  the  jury  were  right ; 
and  we  are  of  opinion  that  they  were.  An  accident  happened,  in 
consequence  of  which  there  was  much  trembling  of  the  vessel ;  and  it 
was  supposed  she  had  been  struck  by  a  swordfish  or  a  whale.  If  she 
could  then  have  been  examined,  it  would  have  been  the  duty  of  the 
master  to  have  had  it  done  ;  but  she  was  in  the  ocean,  and  an  examina- 
tion could  not  be  made.  After  a  long  trial,  however,  it  was  found, 
she  did  not  leak.  Then  was  the  master  bound,  at  all  events,  to  heave 
her  out  when  she  arrived  at  a  port?  We  think  he  was  merely  bound 
to  exercise  sound  discretion. 

But  even  if  had  hove  her  down,  and  not  repaired  her,  and  afterwards 
she  sunk,  the  defect  not  being  discovered,  it  is  argued  that  the  insurer 
Avould  be  discharged.  If  unseaworthiness  at  the  time  of  sailing  from 
Talcahuana  was  a  condition  precedent,  this  would  undoubtedly  be 
correct,  because  then  the  assured  would  take  the  risk  of  latent  and 
unknown  defects.  But  we  think  it  was  not  so,  and  that  the  master 
must  have  known,  or  have  had  reason  to  believe,  that  there  was  a 
defect,  in  order  to  throw  the  risk  from  this  cause  upon  the  assured.^ 

1  In  Peters  v.  Phoenix  Ins.  Co  ,  3  8.  &  R.  25  (1817),  Tilohmak,  C.  J.,  said.-  "  When 
a  ship  which  has  received  ilamage  pnts  into  port  to  repair,  the  captain  or  agent  who 
superintends  the  repairs  is  Ijound  to  use  due  diligence.  But  it  may  he  impossible  to 
make  a  complete  repair,  eitlier  for  want  of  materials  or  of  skilful  workmen  or  of 
accommodations  for  heaving  the  ship  down  in  order  to  make  a  thorough  search.  .  ,  . 
Tlie  law  implies  no  warranty  of  seaworthiness  except  at  the  commencement  of  the 
voyage.  To  say,  therefore,  that  a  sliip  whi-.h  lias  suffered  damage  liy  a  peril  insured 
against  must,  at  all  events,  be  so  repaired  at  the  port  she  puts  into,  as  to  render  her , 
seaworthv,  is  to  add  to  the  contract  a  condition  not  contanied  in  it." 

In  Copelaud  ik  New  England  M.  Ins.  Co..  2  Met.  432,  439-440  (1841 ),  Shaw,  C.  J., 
for  the  court,  after  citing  Paddock  v.  Franklin  Ins.  Co.,  11  Pick.  227,  234  (1831),  and 
Hazard  v.  New  England  M.  Ins.  Co.,  1  Sumner.  218  (1832),  said:  "Upon  tliese  prin- 
ciples and  authorities,  we  consider  it  a  rule  of  the  law  of  insurance,  as  settled  here,  that 
in  aildition  to  the  implied  warranty  which  applies  to  the  state  of  the  vessel  at  tlie  com- 
mencement of  the  voyage,  and  must  he  strictly  complied  witli  as  a  condition  precedent, 
it  is  the  duty  of  the  "assured,  from  time  to  time  during  the  voyage,  to  repair  her  and 
keep  her  in  a  suitalde  condition  for  the  service  in  which  she  is  engaged,  and  if  they 
fail  to  do  so.  and  a  loss  happens  which  is  attributable  to  that  cause,  the  assured,  and 
not  the  underwriters,  must  sustain  it.  And  although  there  are  some  recent  English 
cases  which  seem  to  weai  a  different  aspect,  or  leave  the  point  in  doubt,  yet,  upon  a 
full  consideration   and  comparison,  we  are  i  clined  to  think   they  are  not   opposed 


SECT.  I.]        STARBUCK    V.   NEW    ENGLAND    MARINE   INS.    CO.  679 

to  this  doctrine.  .  .  .  The  doctrine  of  implied  warranty  of  seaworthiness  would  go 
but  a  little  way  in  securing  the  performance  of  the  duties  of  the  assured,  because,  as 
it  has  often  been  said,  that  warranty  is  complied  with,  if  the  vessel  is  seaworthy 
when  siie  sails,  although  she  becomes  unseaworthy  in  twenty -four  hours  after.  But  if 
it  can  be  definitely  settled  what  are  the  duties  of  the  assured,  in  regard  to  the  conduct 
of  the  voyage,  after  its  inception,  and  to  whut  extent  they  are  responsible  for  the  acts 
and  the  negligence  of  the  master,  officers,  and  crew,  and  of  all  other  persons  who  mav 
have  an  agency  in  the  navigation  of  the  vessel  and  conduct  of  the  voyage,  it  will  be  a 
question,  in  each  particular  case,  whether  the  loss  is  one  for  the  insurers  or  owners  to 
bear.  The  modern  cases  go  far  to  establish  the  rule,  that  for  the  conduct  of  the 
master  or  mariners,  in  the  practical  navigation,  care,  and  management  of  the  vessel, 
after  the  commencement  of  the  voyage,  the  insurers  are  responsible,  provided  the 
actual  loss  arise  from  one  of  the  perils  insured  against,  although  such  peril  was 
occasioned  or  increased  by  the  negligence,  carelessness,  bad  seamanship,  or  other  mis- 
conduct of  the  master  and  mariners,  not  amounting  to  barratry." 

In  Merchants'  Mut.  Ins.  Co.  v.  Sweet,  6  Wis.  670,  674-675  (1858),  Cole,  J.,  for  the 
court,  said :  "  The  underwriters  in  this  country  are  held  discharged  from  any  loss 
which  can  be  distinctly  shown  to  have  arisen  from  the  negligence  or  misconduct  of  the 
assured  in  not  keeping  the  ship  in  a  proper  state  of  repair.  .  .  .  And  we  suppose  there 
may  be  a  breach  .  .  .  arising  as  much  from  a  neglect  to  keep  the  vessel  properly 
ballasted  as  from  any  other  cause.  A  vessel  may  become  unnavigable  or  unseawortliy 
as  well  from  overloading  or  a  want  of  sufficient  ballast  as  from  some  defect  in  the 
equipment  or  provision  of  the  vessel.  .  .  .  Tiiere  are  undoubtedly  certain  mistakes  of 
judgment  and  instances  of  negligence  on  the  part  of  officers  or  crew  which  the  under- 
writers are  responsible  for.  A  loss  occasioned  by  a  mistake  of  judgment  or  neglect  of 
duty  on  the  part  of  a  commanding  officer  while  acting  purely  in  his  official  and  pro- 
fessional character  may  be  one  of  the  perils  covered  by  the  policy.  Or  such  a  default 
as  .  .  .  where  the  master  raised  too  much  sail  or  neglected  to  have  the  pumps  properly 
worked,  in  consequence  of  which  the  vessel  was  lost,  is  a  risk  incident  to  navigation 
and  assumed  by  the  insurers." 

In  Union  Ins.  Co.  v.  Smith,  124  U.  S.  405,  427  (1888),  Blatchford,  J.,  for  the 
court,  said  :  "  The  principle  adopted  by  the  Circuit  Court  in  laying  the  case  before  the 
jury  was  the  proper  one.  In  the  insurance  of  a  vessel  by  a  time  policy,  the  warranty 
of  seaworthiness  is  complied  with  if  the  vessel  be  seaworthy  at  the  commencement  of 
the  risk,  and  the  fact  that  she  subsequently  sustains  damage,  and  is  not  properly 
refitted  at  an  immediate  port,  does  not  discharge  the  insurer  from  subsequent  risk  or 
loss,  provided  such  loss  be  not  the  consequence  of  the  omission.  A  defect  of  sea- 
worthiness, arising  after  tlie  commencement  of  the  risk,  and  permitted  to  continue 
from  bad  faitli  or  want  of  ordinary  prudence  or  diligence  on  the  part  of  the  insured  or 
his  agents,  discharges  the  insurer  from  liability  for  any  loss  which  is  the  consequence 
of  such  bad  faith,  or  want  of  prudence  or  diligence,  but  does  not  affect  the  contract 
of  insurance  as  to  any  otlier  risk  or  loss  covered  by  the  policy  and  caused  or  increased 
by  such  particular  defect." 

And  see  ^McDowell  v.  General  Mut.  Ins.  Co.,  7  La.  Ann.  684  (1852) ;  Fawcus  v.  Sars- 
field,  6  E.  &  B.  192  (1856)  ;  Thompson  v.  Hopper,  E.,  B.  &  E.  1038  (Ex.  Ch.  1858) ; 
Dudgeon  v.  Pembroke,  2  App.  Cas.  284.  296-298  (1877).  — Ed. 


680 


PERRIN'S  administrators  v.  TROTECTION  ins.  CO.       [chap.  VII. 


PERRIN'S   ADMINISTRATORS   v.    PROTECTION   INS.    CO. 
Supreme  Court  of  Ohio,  3842.     11  Ohio,  147.^ 

Action  was  brought  on  a  poHcy  to  insure  one-half  of  three-eighths  of 
' '  the  hull,  tackle,  and  apparel  of  the  steamboat  '  Moselle.'  "  The 
risks  insured  against  were  "  of  the  seas,  rivers,  fires,  enemies,  pirates, 
rovers,  assaihng  thieves,  and  all  other  perils,  losses,  and  misfortunes 
which  shall  come  to  the  damage  of  the  said  steamboat,  according  to  the 
true  intent  and  meaning  of  this  policy,  as  liei-ein  expressed."  Within 
the  time  covered  by  the  policy,  there  was  a  boiler  explosion,  by  which 
the  steamboat  was  destroyed.  The  defendant  contended  that  the  loss 
occurred  through  the  negligence  of  the  assured,  the  master,  and  the 
crew.  The  plea  was  the  general  issue.  A  verdict  was  taken  for  the 
amount  of  the  loss,  under  the  direction  of  the  court.  Thereupon  this 
motion  for  a  new  trial  was  made,  because  (1)  the  court  did  not  permit 
expert  testimony  that  the  explosion  was  due  to  negligence,  and  (2)  the 
court  did  not  instruct  the  jury  that  a  loss  by  explosion  of  the  boilers 
from  an  internal  cause  is  not  covered  by  the  policy,  and  (3)  there  was 
newly  discovered  evidence. 

Wright,  Coffin.  &  Mmer,  and  JI.  Starr,  for  defendant,  in  support 
of  the  motion  for  new  trial. 

Charles  Fox,  for  plaintiff.^ 

Lane,  C.  J.  The  newly  discovered  evidence  is  cumulative,  only. 
At  the  trial,  it  was  shown  that  preparations  were  made  before  starting, 
to  overtake  another  boat ;  that  fires  were  kept  burning,  with  great 
fierceness;  and  that  the  boilers  had  l)ecome  very  hot;  that  the  escape 
of  steam  was  attended  with  a  peculiar  shrill  noise,  denoting  great 
pressure,  and  so  loud  as  to  awaken  notice  and  alarm.  The  new  evi- 
dence is,  the  testimony-  of  a  witness,  who,  going  on  board,  was  terri- 
fied by  the  violence  of  the  fires,  the  intensity  of  the  heat,  and  the 
glimmer  from  the  ascent  of  heated  air,  "  which  seemed  to  make  the 
boilers  creep  and  move  in  their  beds,"  and  goes  little  fuither  than  to 
furnish  additional  evidence  of  facts  already  before  the  jurj-. 

That_a^loss,  arising  from  an  explosion  of  the  boiler,  is  covered  b}- 
tl  I  epolicy,  seems  plain  to  us,  when  we~cbnsTd"er  ftie  _s  nbj  ciLt-ins  unixl , 
and  the  nature  of  the  risks  to  which  it  is,  of  necessity,  exposed.  The 
insurance  was  on  a  steamboat.  The  policy  is  in  the  form  which  has 
long  been  in  use  for  marine  risks,  and  the  words  which  describe  the 
perils  are  large  enough  to  embrace  "all  such  as  arise  in  the  ordinar}' 
use  of  the  thing  insured.  A  policy  on  ships  covers  losses  arising  from 
accidents  to  the  power  which  moves  them,  and  it  must  be  presumed 
that  the  parties  contemplated  the  same  protection  to  a  steamboat  when 

1  The  statement  has  been  rewritten.  —  Ed. 

2  The  arguments  on  each  side  were  voluminous  and  valuable.  The  passages  bear- 
ing on  explosion  are  found  in  11  Ohio,  154-156,  163-166.  —  Ed. 


SECT.  I.]  "WASHINGTON    MUTUAL    INS.    CO.    V.    REED.  681 

the  loss  occurs  to  her  motive  agencies.  The  other  causes  for  which 
the  new  trial  is  asked,  depend  upon  the  right  of  the  defendant  to 
use  the  negligence  of  those  managing  the  boat  as  a  defence  against  this 
liabilit3\^  .  .  . 

Motion  overruled.     Judgment  for  plaintijf  on  the  verdict? 


WASHINGTON   MUTUAL   INSURANCE   CO.    v.   REED  et  al. 
Supreme  Court  of  Ohio,  1851.     20  Ohio,  199. 

Error  to  the  Supreme  Court  of  Hamilton  Count}'. 

The  original  action  was  assumpsit,  in  the  Commercial  Court  of 
Cincinnati.  Reed  and  Brown,  the  plaintiffs  below,  declared  specially, 
on  a  policy'  of  insurance  effected  by  the  defendant  below,  the  Insurance 
Company,  on  750  barrels  of  whiskey,  to  be  shipped  in  a  No.  1  flat 
boat,  from  Lawrenceburg,  Indiana,  to  New  Orleans. 

1  The  discussion  of  this  question  has  been  omitted.  —  Ed. 

2  Ace:  Citizens'  Ins.  Co.  v.  Glasgow,  9  Mo.  406  (1845);  and  West  India  and 
Panama  Telegraph  Co.  v.  Home  and  Colonial  M.  Ins.  Co.,  6  Q.  B.  D.  51  (C.  A.,  1880) ; 
but  this  latter  case  has  been  disapproved  by  the  House  of  Lords  in  Thames  and 
Mersey  M.  Ins.  Co.  v.  Hamilton,  12  App.  Cas.  484  (1887). 

Compare  Miller  v.  California  Ins.  Co.,  76  Cal.  145  (1888). 

In  Citizens'  Ins.  Co.  v.  Glasgow,  sw/)?yj,  N.\pton,  J.,  for  the  court,  in  commenting 
on  Perrin  v.  Protection  Ins.  Co.,  said  :  "The  court  seemed  to  consider  that  this  was  a 
peril  incident  to  navigation  of  a  river  by  steam  vessels,  as  much  so  as  a  loss  by  wind 
would  be  a  peril  of  the  sea,  to  which  vessels  propelled  by  that  element  are  liable.  It 
is  no  answer  to  this  view  of  the  subject  to  say  that  a  peril  by  steam  is  not  peculiar 
to  the  water,  but  may  happen  on  land  as  well  as  at  sea,  for  the  same  may  be  said  in 
relation  to  the  dangers  arising  from  the  violence  of  tlie  winds.  An  injury  to  the 
motive  power  of  a  sea  vessel  by  inevitable  accident  is  admitted  to  be  within  the  enum- 
erated perils  of  a  marine  policy  ;  for  the  same  reason,  an  injury  to  the  motive  power 
of  a  steam  vessel  arising  from  inevitable  accident,  is  within  the  perils  of  the  river 
incident  to  such  vessels.  If  steam  were  a  power  entirely  within  the  control  of  man, 
the  conclusion  would  be  different.  But  I  apprehend  that  whatever  natural  philoso- 
phers may  think  of  this,  the  elements  which  combine  to  create  the  power  of  steam  are 
as  entirely  within  the  reach  of  accident,  and  are  no  more  subject  to  fixed  laws  than  the 
elements  which  propel  the  ship  at  sea.  Wliatever  may  be  the  theories  on  either  sub- 
ject, universal  experience  is  that  no  human  skill  can  entirely  guard  against  accidents, 
either  in  the  one  case  or  the  other." 

In  Thames  and  Mersey  M.  Ins.  Co.  v.  Hamilton,  supra,  the  policy  insured  a  steam- 
ship and  its  machinery,  including  donkey-engine  and  pumps,  against  "  perils  ...  of 
the  seas,  .  .  .  fire,  .  .  .  barratry,  .  .  .  and  of  all  otlier  perils."  While  the  steamship 
was  at  anchor,  awaiting  orders,  an  attempt  was  made  to  fill  the  main  boilers  by  means 
of  the  donkey-pump  and  engine,  in  the  usual  way.  In  the  pipe  from  the  donkey-pump 
to  the  main  boilers,  a  valve,  which  ought  to  have  been  open  when  the  boilers  were 
pumped  up,  either  had  been  left  closed  by  the  negligence  of  an  engineer  or  had  been 
accidentally  salted  up.  When  the  donkey-pump  was  set  to  work,  the  pipes  and  water- 
chamber  of  the  donkey-pump  were  overcharged,  and  water  was  forced  into  the  air- 
chamber,  which  in  consequence  split.  For  this  damage  to  the  donkey-pump  it  was 
held  that  there  could  be  no  recovery.  —  Ed. 


682  WASHINGTON    MUTUAL    INS.    CO.    V.    REED.         [CHAP.  VII. 

The  declaration  avers  that  while  the  polic}'  was  in  force,  said  boat, 
"  bj'  a  peril  of  the  river,  grounded  and  became,  and  was  fast  upon 
a  bar  ...  in  the.  bed  ...  of  the  river,  whereby,  and  by  reason  of 
the  beating  of  the  waves  against  said  flat  boat,  the  same  sprung  a  leak, 
whereby  .  .  .  the  said  750  barrels  of  whiskey  on  board  said  boat,  the 
property  of  plaintiffs,  became,  and  were  wholly  lost."  ^.   .  . 

The  parties  in  the  court  below  having  submitted  their  evidence,  the 
jury  returned  a  verdict  for  the  defendant  below,  and  judgment  was 
entered.  During  the  trial  the  plaintiffs  excepted  to  the  charge  of  the 
court  to  the  jur}',  and  submitted  a  motion  for  a  new  trial,  which  was 
overruled. 

The  cause  was  removed  to  the  Supreme  Court  of  Hamilton  County, 
and  the  judgment  was  reversed  for  error  in  the  charge  of  the  court 
below. 

This  is  a  writ  of  error  to  reverse  the  judgment  of  the  Supreme  Court 
of  Hamilton  Count}'.  .   .  . 

The  policy  of  insurance,  as  far  as  is  material  to  a  correct  undertaking 
of  the  decision  of  this  court,  is  as  follows:  ..."  Touching  the  perils 
which  the  said  insurance  company  are  content  to  bear,  and  take  upon 
themselves  in  the  premises,  they  are  of  the  seas,  rivers^  Jlfes,  jettisons, 
enemies,  pirates,  and  overpowering  thieves  (but  not  other  thieves). 
Provided,  that  the  insurers  shall  not  be  liable  except  in  cases  of 
general  average  for  loss  or  damage  on  said  property,  unless  it  amounts 
to  five  per  cent  on  the  whole  sum  at  risk.  .  .  . 

Coffin  (fc  Mitchell,  for  plaintiff  in  error. 

J^ox  &  French,  for  defendants  in  error. 

Caldwell,  J.^  .  .  .  The  Supreme  Court  reversed  the  judgment  of  the 
Commercial  Court,  on  the  following  ground,  as  stated  in  the  record  of 
reversal.  "  Because  the  court  below,  at  the  request  of  the  defendants, 
charged  the  jury  that  if  they  were  of  the  opinion  that  the  loss,  de- 
clared on  by  the  plaintiff,  arose  from  an  ordinary  swell  in  the  river, 
produced  by  the  passage  of  an  ordinary  steamboat,  b}'  the  flat  boat, 
while  on  her  course  in  the  river,  then  it  was  not  a  loss  by  a  peril 
within  the  policy,  and  the  plaintiff  could  not  recover,  whereas  the 
court  ought  not  so  to  have  charged."  .  .  . 

The  charge  has  been  substantially  given  above.  It  was,  that  the 
insurance  company  was  not  liable  for  the  losses  arising  from  the  com- 
mon and  ordinary'  perils  to  which  boats  are  necessaril}'  exposed  in 
navigating  to  New  Orleans,  and  that  if  the  jur^'  were  of  the  opinion 
that  the  loss  in  this  case  arose  from  an  ordinary  swell  in  the  river, 
produced  by  the  passage  of  an  ordinary  steamboat,  by  the  flat  boat, 
while  in  her  course  in  the  river,  then  it  was  not  a  loss  by  a  peril 
veithin  the  policy,  and  the  plaintiff  could  not  recover.  In  Phillips  on 
Insurance,  vol.  1,  p.  635,  it  is  said  :   "  Under  perils  of  the  sea,  which 

^  The  reporter's  statement  has  been  abbreviated.  — Ed. 

'^  From  the  opinion  have  been  omitted  passages  not  discussing  tlie  accuracy  of  the 
charge.  —  Ed. 


SECT.  I.]  WASHINGTON    MUTUAL    INS.    CO.    V.   EEED.  683 

constitute  a  part  of  the  risks  in  almost  every  marine  polic}",  are 
comprehended  those  of  the  winds,  waves,  lightning,  rocks,  shoals, 
running  foul  of  otlier  vessels,  and  in  general,  all  causes  of  loss  and 
damage  to  the  property  insured,  arising  from  the  elements,  and 
inevitable  accidents,  other  than  those  of  capture  and  detentions."  In 
this  case,  it  appears  from  the  evidence  that  at  the  time  the  flat  bunt 
sprung  the  leak,  the  steamboat  "  John  Drennan"  was  passing  her,  so 
close  that  a  person  could  have  jumped  from  one  boat  to  the  other; 
that  the  steamboat  ''John  Drennan,''  in  passing  out  of  the  deep  into 
the  shoal  water,  made  a  ver}'  heavy  swell,  and  that  when  the  flat  boat 
struck  the  swell,  about  mid-ship,  the  boat  cracked,  as  if  somethuig 
was  breaking ;  that  in  a  short  time  the  water  was  coming  into  the 
boat  faster  than  it  could  be  pumped  out,  and  that  on  examination  it 
was  found  that  the  splicing  of  the  gunwales  had  given  wa^',  &c. 

liow,  iuiury  arising  from  the  actioiijof^the  waves  is  one  of  the  perils 
insured  against^aml  wejlo  no^ee^jn  reason,  the  difference  between 
a  wave  raised  b};  the  wind  and  one  raised  b^-  a  stream boat^  !Nor  have 
we  been  able  to  find  that  any  such  distinction~lias  ever  been  held  to 
exist.  Nor  do  we  think  that  any  such  discrimination,  as  appears  to 
be  pr-esupposed  by  the  terms  "  ordinary  swells  "  and  *'  ordinarj-  steam- 
boats," exists.  Whether  the  gale  was  a  severe  one,  or  whether  it  was 
moderate ;  whether  it  produced  heavy  swells,  or  onl3'  those  that  were 
moderatel}'  so,  is  not  important  in  determining  whether  the  insurer  is 
liable  or  not ;  it  is  only  necessary,  to  fix  his  liabilitj-,  that  the  waves 
should  have  caused  the  injury.  Whether  the  steamboat  was  very 
large,  or  only  ordinary,  whether  the  swell  was  extraordinary  or  not,  is 
not  the  question  ;  but  the  question  is,  did  the  swell  cause  the  damage 
to  the  boat?  We  see  no  more  reason  in  making  the  liability  of  the 
insurance  company  depend  on  whether  the  boat  was  an  ordinar}'  one, 
and  the  swell  an  ordinary  one,  or  whether  they  were  both  extraordinary, 
than  there  would  be  in  making  its  liability  depend  on  whether  the 
snag  against  which  the  boat  ran  was  an  ordinary  or  extraordinary  one. 
Now,  if  the  steamboat  had  run  against  this  boat,  and  run  her  under, 
there  is  no  question  but  such  collision  would  have  been  a  peril  within 
the  policy ;  and  we  are  unable  to  see  any  difference,  in  principle, 
between  running  a  boat  under  by  directly  striking  her  with  another 
boat,  or  by  running  so  close  to  her  as  to  cause  the  waves  to  sink  or 
break  her.  The  boat  causing  the  injury  would  be  equally  liable  in  the 
one  case  as  in  the  other,  and  so  would  the  insurance  company. 

But  it  is  said  that  the  peril  arising  from  the  waves  of  steamboats 
is  one  of  the  ordinary  perils  to  which  flat  boats  are  subjected,  and 
when  it  is  not  of  an  extraordinary  character,  it  is  not  one  of  the  perils 
insured  against.  The  time  has  been,  within  the  recollection  of  many, 
when  danger  to  a  flat  boat,  from  the  waves  of  a  steamboat,  on  our 
waters,  would  have  been  a  rare  occurrence  —  when  it  would  have 
been  an  extraordinary  peril ;  but  we  do  not  suppose  that  the  fact  that 
the  number  of  steamboats  has  so  increased,  that  it  has  become  an 
ordinary  peril,  has  altered  the  law  of  insurance. 


GS4  \vashi:;gt.'N  mutual  i:v'3.  go.  v.  keed.      [chap.  vii. 

The  flat  boat,  althougli  not  so  highly  appreciated  as  a  ihoans  of 
transportation  as  formerly,  has  lost  none  of  her  legal  rights  ;  they 
must  still  be  extended  to  her,  if  ^or  no  other  reasoia,  for  the  good  she 
has  done.  Counsel  for  plaintiff  in  error  have  cited  us  to  a  number 
of  authorities,  in  which  it  is  said  that  the  insurers  arc  not  liable  for 
ordinary'  perils,  but  only  for  such  as  are  of  an  extraordinary  kind.  I 
have  been  able  to  find  no  specific  definition  of  what  perils  are  to  be 
considered  ordinary  and  what  extraordinary,  in  the  sense  in  which 
tliese  terms  are  used  in  this  connection.  The  term  "ordinary  peril," 
is  not  used  as  of  similar  meaning  with  common  or  frequent  peril,  or 
peril  likely  to  be  encountered;  nor  does  it  have  any  relation,  so  far  as 
I  have  been  able  to  discover,  to  how  great  or  how  small  the  force 
ma}'  be  that  is  brought  to  bear  or  is  encountered.  The  term,  I  think, 
is  used  rather  in  contradistinction  to  accident.  The  insurer  does  not 
become  liable  for  inherent  defects  in  the  thing  insured  ;  he  does  not 
insure  against  wear  and  tear  —  such  things  as  all  vessels  must  nec- 
essarily' be  subjected  to ;  does  not  insure  against  certain  loss,  but 
insures  against  accidents. 

The  question  how  great  the  force  was  that  produced  the  injury 
ma}'  be  an  important  item  of  evidence,  going  to  show  seaworthiness 
or  the  reverse,  or  the  like  ;  but  if  the  force  produces  the  injur}-  on  a 
seaworthy  vessel,  the  insurer  is  liable,  if  the  peril  belong  to  the  class 
insured  against,  although  such  force  may  have  been  ever  so  small. 
The  case  that  gives  the  most  color  to  the  distinction  that  plaintiff's 
counsel  have  drawn  between  ordlnanj  and  extraordinary  perils.,  is 
the  case  of  Hazard's  Administrator  v.  The  New  England  Insurance 
Co.,  8  Pet.  557.  In  that  case  the  court  say,  that  the  policy  does 
not  cover  ordina'nj  perils,  but  extraordinary  ones  ;  and  yet  we  think  it 
falls  far  short  of  sustaining  their  position.  In  that  case,  the  judge,  on 
the  circuit,  had  charged  "  tliat  if  the  jury  should  find  that  in  the 
Pacific  Ocean  worms  ordinarily  assail  and  enter  the  bottom  of  vessels, 
then  the  loss  of  a  vessel  destroyed  by  worms  would  not  be  a  loss 
within  the  policy."  The  Supreme  Court  sustained  this  charge.  They 
based  their  decision  principally  on  the  case  of  Rohl  v.  Parr,  1  Esp. 
Judge  McLean,  however,  remarks  in  deliverinii-  the  opinion  of  the 
court:  "If  worms  ordinarily  perforate  every  vessel  which  sails  in  a 
certain  sea,  is  not  a  risk  of  injury  from  them,  as  common  to  every 
vessel  which  sails  on  that  sea  as  the  ordinary  wear  and  decay  of 
a  vessel  on  other  seas?  The  progress  of  the  injury  may  be  far 
more  rapid  in  the  one  case  than  in  the  other ;  but  do  they  not  both 
arise  from  causes  peculiar  to  the  different  seas,  and  which  affect,  in  the 
same  way,  all  vessels  that  enter  into  them?"  This  case,  I  think, 
clearly  keeps  up,  and  is  based  on,  the  distinction  between  injuries 
that  must  necessarily  occur,  and  accidents  that  may  or  are  likely  to 
occur.  If  all  vessels  that  sail  in  the  Pacific  Ocean  must  necessarily  be 
perforated  with  worms,  it  could  not  be  an  accident  that  the  particular 
vessel  in  question  was  perforated  by  them. 


SECT.  I.]  MAGNUS    V.    BUTTEMER.  685 

We  think  the  Commercial  Court  erred  in  their  charge  to  the 
jury,  and  that  the  Supreme  Court  decided  correctly  in  reversing  their 
judgment. 

The  judgment  of  the  Supreme  Court  will  therefore  be  affirmed. 


MAGNUS   AND   Others   v.    BUTTEMER. 
Common  Pleas,  1852.     11  C.  B.  876. 

This  was  an  action  of  assumpsit  on  a  policy  of  assurance  on  the  ship 
"  Elizabeth  "  for  twelve  calendar  months,  in  port  or  at  sea,  in  all  ser- 
vices, in  the  coast  and  coasting  trade  of  the  United  Kingdom, 

The  declaration  stated,  that,  during  the  time  covered  by  the  polic}', 
and  while  the  ship  was  in  service  in  the  coasting  trade  in  the  United 
Kingdom,  with  a  cargo  of  timber  on  board,  by  the  said  ship  taking 
the  ground,  and  by  and  througli  the  hardness  and  uneven ness  of  the 
ground,  and  the  perils  and  dangers  of  the  seas,  the  ship  was  strained, 
broken,  damaged,  and  injured  ;  and  that  an  average  loss  was  thereby 
incurred  of  £19  195.  Id.  per  cent. 

Pleas, —  non  assumpsit,  and  a  denial  of  the  loss  in  manner  and  form 
as  alleged. 

Issue  being  joined,  and  the  cause  ripe  for  trial,  it  was  agreed  that 
the  captain  and  mate  of  the  "  Elizabeth  "  should  be  examined  viva  voce 
before  one  of  the  masters  of  this  court,  and  that  the  facts  disclosed  on 
such  examination  should  be  stated  in  a  special  case  for  the  opinion  of 
this  court.     Tlie  material  facts  were  as  follows  :  — 

The  '-'Elizabeth"  sailed  from  Rochester  to  Sunderland.  On  her 
arrival  at  Sunderland,  the  vessel  went  up  the  river  abreast  of  Laing's 
shipyard.  She  had  to  wait  four  or  five  days  before  she  could  go  in  to 
discharge.  She  was  moored  head  and  stern,  and  floated  when  the  tide 
was  in,  and  was  aground,  but  not  dry,  at  low  water,  She  took  three 
days  to  discharge.  The  beach  was  hard,  shingly,  and  steep.  When 
the  vessel  took  ground,  she  listed  towards  the  beach  about  two  planks. 
When  the  first  tide  was  ebbing,  a  creaking  noise  was  heard  as  she  took 
the  ground,  and  it  occurred  when  she  floated  again.  This  happened 
every  tide,  and  sounded  as  if  something  was  breaking.  The  cabin 
door,  which  would  open  and  shut  freely  when  the  vessel  was  afloat, 
would  not  do  so  when  she  was  aground.  After  first  lying  on  the  beach, 
the  vessel  made  more  water  than  usual.  The  mate  saw  tiiat  she  was 
"  hogged,"  after  having  taken  the  ground.  He  observed  tiiat  some  of 
the  trenails  had  started,  and  that  some  of  the  planks  had  left  the 
trenails. 

The  question  for  the  opinion  of  the  court  was,  whether,  under  these 
circumstances,  there  was  a  loss  by  perils  of  the  seas. 


686  MAGNUS    V.    BUTTEMER.  fciIAP.  VII. 

Tomlinson,  for  the  plaintiffs.  The  facts  stated  in  the  case  disclose 
a  loss  by  a  peril  insured  against.  The  vessel  was  unloading  in  the 
ordinary  manner,  and  at  an  ordinary  place,  when  the  stranding  took 
place.  Fletcher  v.  Inglis,  2  B.  &  Aid.  315,  is  not  to  be  disting^uished 
from  this  case ;  the  facts  are  almost  identical.  In  that  case  a  trans- 
port, in  government  service,  was  insured  for  twelve  months,  during 
which  she  was  ordered  into  a  dry  harbor,  the  bed  of  which  was  hard 
and  uneven,  and,  on  the  tide  leaving  her,  she  received  damage  by 
taking  the  ground  ;  and  it  was  Ijeld  tliat  this  was  a  loss  by  a  peril  of 
the  sea.  That  case  was  recognized  in  Phillips  v.  Barber,  5  B.  &  Aid. 
161.  [Cresswell.  J.  Phillips  v.  Barber  was  not  a  case  of  loss  by  a 
peril  of  the  sea.  Maule,  J.  In  Fletcher  v.  Inglis,  there  was  a  loss 
by  a  peril  of  the  sea.  Here,  however,  nothing  happened  that  was  ex- 
traordinary or  unexpected  ;  the  ship  took  the  ground  as  she  naturally 
would  in  a  tide-harbor.  In  Bishop  v.  Pentland,  7  B.  &  C.  219,  1  M. 
«fe  R.  49,  a  ship  having  goods  on  board  which  were  insured,  but  war- 
ranted free  from  average,  unless  general,  or  the  ship  should  be  stranded, 
was  compelled,  in  the  course  of  her  voyage,  to  put  into  a  tide-harbor, 
and  was  there  moored  alongside  a  quay,  in  the  usual  place  for  ships  of 
her  burden.  It  became  necessary,  in  addition  to  the  usual  moorings, 
to  fasten  her  by  tackle  to  posts  on  the  shore,  to  prevent  her  falling 
over,  upon  the  tide  leaving  her.  The  rope  with  which  she  was  so  fast" 
ened,  not  being  of  sufficient  strength,  broke  when  the  tide  left  the 
vessel,  and  she  fell  over  upon  her  side,  and  was  thereby  stove  in,  and 
greatly  damaged  :  and  it  was  held  that  this  was  a  stranding  within  the 
meaning  of  that  word  in  the  policy,  although  the  stranding  might  have 
been  occasioned  remotely  by  the  negligence  of  the  crew  in  not  provid- 
ing a  rope  of  sufficient  strength  to  fasten  the  ship  to  the  shore.  There, 
the  damage  was  the  result  of  an  accident.  But,  taking  the  ground  un- 
der such  circumstances  as  are  stated  here  is  hardly  a  peril  of  the  sea.] 
The  cause  of  damage  was  very  similar  to  what  was  held  in  Devaux  v. 
J' Anson,  5  N.  C.  619,  7  Scott,  517,  to  be  a  loss  by  a  peril  of  the  sea. 

Jaynes  Wilde,  contra.  The  damage  sustained  by  this  vessel  was  not 
the  result  of  a  peril  which  the  underwriter  insures  against:  it  arose 
solely  from  the  weight  of  the  vessel,  when  loaded,  pressing  and  resting 
upon  a  hard  and  uneven  beach.  In  Kent's  Commentaries,  the  learned 
commentator,  in  describing  what  are  "  perils  of  the  sea,"  says,  3  Kent's 
Com.  300 :  "  Those  words  apply  to  all  those  natural  perils  and  oper- 
ations of  the  elements  which  occur  without  the  intervention  of  human 
agency,  and  which  the  prudence  of  man  could  not  foresee,  nor  his 
strength  resist.  Quod  fato  contvif/it,  et  cuivis  patrifamilias  quamvis 
diligentissimo  possit  contingere.  The  imprudence  or  want  of  skill  in 
the  master  may  have  been  unforeseen,  but  it  is  not  a  fortuitous  event. 
The  underwriter  undertakes  only  to  indemnify  against  extraordinary 
perils  of  the  sea,  and  not  against  those  ordinary  ones  to  which  every 
ship  must  inevitably  be  exposed."  In  Stevens  on  Average,  4th  ed. 
p.  150,  afterspeakingof  those  injuries  to  a  ship  which  do  not  come  within 


SECT.  I.]  MAGNUS    V.    BUTTEMER.  687 

the  description  of  particular  average,  the  author  says:  "  Having  thus 
stated  what  is  particular  average,  it  may  perhaps  be  useful  to  state  what 
is  not.  It  is  not  customary  to  consider  the  repairs  of  the  ship,  in  con- 
sequence of  springing  a  leak  at  sea,  as  a  claim  for  which  the  under- 
writers are  liable ;  for,  in  all  cases  of  particular  average,  the  onus  is 
thrown  on  the  assured  (the  owner  of  the  ship).  It  is  not  for  the  in- 
surer to  account  for  the  cause  of  the  accident.  The  assured  must  show 
that  the  damage  for  which  he  has  a  claim  is  the  direct  effect  of  a  fortu- 
itous accident.  In  the  absence  of  such  proof,  the  springing  a  leak  is  to 
be  attributed  either  to  the  working  and  straining  of  the  vessel,  —  which 
is  the  wear  and  tear  of  the  voyage,  — ■  or  to  some  insufficiency  or  inherent 
defect ,  for  neither  of  which  are  the  underwriters  liable.  But,  where 
the  evidence  derived  from  the  log-book,  and  confirmed  by  the  mariners, 
is  sufficiently  clear  to  show  that  the  leak  was  occasioned  by  a  stroke  of 
the  sea ;  for  instance,  when  a  ship  has  been  suddenly  thrown  on  her 
beam-ends,  and  immediately  on  her  rigliting  it  is  discovered  that  she 
has  sprung  a  leak,  there  is  no  doubt  this  comes  under  the  head  of  a 
partial  loss  for  which  underwriters  are  liable."  So,  in  Park  on  Insur- 
ance (8th  ed.  p.  240,  citing  Hearne  v.  Edmunds,  1  Bred.  &  B.  388,  t 
J.  B.  Moore,  1.3)  it  is  said,  that,  "  where  it  is  certain  that,  in  the  ordi- 
nary course  of  the  navigation,  the  vessel  would,  by  the  flux  and  reflux 
of  the  tide,  be  left  on  the  mud,  it  was  held  that  this  was  not  a  stranding 
within  the  meaning  of  that  term  in  the  policy."  Carruthers  v.  Syde- 
botham,  4  M.  &  Selw.  77,  and  Rayner  v.  Godmond,  5  B.  &  Aid.  225, 
were  both  cases  of  accidental  damage.  And  in  Bishop  v.  Pentland, 
LiTTLEDALE,  J.,  takes  the  distinction  expressly:  he  says, —  "where 
a  vessel  is  on  the  ground  or  strand,  in  such  a  situation  as  she  ought 
not  to  be  in  while  prosecuting  the  voyage  on  which  she  is  bound,  that 
is  a  stranding  within  the  meaning  of  the  policy."  In  Fletcher  v. 
Inglis,  there  are  two  things  which  might  have  occasioned  the  damage,  — 
the  taking  the  ground  on  the  receding  of  the  tide,  —  and  the  bumping 
which  was  consequent  on  the  swell:  the  court  do  not  say  on  which 
ground  their  decision  proceeded ;  but  it  is  evident  it  must  have  been 
the  latter.  In  Devaux  v.  J'Anson,  the  statement  in  the  declaration 
shows  a  clear  accident.  The  question  underwent  full  discussion  in 
Wells  V.  Hopwood,  3  B.  &  Ad.  20.  Lord  Tenterden  there  lays  down 
this  intelligible  rule:  "  Several  of  the  cases  hitherto  decided  on  this 
subject  are,  as  to  their  facts,  very  near  each  other,  and  not  easily  dis- 
tinguishable. But  it  appears  to  me  that  a  general  principle  and  rule  of 
law  may,  although  not  explicitly  laid  down  in  any  of  them,  be  fairly 
collected  from  the  greater  number.  And  that  rule  I  conceive  to  be 
this:  Where  a  vessel  takes  the  ground,  in  the  ordinary  and  usual 
course  of  navigation  and  management,  in  a  tide-river  or  harbor,  upon 
t!ie  ebbing  of  the  tide,  or  from  natural  deficiency  of  water,  so  that  she 
may  float  again  upon  the  flow  of  the  tide  or  increase  of  water,  such  an 
event  shall  not  be  considered  a  stranding  within  the  sense  of  the  mem- 
orandum.   But,  where  the  ground  is  taken  under  any  extraordinary 


688  MAGNUS    V.    BUTTEMEE.  [CHAP.  VII. 

circumstances  of  time  or  place,  bj'  reason  of  some  unusual  and  acciden- 
tal occurrence,  such  an  event  shall  be  considered  as  a  stranding  within 
the  meaning  of  the  memorandum."  According  to  that  rule,  there 
clearly  was  no  stranding  here,  no  loss  b}'  a  peril  of  the  sea. 

Tomlinson,  in  reph;,  cited  Phillips  v.  Nairne,  4  C.  B.  343. 

Jervis,  C.  J.  1  am  of  opinion  that  the  loss  in  this  case  was  not  a 
loss  b}-  perils  of  the  sea,  but  a  damage  falling  within  the  description  of 
ordinar}-  wear  and  tear.  No  doubt  the  question  is  one  of  importance  ; 
but  I  think  it  has  been  very  unnecessarily  brought  before  the  court ; 
for  the  matter  seems  to  have  been  perfectly  understood  and  settled  by 
all  the  text-writers  upon  this  branch  of  the  law.  To  make  the  under- 
writers liable,  the  injury  must  be  the  result  of  something  fortuitous  or 
accidental  occurring  in  the  course  of  the  voyage.  Here  the  vessel, 
upon  her  arrival  at  Sunderland,  goes  up  the  river,  and,  in  consequence 
of  the  rising  and  falling  of  the  tide,  rests  upon  the  river's  bed,  and  re- 
ceives damage.  There  was  nothing  unusual,  no  peril,  no  accident. 
To  hold  that  the  assured  were  covered  in  such  a  case,  would  be  virtually 
making  the  policj'  a  warranty  against  the  wear  and  tear  and  ordinary 
repairs  of  the  vessel.     I  think  the  defendant  is  entitled  to  judgment. 

Maule,  J.  I  am  of  the  same  opinion  ;  and  I  concur  with  the  Lord 
Chief  Justice  in  thinking  that  this  is  a  very  clear  case.  Stevens  and  the 
other  text-writers  referred  to  express  no  sort  of  doubt,  but  are  evidentl}^ 
well  acquainted  with  the  distinction  between  wear  and  tear,  for  which 
the  underwriters  are  not  liable,  and  accidents,  the  occurrence  of  some- 
thing out  of  the  ordinary'  course  of  the  voyage,  for  which  they  are 
liable.  This  distinction  has  been  well  understood  for  many  j-ears. 
To  hold  the  underwriters  liable  in  such  a  case  as  this,  would  be  tanta- 
mount to  holding  that  the  ordinary  repairs  of  a  vessel  are  to  be  compre- 
hended within  the  perils  insured  against.  Tlie  case  of  Fletcher  v. 
Inglis  was  sufficiently  distinguished  in  the  course  of  the  argument ;  the 
statement  of  damage  there  is  this  :  "  Between  nine  and  ten  at  night,  the 
tide  having  tshen  left  the  vessel,  a  cracking  noise  was  heard  in  the  ship, 
proceeding,  as  the  witness  believed,  from  something  breaking.  Some 
time  after  this,  on  the  return  of  the  tide,  there  was  a  considerable  swell 
in  the  harbor,  and  the  ship  struck  the  ground  hard  several  times ;  in 
the  morning,  eighteen  of  her  knees  were  found  to  be  broken."  There 
were  in  that  case  some  circumstances  which  also  occur  here  ;  but  there 
was  another  circumstance  there,  which  is  wanting  here,  to  make  the 
cases  parallel.  There  was  casus  fort uitus,  —  the  swell  that  set  in, 
after  which  the  ship's  knees  were  found  to  be  broken.  That,  I  appre- 
hend, was  the  ground  of  the  decision  in.  that  case  ;  and  that  is  quite 
consistent  with  the  argument  of  Mr.  Scarlett,  who  was  not  likely  to 
lay  down  a  general  doctrine  which  did  not  meet  the  assent  of  the  court, 
80  familiar  as  they  were  at  that  time  witli  insurance  law.  The  case 
evidently  proceeded  upon  the  extraordinary  and  accidental  circum- 
stance of  the  great  swell  setting  in  the  harbor.  Suppose,  instead  of 
the  swell,  the  case  had  stated,  or  the  evidence  shown,  that  a  violent 


SECT.  I.]  MAGNUS    V.    BUTTEMER.  689 

stoiui  had  arisen,  and  that  the  vessel  was  dashed  against  a  rock,  and 
injured,  nobody  could  have  doubted  that  that  was  a  loss  by  perils  of  the 
sea.  That  onlj'  differs  in  degree  from  the  actual  case  of  Fletcher  v. 
Ino-lis  ;  but  it  differs  ver}'  materially  from  the  present  case,  which  shows 
a  mere  sul>siding  of  the  ship  upon  the  shore  or  beach  on  the  receding 
of  the  tide,  in  the  usual  and  expected  course.  According  to  sound  law 
and  common  sense,  the  assured  was  entitled  to  recover  in  that  case ; 
whereas  here,  nothing  has  happened  which  tlie  assured  could  have 
^\ished  or  anticipated  to  happen  otherwise  than  it  did  happen.  They 
intended  the  ship  to  take  the  ground  as  she  did.  There  was  no  acci- 
dent. We  are  asked,  therefore,  to  assume  a  loss  by  perils  of  the  sea, 
when  the  facts  disclosed  to  us  absolutely  negative  the  existence  of  sea 
peril.  No  instance  is  to  be  found  of  underwriters  being  held  liable 
where  the  voyage  has  been  conducted  to  its  termination  without  any- 
thing happening  but  what  was  expected  and  intended,  and  where  the 
sole  cause  of  the  damage  was  the  insufficiency  of  the  sliip  to  bear  the 
ordinary  stress  of  the  voyage  to  which  she  was  exposed.  Authority 
and  common  sense  concur  in  showing  that  this  is  not  a  liability  which 
ought  to  be  cast  upon  the  underwriters. 

Cresswell,  J.  I  am  of  the  same  opinion,  and  should  only  be  re- 
peating what  has  already  been  said  if  I  gave  my  reasons  for  concur- 
ring with  the  rest  of  the  court. 

Williams,  J.  This  clearly  is  a  case  of  ordinary  wear  and  tear,  and 
not  accident.  Judgment  for  the  defendant?- 

1  Compare  Potter  v.  Suffolk  Ins.  Co.,  2  Sumner,  197  (1835). 

In  Paterson  v.  Harris,  1  B.  &  S.  336  (1861),  the  owaier  of  a  share  in  the  Atlantic 
Telegraph  Company  procured  a  policy  of  marine  insurance  on  that  share,  the  policy 
being  in  the  ordinary  form  and  having  annexed  to  it  this  memorandum  :  "  It  is  under- 
stood and  agreed  that  this  insurance  shall  cover  and  inclnde  the  successful  working 
of  the  cable  when  laid  down."  The  cable  having  failed  to  work  successfully  by  reason 
of  the  chemical  action  of  sea  water,  such  chemical  action  being  due  to  a  defect  in  the 
insulation  caused  by  an  accident  occurring  before  shipment,  it  was  held  that  as  to  this 
cause  of  loss  there  could  be  no  recovery,  Cockburn,  C.  J.,  for  the  court,  saying : 
"  We  are  of  opinion  that  this  is  not  an  injury  which  can  properly  be  referred  to  perils  of 
the  seas,  under  which  head  of  damage  it  was  contended  for  the  plaintiff  that  the  loss 
fell.  We  are  of  opinion  that  an  injury  of' this  nature,  not  arising  from  the  external 
violence  or  mechanical  action  of  the  winds  or  waves,  but  which  was  the  natural  and 
necessary  consequence  of  the  ordinary  action  of  the  sea  water  on  the  cable,  in  the  state 
in  which  it  was  when  immersed  in  the  sea,  is  not  comprehended  in  the  perils  insured 
against.  The  injury,  so  far  as  the  damage  occasioned  by  the  sea  is  concerned,  was  the 
inevitable  consequence  of  the  immersion  of  the  cable  in  its  then  state  in  the  sea  water. 
But  the  purpose  of  insurance  is  to  afford  protection  against  contingencies  and  dangers 
which  may  or  may  not  occur;  it  cannot  properly  apply  to  a  case  where  the  loss  or  in- 
jury must  inevitably  take  place  in  the  ordinary  course  of  things.  The  wear  and  tear 
of  a  ship,  the  decay  of  her  sheathing,  the  action  of  worms  on  her  bottom,  have  been 
properly  held  not  to  be  included  in  the  insurance  against  perils  of  the  seas,  as  being 
the  unavoidable  consequences  of  the  service  to  which  the  vessel  is  exposed.  The  in- 
surer cannot  be  understood  as  undertaking  to  indemnify  your  losses  which,  in  the 
nature  of  things,  must  necessarily  happen.  For  these  reasons,  we  are  of  opinion  that 
the  plaintiff  is  not  entitled  to  recover  in  respect  to  this  portion  of  his  claim." 

lu  ^klerchants'  Trading  Co.  v.  Universal  Mar.  Ins.  Co.,  2  Aspinall's  Maritime  Cas.  n.  s. 

44 


690  TAYLOR    V.   DUNBAR.  [CHAP,  VII. 

TAYLOR   V.  DUNBAR. 
Common  Pleas,  1869.     L.  R.  4  C.  P.  206.  ^ 

This  was  an  action  upon  a  policy  of  insurance,  in  the  usual  form, 
against  perils  of  the  seas  and  all  other  perils,  on  goods  per  steamer 
from  Hamburg  to  London.  The  case  was  stated  for  the  opinion  of  the 
court.  There  were  two  claims  for  loss,  one  of  twenty-six  packages  of 
pork  on  the  "Leopard,"  and  the  other  of  thirty-two  quarters  of  beef  on 
the  "Ostrich."  The  "Leopard"  sailed  from  Hamburg  on  November  3, 
18G6,  encountered  hard  gales  of  wind  and  most  tempestuous  weather, 
accompanied  by  high  running  seas  which  frequently  broke  over  the  ship  ; 
and  on  November  5  the  ship  was  put  back  to  Cuxhaven.  On  Novem- 
ber 6  the  ship  put  to  sea  again,  again  encountering  hard  gales  and  high 
running  seas,  and  again  was  put  back  to  Cuxhaven.  On  November  8 
the  ship  finally  sailed  from  Cuxhaven,  and  throughout  the  voyage 
.experienced  most  boisterous  weather  and  shipped  much  water.  The 
pork  was  in  no  way  injured  b}-  the  sea  or  b}'  the  storm  ;  but  on  Novem- 
ber 10  it  was  discovered  that  the  pork,  owing  to  the  length  of  time  to 
which  the  voyage  was  protracted  and  delayed  by  the  weather,  had 
become  putrid,  and  it  was  uecessaril}-  thrown  overboard  at  sea. 

The  facts  as  to  the  beef  on  the  '■'  Ostrich  "  were  in  effect  the  same, 
with  different  dates. 

The  ordinar}'  vo^'age  of  these  steamers  from  Hamburg  to  London  is 
fifty  hours.    If  the  voyages  had  been  of  the  ordinaiy  duration,  the  pork 

431,  n.  (C.  P.  1870),  the  question  being  wliether  Lush,  J.,  had  misdirected  tlie  jury, 
BoviLL,  C.  J.,  for  the  court,  said:  "  He  further  exphnined  to  the  jury  that  tlie  terms 
'  perils  of  the  sea '  denoted  all  marine  casualties  resulting  from  the  violent  action  of 
the  elements  of  the  wind  and  waters,  lightning,  tempest,  stranding,  striking  on  a  rock, 
and  so  on  —  all  casualties  of  that  descripticMi  as  distinguished  from  tlie  silent  natural 
gradual  action  of  the  elements  upon  the  vessel  itself,  though  tlie  latter  properly  be 
longed  to  wear  and  tear,  and  that  what  the  underwriters  insured  wore  casualties  that 
might  happen,  not  consequences  which  must  happen,  casualties  which  might  occur 
and  were  incident  to  navigation  arising  from  the  violent  action  of  the  elements  upon 
the  ship.  The  learned  judge  proceeded  to  say,  '  that  in  the  peculiar  circumstances  of 
this  case,  the  voj'age  having  scarcely  commenced,  the  vessel  being  in  still  water  at  the 
time  when  this  casualty  happened,  .  .  .  two  questions  a];)parently  different  in  form 
appeared  to  him  to  become  merged  in  the  one  practical  question,  which  Mas  this, 
Was  the  leak,  the  extraordinary  leak  which  occurred  while  the  vessel  was  lying  at 
anchor,  attributable  to  injury  and  violence  from  without  or  weakness  within  ? '  .  .  . 
Tlie  perils  mentioned  by  the  learned  judge  do  not  include  all  the  risks  and  perils 
covered  by  the  policy,  but  from  the  nature  of  the  question  that  was  raised  in  this  case, 
which  was  as  to  the  cause  of  the  sudden  rushing  of  the  water  into  the  vessel,  wliether 
it  was  the  inherent  weakness  of  the  vessel  in  consequence  of  original  defects  and  con- 
struction, or  neglected  rust,  or  some  unaccountable  accident  resulting  in  foundering, 
and  with  reference  to  the  evidence,  the  attention  of  the  jury  was  in  our  opinion 
properly  called  to  such  of  the  perils  as  were  material." 

On  stranding,  see  Bishop  v.  Pentland,  7  B.  &  C.  219  (1827)  ;  Wells  v.  Hopwood, 
3  B.  &  Ad.  20  (1832)  ;  Lake  v.  Columbus  Ins.  Co.,  13  Ohio,  48  (1844).  —Ed. 
1  The  statement  has  been  rewritten.  — Ed. 


SECT.  I.]  TAYLOK    V.   DUNBAR.  691 

and  beef  would  have  arrived  in  good  condition.     The  damage  was  due 
solely  to  the  delay. 

The  question  for  the  court  was  whether  the  plaintiff,  whose  interest 
was  admitted,  was  entitled  to  recover  the  agreed  amount  of  the  two 
losses. 

Beasley,  for  the  plaintiff.  The  question  is,  whether  the  loss  was 
proximately  caused  by  perils  of  the  seas,  within  the  meaning  of  this 
polic}-.  The  expression  "perils  of  the  seas"  is  thus  defined  in  1 
Phillips  on  Insurance,  3d  ed.  62G,  §  1099.  "Under  perils  of  the  seas, 
which  constitute  a  part  of  the  risks  in  almost  every  marine  policy,  arc 
comprehended  those  of  the  winds,  waves,  lightning,  rocks,  shoals,  col- 
lisions, and  in  general  all  causes  of  loss  and  damage  to  the  property 
insured,  arising  from  the  elements  and  inevitable  accidents  other  than 
those  of  capture  and  detention."  Chancellor  Kent,  3  Com.  10  ed.  407, 
says  :  "Those  words  apply  to  all  those  natural  perils  and  operations 
of  the  elements  which  occur  without  the  intervention  of  human  agency, 
and  which  the  prudence  of  man  could  not  foresee,  nor  his  strength  re- 
sist." And  Emerigon,  p.  280  (by  Meredith),  says  :  '  •  Perils  of  the  sea 
(fortunes  de  mer),  properly  termed,  are  those  which  proceed  from  rocks 
and  tempests,  ex  marinm  tempestatis  discrimine.  But,  in  the  matter 
of  insurance,  by  perils  of  the  sea  is  understood  all  losses  and  damages 
which  happen  at  sea  by  a  fortuitous  event,  and  even  sometimes  under 
the  same  denomination  are  undei'stood  accidents  which  happen  in  the 
course  of  the  voyage  through  the  misconduct  of  the  captain  and  of  the 
mariners.  Thus,  perils  of  the  sea  (fortunes  de  mer)  is  a  generic  term, 
comprehending  everything  for  which  the  insurers  are  responsible."  In 
Montoya  v.  London  Assurance  Co.,  6  Ex.  451  ;  20  L.  J.  (Ex.)  254, 
where  tobacco  was  damaged  by  the  ill-flavor  imparted  to  it  from  the 
putrefaction  of  hides  caused  by  the  shipping  of  sea- water.  Pollock, 
C.  B.,  says  :  "  I  think  it  may  be  laid  down  as  a  general  rule,  that  when 
mischief  arises  from  perils  of  the  seas,  and  the  natural  and  almost  in- 
evitable consequence  of  that  mischief  is  to  create  further  mischievous 
results,  the  underwriters  in  such  case  are  responsible  for  the  further 
mischief  so  occasioned."  In  ^Lawrence  v.  Aberdein,  5  B.  &  A.  107, 
a  policy  was  effected  on  living  animals,  warranted  free  from  mortality 
and  jettison.  Some  of  the  animals,  in  consequence  of  the  agitation  of 
tlie  ship  in  a  storm,  were  killed,  and  others  from  the  same  cause  re- 
ceived such  injury  that  they  died  before  the  termination  of  the  voyage  ; 
and  this  was  held  to  be  a  loss  by  perils  of  the  sea.  The  like  was  held 
in  Gabay  v.  Lloyd,  3  B.  &  C.  793,  where  horses  were  killed  by  reason 
of  the  breaking  down  of  the  partitions  which  separated  them,  in  conse- 
quence of  the  agitation  of  the  ship  in  a  storm.  So,  here,  the  loss 
arose  from  damage  sustained  by  the  meat  in  consequence  of  its  being 
knocked  about  in  the  storm. 

[MoxTAGUE  Smith,  J.  The  case  states  that  the  pigs  and  beef  were 
in  no  degree  affected  or  injured  by  the  sea-water  or  by  the  storm  or 
tempest,  but  became  putrid  by  the  retardation  and  delay  of  the  voyage. 


692  TAYLOR   V.   DUNBAR.  [CHAP.  VII. 

The  present  case  more  clearly  resembles  Tatham  v.  Hodgson,  6  T.  R, 
G56.  There,  upon  an  insurance  af  slaves  against  perils  of  the  sea, 
their  death  by  failure  of  sufficient  and  suitable  provisions,  occasioned 
by  extraordinary  delay  in  the  V03age  from  bad  weather,  was  held  not 
to  be  a  loss  within  the  policy.] 

The  loss  here  was  the  proximate  result  of  the  bad  weather  which  the 
vessels  encountered.  Speaking  of  the  general  clause,  "  and  of  all  other 
perils,  losses,  and  misfortunes,"  &c.,  Mr.  Arnould  (2  Arnould  on  In- 
surance, 3d  ed.  p.  727),  says:  "This  general  and  sweeping  clause, 
it  is  now  decided,  covers  other  cases  of  marine  damage  of  the  like  kind 
with  those  specially  enumerated,  and  occasioned  by  similar  causes." 

[Keating,  J.,  referred  to  lonides  v.  Universal  Marine  Insurance  Co., 
U  C.  B.  (x.  s.)  259  ;  32  L.  J.  (C.  P.)  170.] 

Sir  G.  Ilonyman,  Q.  C,  contra.  Underwriters  do  not  insure  against 
mere  dela}-  of  tlie  voyage  caused  ])y  change  of  wind  or  the  prudence  of 
the  captain  in  avoiding  foul  weather.  Everth  v.  Smith,  2  M.  &  S.  278; 
Philpott  V.  Swann,  11  C.  B.  (n.  s.)  270,  30  L.  J.  (C.  P.)  358. 

Keating,  J.  Mr.  Beasle}'  has  referred  us  to  every  authority  which 
could  at  all  favor  the  view  he  wislied  to  present ;  but  they  do  not,  in 
my  opinion,  go  far  enough  to  sustain  his  argument.  The  facts  stated 
in  the  case  show  be3-ond  a  doubt  that  the  proximate  cause  of  the  loss  of 
the  meat  was  the  dela}-  in  the  prosecution  of  the  voyage.  That  delay 
was  occasioned  by  tempestuous  weather ;  but  no  case  that  I  am  aware 
of  has  held  that  a  loss  by  the  unexpected  duration  of  the  voyage, 
though  that  be  caused  by  perils  of  the  sea,  entitles  the  assured  to 
recover  upon  a  policy  like  this.  I  think  we  should  be  establishing  a 
dangerous  precedent  if  we  were  to  give  effect  to  Mr.  Beasley's  argu- 
ment, seeing  that  there  are  so  many  cargoes  which  are  necessaril}' 
affected  b^'  the  vo3'age  being  dchiyed.  I  am  not  disposed  to  create 
such  a  precedent.     I  think  our  judgment  ought  to  be  for  the  defendant. 

Montague  Smith,  J.  I  am  of  the  same  opinion.  The  loss  here  has 
arisen  in  consequence  of  the  putrefaction  of  the  meat  from  the  voyage 
having  been  unusually"  protracted.  That  is  a  loss  which  does  not  fall 
within  an}'  of  the  perils  enumerated  in  this  policy".  To  render  the 
underwriters  liable,  it  must  be  shown  that  the  loss  is  proximately  due 
to  one  of  the  known  perils.  Retardation  or  delay  of  the  voyage  is  not 
one  of  them.  The  case  states  that  the  meat  was  not  affected  by  the 
sea  or  b}-  the  storm.  It  was  not,  therefore,  as  Mr.  Beasley  wished  us 
to  assume,  damaged  b}-  knocking  about.  If  it  had  been,  the  case  might 
have  been  brought  within  the  principle  of  Lawrence  v.  Aberdein,  5  B. 
&  A.  107,  and  Gabay  v.  Lloyd,  3  B.  &  C.  793.  But  the  statement  in 
the  case  precludes  us  from  drawing  an}'  such  inference.  If  we  were  to 
hold  that  a  loss  b}'  delay,  caused  by  bad  weather  or  the  prudence  of  the 
captain  in  anchoring  to  avoid  it,  was  a  loss  by  perils  of  the  sea,  we 
should  be  opening  a  door  to  claims  for  losses  which  ncA'er  were  in- 
tended to  be  covered  b}-  insurance,  not  only  in  the  case  of  perishable 
goods,  but  in  the  case  of  goods  of  all  other  descriptions.     By  the  com- 


SECT.  I.]         PROYIDEXCE    WASIIIXGTOX    INS.    CO.    V.    ADLER.  693 

moD  understanding  both  of  assured  and  assurers,  delay  in  the  voyage 
has  never  been  considered  as  covered  l)^-  a  policy  like  this.  I  there- 
fore agree  tliat  our  judgment  should  be  for  the  defendant. 

Brett,  J.  I  am  also  of  opinion  that  damage  to  goods  caused  bj'  de- 
lay of  the  voyage,  through  the  consequence  of  stormy  and  tempestuous 
M-eathei-,  is  not  one  of  the  perils  covered  bv  an  ordinary  policy.  Such 
damage  must  have  occurred  many  times,  and  yet  no  trace  is  to  be 
found  of  such  a  claim  being  maintained.  If  it  be  desired,  a  clause 
may  easily  be  inserted  in  the  policy  to  meet  the  case. 

Judgment  for  the  defendant} 


PROVIDEXCE  WASHINGTON  INS.  CO.  v.  ADLER  axd  Others. 
Court  of  Appeals  of  Maryland,  1886.     65  Md.  162. 

Appeal  from  the  Superior  Court  of  Baltimore  City.-  .  .  .  The  case 
is  stated  in  the  opinion.   .  .   . 

The  plaintiffs  asked  .  .  .  instructions :  .  .  .  4.  That  the  defendant 
in  taking  a  risk  like  the  present,  upon  oil-cloth  clothing,  is  presumed 
to  know,  and  to  have  contemplated  all  the  casualties  and  incidents  to 
which  the  subject  insured  might  be  liable,  and  that  the  plaintiffs  are 
entitled  to  recover  .  .  .  even  should  the  jur}'  find  that  the  loss  pro- 
ceeded from  spontaneous  combustion,  should  the  jury  furtlier  find  that 
spontaneous  combustion  is  one  of  the  casualties  and  incidents  to  which 
the  subject  insured  is  liable. 

The  defendant  then  submitted  .  .  .  instructions:  ...  1.  That  the 
plaintiffs  .  .  .  cannot  recover,  if  .  .  .  the  oil-cloth  coats  .  .  .  were 
damaged  or  destroyed  from  spontaneous  combustion  caused  bv  their 
inherent  infirmity.   .   .   . 

The  court  (Fisher,  J^  granted  the  prayers  of  the  plaintiffs,  .  .  . 
but  rejected  the  defendant's  first  pra3-er.  The  defendant  excepted. 
The  verdict  and  judgment  were  for  tiie  plaintifis,  and  the  defendant 
appealed. 

John  R.  Kenhj^  for  the  appellant. 

Frank  P.  Clark,  for  the  appellees. 

Stoke,  .J.  The  plaintiffs  shipped  bv  a  line  of  steamers,  running  from 
New  York  to  the  South,  a  quantit}'  of  oil-cloth  clothing  to  Louisiana 
and  Texas.  They  insured  this  clothing  before  shipment  in  the  office 
of  the  defendant  company.  The  clothing  was  packed  in  boxes,  and  on 
its  arrival  at  its  destination  it  was  found  injured  and  comparatively 
worthless,  either  by  spontaneous  combustion  or  hy  some  chemical  action 

1  See  Goold  t-.  Shaw,  1  Johns.  Cas.  293  (1800) ;  Baker  v.  Manufacturers '  Ins.  Co.,  12 
Gray,  G03  (1851);  Perry  v.  Cobb,  88  Me.  4-35  (1896).  — Ed. 
^  Tl;e  statement  has  been  abridged.  —  Ed. 


694  PROVIDENCE    WASHINGTON    INS.    CO.    V.    ADLEE,       [cHAP.  VII. 

arising  from  the  material  in  tlie  goods  themselves.  They  all  presented 
the  appearance  of  having  lieen  burned  or  charred  within  the  boxes. 
The  clothing  was  not  injured  by  any  external  force  or  accident,  but 
whatever  the  injur\-  was,  it  was  the  result  of  the  inherent  infirmity  of 
the  goods  themselves.  Neither  the  plaintiffs  nor  the  defendants  knew 
at  the  Ume  the  insurance  was  effected  that  the  goods  were  liable  to 
spontaneous  combustion,  or  to  be  injured  by  any  inherent  defect  in  the 
goods.     No  extra  premium  to  cover  such  risk  was  paid. 

Under  these  circumstances,  the  defendants  claim  that  by  the  general 
principles  of  insurance  law,  they  are  not  liable  for  a  loss  b}'  sponta- 
neous combustion,  caused  by  the  inherent  infirmit}'  of  the  goods 
themselves. 

This  was  a  marine  policy,  and  one  of  the  dangers  insured  against, 
by  the  terms  of  the  policy,  was  fire.  But  while  this  is  undoubtedly' 
so,  the  question  remains,  and  is  still  undecided  in  this  State,  whether 
the  term  "  fire  "  used  in  the  ordinary  marine  policy  will,  upon  general 
principles,  cover  the  case  of  spontaneous  combustion,  caused  b}'  an 
inherent  infirmit}'  in  the  article  insured,  and  not  the  result  of  accident 
or  peril  of  the  sea.  There  is  no  doubt  of  the  liability  of  the  defendant 
company,  under  its  i)olicy,  had  the  ship  taken  fire,  and  the  goods  been 
consumed  ;  or  had  the  fire  originated  from  an}'  of  the  perils  insured 
against ;  but  the  question  is  a  very  different  one  when,  as  in  this  case, 
the  goods  are  in  good  faith  insured,  and  believed,  both  by  plaintiffs 
and  defendant,  not  to  be  liable  to  spontaneous  combustion  by  reason 
of  their  inherent  infirmity,  but  which  in  fact  were  so  liable,  and  were 
so  injured. 

The  authorities  are  few  upon  this  subject,  and  neither  full  nor  satis- 
factory. One  of  the  oldest  to  which  we  have  access  is  Emerigon,  who 
says,  page  290  : 

"Alt.  12  of  another  title  establishes,  as  a  general  rule,  that  ever}-- 
thing  which  happens  through  the  inherent  vice  of  the  thing,  or  by  the 
act  of  the  owners,  master,  or  merchant  shipper,  shall  not  be  reputed  a 
peril,  if  not  otherwise  borne  on  the  policy."     • 

It  is  then  certain  that  the  insurers  never  answer  for  damages  and 
losses  which  happen  directly  through  the  act  or  fault  of  the  assured 
himself.  It  would  be  in  fact  intolerable  that  the  assured  should  be  in- 
demnified by  others  for  a  loss  of  which  he  is  the  author.  This  rule  is 
grounded  on  first  principles.  It  is  a  general  rule,  from  which  it  is  not 
permitted  to  derogate  by  a  contrary  agreement.  As  Pothier  remarks, 
•' it  is  evident  that  I  cannot  validly  agree  with  any  one  that  he  shall 
charge  himself  with  the  faults  that  I  shall  commit." 

We  do  not  understand  this  learned  author  to  mean  that  an  article 
may  not  be  insured  that  is  inherently  liable  to  spontaneous  combustion, 
or  decay,  provided  it  is  so  expressed  in  the  2^olicy^  but  not  otherwise. 
But  if  the  loss  happens  through  the  fault  of  the  assured,  then  the  in- 
surers are  not  liable,  whatever  may  be  the  terms  of  the  polic}'.  For 
example,  if  an  article  is  insured,  which  irhen  dry  is  not  liable  to  spon- 


SECT.  I.]        PROVIDENCE   WASHINGTON    INS.    CO.   V.   ABLER.  695 

taneous  combustion,  but  when  he  puts  it  on  board,  it  is  icet,  in  such 
case  no  recovery  can  be  had.  Such  we  understand  to  be  the  views  of 
this  author. 

The  next  case  to  which  we  are  referred  is  the  case  of  Boyd  v.  Dubois, 
3  Campbell.  In  that  case  Lord  EUenborough  said  :  "  If  the  hemp  was 
put  on  board  in  a  state  liable  to  effervesce,  and  it  did  effervesce,  and 
generate  the  fire  which  consumed  it,  upon  the  common  principles  of 
insurance  law,  the  assured  cannot  recover  for  a  loss  which  he  him- 
self has  occasioned." 

The  defendant  in  that  case  attempted  to  prove  that  the  hemp,  which 
was  insured,  was  put  aboard  ship  in  a  damaged  condition  ;  and  for  that 
reason  was  apt  to  ferment  and  take  fire. 

This  case  is  in  accord  with  Emerigon. 

The  next  authority  is  Parsons  on  Contracts,  vol.  ii.  p.  374,  6th  ed. 
The  author  therein  says  : 

"  It  is  another  rule  that  insurers  are  not  liable  for  property  destroyed 
by  the  effect  of  its  own  inherent  deficiencies  or  tendencies',  unless  these 
tendencies  are  made  active  and  destructive  by  a  peril  insured  against. 
Thus,  if  hemp,  which  was  dr}-  when  laden,  be  afterwards  wet  by  a  peril 
of  the  sea,  and  b}'  reason  of  such  wet  ferments,  or  rots,  or  burns,  the 
insurers  would  be  liable."  And  that  very  learned  author  refers  to  both 
Emerigon  and  the  case  of  Boyd  and  Dubois  as  his  authorities. 

Chancellor  Kent  also  takes  a  similar  view  in  his  Commentaries, 
vol.  iii.  c.  48. 

Phillips  on  Insurance,  c.  13,  marginal  page,  says : 

"It  is  a  general  rule  that  insurers  are  not,  under  the  common  form 
of  the  policv,  liable  to  an}'  damage  or  loss  arising  from  the  qualities  or 
defects  of  the  subject  insured,  since  these  are  not  among  the  perils 
assumed  by  the  underwriter." 

Parsons  on  the  Law  of  Marine  Insurance,  vol.  ii.  p.  216,  holds  the 
same  view.     He  says  : 

"  It  is  also  a  rule  that  the  insurers  are  liable  for  no  subject-matter  of 
insurance  which  is  destroyed  by  reason  of  its  own  inherent  defects  or 
tendencies.  But  this  rule  does  not  appU'  to  tendencies  which  are  called 
into  activity  only  by  a  peril  insured  against.  Thus,  if  hemp  insured, 
burns  up,  or  rots,  from  spontaneous  ignition  or  fermentation,  it  being 
known  that  this  may  happen,  if  the  hemp  be  damp,  but  not  if  it  be  dry, 
the  question  would  be,  whether  it  was  damp  or  ^ry  when  it  was  put 
on  board.  But  if  the  hemp  were  dry  when  laden,  and  was  afterwards 
wet  by  reason  of  the  straining  of  the  ship  in  a  storm,  or  by  the  ship- 
ping of  a  sea,  or  any  like  peril,  then  the  insurers,  whether  on  ship  or 
cargo,  would  be  liable." 

All  these  authorities  refer  to  Emerigon  and  the  case  in  3  Campbell, 
and  are  all  upon  marine  insurance. 

On  the  other  hand,  we  have  been  referred  to  the  case  of  The  British 
American  Insurance  Co.  v.  Joseph,^  decided  in  the  Court  of  Appeals 

1  9  Lower  Canada,  448  (1857).  —  Ed. 


696  PROVIDENCE    WASHINGTON    INS.    CO.    V.    ADLER.       [CHAP.  VII. 

for  Lower  Canada,  wliich  lias  been  snpposed  to  decide  that  a  fire  in- 
surance (not  marine)  covers  the  risk  of  spontaneous  combustion  ;  and 
citing  that  case  only,  Mr.  May,  in  his  Work  on  Fire  Insurance,  comes 
to  the  same  conclusion. 

The  Lower  Canada  case  is  certainly  very  imperfectly  reported.  The 
report  is  in  French,  and  the  court  gave  no  opinion  ;  the  terms  of  the 
policy  are  not  set  out,  and  but  a  very  few  of  the  facts  in  the  case.  It 
is  liy  no  means  clear,  from  the  few  facts  that  are  stated,  that  the  spon- 
taneous combustion  did  not  originate  in  a  heap  of  unhisured  coal,  and 
extend  from  that  to  the  insured  coal. 

But  suppose  the  case  has  all  the  effect  claimed  for  it  by  the  appellees, 
and  does  decide  that  in  a  purely  fire  insurance  the  risk  of  spontaneous 
combustion  is  covered,  we  could  not  agree  that  it  should  overrule  the 
long  list  of  high  authorities  to  the  contrary  in  marine  policies.  INIore 
especially  since  the  reasons  to  the  contrary,  we  think,  are  satisfactory. 

No  well  managed  insurance  company  would  take  a  marine  risk  on  an 
article  inherently  liable  to  spontaneous  combustion  ;  nor  would  an}' 
prudent  shipmaster  or  owner  receive  such  on  his  vessel,  as  not  merel}' 
the  property  so  insured,  but  the  propert}-  of  others,  and  the  safety  of 
the  sliip,  and  the  lives  of  the  crew,  would  be  endangered  by  so  doing. 
It  would,  as  Fmerip-on  snvs,  bo  intolerable  that  the  owner  should  re- 


ceive pay  forj;oods  that  destroj-ed  themsch'es.  The  object  of  a  marine 
policy  is  to  insure  against  the  perils  of  the  sea,  and  not  against  the 
perils  incident  to  the  goods  themselves. 

In  this  case  it  is  verv  clear  that  the  goods  were  injured  by  their  own 
inherent  infirmity,  and  that  such  inherent  infirmity  was  not  called  into 
activity  by  an}'  peril  insured  against.  We  think  such  loss  was  not 
within  the  contemplation  of  either  part}'  to  the  contract  of  insurance. 
That  the  term  "fire,"  used  in  the  policy,  included  fire  from  acci- 
dent, or  brought  about  by  a  peril  of  the  sea,  and  not  spontaneous 
combustion. 

Entertaining  these  views,  we  think  the  court  below  was  in  error  in 
granting  the  fourth  prayer  of  the  plaintiffs,  and  in  refusing  the  first 
prayer  of  the  defendant,  and  the  judgment  must  be  reversed.  But  in- 
asmuch as  the  evidence  is  full  and  exi)licit  that  the  injury  was  caused 
by  the  inherent  infirmity  of  the  goods,  a  new  trial  will  not  be  awarded.^ 

Judgment  reversed.^ 

*  On  application  for  a  rehearing,  a  new  trial  was  awarded  to  permit  the  appellees 
to  furni.sh  new  evidence  to  the  effect  that  the  injury  was  not  in  fact  caused  by  the 
inherent  infirmity  of  the  goods.  —  Ed. 

2  On  the  perils  insured  against,  see  also  :  — 

Tierney  v.  Etherington,  1  Burr,  at  348  (1743) ; 

Felly  V.  Royal  Exchange  Assur.  Co.,  1  Burr.  341  (1757); 

Hodgson  r.Malcolm,  2  B.  &  P.  N.  R.  336  (1806)  ; 

Butler  i;.  Wildman,  3  B.  &  Aid.  398  (1820) ; 

Ellery  v.  New  England  Ins.  Co.,  8  Pick.  14  (1829) ; 

Wilson  V.  Jones,  L.  R.  2  Ex.  139,  148  (Ex.  Ch.  1867) ; 

Moores  f.  Louisville  Underwriters,  14  Fed.  Rep.  226  (C.  C,  W.  D.  Tenn.,  1882) ; 

Snowden  v.  Guion,  101  N.  Y.  458  (1886).  —  Ed. 


SECT.  1.]  PETERS   V.   WxlRREN    INS.    CO.  697 

SECTION   I.   (continued). 
(B)    The   Coxnection  between  Peril  and  Loss. 

BONDRETT   v.    HENTIGG. 
Nisi  Prius,  Common  Pleas,  1816.     Holt,  N.  P.  149. 

Policy  of  insurance  on  goods  from  London  to  the  Isle  of  France, 
&c.  Loss  averred  by  perils  of  the  sea.  The  plaintiff  claimed  a  total 
loss.  The  ship  had  been  wrecked  ;  but  some  of  her  cargo  was  saved 
and  got  on  shore.  It  felj^  however,  into  the  hands  of  the  natives  of  the 
Isle  of  Frajice,  who  destroy ed_part^j3d_plundered  the  rest. 

IBosanquet,  serjeant,  for  the  defendant.  This  is  nofa  loss  by  perils 
of  the  sea,  and  the  plaintiff  has  not  abandoned.  To  make  it  a  total 
loss  under  these  circumstances  there  must  be  an  abandonment. 

GiBBS,  C.  J.  An  abandonment  is  not  necessary  to  make  it  a  total 
loss  ;  the^ause  oMhe  Joss  was  the^^perils  of  the  seas^  and  the  portion 
of  the  goods  which  was  saved  from  the  wreck,  though  got  on  shore, 
never  came  again  into  the  hands  of  the  owners.  It  is  therefore  a  total 
loss  to  them  from  the  perils  stated  in  the  declaration. 

Vcmghan,  serjeant,  and  Barnewell,  for  plaintiff. 

Bosanquet,  serjeant,  for  defendant. 


PETERS  AND  Another  v.  WARREN   INSURANCE   COMPANY. 
Supreme  Court  of  the  United  States,  1840.     14  Pet.  99. ^ 

The  case  is  stated  in  the  opinion. 

Mr.  Webster^  for  the  plaintiffs. 

Mr.  Parsons,  for  the  defendant. 

Mr.  Justice  Story  delivered  the  opinion  of  the  court. 

Tliis  is  the  case  of  a  division  of  opinion,  certified  to  this  court  by  the 
judges  of  the  Circuit' Court  for  the  District  of  Massachusetts. 

The  defendant,  by  a  policy  of  insurance,  dated  the  1st  of  April, 
1836,  insured  the  plaintiffs,  for  whom  it  may  concern,  payable  to 
them,  eight  thousand  dollars,  on  the  ship  "  Paragon,"  for  the  term 
of  one  year,  commencing  the  risk  on  the  13th  of  March,  1836,  at 
noon,  at  five  per  cent.  The  policy  contained  the  usual  risks,  and 
among  others,  that  of  perils  of  the  sea.  The  declaration  alleged  a 
loss,  by  collision  with  another  vessel,  without  any  fault  of  the  mas- 
•ter  or  crew  of  the  "  Paragon  ;  "  and  also  insisted  on  a  general  average 

1  The  reporter's  statement  has  been  omitted.  —  Ed. 


698  PETEES    V.   WARREN   INS.    CO.  [CHAP.  VII. 

and  contribution.  The  parties  at  the  trial  agreed  upon  a  statement 
of  facts;  bj-  which  it  appeared  that  the  "Paragon"  was  owned  bj 
the  plaintiffs,  and  was  in  part  insured  bj-  the  defendants,  b}'  the  policy 
above  mentioned.  On  the  10th  of  November,  1836,  the  "  Paraxon  " 
sailed  from  Hamburg,  in  ballast,  for  Gottenburg,  to  procure  a  caro-o 
of  iron  for  the  United  States.  While  proceeding  down  the  Elbe,  with 
a  pilot  on  board,  she  came  in  contact  with  a  galliot,  called  the  "  Frau 
Anna,"  and  sunk  her.  By  this  accident,  the  "Paragon"  lost  her 
bowsprit,  jibboom,  and  anchor,  and  sustained  other  damage,  which 
obliged  her  to  put  into  Cuxhaven,  a  port  at  the  mouth  of  the  Elbe, 
and  subject  to  the  jurisdiction  of  Hamburg,  for  repairs.  Whilst  lying 
there,  the  captain  of  the  galliot  libelled  the  "  Paragon"  in  the  Marine 
Court,  alleging  that  the  loss  of  the  vessel  was  caused  by  the  careless- 
ness or  fault  of  those  on  board  of  the  "  Paragon."  The  ship  was 
arrested,  but  was  subsequently  released  on  security  being  given  by  the 
agents  of  the  owners,  to  respond  to  such  damages  as  should  be  awarded 
b}-  the  court.  Upon  hearing  of  the  cause,  the  court  decided  that  the 
collision  was  not  tlic  result  of  fault  or  carelessness  on  either  side, 
and  that  therefore,  according  to  the  marine  law  of  Hamburg,  the  loss 
was  a  general  average  loss,  and  to  be  borne  equally  by  each  party; 
that  is  to  say,  that  the  "  Paragon  "  was  to  bear  one-half  of  the  expense 
of  her  own  repairs,  and  to  pay  one-half  of  the  value  of  the  galliot ;  and 
that  the  galliot  was  to  bear  the  loss  of  one-half  of  her  own  value,  and 
to  pay  one-half  of  the  repairs  of  the  "  Paragon  :  "  the  result  of  wliich 
was,  that  the  "  Paragon  "  was  to  pa}'  the  sum  of  two  thousand  six  hun- 
dred dollars,  being  one-half  of  the  value  of  the  galliot  (three  thousand 
dollars),  after  deducting  one-half  of  her  own  repairs  (four  hundred  dol- 
lars). The  owners  of  the  "Paragon"  having  no  funds  at  Hamburg 
the  captain  was  obliged  to  raise  the  money  on  bottomr}'.  There  being 
no  cargo  on  board  of  the  "Paragon,"  and  no  freight  earned,  the 
"Paragon"  was  obliged  to  bear  the  whole  loss. 

Upon  this  state  of  facts  the  question  arose,  whether  in  this  case  the 
contributory  amount  paid  b\-  the  "  Paragon"  on  account  of  the  col- 
lision, was  a  direct,  positive,  and  proximate  effect  from  the  accident, 
in  such  sense  as  to  render  the  defendants  liable  therefor.  Upon  this 
question  the  judges  were  opposed  in  opinion  ;  and  it  has  accordingly 
been  certified  to  this  court  for  a  final  decision. 

That  a  loss  by  collision,  without  any  fault  on  either  side,  is  a  loss  by 
the  perils  of  the  sea,  within  the  protection  of  the  policy  of  insui-ance,  is 
not  doubted.  So  far  as  the  injury  and  repairs  done  to  the  "  Paragon  " 
itself  extend,  it  is  admitted  that  the  underwriters  are  liable  for  all  the 
damages.  The  only  point  is,  whether  the  underwriters  are  liable  for 
the  contribution  actually  paid  on  account  of  the  loss  of  the  galliot. 

This  point  does  not  appear  ever  to  have  been  decided  in  any  of 
the  American  courts.  It  is  proper,  therefore,  to  examine  it  upon 
principle,  and  to  ascertain  what  is  the  true  bearing  of  the  foreign 
authorities  upon  it. 


SECT.  I.]  PETERS    V.    WARKEN   INS.    CO.  699 

And  first  npon  principle:  That  the  owners  of  the  "Paragon"  have 
been  compelled  to  pay  this  contribution  witliont  any  fault  on  their  side, 
is  admitted  ;  that  it  constituted  a  proper  subject  of  cognizance  by  the 
Marine  Court  of  Hamburg,  the  collision  having  occurred  within  tlic 
territorial  jurisdiction  of  that  city,  is  also  admitted  ;  and  that  the  claim 
constituted  a  charge  or  lien  upon  the  "  Paragon,"  according  to  the  local 
law,  capable  of  being  enforced  by  a  proceeding  m  rem,  is  equally  clear. 
Wh}',  then,  should  not  the  loss  be  borne  b}'  the  underwriters,  since 
it  was  an  unavoidable  incident  or  consequence  resulting  from  the 
collision? 

Tiie  argument  is,  that  in  the  law  of  insurance,  which  governs  the 
present  contract,  it  is  a  settled  rule  that  underwriters  are  liable  only 
for  losses  arising  from  the  ^woximate  cause  of  the  loss,  and  not  for 
losses  arising  from  a  remote  cause,  not  immediately  connected  with 
the  peril.  Causa  proxima  non  remota  spzctatur.  The  I'ule  is  correct, 
when  it  is  understood  and  applied  in  the  true  sense  ;  and,  as  such  it  has 
been  repeatedh*  recognized  in  this  court.  But  the  question,  in  all  cases 
of  this  sort,  is,  what,  in  a  just  sense,  is  the  proximate  cause  of  the  loss? 

The  argument  in  the  present  case,  on  the  part  of  the  defendants,  is, 
that  the  law  of  Hamburg  is  the  immediate  or  proximate  cause  of  the 
loss  now  claimed,  and  the  collision  is  but  the  remote  cause.  But  surely 
this  is  is  an  over-refinement,  and  savors  more  of  metaphysical  than  of 
legal  reasoning.  If  the  argument  were  to  be  followed  out,  it  might  be 
said,  with  more  exactness,  that  the  decree  of  the  court  was  the  proxi- 
mate cause,  and  the  law  of  Hamburg  the  remote  cause  of  this  loss. 
But  law,  as  a  practical  science,  does  not  indulge  in  such  niceties.  It 
seeks  to  administer  justice  according  to  the  fair  interpretation  of  the 
intention  of  the  parliesj^and  deerhs  that  to  be  a  loss  within  t¥e  polic}- 
which  is  a  hafufaTorjiecessary  conseqiience"  of  the  ~pefil  insured  against. 
In  a  just  view  of  the  matter,  the^coUision  was  the  sole  proximate  cause 
of  the  loss  ;  and  the  decree  of  the  court  did  but  ascertain  and  fix  the 
amount  chargeable  upon  the  "Paragon,"  and  attached  thereto  at  the 
ver}'  moment  of  the  collision.  The  contribution  was  a  consequence  of 
the  collision,  and  not  a  cause.  It  was  an  incident  inseparably  con- 
nected, in  contemplation  of  law,  v/ith  the  sinking  of  the  galliot ;  and  a 
damage  immediate,  direct,  and  positive,  from  the  collision.  In  the  com- 
mon case  of  an  action  for  damages  for  a  tort  done  by  the  defendant,  no 
one  is  accustomed  to  call  the  verdict  of  the  jur}-,  and  the  judgment  of 
tl)e  court  thereon,  the  cause  of  the  loss  to  the  defendant.  It  is  properly 
attributed  to  the  original  tort,  which  gave  the  right  to  damages  conse- 
quent thereon  ;  which  damages  the  verdict  and  judgment  ascertained, 
but  did  not  cause. 

But  let  us  see  how  the  doctrine  is  applied  in  other  analogous  cases 
of  insurance,  to  which,  as  much  as  to  the  present  case,  the  same 
maxim  ought  to  apply,  if  there  is  any  just  foundation  for  it  here.  If 
there  be  an}'  commercial  contract  which,  more  than  any  other,  requires 
the  application  of  sound  common  sense  and  practical  reasoning  in  the 


700  PETERS    V.    WARREN    INS.    CO.  [CHAP.  VII. 

exposition  of  it,  and  in  the  uniformit}'  of  the  application  of  rules  to  it, 
it  is  certainly  a  policy  of  insurance  ;  for  it  deals  with  the  business  ami 
interests  of  common  men,  who  are  unused  to  deal  with  abstractions 
and  refined  distinctions.  Take  the  case  of  a  jettison  at  sea,  to  avoid 
a  peril  insured  against.  It  is  a  voluntary  sacrifice,  and  may  be  caused 
by  the  perils  of  the  sea;  but  it  is  ascertained  long  afterwards,  and  that 
ascertainment,  whether  made  by  a  court  of  justice,  or  by  an  agreement 
of  the  parties,  would,  in  the  sense  of  the  maxim  contended  for  in  the 
argument,  be  the  immediate  cause  of  the  contribution,  and  the  jettison 
but  a  remote  cause  ;  and  the  violence  of  the  winds  and  waves  a  still 
more  remote  cause  of  the  jettison.  Yet  all  such  niceties  are  disre- 
garded, and  the  underwriters  are  held  liable  for  the  loss  thus  sustained 
by  the  jettison,  as  a  general  average.  It  is  no  answer  to  saj-,  that  tliis 
is  now  the  admitted  doctrine  of  the  law,  and  therefore  it  is  treated  as  a 
loss  within  the  policy.  The  true  question  to  be  asked  is,  Why  is  it  so 
treated?  General  average,  as  such,  is  not,  eo  nomine,  insured  against 
in  our  policies.  It  is  only  payable  when  it  is  a  consequence,  or  re- 
sult, or  incident  (call  it  wliat  we  raaj')  of  some  peril  positively  insured 
against;  as,  for  example,  of  the  perils  of  the  sea.  The  case  of  a  ran- 
som after  capture  stands  upon  similar  grounds.  The  ransom  is,  in  a 
strict  metaphysical  sense,  no  natural  consequence  of  the  capture.  It 
mav  be  agreed  upon  long  afterwards  ;  and  if  we  were  to  look  to  the 
immediate  cause,  it  might  be  said  that  the  voluntary  act  of  the  party 
in  the  payment  was  the  cause  of  the  loss.  But  the  law  treats  it  as  far 
otherwise,  and  deems  the  ransom  a  necessary  means  of  deliverance 
from  a  peril  insured  against,  and  acting  directly  upon  the  property. 
The  expenses  consequent  upon  a  capture,  where  restitution  is  decreed 
bv  a  Court  of  Admiralty  upon  the  payment  of  all  the  costs  and  expenses 
of  the  captors,  fall  under  a  similar  consideration.  In  such  cases,  the 
decree  of  the  court  allowing  the  costs  and  expenses  may  be  truly  said 
to  be  the  immediate  cause  of  the  loss  ;  but  courts  of  justice  treat  it  also 
as  the  natural  consequence  of  the  capture. 

A  still  more  striking  illustration  will  be  found  in  the  case  of  salvage 
decreed  by  a  Court  of  Admiralty  for  services  rendered  to  a  vessel  in 
distress.  The  vessel  may  have  been  long  before  dismasted  or  other- 
wise injured,  or  abandoned  by  her  crew  in  consequence  of  the  perils  of 
the  winds  and  waves  ;  and  the  salvage  decreed  in  such  a  case  would 
seem,  at  the  first  view,  far  removed  from  the  original  peril,  and  dis- 
connected from  it :  and  yet,  in  the  law  of  insurance,  it  is  constantly 
attributed  to  the  original  peril,  as  the  direct  and  proximate  cause ;  and 
the  underwriters  are  held  responsible  therefor,  although  salvage  is  not 
specifically,  and  in  terms,  insured  against. 

These  are  by  no  means  the  only  illustrations  of  the  danger  of  intro- 
ducing such  an  application  of  the  maxim  into  the  law  of  insurance  as 
is  now  contended  for.  Suppose  a  perishable  cargo  is  greatly  damaged 
by  the  perils  of  the  sea,  and  it  should,  in  consequence  thereof,  long 
afterwards,  and   before   arrival   at  the   port   of  destination,   become 


SECT.  I.]  PETERS    V.    WARKEN    INS.    CO.  701 

gradually  so  putrescent  as  to  be  required  to  be  tLrown  overboard  for 
the  safety  of  the  crew :  the  immediate  cause  of  the  loss  would  be  the 
act  of  the  master  and  crew  ;  but  there  is  no  doubt  tliat  the  under- 
writers would  be  liable  for  a  total  loss,  upon  the  ground  that  the 
operative  cause  was  the  perils  of  the  sea.  Suppose  a  vessel  which 
is  insured  against  fire  only,  is  struck  by  lightning,  and  takes  fire  ; 
and  in  order  to  save  her  from  utter  destruction,  she  is  scuttled  and 
sunk  in  shoal  water,  and  she  cannot  afterwards  be  raised  ;  it  might 
be  said  that  the  immediate  cause  of  the  loss  was  the  scuttling  :  but  in 
a  juridical  sense  it  would  be  attributed  to  the  fire  ;  and  the  under- 
writers would  be  held  liable  therefor.  Suppose  another  case,  that  of 
:i  vessel  insured  against  all  perils  but  fire,  and  she  is  shipwrecked  by 
a  storm  on  a  barbarous  coast,  and  is  there  burnt  by  the  natives  ;  it 
misrlit  be  said  that  the  proximate  cause  of  the  loss  was  the  fire  ;  and 
yet  Lhere  is  no  doubt  that  the  underwriters  would  be  held  liable  on 
the  policy,  upon  the  ground  that  the  vessel  had  never  been  delivered 
from  the  original  peril  of  shipwreck. 

Illustrations  of  this  soi-t  might  be  pursued  much  farther,  but  it  seems 
unnecessary.  Tjiose  which  have  been  already  suggested  sufficiently 
establish  thatjhe_maxim.  Causa  proxima  rion  remota  spectatur,  is  not 
%vTthout  limitations,  and  has  never  been  applied  in  matters  of  insurance 
to  the  extent  contendedjoi- ;  but  that  it  has  been  constantly  qualified, 
and  constantly  applied  only  in  a  modified  practical  sen_se,  to  the  perils 
insured  against.  In  truth,  in  the  present  case,  the  loss  occasioned  by 
the  contribution  is  (as  has  been  already  suggested)  properly  a  conse- 
quence of  the  collision,  and  in  no  just  sense  a  substantive  independent 
loss. 

In  the  next  place,  how  stand  the  authorities  on  this  subject?  The 
only  authority  which  has  been  cited  by  the  counsel  for  the  defendants, 
to  sustain  their  argument,  is  the  case  of  De  Vaux  v.  Salvador,  4  Adol- 
phus  and  Ellis's  Rep.  420.  That  case  is  certainly  direct  to  the  very 
point  now  in  judgment.  It  was  a  case  of  collision,  where  the  assured 
had  been  compelled  to  pay  for  an  injury  done  to  another  vessel  by  the 
mutual  fault  of  both  vessels,  according  to  the  rule  of  the  English  Court 
of  Admiralty,  which,  in  a  case  of  mutual  fault,  apportions  the  loss  be- 
tween them.  Lord  Denman,  in  delivering  the  opinion  of  the  court, 
admitted  that  the  point  was  entirely  new  ;  and  after  referring  to  the 
above  maxim,  said:  '^  It  turns  out  that  the  ship  (insured)  has  done 
more  damage  than  she  has  received,  and  is  obliged  to  pay  the  owners 
of  the  other  ship  to  some  amount,  under  the  rule  of  the  Court  of 
Admiralty.  But  this  is  neither  a  necessary  nor  a  proximate  effect  of 
the  perils  of  the  sea.  It  grows  out  of  an  arbitrary  provision  in  the  law 
of  nations  ;  from  views  of  general  expediency,  not  as  dictated  by  nat- 
ural justice,  nor  (possibly)  quite  consistent  with  it :  and  can  no  more 
be  charged  on  the  underwriters  than  a  penalty  incurred  by  contraven- 
tion of  the  revenue  laws  of  any  particular  State,  which  was  rendered 
inevitable  by  perils  insured  against."     This  is  the  whole  reasoning  of 


702  PETERS   V.   WARKEN    INS.    CO.  [CHAP.  VII, ' 

the  learned  judge  upon  the  point  ;  and  with  great  respect,  if  the  views 
already  suggested  are  well  founded,  it  is  not  supported  by  the  analo- 
gies of  the  law,  or  by  tlie  principles  generally  applied  to  policies  of 
insurance.  The  case  of  a  penalty,  put  by  the  learned  judge,  does  not 
strike  us  with  the  same  force  as  it  does  his  lordship.  If  any  nation 
should  be  so  regardless  of  the  principles  of  natural  justice  as  to  declare 
that  a  vessel  driven  on  shore  by  a  storm  should  be  forfeited  because 
its  revenue  laws  were  thereby  violated,  it  would  then  deserve  consid- 
eration whether  the  underwriters  would  not  be  liable  for  the  loss,  as 
an  inevitable  incident  to  the  shipwreck.  At  all  events,  the  point  is 
too  doubtful  in  itself  to  justify  us  in  adopting  it  as  the  basis  of  any 
reasoning  in  the  present  case. 

The  case  before  the  King's  Bench  was  confessedly  new,  and  does  not 
ai)pear  upon  this  point  to  have  been  much  argued  at  the  bar.  It  seems 
to  have  been  decided,  principally,  upon  the  ground  of  the  absence  of 
any  authority  in  favor  of  the  assured,  and  as  it  appears  to  us,  in  oppo- 
sition to  the  analogies  furnished  by  other  acknowledged  doctrines  in 
the  law  of  insurance. 

The  same  question,  however,  has  undergone  the  deliberate  considera- 
tion of  some  of  the  greatest  maritime  jurists  of  continental  Europe;  and 
the  result  at  which  they  have  arrived  is  directly  opposite  to  that  of  the 
King's  Bench.  Pothier  lays  it  down  as,  in  his  opinion,  the  clear  result 
of  the  contract  of  insurance,  that  the  underwriters  are  bound  to  pay 
not  only  the  direct  loss  occasioned  by  any  peril  insured  against,  but 
all  the  expenses  which  follow  as  a  consequence  therefrom.  Pothier, 
Traite  d' Assurance,  n.  49.  Estrangin,  a  very  excellent  modern  com- 
mentator upon  Pothier  (Estrangin's  note),  asserts  that  there  is  not 
the  slighte'st  doubt  on  the  subject.  Emerigon,  whose  reputation  as 
a  writer  on  the  law  of  insurance  is  second  to  no  one,  unequivocally 
adopts  the  same  opinion.  Eraerig.  Assur.,  ch.  12  §  14,  p.  414-417. 
In  short,  all  tliose  learned  foreigners  hold  the  doctrine  that  whenever 
the  thing  insured  becomes  l^y  law  directly  chargeable  with  any  ex- 
pense, contribution,  or  loss,  in  consequence  of  a  particular  peril,  the 
law  treats  that  peril,  for  all  practical  purposes,  as  the  proximate  cause 
of  such  expense,  contribution,  or  loss.  And  this  they  hold,  not  upon 
any  peculiar  provisions  of  the  French  ordinance,  but  ui)on  the  general 
principles  of  law  applicable  to  the  contract  of  insurance.  In  our  opinion 
this  is  the  just  sense  and  true  interpretation  of  the  contract. 

It  has  been  suggested  that  there  is  a  difference  between  our  policies 
and  the  French  policies  ;  the  latter  containing  an  express  enumeration 
of  fortuitous  collision,  or  running  foul  (abordage  fortuit:),  as  a  peril 
insured  against ;  while  in  our  policies  it  falls  only  under  the  more  gen- 
eral head  of  "  perils  of  the  sea."  But  this  furnishes  no  just  ground  for 
any  distinction  in  principle.  The  reasoning,  if  any,  to  be  derived  from 
this  circumstance,  would  seem  ratiier  to  apply  with  more  force  in  favor 
of  the  plaintiff,  since,  even  when  the  risk  of  collision  is  specifically  enu- 
merated, the  expenses  and  contribution  attendant  upon  it  are  treated 


SECT.  1.]  PETEKS    V.    WAKREN    INS.    CO.  -703 

as  inseparable  from  the  direct  damage  to  the  vessel  itself,  as  a  part  of 
the  loss.  lu  short,  whether  a  particular  risk  is  specified  in  terms,  or 
is  comprehended  in  the  general  words  of  the  policy,  the  same  result 
must  arise,  viz.,  that  the  underwriters  are  to  bear  all  losses  properly 
attributable  to  that  peril,  and  no  other  losses. 

It  may  be  proper  to  remark,  that  the  rule  which  we  here  adopt  is 
just  as  likely,  in  actual  practice,  to  operate  favorably  as  unfavorably 
to  the  underwriters.  If  by  the  collision  the  "Paragon"  had  been 
sunk,  and  the  galliot  saved,  the  underwriters  would  have  had  the 
entire  benefit  of  the  reciprocity  of  the  rule.  It  would  sound  odd 
tliat  in  such  a  case  the  underwriters  should  be  entitled  to  receive 
the  full  benefit  of  the  Hamburg  law  for  their  own  indemnity;  and 
yet  in  the  opposite  case,  that  they  §liould  escape  from  the  burden 
imposed  by  that  law. 

In  all  foreign  voyages,  the  underwriters  necessarily  have  it  in  con- 
templation that  the  vessel  insured  must,  or  at  least  may  be,  subjected 
to  the  operation  of  the  laws  of  the  foreign  ports  which  are  visited. 
Those  very  laws  noay  in  some  cases  impose  burdens,  and  in  some  cases 
give  benefits,  different  from  our  laws  ;  and  yet  there  are  cases  under 
policies  of  insurance,  where  it  is  admitted  that  the  foreign  law  will 
govern  the  rights  of  the  parties,  and  not  the  domestic  law.  Such  is 
the  known  case  of  a  general  average,  settled  in  a  foreign  port  accord- 
ing to  the  local  law,  although  it  may  differ  from  our  own.  Simonds  v. 
White,  2  Barn,  and  Cresw.  805.  In  the  present  case,  the  policy  was 
on  time,  and  the  vessel  had,  as  it  were,  a  roving  commission  to  visit 
any  foreign  port;  and  of  course  might  well  be  presumed  at  different 
periods  to  come  under  the  dominion  of  various  codes  of  laws,  which 
might  subject  her  to  various  expenditures  and  burdens.  The  under- 
writers have  no  right  to  complain,  that  when  those  expenditures  and 
burdens  arise  from  a  peril  insured  against,  they  are  compelled  to  pay 
them  ;  for  they  were  bound  to  have  foreseen  the  ordinary  incidents  of 
the  voyage.  Suppose  a  vessel  injured  by  the  perils  of  the  sea  puts  into 
a  foreign  port  to  repair,  and  the  license  to  repair,  or  the  repairs  them- 
selves, are  burdened  with  a  heavy  revenue  duty ;  no  one  will  doubt 
that  the  charge  must  be  borne  by  the  underwriters,  as  an  expense 
incident  to  the  repair ;  and  yet  it  might  truly  be  said  not  to  be  the 
natural  result  of  the  peril,  but  only  a  charge  imposed  by  law,  consequent 
thereon. 

Upon  the  whole,  we  are  of  opinion  that  it  be  certified  to  the  Circuit 
Court,  that  in  this  case  the  contril)utory  amount  paid  by  the  "  Para- 
gon," on  account  of  the  collision,  was  adirect,  positive,  and  proximate 
effect  from  the  accident,  in  such  sense  as  to  render  the  defendants^ 
liable  tiierefor  upon^this  policy. 


704  MONTOYA   V.   LONDON   ASSURANCE    CO.  [CHAP.  VII. 

MONTOYA  AND   Others   v.   LONDON   ASSURANCE   CO. 

Exchequer,  1851.     6  Excb.  451. 

Covenant  on  two  sea  policies  of  insurance  on  produce  or  goods.  The 
declaration  stated  an  average  loss  on  tobacco  by  perils  of  the  seas. 
The  defendants  pleaded  (by  statute)  that  they  had  not  broken  their 
covenants  ;  and  issue  having  been  joined  thereon,  by  the  consent  of  the 
parties,  and  by  a  judge's  order,  the  following  case  (in  substance)  was 
stated  for  the  opinion  of  this  court : 

The  plaintiffs,  who  are  merchants  carrying  on  business  in  London, 
on  the  9th  of  January,  1849,  effected  the  first  of  the  policies  in  the 
declaration  mentioned  with  the  defendants,  on  tobacco  and  hides  {inter 
alia)  from  New  Granada  to  ports  of  discharge  in  the  United  Kingdom, 
the  plaintiffs  engaging  to  pay  averages  on  tobacco.  On  the  19th  of 
February,  1849,  the  plaintiffs  effected  a  similar  policy,  the  second 
policy  in  the  declaration  mentioned,  with  the  defendants,  on  tobacco 
and  hides.  The  produce  as  declared  was  duly  shipped  on  board  the 
vessel,  which  sailed  with  her  cargo  from  St.  Martha  in  New  Granada 
on  her  voyage  towards  her  port  of  discharge  ;  and  whilst  proceeding  on 
her  voyage  encountered  much  bad  weather,  and  was  struck  by  heavy 
seas,  and  shipped  large  quantities  of  water,  by  reason  whereof  the 
produce  so  shipped  sustained  damage  as  hereafter  mentioned.  In 
April,  1849,  the  vessel  arrived  at  her  port  of  discharge;  and  it  was 
then  discovered  that  some  part  of  the  cargo  was  considerably  damaged 
from  the  causes  above  mentioned,  and  on  the  opening  of  the  hold  a 
suffocatuig  stench  and  vapor  or  gas  issued  from  it.  The  cargo  had 
consisted  principally  of  sugar,  hides,  and  tobacco.  The  tobacco  had 
been  shipped  according  to  the  usual  course  adopted  in  exporting 
tobacco  from  ports  in  New  Granada,  in  serous  —  a  Spanish  term  signi- 
fying dry  hide  packages.  A  very  large  part  of  the  cargo  of  hides  was 
in  an  absolute  state  of  rottenness  and  putridity  from  sea  damage,  and  a 
great  number  of  the  serous  in  which  the  tobacco  was  packed  were  also 
rotten,  and  greatly  damaged  by  sea-water.  A  large  portion  of  the 
cargo  of  tobacco  was  rendered  totally  worthless.  The  rest  was  greatly 
deteriorated  in  consequence  of  a  part  of  the  cargo  having  been  exces- 
sively damaged  by  sea-water,  which  caused  fermentation,  and  strongly 
impregnated  more  or  less  the  whole  of  the  cargo  with  a  fetid  flavor. 

The  plaintiffs  claimed  in  this  action  in  respect  only  of  the  damage 
sustained  by  the  tobacco  part  of  the  cargo  insured,  which  was  not,  nor 
were  the  serons,  immediately  in  contact  with  nor  directly  damaged  by 
sea-water,  but  which  was  damaged  and  deteriorated  in  the  manner 
described,  that  is  to  sa}-,  was  damaged  and  deteriorated  in  flavor  onl}-, 
and  not  otherwise,  by  the  fetid  odor  caused  by  and  proceeding  from 
the  fermentation  and  putridity  of  that  part  of  the  cargo  which  had  been 
directly  damaged  and  putrified  by  the  sea-water. 


CE.T.  I.]       MOXTOYA  V.    LONDON  ASSUKANCE  CO.  705 

The  court  were  to  be  at  liberty  to  draw  any  sucli  iaferencc  from  the 
facts  as  a  jury  would  be  at  liberty  to  draw. 

The  question  for  the  opinion  of  the  court  was,  whether  the  defend- 
ants were  liable  for  the  damage  aforesaid  ;  and  if  the  court  should  be 
of  opuiion  that  they  were,  judgment  was  to  be  entered  for  the  plain- 
tiffs for  £630  ;  but  if  the  court  should  be  of  opinion  that  the  defend- 
ants were  not  liable,  judgment  of  nolle  jyi-oserjui,  or  such  judgment 
as  the  court  might  think  fit,  was  to  be  entered. 

Sir  F.   Thesiger  {Tomlinson  with  him),  for  the  plaintiffs. 

Peacock,  co)itra} 

Pollock,  C.  B.  We  think  it  unnecessary  to  hear  any  further  argu- 
ment on  the  part  of  the  plaintiffs.  The  question  for  the  court  is, 
whether,  under  the  particular  circumstances  of  this  case,  the  plaintifTs 
are  entitled  to  recover  from  the  underwriters  for  the  damage  occasioned 
to  the  tobacco,  as  a  loss  within  the  meaning  of  the  policy  ;  and  we  are 
all  clrarly  of  oi)inion  that  our  judgment  ought  to  be  for  the  plaintiffs. 
jNIr.  Peacock  has  argued  the  case  with  much  ingenuity,  and  the  effect 
of  his  argument  has  been  to  cause  some  doubt  wliere  the  precise  limits 
of  the  responsibility  of  underwriters  are  to  be  fixed.  Many  ingenious 
cases  might  be  suggested,  in  which  the  court  would  have  much  difficulty 
in  deciding  whether  they  would  fall  within  such  limits.  But  it  appears 
to  me  that  no  such  doubt  or  difficulty  exists  in  the  present  case,  and  I 
think,  as  fell  from  one  of  the  members  of  the  court  in  the  course  of  the 
argument,  that,  if  the  underwriters  here  would  have  been  responsible 
for  damage  done  to  a  cargo  consisting  entirely  of  corn,  the  lower  part 
of  which  had  been  spoilt  by  direct  contact  with  the  sea-water,  and  the 
upper  by  the  fermentation  of  the  lower  part,  the  underwriters  must 
equally  l)e  liable  in  the  present  case  :  for,  in  truth,  there  is  no  distinc- 
tion between  the  two  cases.  It  is  a  matter  of  no  difference  whether 
tiie  wliole  of  the  cargo  belongs  to  one  person,  and  consists  of  one  entire 
package  of  corn,  or  whether  the  cai-go  consists  partly  of  corn  and 
partly  of  hides,  and  is  the  property  of  several  owners.  In  both  cases 
the  loss  arises  from  perils  of  the  seas  ;  and  it  is  difficult  to  see  how  the 
loss  can  be  said  not  to  be  the  immediate  result  of  such  perils.  Several 
of  the  cases  put  to  us  on  the  part  of  the  defendants  are,  in  my  opinion, 
cases  of  the  direct  and  immediate  consequence  of  perils  of  the  seas,  in 
which  the  sea-waler  is  the  immediate  cause  of  the  loss.     And  I  think  it 

1  This  argument  was  interrupted  by  P.vrke,  B.,  thus  :  "  Suppose,  in  the  present 
case,  that  instead  of  the  cargo  consisting  of  a  layer  of  hides,  the  whole  cargo  had  con- 
sisted of  several  quarters  of  corn,  and  tliat  the  lower  portion  had  become  damaged  by 
the  action  of  salt  water,  and  had  undergone  the  process  of  fermentation,  and  had,  by 
the  evolution  of  gas,  totally  destroyed  the  upper  portion  of  the  cargo,  would  not  such 
a  damage  have  fallen  within  the  terms  of  this  policy  ?  " 

And  the  argument  was  interrupted  by  Platt,  B.,  thus:  "Even  admitting  that 
this  damage  might  have  been  prevented  if  the  captain  of  the  vessel  had  landed  the 
cargo  at  some  intermediate  port  and  had  caused  the  hides  to  be  dried,  does  not  the 
loss"  equally  arise  from  the  perils  of  the  seas,  when,  instead  of  adopting  that  course, 
the  captain  proceeds  on  his  vovage  ?  "  —  F>T). 

4-5 


706  MONTOYA   V.    LONDON    ASSURANCE   CO.  [CHAP.  VII. 

may  be  laid  down  as  a  general  rule,  that  wliere  mischief  arises  from  perils 
of  the  seas,  and  the  natural  and  almost  inevitable  consequence  of  that 
mischief  is  to  create  further  mischieA'ous  results,  the  underwriters,  in 
such  case,  are  responsible  for  the  further  mischief  so  occasioned. 

Parke,  B.  I  am  also  of  opinion  that  our  judgment  ought  to  be  for 
the  plaintiff's.  There  is  no  doubt  that  the  maxim  of  Lord  Bacon, 
which  was  cited  at  the  commencement  of  the  case,  and  has  been  I'elied 
upon  by  Mr,  Peacock,  is  perfectly  correct,  and  applies  not  onh-  to  the 
present  case  but  to  all  cases  of  this  description  ;  and  the  question  in 
each  case  is,  what  is  causa  proximo,  and  what  causa  remota?  There 
is  very  great  difficulty,  as  my  Lord  Cliief  Baron  has  observed,  in  saying 
where  the  precise  line  is  to  be  drawn  ;  and  it  is  often  no  eas}-  matter  to 
decide  whether  a  particular  case  falls  within  it  or  not.  But  I  do  not 
see  that  there  is  any  difficulty  in  saying  that  the  present  case  does  fall 
within  the  line.  If  the  owner  of  this  tobacco  which  has  been  injured, 
could  recover  compensation  for  his  loss  occasioned  by  that  injury  from 
the  master  or  owner  of  the  vessel,  tliere  is  no  good  reason  wh}-  he 
should  not  be  entitled  also  to  recover  against  the  underwriter  for  a  loss 
occasioned  by  perils  of  the  seas.  If  the  cargo  had  consisted  wholly  of 
hides,  and  the  upper  part  had  been  injured  b}-  vapors  arising  from  the 
decomposition  of  the  lower  hides,  occasioned  by  the  action  of  sea-water, 
the  owner  of  the  hides  would  have  been  entitled  to  recover  from  the 
underwriter  for  the  injury  so  occasioned  to  the  upper  layers.  It  is  a 
matter  of  no  difference  whatever  that  the  cargo  consists  partly  of  corn 
and  partly  of  hides.  The  loss  in  either  case  is  immediately  and  direct]}' 
caused  b}'  perils  of  the  seas,  and  would  therefore  fall  within  the  terms 
of  this  polic}-.  It  is  therefore  not  necessary  to  give  any  opinion  upon 
tlie  cases  which  have  been  put  on  the  part  of  the  defendants.  Some  of 
them  may  fall  within  the  line,  and  others  without  it.  It  seems  to  me 
to  be  impossible  to  distinguish  this  case  from  that  which  I  put,  where 
the  cargo  is  supposed  to  consist  entirely  of  hides  or  corn,  and  the  upper 
part  is  injured  by  noxious  gases  arising  from  the  decomposition  of  the 
lower  portions,  or  by  the  water  being  raised  by  capillary  attraction. 
The  assured  are  therefore  entitled  to  recover  in  this  action. 
•  Platt,  B.  I  am  of  the  same  opinion.  I  do  not  feel  that  I  was 
answered  by  the  difficulty  which  Mr.  Peacock  suggested  in  reply  to  the 
case  I  put  to  him  during  the  course  of  his  argument.  The  learned 
counsel  asked  at  what  time  the  loss  occurred.  I  do  not  think  that  is  a 
matter  of  the  least  moment  or  consequence  whatever.  The  sea-water 
having  caused  the  hides  to  ferment,  and  thereby  the  tobacco  to  be 
spoilt,  it  is  merely  playing  with  terms  to  say  that  the  injury  is  not 
occasioned  by  the  sea-water.  The  action  of  the  sea-water  which  has 
been  shipped  in  consequence  of  bad  weather  occasions  the  fermentation, 
and  is  the  proximate  cause.  It  appears  to  me,  therefore,  that  what- 
ever mischief  is  occasioned  to  the  cargo  by  the  shipping  of  sea-water, 
is  a  loss  occasioned  b}-  the  perils  of  the  seas,  and  that  the  insurers  are 
liable  to  make  the  loss  good. 


SECT.  I.]  GENERAL    MUTUAL    INS.   CO.    V.    SHERWOOD. 


707 


Martin,  B.  I  am  clearly  of  opinion  that  the  injury  to  the  tobacco 
is  a  loss  arising  from  perils  of  the  seas.  The  case  finds  that  the  putre- 
faction of  the  hides  was  caused  by  the  sea-water,  which  had  found  its 
way  into  the  hold  of  the  vessel,  and  that  the  putrefaction  of  the  hides 
so  occasioned  had  caused  the  destruction  of  the  tobacco.  I  do  not  think 
it  to  be  by  any  means  necessary  that  the  sea-water  should  be  in 
absolute  contact  with  the  injured  article.  The  result  of  the  injury  to 
the  hides  by  the  sea-water  is  the  damage  to  the  tobacco.  It  is,  no 
doubt,  difficult  to  say  where  the  line  is  to  be  drawn  in  all  cases.  But 
in  the  present  the  loss  clearly  falls  within  the  terms  of  the  policy,  as 

arising  from  perils  of  the  seas. 

Judgment  for  the  plaintiffs} 


GENERAL   MUTUAL  INS.    CO.,  Plaintiffs  in  Erkor, 
V.  SHERWOOD,  Defendant  in  Error. 

Supreme  Court  of  the  United  States,  18.52.     14  How.  351.^ 

The  case  is  stated  in  the  opinion. 

Mr.  A.  Hamilton,  Jr.,  for  the  plaintiffs  in  error. 

Mr.  Butler,  with  whom  was  Mr.  Cutting,  for  the  defendant  in 
error. 

Mr.  Justice  Curtis  delivered  the  opinion  of  the  court. 

This  is  a  writ  of  error  to  the  Circuit  Couit  of  the  United  States  for 
the  Southern  District  of  New  York. 

The  action  was  assumpsit  on  a  time  policy  of  insurance,. subscribed 
by  the  plaintiffs  in  error,  upon  the  brig  '•  Emily,"  during  one  year  from 
the  seventeenth  day  of  October,  1843,  for  the  sum  of  eight  thousand 
dollars,  the  vessel  being  valued  at  the  sum  of  sixteen  thousand  dollars. 
The  policy,  described  in  the  declaration,  assumed  to  insure  against 
the  usuaf  sea  perils,  among  which  is  barratry  of  the  master  and 
mariners.  The  declaration  avers,  that  during  the  prosecution  of  a 
voyage,  within  the  policy,  while  on  the  high  seas,  and  near  the 
entra'nce  of  the  harlior  of' the  city  of  New  York,  by  and  through  the 
want  of  a  proper  look-out,  by  the  mate  of  tlie  said  brig,  and,  by  and 
through  the  erroneous  order  of  the  chief  mate,  who  was  stationed  on 
the  top-gallant  forecastle  of  the  said  brig,  who  saw  the  schooner, 
hereinafter  named,  and  cried  out  to  the  man  at  the,  wheel,  '"helm 
hard  down  —  luff"  —  whereas,  he  ought  not  to  have  given  the  said 
order ;  and,  by  and  through  the  negligence  and  fault  of  the  said  brig 
"Emil3-,"  the  said  brig  ran  into  a  schooner  called  the  "Virginian," 
and   so  injured  her  that   she   sank,  whereby  the  said  brig  "  Emily  " 

1  See  Corv  v.  Bovlston  F.  &  M.  Ins.  Co.,  107  Mass.  140  (1871). 
Compare  Cator  v.  Great  Western  In.s.  Co  ,  L.  R.  8  C.  P.  .5.52  (1873)  —Ed. 

2  The  reporter's  statement  has  been  omitted.  —  Ed. 


708  GENERAL   MUTUAL    INS.    CO.    V.    SHERWOOD.        [CHAP.  VIL 

became  liable  to  the  owners  of  the  said  schooner  and  her  cargo,  to 
make  good  tlieir  damages  ;  which  liability  was  a  charge  and  encum- 
brance on  tlie  said  brig.  The  declaration  then  proceeds  to  aver,  that 
the  brig  was  libelled,  by  the  owners  of  the  schooner  and  her  cargo,  in 
the  District  Court  of  the  United  States ;  that  a  decree  was  there  maxle, 
whereby  it  was  adjudged,  "That  the  collision  in  the  pleadings 
mentioned,  and  the  damages  and  loss  incurred  by  the  libellants,  in 
consequence  thereof,  occurred  by  the  negligence  or  fault  of  the  said 
brig,  and  that  the  libellants  were  entitled  to  recover  their  damages 
by  them  sustained  thereby  ;  "  that  the  same  having  been  assessed,  a 
decree  therefor  was  made  by  the  District  Court,  which,  on  appeal, 
M-as  affirmed  by  the  Circuit  Court,  which  found,  ''That  the  hands,  on 
board  the  'Emily,'  failed  to  keep  a  proper  look-out,  and,  that  the 
said  brig  might  have  avoided  the  collision,  by  the  use  of  proper 
caution,  skill,  and  vigilance."  The  declaration  further  avers,  that  the 
plaintiff  has  paid  divers  sums  of  money,  to  satisfy  this  decree  and  the 
expenses  of  making  the  defence,  amounting  to  the  sum  of  eight 
thousand  dollars. 

This  statement  of  the  substance  of  the  declaration  presents  the 
question  which  has  been  here  argued,  and  sufficiently  shows  how  it 
arose  ;  for,  although  there  was  a  demurrer  to  the  first  two  counts  in 
the  declaration,  and  a  trial  upon  the  general  issue  pleaded  to  the  other 
counts,  and  a  bill  of  exceptions  taken  to  the  ruling  at  the  trial,  yet  the 
same  question  is  presented  by  each  mode  of  trial,  and  that  question  is, 
whether,  under  a  policy  insuring  against  the  usual  perils,  including 
barratry,  the  underwriters  are  liable  to  repay  to  the  insured,  damages 
paid  by  him  to  the  owners  of  another  vessel  and  cargo,  suffered  in  a 
collision  occasioned  by  the  negligence  of  the  master  or  mariners  of 
the  vessel  insured. 

The  great  and  increasing  internal  navigation  of  the  United  States, 
carried  on  over  long  distances,  through  the  channels  of  rivers  and 
other  comparatively  narrow  waters,  whore  the  danger  of  collisions,  and 
the  frequency  of  their  occurrence,  arc  much  greater  than  on  maritime 
voyages,  renders  the  respective  rights  of  underwriters  and  insured, 
growing  out  of  such  occurrences,  of  more  moment  in  this  than  in  any 
other  civilized  country ;  and  the  court  has  considered  the  inquiry 
presented  by  this  case,  with  the  care  which  its  difficulty  and  its 
importance  demand. 

In  examining,  for  the  first  time,  any  question  under  a  policy  of 
insurance,  it  is  necessary  to  ascertain  whether  the  contract  has  received 
a  practical  construction,  b^-  merchants  and  underwriters  ;  not  through 
any  partial  or  local  usages,  but  by  the  general  consent  of  the  mercantile 
T^-orld.  Such  a  practical  construction,  when  clearl}'  apparent,  is  of 
great  weight,  not  onl}'  because  tlie  parties  to  the  policy  ma}-  be  pre- 
sumed to  have  contracted  in  reference  to  it,  but  because  such  a 
practice  is  ver}'  high  evidence  of  the  general  convenience  and  sub- 
stantial equity  of  it,  as  a  rule.     This  is  true  of  most  commercial  con- 


SECT.  I.]  GENERAL    MUTUAL    INS.    CO.    V.    SUZllWOGD.  709 

tracts  ;  but  it  is  especially  true  of  a  policy  of  insurance,  which  has  been 
often  declared  to  be  an  "  obscure,  incoherent,  and  very  strange  in- 
strument," and,  "  generally"  more  informal  than  any  other  brought 
into  a  court  of  justice  "  (Per  Duller,  J.,  4  T.  R.  210  ;  Mansfield,  C.  J., 
4  Taunt.  380  ;  Marshal,  C.  J.,  6  Or.  45  ;  Lord  Mansfield,  1  Bur.  347)  ; 
but  which,  notwithstanding  the  number  and  variety  of  the  interests 
which  it  embraces,  and  of  the  events  by  which  it  is  affected,  has  been 
reduced  to  much  certainty,  by  the  long  practice  of  acute  and  well- 
informed  men  in  commercial  countries;  by  the  decisions  of  courts  in 
America  and  in  England,  and  by  able  writers  on  the  subject,  in  this 
and  other  countries. 

And  it  should  not  be  forgotten,  that,  not  only  in  the  introduction  of 
this  branch  of  law  into  England,  by  Lord  MansQeld,  but  in  its  progress 
since,  both  there  and  here,  a  constant  reference  has  been  had  to  the 
usage  of  merchants,  and  the  science  of  insurance  law  has  been  made 
and  kept  a  practical  and  convenient  system,  by  avoiding  subtle  and 
refined  reasoning,  however  logical  it  may  seem  to  be,  and  looking  for 
safe  practical  rules. 

Now,  although  cases  like  the  present  must  have  \evy  frequently 
occurred,  we  are  not  aware  of  any  evidence  that  underwriters  have 
paid  such  claims,  or  that,  down  to  the  time  when  one  somewhat 
resembling  it  was  rejected  by  the  Court  of  King's  Bench,  in  De  Vaux 
V.  Salvador,  5  Ad.  and  Ellis,  decided  in  1836,  such  a  claim  was  ever 
made.  And  we  believe  that,  if  skilful  merchants,  or  underwriters,  or 
lawyers,  accustomed  to  the  practice  of  the  commercial  law,  had  been 
asked  whether  the  insurers  on  one  vessel  were  liable  for  damage  done 
to  another  vessel,  not  insured  b}-  the  polic}-,  by  a  collision  occasioned 
by  the  negligence  of  those  on  board  the  vessel  insured,  they  would, 
down  to  a  very  recent  period,  have  answered,  unhesitatingly,  in  the 
negative. 

As  we  shall  presently  show,  sucli,  for  a  long  time,  was  the  opinion 
of  the  writers  on  insurance,  on  tlie  continent  of  Europe,  and  in  Eng- 
land and  America.  And  this,  alone,  would  be  strong  proof  of  the 
general  understanding  and  practice  of  those  connected  with  this  subject. 

But,  although  this  practical  interpretation  of  the  contract  is  entitled 
to  mucli  weight,  we  do  not  consider  it  perfecth'  decisive.  It  may  be, 
that,  by  applying  to  the  case  the  settled  principles  of  the  law  of 
insurance,  the  loss  is  within  the  policy  ;  and,  that  it  has  not  heretofore 
been  found  to  be  so,  because  an  exact  attention  has  not  been  given  to 
the  precise  question.  Or,  it  may  be,  that  the  weight  of  recent  author- 
itj',  and  the  propriety  of  rendering  the  commercial  law  as  uniform  as 
its  necessities,  should  constrain  us  to  adopt  the  rule  contended  for  by 
the  defendant  in  error.  And,  therefore,  we  proceed  to  examine  the 
principles  and  authorities,  bearing  on  this  question. 

Upon  principle,  the  true  inquiries  are,  what  was  the  loss,  and  what 
was  its  cause? 

The  loss  was  the  existence  of  a  lien  on  the  vessel  insured,  securing 


•J  10    •  GENERAL   MUTUAL    INS.    CO.    V.    SHERWOOD.       [CHAP.  VIL 

a  valid  claim  for  damages,  and  the  consequent  diminution  of  the  value 
of  that  vessel.  In  other  words,  by  operation  of  law,  the  owners  of  the 
"  Virginian"  obtained  a  lien  on  the  vessel  insured,  as  security  for  the 
payment  of  damages,  due  to  them  for  a  marine  tort,  whereby  their 
property  was  injured. 

What  was  the  cause  of  this  loss?  We  think  it  is  correctly  stated  by 
this  court,  in  the  case  of  the  Paragon,  14  Peters,  109.  In  that  case, 
it  was  said  :  "In  the  common  case  of  an  action  for  damages  for  a  tort 
done  by  the  defendant,  no  one  is  accustomed  to  call  the  verdict  of  the 
jury  and  the  judgment  of  the  court  thereon,  the  cause  of  the  loss  to 
the  defendant.  It  is  properly  attributable  to  the  original  tort,  which 
gave  the  right  to  damages  consequent  thereon."  The  cases  there 
spoken  of  were  claims  in  personam.  But  the  language  was  used  to 
illustrate  the  inquiry,  what  should  be  deemed  the  cause  of  a  loss  by  a 
claim  in  rem,  and  is  strictly  applicable  to  such  a  claim.  Whether  the 
owners  of  the  "Virginian"  would  proceed  in  rem  or  in  personam, 
was  at  their  election.  It  affected  only  their  remedy.  Their  right,  and 
the  grounds  on  which  it  rested,  and  the  extent  of  the  defendant's 
liability,  and  its  causes,  were  the  same  in  both  modes  of  proceeding. 
And,  in  both,  the  cause  of  the  loss  of  the  defendant  would  be  the 
negligence  of  his  servants,  amounting  to  a  tort.  The  loss  consisting 
in  a  valid  claim  on  the  vessel  insured,  we  must  look  for  the  cause  of 
the  loss  in  the  cause  of  the  claim,  and  this  is  expressly  averred  by  the 
declaration  to  have  been  the  negligence  of  the  servants  of  the  assured. 
From  the  nature  of  the  case,  it  was  absolutely  necessary  to  make  such 
an  averment.  If  the  declaration  had  stated  simply  a  collision,  and 
that  the  plaintiff  had  paid  the  damages  suffered  by  the  "Virginian". 
and  her  cargo,  it  would  clearly  have  been  bad  on  demurrer ;  because, 
although  it  would  show  a  loss,  it  would  state  no  cause  of  that  loss.  It 
is  only  by  adding  the  fact,  that  the  damage  done  to  the  "  Virginian  " 
was  caused  by  negligence,  that  is,  by  stating  the  cause  of  damage, 
that  the  cause  of  payment  appears,  and,  when  it  appears,  it  is  seen  to 
be  the  negligence  of  the  servants  of  the  assured. 

We  know  of  no  principle  of  insurance  law  which  prevents  us  from 
looking  for  this  sole  operative  cause,  or  requires  us  to  stop  short  of  it, 
in  applying  the  maxim  causa  ^yroxima  non  remota  spectatur.  The 
argument  is,  that  collision,  being  a  peril  of  the  sea,  the  negligence 
wiiich  caused  that  peril  to  occur  is  not  to  be  inquired  into;  it  lies 
behind  the  peril,  and  is  too  remote.  This  is  true  when  the  loss  was 
inflicted  by  collision,  or  was  by  law  a  necessai-y  consequence  of  it. 
The  underwriter  cannot  set  up  the  negligence  of  the  servants  of  the 
assured  as  a  defence.  But  in  this  case  he  does  not  seek  to  go  beliind 
the  cause  of  loss,  and  defend  himself  by  showing  this  cause  was  pro- 
duced by  negligence.  The  insured  himself  goes  behind  the  collision, 
and  shows,  as  the  sole  reason  why  he  has  paid  the  nionej',  that  the 
negligence  of  his  servants  compelled  him  to  pay  it.  It  is  true  tliat  an 
expense,  attached  by  the  law  maritime  to  the  subject  insured,  solely  as 


SECT.  I.]  GEXEEAL   MUTUAL   INS.    CO.    V.    SHERWOOD.  711 

a  consequence  of  a  peril,  may  be  consid^ed  as  proximately  caused  by 
that  peril.  But  where  the  expense  is  attached  to  the  vessel  insured, 
not  solely  in  consequence  of  a  peril,  but  in  consequence  of  the  miscon- 
duct of  the  servants  of  the  assured,  the  peril  per  se  is  not  the  efficient 
cause  of  the  loss,  and  cannot,  in  any  just  sense,  be  considered  its 
proximate  cause.  In  such  a  case  the  real  cause  is  the  negligence,  and 
unless  the  policy  can  be  so  interpreted  as  to  insure  against  all  losses 
directly  referable  to  the  negligence  of  the  master  and  mariners,  such  a 
loss  is  not  covered  by  the  policy.  We  are  of  opinion  the  policy  cannot 
be  so  construed.  When  a  peril  of  the  sea  is  the  proximate  cause  of  a 
loss,  the  negligence  which  caused  that  peril  is  not  inquired  into ;  not 
because  the  underwriter  has  taken  upon  himself  all  risks  arising  from 
negligence,  but  because  he  has  assumed  to  indemnify  the  insured 
against  losses  from  particular  perils,  and  the  assured  has  not  warranted 
that  his  servants  will  use  due  care  to  avoid  them. 

These  views  are  sustained  by  many  authorities.     Mr.  Arnould,  in 
his   valuable   Treatise  on    Insurance   (vol.    2,    775),  lays    down    the 
correct  rule:  "  Where  the  loss  is  not  proximately  caused  by  the  perils 
of  the  sea,  but  is  directly  referable  to  the  negligence  or  misconduct  of 
the  master  or  other  agents  of  the  assured,  not  amounting  to  barratry, 
there  seems  little  doubt  that  the  underwriters  would  be  thereby  dis- 
charged."    To  this  rule  must  be  referred  that  class  of  cases  in  which 
the  misconduct  of  the  master  or  marines  has  either  aggravated  the 
consequences  of  a  peril  insured  against,  or  been  of  itself  the  efficient 
cause  of  the  whole  loss.     Thus,  if  damage  be  done  by  a  peril  insured 
against,  and  the  master  neglects  to  repair  that  damage,  and  in  con- 
sequence of  the  want  of  such  repairs  the  vessel  is  lost,  the  neglect  to 
make   repairs,    and    not   the   sea  damage,    has   been   treated   as   the 
proximate  cause  of  the  loss.     In  the  case  of  Copelaud  v.  The  N.  E. 
Marine  Ins.  Co.,  2  Met.  432,  ]Mr.  Chief  Justice  Shaw  reviews  many  of 
the  cases,  and  states  that  ' '  the  actual  cause  of  the  loss  is  the  want  of 
repair,  for  which  the  assured  are  responsible,  and  not  the   sea  damage 
which  caused  the  want  of  repair,  for  which  it  is  admitted  the  under- 
writers are  responsible."     And  the  same  principles  were  applied  by 
Mr.  Justice  Story,  in  the  case  of  Hazard  v.  N.  E.  Marine  Ins.  Co., 
1  Sum.  R.  218,  where  the  loss  was  by  worms,  which  got  access  to  tlie 
vessel  in  consequence  of  her  bottom  being  injured  by  stranding,  which 
injury   the  master  neglected  to  repair.     So  where  a  vessel  has  been 
lost  or  disabled,  and  the  cargo  saved,  a  loss  caused  by  the  neglect  of 
the  master  to  transship,  or  repair  his  vessel  and  carry  the  cargo,  cannot 
be  recovered.     Schieffelin  v.  N.  Y.  Ins.  Co.,  9  Johns.  21  ;  Bradhurst 
V.  Col.  Ins.  Co.,   9  Johns.  17;  Am.  Ins.  Co.  v.  Centre,  4  Wend.  45; 
S.  C.  7  Cow.  504 ;  McGaw  v.  Ocean  Ins.  Co.,  23  Pick.  405.     So  where 
condemnation  of  a  neutral  vessel  was  caused  by  resistance  of  search : 
Robinson  v.  Jones,  8  Mass.  536  ;  or  a  loss  arose  from  the  master's 
negligently  leaving  the  ship's  register  on   shore:  Cleveland  v.  Union 
Ins.  Co.,  8  Mass.  308.     So  where  a  vessel  was  burnt  by  the  pul)lic 


712  GENERAL   MUTUAL   INS.   CO.   V.   SHERWOOD.       [cHAP.  VIL 

authorities  of  a  place  into  which  the  master  sailed  with  a  false  bill  o( 
health,  having  the  plague  on  board,  Emerigon  (by  Meredith),  348; 
in  these  and  manj*  other  similar  cases,  the  courts,  having  found  the 
efficient  cause  of  the  loss  to  be  some  neglect  of  duty  by  the  master, 
have  held  the  underwriter  discharged.  Yet  it  is  obvious  that  in  all 
such  cases,  one  of  the  perils  insured  against  fell  on  the  vessel.  And 
they  are  to  be  reconciled  with  the  other  rule,  that  a  loss  caused  by  a 
l)eril  of  the  sea  is  to  be  borne  by  the  underwriter,  though  the  master 
did  not  use  due  care  to  avoid  the  peril,  by  bearing  in  mind  that  in 
these  cases  it  is  negligence,  and  not  simply-  a  peril  of  the  sea,  which 
is  the  operative  cause  of  the  loss.  It  may  sometimes  be  difficult  to 
trace  this  distinction,  and  mistakes  have  doubtless  been  made  in  apply- 
ing it,  but  it  is  one  of  no  small  importance  in  the  law  of  insurance, 
and  cannot  be  disregarded  without  producing  confusion.  The  two 
rules  are  in  themselves  consistent.  Indeed,  they  are  both  but  applica- 
tions, to  different  cases,  of  the  maxim,  causa  jn-oxima  non  remota 
spectatur.  In  applying  this  maxim,  in  looking  for  the  proximate 
cause  of  the  loss,  if  it  is  found  to  be  a  peril  of  the  sea,  we  inquire  no 
further  ;  we  do  not  look  for  the  cause  of  that  peril.  But  if  the  peril  of 
the  sea,  which  operated  in  a  given  casej_was  not  of  itself  sufficient  to 
occasion,  and  did  not  in  and  by  itself  occasion  the  loss  claimed,  if  it 
depended  upon  the  cause  of  that  peril  whether  the  loss  claimed  would 
follow  it,  and  _therefore_aj2MiJMlgjLgg"se  of  the  peril  is  essential  to  be 
shown^bj"  the  assured,  then  we^jnust  look  beyond  the  peril  to  its 
cause,_to  ascertain  the  efficient  cause  of  the  loss. 

The  case  at  bar  presents  an  illustration  of  both  rules.  So  far  as 
the  brig  "Emily"  was  herself  injured  by  the  collision,  the  cause  of 
the  loss  was  the  collision,  which  was  a  peril  insured  against,  and  the 
assured,  showing  that  this  vessel  suffered  damage  from  that  cause, 
makes  a  case,  and  is  entitled  to  recover.  But  he  claims  to  recover 
not  only  for  the  damages  done  to  his  vessel,  which  was  insured,  but 
for  damages  done  to  the  other  vessel,  not  insured.  To  entitle  himself 
to  recover  these,  he  must  show  not  only  that  they  were  suffered  b}-  a 
peril  of  the  sea,  but  that  the  underwriter  is  responsible  for  the  con- 
sequences of  that  peril  falling  on  a  vessel  not  insured.  It  is  this 
responsibilit}'  which  is  the  sole  basis  of  his  claim,  and  to  make  out 
this  responsibility  he  does  not  and  cannot  rest  upon  tlie  occurrence  of 
a  collision  ;  this  affords  no  ground  for  this  claim  ;  he  must  show  a 
particular  cause  for  that  collision  ;  and  aver  that  by  reason  of  the 
existence  of  that  cause,  the  loss  was  suffered  by  him,  and  so  the 
underwriter  became  responsible  for  it. 

This  negligence  is  therefore  the  fact  without  which  the  loss  would 
not  have  been  suffered  by  the  plaintiff,  and  b}"  its  operation  the  loss  is 
suffered  b}-  him.  In  the  strictest  sense,  it  causes  the  loss  to  the 
plaintiff.  The  loss  of  the  owners  of  the  "Virginian"  was  occasioned 
by  a  peril  of  the  sea,  bj-  which  their  vessel  was  injured.  But  nothiiju- 
connects   the   plaintiff  with  that   loss,  or   makes   it  his,    except_Jhe 


SECT.  1.]  GE.NEKAL   MUTUAL    INS.    CO.    V.   SHEiaVOOD.  713 

negligence  of  bis  servants^  Of  liis  loss  this  negligence  is  the  only 
efficient  cause,  and  in  the  sense  of  the  law  it  is  the  proximate  cause. 

The  ablest  writers  of  the  continent  of  Europe,  on  the  subject  of 
insurance  law,  have  distinctly  declared,  that,  in  case  of  damage  to 
another  vessel  solely  through  the  fault  of  the  master  or  mariners  of 
the  assured  vessel,  the  damage  must  be  repaired  by  him  who  occasioned 
it,  and  the  insurer  is  not  liable  for  it.  Pothier  Traile  d' Assurance, 
No.  4'J,  oO;  Boucher,  1500,  1501,  1502;  4  Boulay  Paty,  Droit 
Maritime  (ed.  of  1823),  14,  16;  Santayra's  Com.,  7,  223;  Emerigon 
(by  Meredith),  337.  If  the  law  of  England  is  to  be  considered 
settled  by  the  case  of  DeVaux  v.  Salvador,  4  Ad.  &  El.  420,  it  is  clear 
such  a  loss  could  not  be  recovered  there.  Mr.  Marshall  is  evidently 
of  opinion  that  unless  the  misconduct  of  the  master  and  crew  amounted 
to  barratry,  tlie  loss  could  not  be  recovered.  Marsh,  on  Ins.,  495, 
And  Mr.  Phillips  so  states  in  terms.     1  Phil,  on  Ins.,  636= 

It  has  been  urged  that,  in  the  case  of  the  Paragon  (Peters  v. 
Warren  Ins.  Co.,  14  Pet.  99),  this  court  adopted  a  rule  which,  if 
applied  to  the  case  at  bar,  would  entitle  the  insured  to  recover.  But 
we  do  not  so  consider  it.  It  was  there  determined  that  a  collision 
without  fault  was  the  proximate  cause  of  that  loss.  Indeed,  unless 
the  operation  of  law,  which  fixed  the  lien,  could  be  regarded  as  the 
cause  of  that  loss,  there  was  no  cause  but  the  collision,  and  that  was  a 
peril  insured  against. 

We  are  aware  that  in  the  case  of  Hall  v.  Washington  Ins.  Co.,  2 
Story,  Mr.  Justice  Story  took  a  different  view  of  this  question  ;  and 
we  are  informed  that  the  Supreme  Court  of  Massachusetts  has 
recently  decided  a  case  in  conformity  with  his  opinion,  which  is  not 
yet  in  print,  and  which  we  have  not  been  able  to  see.^  But  with 
great  respect  for  that  very  eminent  judge,  and  for  that  learned  and 
able  court,  we  think  the  rule  we  adopt  is  more  in  conformity  with 
sound  principle,  as  well  as  with  the  practical  interpretation  of  the 
contract  b}'  underwriters  and  merchants,  and  that  it  is  the  safer  and 
more  expedient  rule. 

We  cannot  doubt  that  the  knowledge  by  owners,  masters,  and  sea- 
men, that  underwriters  were  responsible  for  all  the  damage  done  b^' 
collision  with  other  vessels  through  their  negligence,  would  tend  to 
relax  their  vigilance  and  materially  enhance  the  perils,  both  to  life  and 
propert}',  arising  from  this  case. 

The  judgment  of  the  Circuit  Court  must  be  reversed,  and  the  cause 
remanded,  with  directions  to  render  a  judgment  for  the  defendants, 
on  the  demurrer  to  the  first  two  counts,  and  award  a  venire  de  novo  to 
try  the  general  issue  pleaded  to  the  other  counts.^ 

1  The  case  alluded  to  is  doubtless  Nelson  v.  Suffolk  Ins.  Co.,  8  Cush.  477 
(1851).  — Ed. 

2  Ace:  Mathews  v.  Howard  Ins.  Co.,  11  N.  Y.  9  (1854)  ;  Street  v.  Augusta  Ins. 
and  Banking  Co.,  12  Rich.  S.  Car.  Law,  13  (18.59). 

Contra  :  Nelson  v.  Suffolk  Ins.  Co.,  3  Cush.  477  (1851) ;  Walker  v.  Boston  Ins.  Co., 


714  GENEEAL   MUTUAL   INS.    CO.   V.   SHERWOOD.        [CIIAP.  VIL 

U  Gray,  288  (1859);  Blanchard  v.  Equitable  Safety  Ins.  Co.,  12  Allen,  .386  (1866) ; 
Thwiugk  Great  Western  Ins.  Co.,  Ill  Mass.  9.3  (1872). 

See  Thompson  v.  Kevnolds,  7  E.  &  B.  172  (1857) ;  Taylor  v.  Dewar,  5  B.  &  S.  58 
(1864)  ;  Xenos  o.  Fox,  L.  K.  4  C.  P.  665  (Ex.  Ch.  1869) ;  VVhorf  v.  Equitable  M.  Ins. 
Co.,  144  Mass,  68  (1887);  London  S.  (J.  lus.  Co.  v.  Grampian  Steamship  Co.,  24 
Q.  B.  D.  663   (C.  A.   1890). 

On  proximate  cause  in  marine  cases,  see  also  :  — 

Jones  V.  SchmoU,  1  T.  R.  130,  n.  (N.  P.  1785)  ; 

Hodgson  V.  Malcolm,  2  B.  &  P.  N.  11.  336,  340  (1806) ; 

Livie  V.  Jausou,  12  East,  648,  652  (1810);    ^ 

Bell  V.  Carstairs,  14  East,  375  (1811); 

Powell  V.  Gudgeon,  5  M.  &  S.  431  (1816) ; 

Lawrence  v.  Aberdein,  5  B.  &  Aid.  107  (1821); 

Navlor  v.  Palmer,  8  Exch.  739  (1853) ; 

loriides  v.  Universal  M.  In.s.  Co.,  14  C.  B.  n.  s.  259  (1863); 

Dyer  v.  Piscataqua  F.  &  M.  Ins.  Co.,  53  Me.  118  (1865) ; 

Dent  V.  Smith,  L.  E.  4  Q.  B.  414  (1869); 

Insurance  Co.  v.  Transportation  Co.,  12  Wall.  194,  199  (1870); 

Brown  v.  St.  Nicholas  Ins.  Co.,  61  N.  Y.  332  (1874) ; 

Dudgeon  v.  Pembroke,  2  App.  Cas.  284,  295-297  (H.  L.  1877) ; 

Mercantile  Steamship  Co.  v.  Tyser,  7  Q.  B.  D.  73  (1881) ; 

luman  Steamship  Co.  v.  Bischoff,  7  App.  Cas.  670  (1882); 

Cory  r.  Burr,  8  App.  Cas.  393  (1883) ; 

The  Alps,  '93,  P.  109; 

The  Bedouin,  "94,  P.  1  (C.  A.  1893).  — Ed. 


SECT.  II.]  AUSTIN   V.   DREWE.  715 

SECTION    II. 

Fire  Insurance. 

(A)    The  Kind  of  Peril  ixslred  agaixst. 

AUSTIN  ANT)  Another  v.  DREWE. 

Common  Pleas,  1816.     6  Taunt.  436.^ 

This  was  an  action  of  covenant  on  a  polic}'  of  insurance  effected 
with  the  defendant  "  against  all  the  damage  which  the  plaintiffs  should 
suffer  b}-  fire  "  on  their  "stock  and  utensils  in  their  regular  built  sugar- 
house,"  and  the  plaintiff's  averred  that  "  their  stock  and  utensils  were 
very  much  damaged  by  fire  in  the  sugar-house."  The  defendant  pleaded 
that  "  the  stock  and  utensils  were  by  and  through  the  carelessness, 
negligence,  and  improper  conduct  of  the  plaintiffs  and  their  servants, 
in  regulating  and  managing  the  fires  usuallj-  empWed  in  and  about 
the  sugar-house,  damaged  b}-  the  smoke  arising  from  such  fires,  and 
not  from  an}*  other  cause,  without  this,  that  the  stock  and  utensils 
were  damaged  b}*  fire  in  the  sugar-house  within  the  meaning  of  the 
polic}'."  The  plaintiffs  replied,  that  the  stock  and  utensils  were  dam- 
aged by  fire  in  the  sugar-house,  within  the  meaning  of  the  polic}',  and 
the  defendant  joined  issue  on  this  traverse.  Upon  the  trial  of  this 
cause  at  Guildhall,  at  the  Sittings  after  Michaelmas  Term,  1815,  before 
GiBBS,  C.  J.,  the  evidence  was,  that  the  building  insured  contained  eight 
stories,  and  in  each  story  sugar,  in  a  certain  state  of  preparation,  was 
deposited  for  the  purpose  of  being  refined  ;  in  order  for  refining,  a  cer- 
tain degree  of  heat  was  necessar}*,  and  a  chimne}'  running  up  through 
the  whole  building  formed  almost  one  side  of  each  of  the  stories,  and 
by  means  of  this  chimney  heat  was  communicated  to  each  of  the 
stories.  At  the  top  of  the  chimne}-,  above  the  eight  stories,  was  a 
register,  which  the  plaintiffs  used  to  shut  at  night,  in  order  to  retain  in 
the  chimne}-  and  building  all  the  heat  the}'  could.  They  shut  it  one 
night,  and  lighted  the  fires  next  day,  and  they  soon  afterwards  found 
the  building  full  of  smoke  and  sparks  ;  and  on  examination  they  found 
that  the  register,  which  always  ought  to  be  open  whensoever  the  fire 
was  burning,  was  continued  shut  down  :  sparks  and  smoke  had  got  out 
into  the  rooms  ;  the  heat  had  slightly  blistered  the  walls,  and  consid-i 
crably  discolored  and  damaged  the  sugars.  There  was  much  smoke, 
but  the  only  injury  done  to  the  sugars  proceeded  from  heat ;  the  smoke 
would  not  have  hurt  them.  There  was  no  fire  in  the  building  that 
ought  not  to  be  there,  nothing  was  on  fire  that  ought  not  to  be  on 

1  s.  c.  2  Marsh.  130;  and  at  Nisi  Prius,  Holt  N.  P.  126  (1815),  and,  sub.  nom. 
Austin  V.  Drew,  4  Camp.  360. — Ed. 


716  AUSTIN   V.  DKE WE.  '  [CHAP.  VII. 

fire,  the  damage  was  occasioned  by  the  sparks,  heat,  and  smoke  taking 
a  wrong  direction.  Gibbs,  C.  J.,  directed  the  jury,  that  inasmuch  as 
the  damage  was  occasioned  entirely  by  the  increased  heat,  which  was 
produced  by  keeijing  tlie  register  closed,  it  was  not  a  loss  by  fire  within 
the  meaning  of  the  policy,  but  was  occasioned  by  the  improper  manage- 
ment of  the  register.^     The  jury  found  a  verdict  for  the  defendant. 

/Shepherd,  Attorney-General,  now  moved  for  a  new  trial.  Tlie  words 
of  the  policy  are  not  "excess  of  fire,"  or  "  improper  fire,"  but  "dam- 
age by  fire."  The  actual  flame  which  proceeded  from  the  grates  below, 
and  would,  if  the  register  had  not  been  closed,  have  issued  out  of  that 
chimney,  being  confined  therein  by  the  register,  occasioned  the  mis- 
chief. If  actual  flame  was  the  cause  of  the  damage,  it  matters  not 
whether  the  fire  was  properly  or  improperly  lighted,  but  the  question 
is,  whether  fire  occasioned  the  damage.  If  any  other  criterion  be 
taken,  it  would  in  many  cases  of  policies  against  fire  introduce  nice 

1  Accordiug  to  the  report  in  2  Marsli.  130,  Gibbs,  C.  J.,  "  told  the  jury  that,  as  the 
daniiige  had  been  produced  by  the  increase  of  heat,  occasioned  by  keeping  tlie  register 
improperly  closed,  and  as  nothing  had  taken  Jire  which  ought  not  to  liave  been  on 
fire,  it  was  not  a  loss  within  tlie  policy,  but  was  occasioned  by  the  unskilful  manage- 
ment of  the  plaintiffs'  machinery." 

Accordiug  to  the  report  in  Holt  N.  P.  126,  Gibbs,  C.  J.,  said  :  "  I  am  of  opinion 
that  this  is  not  a  loss  within  the  policy.  No  greater  fire  existed  than  was  necessary 
for  the  purposes  of  the  business.  By  omitting  to  open  the  register,  heat  and  smoke 
have  been  forced  into  the  rooms  where  the  sugars  were  preparing;  the  heat  produced 
the  misciiief ;  no  sensilde  damage  resulted  from  the  smoke  and  sparks,  and  the  occa- 
sion wliich  produced  the  excess  of  heat  was  not  a  fire  against  which  the  defendant 
had  undertaken  to  indemnify  the  plaintiffs.  The  servants  had  neglected  to  open  the 
register.  What  is  this  but  a  bad  management  of  their  own  machinery?  The  fire  is 
where  it  ought  to  be;  no  more  than  it  ought  to  be.  But  it  received  a  false  direction 
by  the  irregular  and  improvident  conduct  of  the  plaintiffs'  servants.  As  no  substance, 
therefore,  was  taken  pos.session  of  by  the  fire,  which  was  not  intended  to  be  fuel  for 
it ;  as  tlie  sparks  and  smoke  caused  no  mischief,  but  as  the  damage  arose  from  an 
excess  of  heat  in  tlie  rooms,  occasioned  by  the  register  being  shut,  I  am  of  opiuion 
that  the  plaintiffs  are  not  entitled  to  recover." 

According  to  the  report  in  4  Camp.  .360,  Gibbs,  C.  J.,  said :  "  I  am  of  opinion  that 
chis  action  is  not  maintainable.  There  was  no  more  fire  than  always  exists  when  the 
manufacture  is  going  on.  Nothing  was  consuni(^  by  fire.  The  plaintiffs'  loss  arose 
from  the  negligent  management  of  their  machinery.  The  sugars  were  chiefly  dam- 
aged by  the  heat;  and  what  produced  that  heat?  Not  any  fire  against  which  the 
company  insures,  but  the  fire  for  heating  the  pans,  which  continued  all  the  time  to 
burn  without  any  excess.  The  servant  forgot  to  open  the  register  by  which  the  smoke 
ought  to  have  escaped,  and  the  heat  to  have  been  tempered."  Hereupon  a  juryman 
said  :  "  If  my  servant  by  negligence  sets  my  house  afire,  and  it  is  burnt  down,  I  expect, 
my  Lord,  to  be  paid  by  the  insurance  ofiice."  And  Gibbs,  C.  J.,  answered  :  "  And  so 
you  would.  Sir;  but  then  there  would  be  a  fire,  whereas  here  there  has  been  none.  If 
there  is  a  fire,  it  is  no  answer  that  it  was  occasioned  by  the  negligence  or  misconduct 
of  servants  ;  but  in  this  case  there  was  no  fire  except  in  the  stove  and  the  flue,  as  there 
ought  to  have  been,  and  the  loss  was  occasioned  by  the  confinement  of  heat.  Had  the 
fire  been  brought  out  of  the  flue,  and  anything  had  been  burnt,  the  company  would 
have  been  liable.  But  can  this  be  said  where  the  fire  never  was  at  all  excessive,  and 
was  always  confined  within  its  proper  limits?  This  is  not  a  fire  within  the  meaning 
of  the  policy,  nor  a  loss  for  which  the  company  undertake.  They  might  as  well  be 
sued  for  the  damage  done  to  drawing-room  furniture  by  a  smoky  chimney."  —  Ed. 


SECT.  II.]       KEXXISTON    V.    MERRIMACK    CO.    MUTUAL   INS.    CO.  717 

and  intricate  questions.  It  cannot  be  necessar}*  that  the  fire,  to  pro- 
duce a  loss  within  the  poUc}',  should  be  onh'  such  fire  as  is  communi- 
cated to  some  substance  not  contained  in  the  intended  and  proper 
receptacle  of  fire.  Heat  may  be  so  intense  as  to  ignite  comliustiblcs 
without  the  actual  contact  of  flame.  Suppose  the  intensity  of  heat  nec- 
essarily required  for  an}'  process  to  be  so  great  that  the  fire  made  in 
a  chimney,  though  confined  there,  might  ignite  neighboring  bodies,  it 
might  in  tliat  case  as  well  be  said  that  that  was  not  a  damage  by  fire, 
because  the  original  fire  was  contained  in  its  proper  receptacle.  In  the 
common  case  of  a  house  on  fire,  if  goods  are  damaged  by  the  removal, 
that  is  a  loss  b}-  fire  within  the  polic}-.  Put  the  case  of  a  chimney  on 
fire,  there  is  only  the  usual  quantit}'  of  heat  below,  but  the  mischief  is 
occasioned  by  an  accumulation  of  soot  in  the  chimney,  yet  the  insurers 
would  be  bound  to  pay  any  loss  thereby  occasioned. 

GiBBS,  C.  J.  I  think  it  is  not  necessar}'  to  determine  any  of  those 
extreme  questions.  In  the  present  case,  I  think  no  loss  was  sustained 
by  any  of  the  risks  in  the  policy.  The  loss  was  occasioned  by  the  ex- 
treme mismanagement  b}'  the  plaintiffs  of  their  register.  I  so  directed 
the  jury,  and  I  have  no  reason  to  alter  the  o[)inion  I  then  formed.^ 

Dallas,  J.  I  am  of  the  same  opinion.  The  only  cause  of  the  dam- 
age  appears  to  me  to  have  been  the  imskilful  management  of  the  m.n- 
cliinery  by  the  plaintiff's  own  servants,  and  it  is  therefore  not  a  loss 
witlmrthe  meaning  of  the  policy.^  Mule  refused.^ 

M 


KENNISTON  v.  MERRIMACK   COUNTY  MUTUAL   INS.  CO. 

Superior  Court  of  New  Hampshire,  1843.     14  N.  H.  341. 

Assumpsit,  on  a  policy  of  insurance  duly  executed.  The  act  creat- 
ing the  defendant  corporation  (approved  July  1,  1825),  sect.  1,  consti- 
tutes certain  persons  a  body  politic,  "  for  the  purpose  of  insuring  their 
respective  dwelling-houses,  with  their  contents,  against  loss  or  damage 

'  In  2  Marsh.  130,  this  opinion  is  reported  thus :  — 

"  It  is  not  necessary  to  determine  any  of  the  e.xtreme  questions  put  on  the  part  of 
tlie  plaintiff.  It  is  sufficient  to  say  that  in  this  case  no  loss  has  been  sustained  which 
can  be  brought  within  the  fair  meaning  of  the  words  of  tliis  policy.  The  damage  was 
occasioned  by  the  unskilful  management  of  the  niacliinery,  and  not  by  any  of  those 
accidents  from  which  the  defendants  intended  to  indemnify  the  plaintiffs  "  —  Ed. 

^  In  2  Marsh.  130,  this  opinion  is  reported  thus  :  — 

"  His  Lordship's  direction  appears  to  have  been  perfectly  right,  and  the  jury  have 
drawn  a  perfectly  correct  conclusion  from  it.  There  was  nothing  on  fire  wliich  ought 
not  to  have  been  on  fire ;  and  the  loss  was  occasioned  by  the  carelessness  of  the  plain- 
tiffs themselves." 

And  tlie  same  report  adds  that  Pakk,  J.,  concurred  in  the  decision. —  Ed. 

3  See  Scripture  v.  Lowell  ]\tut.  F.  Ins.  Co.,  post,  p.  732  (1852) ;  American  To\ving 
Co.  V.  German  F.  Ins.  Co.,  74  Md.  25  (1891).  —Ed. 


718        KENNISTON    V.    MEKRIMACK   CO.    MUTUAL   INS.    CO.       [CIIAP.  VII. 

by  fire,  whether  the  same  shall  happen  by  accident,  lightning,  or  by 
any  otlier  means,"  excepting  in  case  of  design,  invasion,  or  insurrection. 
The  terms  of  the  policy  sued  on  were  to  pay,  "  within  three  months 
next  after  the  said  property  sliall  be  burnt,  destroyed,  or  demolished  by 
or  by  reason  or  by  means  of  fire  ;  "  and  farther,  if  any  part  rebuilt,  re- 
paired, &c.,  to  the  amount  of  the  policy,  "  shall  happen  to  be  injured 
by  means  of  fire,  such  damages  shall  be  made  good,  according  to  the 
estimate  thereof,  or  repaired  and  put  in  as  good  condition  as  the  same 
was  before  the  said  fire  happened." 

The  plaintiff  claims  an  indemnity  as  for  a  partial  loss  on  his  dwelling- 
house  and  its  contents. 

To  sustain  his  claim  the  plaintiff  offered  evidence  tending  to  show 
that  on  a  certain  day  his  house  was  struck  by  lightning,  and  different 
parts  of  it  materially  injiu'cd,  and  also  articles  of  crockery,  glass,  and 
tin  ware  broken  or  destroyed.  His  witnesses  also  testified  that  the 
boards  and  timber  near  one  of  the  windows  where  the  lightning  struck, 
exhibited  marks  or  traces  of  fire,  being  discolored  and  rendered  of  a 
dark  brown  color,  as  if  aflfected  by  a  blaze  of  fire.  One  witness  testified 
that  he  saw  on  these  boards  and  timbers  where  fire  burned,  and  he  had  . 
no  doubt  that  the  house  would  have  been  burned  had  not  the  water 
been  admitted  through  the  window  which  was  broken  out  by  the 
lightning. 

The  only  question  made  by  the  defendant  was,  whether  the  loss  was 
covered  by  the  policy  or  act  of  incorpoi'ation  ;  and  the  court  being  of 
the  opinion  that  it  was,  a  verdict  was  ordered  to  be  taken  for  the  plain- 
tiff, subject  to  be  affirmed  or  set  aside  and  a  verdict  entered  for  the 
defendant,  as  the  opinion  of  this  court  might  be  on  the  case  stated. 

Parker,  C.  J.  There  must  be  a  new  trial.  On  the  facts  stated,  the 
court  cannot  determine  whether  the  loss  is,  or  is  not,  within  the  risks 
of  the  polic}'. 

If  the  damage  was  from  lightning  without  any  combustion,  it  is 
clearly  not  within  the  terms  of  the  contract  of  insurance.  The  policy 
docs  not  provide  against  every  damage  which  may  arise  from  the  action 
of  the  electric  fluid. 

The  charter  of  the  insurance  company  indeed  refers  to  lightning, 
but  it  is  only  to  authorize  the  defendant  to  insure  against  losses  by  fire, 
which  "  shall  happen  by  lightning."  This  is  a  very  different  thing  from 
direct  losses  by  lightning,  both  as  regards  their  origin,  nature,  predis- 
posing causes,  development  and  effects,  and  in  reference  to  the  possi- 
ble application  of  means  to  prevent  and  to  limit  the  damage. 

The  terms  of  the  policy,  too,  were  to  pay  within  a  certain  time  after 
the  destruction  "  by  reason  or  by  means  of  fire."  Fire  is  the  one  loss 
insured  against ;  and  lightning,  though  not  excepted  from  the  sources 
of  fire,  is  nowhere,  either  in  the  charter  or  policy  itself,  directly  pro- 
vided against. 

It  is  true,  that  there  was  evidence  tending  to  show  tliat  the  building, 
insured  in  the  policy  now  in  question,  was  set  on  fire  by  the  lightning ; 


SECT.  II.]       JOHNSON    V.   BERKSHIRE    MUTUAL   FIRE   INS.    CO.  719 

and  if  such  was  the  fact,  this  action  is  well  brought.  But  this  fact  is 
not  made  certain  by  the  evidence,  and  the  question  must  be  submitted 
to  a  jury.  iV^eio  (rial  ordered.^ 


JOHNSON   V.BERKSHIRE   MUTUAL  FIRE   INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1862.     4  Allen,  388. 

Contract  upon  a  policy  of  insurance  upon  the  plaintiff's  barn  and 
grain  therein,  issued  by  the  defendants.  A  trial  by  jury  was  waived 
in  the  Superior  Court,  and  the  case  was  heard  before  Ames,  J.,  who 
found  the  following  facts : 

In  the  afternoon  of  a  hot  day  in  a  dry  season  in  August,  1859,  during 
the  time  covered  by  the  policy,  tlie  plaintiff  and  his  son  were  unloading 
hay  from  a  wagon,  and  placing  it  in  a  shed  adjoining  the  barn,  and 
while  so  engaged  were  annoyed*  by  bees  whose  nest  was  in  a  hollow 
place  under  the  door  at  which  they  were  pitching  in  the  hay  ;  and  the 
plaintiff,  finding  tliat  no  hot  water  could  readily  be  had,  undertook  to 
smoke  them  out  by  thrusting  a  wisp  of  straw  into  their  hole  and  light- 
ing it  with  a  match.  A  fresh  breeze  was  blowing  at  the  time  ;  the 
Iniilding  was  very  old,  and  covered  on  the  outside  with  white  wood 
boards  ;  the  barn  adjoining  was  full  of  ha}',  and  some  hay  was  stored 
in  the  loft  of  the  shed.  After  withdrawing  tlie  wisp  of  straw,  and 
while  attempting  to  extinguish  it,  tlie  fire  spread  with  great  rapidity 
on  the  outside  of  the  shed,  and  destroyed  the  "property.  It  was 
admitted  that  there  was  no  fraudulent  intent  on  the  part  of  the 
plaintiff.  Upon  these  facts,  the  judge  found  that  there  had  been 
a  want  of  ordinarj-  care,  judgment,  and  discretion  on  the  part  of  the 
plaintiff  ;  tliat  this  default  was  the  immediate  and  proximate  cause  of 
the  fire ;  and  that,  although  he  acted  in  good  faith,  and  the  negligence 
and  default  on  his  part  did  not  amount  to  recklessness  and  wilful  mis- 
conduct, yet  under  the  circumstances  he  was  not  entitled  to  recover. 

The  plaintiff  alleged  exceptions ;  and  it  was  agreed  that  if  the 
exceptions  should  be  sustained,  judgment  should  be  entered  for  the 
plaintiff,  for  the  amount  of  the  policy. 

Jf.  Wilcox,  for  the  plaintiff. 

J.  A.  Walker,  for  the  defendants. 

Merrick,  J.  The  defendants  contend  that  the  carelessness  and 
negligence  proved  at  the  trial  whereby  tlie  fire  was  caused,  by  which 
the  barn  and  other  property  insured  were  destro3'ed,  constitute  a  valid 
defence  to  this  action.  It  is  admitted  that  there  was  no  fraudulent 
intent  on  the  part  of  the  plaintiff  in  the  commission  of  the  acts  from 
which  the  fire  immediately  resulted.     But  it  was  found  as  a  fact  bj-  the 

1  Ace:  Babcock  v.  Montgomery  County  Mut.  Ins.  Co.,  4  N.  Y.  326  (1830);  An- 
drews V.  Union  Mut.  F.  Ins.  Co.,  37  Me.  256  (1854).  — Ed. 


720  JOHNSON    V.    BEEKSniRE    :\IUTUAL   FIEE   INS.    CO.       [CHAP.  VII. 

court,  the  partie.s  having  waived  a  trial  b}- jur}-,  that  there,  had  been 
an  omission  to  exercise  ordinar}'  care,  discretion,  and  judgment  on  his 
part;  and  it  was  thereupon  determined  that,  although  he  had  acted  in 
good  faith,  and  his  negligence  and  default  did  not  amount  to  reckless- 
ness or  wilful  misconduct,  he  was  not  entitled  to  recover  iudemnit}-  in 
this  action  for  his  loss. 

This  determination  was  erroneous.  It  is  said  to  have  been  formerly 
doubted  whether  in  marine  insurances  underwriters  were  liable  for 
losses  b}-  fire  occasioned  by  the  negligence  or  mismanagement  of  the 
master  or  mariners  at  sea,  but  that  now  it  is  the  better  and  established 
doctrine  that  they  are  liable  where  the  acts  are  not  of  a  barratrous 
character,  and  that  this  is  a[)plicable  in  all  cases  of  such  loss  whether 
occurring  on  land  or  at  sea.  1  Phil.  Ins.,  §§  1049,  1096.  And  in 
Angell  on  Ins.,  §  125,  it  is  stated  as  an  indisputable  proposition,  that 
as  applied  to  policies  agalnsOre  on  land  Uie^loctrinohasjbr  a  great 
length  of  time  prevailed  that  losses  occasioned  by  the  mere  fault  of  the 
insured  or  his  servants,  unaffected  by  fraud  or  design,  are  within  the 
in-etection-of  tbe^polrcTesT-rnrdTis^suclFare  rpooverable  from  thp  imdpr- 
wflters.  In  Shaw  v.  Robberds,  6  Ad.  &  El.  75,  it  is  said  by  the  court 
that  the  object  of  insurance  is  to  guard  against  the  negligence  of  ser- 
vants and  others  ;  and  that  there  is  no  ground  of  distinction  between 
the  negligence  of  strangers  and  others  and  that  of  the  assured  liimself ; 
and  that  in  the  absence  of  all  fraud  the  particular  cause  of  tlie  loss 
is  only  to  be  looked  at.  And  in  Huckins  v.  People's  Ins.  Co.,  11  Fost. 
(N.  H  )  238,  it  was  distinctly  held  that  carelessness  and  negligence 
as  such  cannot  be  held  to  bo  a  defence  to  an  action  upon  a  policy  of 
insurance  ;  tliat,  in  the  absence  of  fraud,  it  is  only  the  proximate  cause 
of  the  loss  that  is  to  be  considered. 

The  same  doctrine  was  recognized  by  this  court  in  the  case  of 
Chandler  v.  Worcester  Ins.  Co.,  3  Cush.  328.  It  is  there  said  that  the 
general  rule  unquestionably  is,  that  in  cases  of  insurance  against  fire 
the  carelessness  and  negligence  of  the  agents  and  servants  of  the 
assured  constitute  no  defence.  The  defendants  in  that  case  offered  to 
show  not  only  that  the  plaintifT  had  been  guilty  of  negligence  but  also 
of  gross  misconduct.  And  the  court  in  examining  tlie  case,  where  the 
facts  upon  which  the  allegation  of  the  gross  misconduct  imputed  to 
the  party  were  not  reported,  expressed  an  opinion  that  it  might  be  of 
such  character,  though  not  amounting  to  a  fraudulent  intent  to  burn 
the  building,  as  to  deprive  the  assured  of  his  right  to  recover;  and  this 
for  the  reason  assigned,  that  tlio  misconduct  miglit  be  such  as  to  mani- 
fest a  willingness,  differing  little  from  a  fraudulent  and  criminal  pur- 
pose to  commit  such  an  injury.  But  the  law  makes  a  clear  distinction 
between  even  gross  negligence  and  fraud,  and  although  the  former 
may  be  evidence  tending  to  show  mala  fides,  it  is  not  in  fact  the  same 
thing.  1  Parsons  on  Con.,  571  ;  Goodman  v.  Harvey,  4  Ad.  &  El. 
870.  In  the  present  case,  tliere  is  nothing  in  the  facts  found  to  show 
cither  a  fraudulent  intent  or  any  willingness  on  the  part  of  the  plaintiff 


SECT.  II.]  KANE    V.    IIIBELINIA    INS.    CO.  721 

to  set  fire  to  the  building.  On  tlie  contraiy,  it  is  conceded  that  he 
acted  in  good  faith.  And  although  his  conduct  was  very  imprudent,  it 
is  obvious,  as  well  from  his  purpose  as  from  his  efforts  to  prevent  the 
conflagration  when  the  tire  began  to  kindle,  that  he  was  actuated  bv 
no  improper  motive.  These  facts  show  a  case  of  mere  ne'dioence,  and 
therefore  are  not  sufficient  to  preclude  him  from  his  right  to  recover  on 
the  policy  an  indemnity  for  his  loss.  Exceptiom  sustained} 


KANE   V.    HIBERNIA   INSURANCE   COMPANY. 

Court  of  Errors  of  New  Jersey,  1877.     39  N.  J.  L. 
(10  Vroora)  097. 

On  error  to  the  Supreme  Court. 

Kane  brought  an  action  of  assumjjsit  against  the  insurance  company 
on  two  policies  of  insurance  (not  under  seal),  against  loss  by  fire.  The 
defence  was  that  the  building  insured  svas  burned  b\-  design,  with  the 
knowledge  and  procurement  of  the  plaintiff. 

The  defendant's  counsel  asked  the  court  to  charge  the  jury  that,  as 
to  the  defence  of  burning  by  design,  while  the  burden  of  proof  was  on 
the  defendant  to  establish  this  defence,  it  was  onlj-  necessarv  to  do  so 
by  the  fair  weight  or  preponderance  of  the  evidence.  The  court  re- 
fused so  to  charge,  and  charged  the  juiy  that,  in  order  to  make  out 
such  defence,  tlie  defendant  was  bound  to  establish  the  same  beyond  a 
reasonable  doubt,  and  by  the  same  measure  of  testimony  tliat  would 
be  necessary  to  convict  the  plaintiff  if  tried  under  an  indictment  charg- 
ing that  offence. 

The  question  of  the  correctness  of  this  instruction  was  reserved  and 
heard  before  the  Supreme  Court.  Kane  v.  Hibernia  Insurance  Com- 
pany, 9  Vroom,  441.  The  decision  of  the  Supreme  Court  being  adverse 
to  the  defendants,  the  case  was  removed  b}-  them  to  this  court,  by  writ 
of  error,  on  exceptions  sealed  at  the  trial. 

For  the  plaintiff  in  error,  Joseph  Coult  and  H.  C.  Pitney. 

Contra^  F.  Voorhees  and  J.  C.  Ten  Eyck. 

The  opinion  of  the  court  was  delivered  by 

Depue,  J.  The  writ  of  error  brings  up  for  review  onh-  the  propriety 
of  the  judge's  charge. 

It  is  conceded  that  there  is  a  ditference  between  civil  and  criminal 
cases  in  respect  to  the  degree  or  quantitj-  of  evidence  necessary  to  de- 
termine the  verdict  of  a  jur^-.     In  civil  cases,  it  is  the  duty  of  the  jury 

1  Ace:  Phenix  Ins.  Co.  v.  Sullivan,  39  Kans.  449  (1888). 

See  Catlin  v.  Springfield  F.  Ins.  Co.,  I  Sumner,  4.34, 444  (1833) ;  Sha-w  v.  Robberds,  6 
Ad.  &  E.  75,  84  (1837) ;  Henderson  v.  Western  M.  &  F.  Ins.  Co.,  10  Rob.  La.  164  (1845). 

Compare  Fleisch  v.  Ins.  Co.  of  Xorth  America,  58  .Mo.  App.  59(1.  606-607 
(1894).— Ed. 

46   . 


722  KANE    V.    HIBERNIA   INS.    CO.  [CHAP.  VII. 

to  find  for  the  party  in  whose  favor  the  evidence  preponderates  ;  but  in 
criminal  cases,  the  accused  should  not  be  convicted  upon  any  prepon- 
derance of  evidence,  unless  it  generates  full  belief  of  the  fact,  to  the 
exclusion  of  all  reasonable  doubt.  3  Greenl.  Ev.,  §  29  ;  Best  on  Ev., 
§  95.  But  it  is  contended  that  there  is  an  exception  to  this  general 
rule,  where  the  issue  in  a  civil  case  is  one  in  which  crime  is  imputed, 
and  the  guilt  or  innocence  of  a  party  is  directly  or  incidentally  involved. 
In  such  cases,  it  is  said  that  the  presumption  of  innocence  is  to  have 
as  great  effect  as  in  criminal  trials,  and  that  to  justify  a  verdict  against 
the  part}'  to  whom  crime  is  imputed,  the  evidence  adduced  must  be 
such  as  would  be  sufficient  to  convict  upon  an  indictment  for  the  crime 
imputed.     2  Greenl.  Ev.,  §§  408,  426  ;  1  Taylor  on  Ev.,  97  a. 

This  exception  is  most  frequently  invoked  in  actions  of  libel  and 
slander^  where  a  justification  imputing  crime  is  pleaded,  and  actionson 
firpj^obcies,  where  the  defenceJsUiat  the  property  was  wilfully  burned 
bythejnsuredj_  .   .  . 

In  an  action  on  a  contract  of  insurance,  a  defence  that  the  loss  was 
caused  by  the  wilful  act  of  the  assured,  does  not  necessarily  involve  a 
criminal  accusation.  It  rests  upon  the  legal  maxim  that  no  man  shall 
be  permitted  to  derive  advantage  from  his  own  wrong.  "  It  is,"  says 
Lord  Campbell,  C.  J.,  "a  maxim  of  our  insurance  law,  and  of  the  in- 
surance laws  of  all  commercial  nations,  that  the  assured  cannot  seek 
indemnity  for  a  loss  produced  by  his  own  wrongful  act."  Thompson 
V.  Hopper,  6  E.  «fe  B.  171,  196.  In  that  case,  which  was  an  action  on 
a  marine  polic}',  a  plea  that  the  plaintiffs  knowinglj',  wilfully,  and  im- 
properly sent  the  ship  to  sea  at  a  time  when  it  was  dangerous  for  her 
to  go  to  sea  in  the  state  and  condition  in  which  she  then  was,  and 
wrongfully-  and  improperly-  caused  and  permitted  the  ship  to  be  and 
remain  on  the  high  seas,  near  to  the  shore,  in  the  state  and  condition 
aforesaid,  without  a  master  and  without  a  proper  crew  to  manage  and 
navigate  her,  etc.,  and  that  the  ship,  by  reason  of  the  premises,  was 
wrecked,  was  held  to  disclose  a  good  defence.  In  delivering  the  judg 
ment  of  the  court.  Lord  Campbell  said,  "  According  to  the  statement 
in  this  plea,  the  plaintiffs'  loss  was  caused  by  tjieir  wrongful  act,  and, 
if  so,  I  think  there  was  no  necessity  to  characterize  it  as  being  either 
felonious  or  fraudulent."  Knowledge  and  wilfulness  and  a  loss  resulting 
directl}'  and  immediately  from  such  wrongful  act,  are  the  essential  ele- 
ments of  such  a  defence.  Dudgeon  v.  Pembroke,  L.  R.  9  Q.  B.  581  ; 
1  Q.  B.  Div.  96  ;  2  App.  Gas.  284;  Thompson  v.  Hopper,  E.,  B  «&  E. 
1038. 

Under  a  fire  policy,  the  assured  maj'  recover  for  a  loss  occasioned  In- 
mere  carelessness,  w-ithout  fraud  or  wilful  misconduct.  But  to  make 
defence  to  the  action,  the  defendants  need  not  prove  that  the  plaintiff 
had  committed  an  indictable  offence.  It  is  sufficient  if  it  be  shown 
that  the  plaintiff  purposely  and  wantonly  set  fire  to  the  property  in- 

1  Here  and  elsewhere  in  the  opinion  passages  not  dealing  directly  with  Insurance 
have  been  omitted.  — Ed. 


SECT.  II.]  KANE    V.    HIBEUNIA   INS.    CO.  723 

sured.  Schuiiilt  c.  N.  Y.  U.  M.  F.  Ins.  Co.,  1  Gray,  529.  At  com- 
mon law,  and  independently  of  the  act  of  1859  (Rev.,  p.  242),  a  man 
might  burn  his  own  house  without  incurring  liability  to  indictment, 
unless  it  was  so  situated  with  respect  to  the  houses  of  others  as  to 
endanger  their  safety.  2  East  PI.  1027,  §  7  ;  1034,  §  11  ;  State  v.  Fish, 
3  Dutcher,  323.  After  the  act  of  1859  became  a  law,  a  man  might 
still,  without  criminal  responsibilit}',  burn  his  own  house,  if  it  was  done 
without  intent  to  prejudice  the  insurance  thereon.  Indeed,  cases  ma}- 
arise  where  the  assured  may  procure  the  destruction  b^-  fire  of  his  prop- 
erty, with  intent  to  defraud  the  insurer,  and  not  be  liable  to  indictment 
under  the  statute.  Criminal  laws  are  essentiall}-  local  in  their  opera- 
tion, and  the  incitement  in  a  foreign  jurisdiction  to  the  commission  of 
a  crime  in  this  State,  is  not  indictable  under  our  laws.  Therefore,  one 
who,  in  anotlier  State,  procures  another  to  enter  this  State  and  com- 
mit a  crime,  is  not  guilt}-  of  any  offence  punishable  by  the  laws  of  this 
State.  State  v.  W^-ckoff,  2  Vroom,  65.  And  yet  it  cannot  be  doubted 
that,  before  the  act  of  1859,  an  insurance  company  might  successfully 
defend  on  the  ground  that  the  assured  wilfully  caused  the  destruction 
of  the  propert}'  insured,  and  that  such  defence  may  be  made  where  the 
assured  is  so  circumstanced  as  not  to  be  indictable  under  the  statute. 
A  contract  for  indemnity  in  such  case  would  be  absurd,  and,  so  far  as 
it  related  to  a  voluntary  and  intended  loss,  would  be  void  in  law. 
1  Pliillips'  Ins.  §  1046. 

The  doctrine  that,  in  an  action  on  a  polic}',  the  defence  that  the 
plaintiff  had  wilfully  set  fire  to  the  premises  must  be  as  full}-  and  satis- 
factorily proved  as  if  the  plaintiff  were  on  trial  on  indictment,  origi- 
nated in  the  case  of  Thurtell  ?;.  Beaumont,  8  J.  B.  Moore,  612  ;  1  Bing. 
339.  This  ruling  is  adopted  by  Mr.  Greenleaf  and  Mr.  Taylor,  and  is 
strongly  approved  by  the  latter  writer.  2  Greenl.  Ev.,  §  418  ;  1  Tay- 
lor's Ev.  (5th  ed.)  97  a.  It  is  disapproved  by  Mr.  Wharton,  and  is 
vigorously  assailed  by  Mr.  May,  the  author  of  May  on  Insurance,  in  an 
article  in  the  American  Law  Review.  2  Whart.  Ev.,  §  1246  ;  10  Am. 
Law  Rev.  642. 

The  decision  on  this  point,  in  Thurtell  v.  Beaumont,  was  made  on  an 
application  for  a  rule,  and  without  much  consideration.  It  has  never 
received  approval  in  the  English  courts,  although,  as  a  rule  of  evidence, 
occasions  have  repeatedly  arisen  for  its  adoption  and  application.  .  .  . 

It  may  safely  be  said  that  Thurtell  v.  Beaumont,  in  principle,  stands 
alone  and  unsupported  in  the  P^nglish  courts,  except  in  actions  of  libel 
and  slander,  which  are  to  be  regarded  as  exceptional,  and  resting  upon 
considerations  peculiar  to  the  nature  of  the  actions  and  of  the  injuries 
for  which  they  are  brought. 

In  the  courts  of  this  country,  the  principle  adjudged  in  Thurtell  v. 
Beaumont  has  received  but  slender  support,  except  in  libel  and  slander 
cases.  The  weight  of  authority  is  decidedly  against  the  soundness  of 
the  rule  there  propounded,  in  its  application  to  actions  on  policies  of 
insurance,  as  well  as  other  civil  actions,  where  the  issue  is  such  that, 


724  KANE    V.    HIBERNIA.    INS.    CO.  [CHAP.  VII. 

for  its  support,  a  case  must  be  made  such  as  would  afford  ground  for 
an  indictment.  .  .   . 

Tlie  decisions  in  actions  on  policies  of  insurance  against  loss  by  fire 
are  mainly  to  the  same  effect.  In  Schmidt  v.  N.  Y.  U.  M.  Fire  Ins. 
Co.,  1  Gray,  529,  the  defence  was,  that  the  plaintiff  had  purposelj'  set 
fire  to  the  property  insured,  and  burned  it ;  and  it  was  held  that  the 
judge  properly  refused  to  instruct  the  jurj*  that  they  must  be  satisfied, 
beyond  a  reasonable  doubt,  of  the  truth  of  this  defence.  The  criticism 
on  this  case,  in  the  court  below,  that  the  instruction  actually*  given 
was,  in  substance,  equivalent  to  an  instruction  that  the  defence  must 
be  established  beyond  a  reasonable  doubt,  and  that  the  case,  if  it  does 
not  inferentially  recognize  the  rule  in  Thurtell  v.  Beaumont,  is  of  no 
value  as  an  authority  against  it,  though  warranted  by  some  expressions 
of  the  judge,  in  his  opinion,  is  shown  to  be  untrue,  in  fact,  by  the  opin- 
ion of  the  same  judge,  in  Gordon  v.  Parmelee,  15  Gray,  413.  In  the 
latter  case,  he  adverts  to  the  case  in  1  Giay,  and  declares  it  was  not 
the  purpose  of  the  court  to  sanction  any  exception  to  the  rule,  or  to  say 
that,  in  any  civil  action,  the  jury  were  not  to  decide  bj-  the  preponder- 
ance of  the  proof  or  the  weight  of  the  evidence  ;  and  he  closes  his  opin- 
ion by  saying  that,  "in  the  opinion  of  the  court,  it  is  better  that  the 
rule  be  uniform,  leaving  the  instruction  that  the  jury  must  be  satisfied 
of  the  guilt  of  the  party  beyond  a  reasonable  doubt,  to  apply  solely  to 
criminal  cases."  In  the  following  cases,  also,  in  actions  on  fire  policies, 
where  the  defence  was  a  wilful  destruction,  by  the  assured,  of  the  prop- 
erty insured,  the  rule  of  evidence  adopted  in  Thurtell  v.  Beaumont 
was  repudiated,  and  the  correct  rule  declared  to  be  that,  in  civil  cases, 
the  verdict  should  be  determined  by  the  preponderance  of  the  evidence, 
without  regard  to  the  fact  that  in  the  defence  was  involved  a  charge 
which  might  be  made  the  ground  of  a  criminal  prosecution.  Scott  v. 
Home  Ins.  Co.,  1  Dillon  C.  C.  105  ;  Huchberger  v.  Merchants'  Fire 
Ins.  Co.,  4  Bissel  C.  C.  265  ;  Washington  Ins.  Co.  v.  Wilson,  7  Wis. 
169  ;  Blaeser  v.  M.  M.  M.  Ins.  Co.,  37  Wis.  31  ;  Eothschild  v.  Amer. 
Cent.  Ins.  Co.,  62  Mo.  356  ;  ^tna  Ins.  Co.  v.  Johnson,  11  Bush.  587 ; 
Hoffman  v.  W.  M.  &  F.  Ins.  Co.,  1  La.  An.  216  ;  Wightman  v.  Same, 
8  Rob.  442. 

I  fully  concur  in  these  decisions,  and  the  reasoning  on  which  they 
are  founded. 

In  actions  wlicre  usury  was  pleaded,  it  has  been  said  that  the  de- 
fence must  bo  established  beyond  a  reasonnble  doubt.  Conover  v. 
Van  Mater,  3  C.  E.  Green,  481  ;  Taylor  v.  Morris,  7  id.  606.  This 
language  was  used,  perhaps  inconsiderately,  to  express  the  quantity  of 
evidence  that,  under  the  circumstances,  should  be  required  to  def'cnt 
the  plaintiff's  security,  without  intending  to  assert  that,  as  a  rule  oi 
law,  the  same  measure  of  proof  should  be  required  in  civil  as  in  crimi- 
nal cases.  So  also  in  suits  on  fire  policies,  on  a  defence  like  that  in 
the  present  case,  judges,  in  their  instructions  to  juries,  have  commented 
on  the  gravity  of  the  charge  contained  in  such  a  defence,  and  have  put 


SECT.  II.]  KANE    V.    HIBEENIA    INS.    CO.  /  2o 

the  presumption  of  innocence  in  the  scales  as  an  element  to  weigh  in 
favor  of  the  plaintiff  and  decide  the  issue,  if  the  evidence  was  not  en- 
tirelv  satisfactory.  The  charge  of  Judge  Davis,  in  Huchberger  v. 
Merchants'  Fire  Insurance  Company,  and  of  Judge  Dillon,  in  Scott  v. 
Home  Insurance  Company,  and  of  Chief  Justice  Whelpley,  in  Powers 
V.  Market  Fire  Insurance  Company,  in  the  Morris  Circuit,  are  exam- 
ples of  this  mode  of  dealing  with  the  subject  in  the  practical  adminis- 
tration of  the  law.  But  in  each  of  these  cases  the  judge  was  careful  to 
instruct  the  jury  that  the  rule  of  law  in  criminal  cases,  with  respect  to 
the  quantum  of  proof,  was  not  to  be  applied. 

A  judge  may  make  such  comments  on  the  evidence  as  he  deems 
proper,  and  may  advise  and  instruct  the  jury  with  respect  to  the  degree 
of  proof  they  should  require  to  decide  the  issue  under  the  circum- 
stances of  the  particular  case.  But  a  charge  that,  as  a  question  of  law, 
proof  beyond  a  reasonable  doubt  is  required,  is  quite  a  different  thing. 
While  it  is  impracticable  to  frame  a  satisfactory  definition  of  the  ex- 
pression "  reasonable  doubt,"  yet  the  effect  of  a  charge,  in  this  lan- 
guage, is  a  matter  of  almost  every  day's  observation.  Every  one 
familiar  with  the  administration  of  justice  can  recall  instances  in  which 
defendants,  under  such  an  instruction,  have  been  pronounced  not  guilty, 
when  the  evidence  of  guilt  was  quite  convincing. 

The  importance  of  preserving  the  distinction  between  civil  and 
criminal  cases  increases  with  the  growth  of  the  criminal  law.  Al- 
most every  tortious  act  is  by  statute  made  indictable,  if  done  wilfully 
or  maliciously,  and  the  courts  should  be  reluctant  to  adopt,  in  civil 
cases,  the  rules  peculiar  to  criminal  law,  lest  wrong-doers  be  enabled 
to  avoid  civil  liability,  as  well  as  escape  criminal  responsibility,  under 
cover  of  the  rules  of  criminal  prosecution,  the  object  of  which  is  pun- 
ishment only. 

The  judgment  should  be  reversed.^ 

Dixon,  J.  Several  of  my  brethren  unite  with  me  in  desiring  to  ex- 
clude the  inference  that  we  assent  to  the  intimation  contained  in  the 
opinion  just  read,  as  to  the  exceptional  character  of  actions  of  libel  and 
slander.  We  prefer  that  the  matter  should  remain  open,  to  be  decided 
when  its  decision  is  necessary. 

Knapp,  Reed,  and  Dodd,  JJ.,  concurred  in  the  views  of  Justice 
Dixon. 

Foi'  affirmance  —  None. 

Ji'or  reversal  —  The  Chancellor,  Dalrimple,  Depue,  Dixon, 
Knapp,  Reed,  Clement,  Dodd,  Lathrop,  Lilly,  Wales  —  11. 

1  Ace:  Continental  Ins.  Co.  v.  Jachnichen,  110  Ind.  59  (1886). 
See  Perry  v.  Mechanics'  Mut.  Ins.  Co.,  11   Fed.  R.  485  (C.  C,  D.  R.  I.,  1882): 
Karow  v.  Contineutal  Ins.  Co.,  57  "Wis.  56  (1883).— -Ed. 


726  WAY   V.   ABINGTON   MUTUAL   FIRE   INS.    CO.       [CHAP.  VII. 

WAY   V.   ABINGTON   MUTUAL   FIRE  INS.   CO. 

Supreme  Judicial  Court  of  Massachusetts,  1896.     166  Mass.  67.^ 

This  was  an  action  upon  a  fire  insurance  policy,  of  the  Massachusetts 
standard  form,  for  Sl,500.  Tiie  property  insured  consisted  of  cigars 
manufactured  and  in  process,  tobacco,  and  supplies  for  cigars.  About 
five  o'clock  in  the  afternoon  the  foreman  emptied  waste  paper  into  a 
stove,  and  when  the  paper  was  consumed  closed  the  drafts  and  shut 
the  store  for  the  night.  About  eight  o'clock  it  was  discovered  that  the 
premises  were  full  of  dense  smoke.  This  came  down  the  chimney. 
The  soot  in  the  chimney  had  been  set  on  fire  by  the  waste  paper,  and 
the  smoke  thus  [)roduced  had  been  forced  into  the  premises  because 
the  flue  was  choked  with  an  accumulation  of  loose  plaster  and  scales 
of  soot.  Thus  resulted  a  damage  by  smoke  alone  to  the  goods  insured. 
The  damage  was  $1,180.65.  The  loss  occurred  within  the  term  of  the 
policy.  The  case  was  referred  to  an  auditor,  who  reported  the  fore- 
going facts,  and  ruled  "that,  although  the  fire  was  confined  in  places 
constructed  or  maintained  for  holding  and  conducting  fire  and  the  prod- 
ucts of  combustion  under  ordinary  intended  conditions,  it  was  still 
not  such  a  fire  as  the  places  and  appliances  were  intended  for,  and 
neither  the  fire  nor  the  damage  was  caused  by  any  misuse  or  mis- 
management of  such  appliances,  but  the  fire  was  accidental  and  in  a 
place  where  the  plaintiff  did  not  intend  to  maintain  it,  and  that  it  was 
the  proximate  cause  of  the  damage  ;  that  the  chimney  was  not  made 
or  maintained  for  the  purpose  of  maintaining  fires  therein,  but  for  the 
purpose  of  conducting  the  products  of  combustion  to  the  outside  of  the 
building,  which  in  tliis  case  it  failed  to  do  by  reason  of  the  soot  being 
so  ignited  and  burnt,  thereby  causing  the  obstruction  which  forced  the 
products  of  such  fire  into  the  rooms  of  the  building  and  caused  the 
damage."     The  auditor  found  for  the  plaintift'. 

At  the  trial  in  the  Superior  Court  the  plaintiflf  introduced  no  evi- 
dence except  the  auditor's  report,  the  policy,  and  the  affidavit  of  loss. 

The  defendant's  counsel  in  his  opening  to  the  jury  contended  that," 
within  the  common  knowledge  of  the  jury,  when  stoves  are  used,  soot 
collects  in  the  chimney  and  is  liable  to  burn,  and  chimneys  are  con- 
structed with  the  expectation  of  such  occasional  burning  and  with  the 
intention  of  carrying  off"  the  products  of  such  combustion,  so  tliat  stoves 
and  chimneys  are  intended  and  maintained  as  receptacles  for  fire,  and 
fire,  while  confined  therein,  is  not  such  fire  as  is  insured  against. 
Thereupon  he  called  as  a  witness  an  experienced  builder,  by  whom  it 
was  testified  that  the  flue  was  of  ordinary  construction.  To  this  wit- 
ness the  defendant's  counsel  put  questions  whether  soot  ordinarily 
collects  in  such  a  flue  and  occasionally  burns  out,  and  whether  such  a 

1  The  statement  has  been  rewritten.  —  Ed. 


'      CT.  II.]  WAY    V.    ABINGTON    MUTUAL   FIRE    INS.    CO.  727 

flue  is  intended  to  meet  that  result  and  to  carry  off  the  consequences 
of  such  ignition;  but  upon  the  plaintiffs  objection,  Masox,  C.  J., 
excluded  this  evidence.  The  defendant  requested  instructions  to  the 
effect  that  the  defendant  was  not  liable  so  long  as  the  fire  was  con- 
fined within  the  appliances  intended  to  hold  it  and  carry  off  its  effects, 
and  that  the  defendant  was  not  liable  if  the  ordinary  effect  of  maintain- 
ing fire  in  a  stove  is  to  create  soot  in  the  chimney,  with  the  consequence 
that  the  lighting  of  a  fire  in  the  common  wa}'  occasionally  sets  fire  to 
the  accumulation  ;  and  that  the  defendant  was  not  liable  if  the  smoke 
escaped  into  the  premises  hy  reason  of  an  obstruction,  and  if  the  fire 
did  not  escape  from  the  chimney.  The  judge  did  not  give  these  in- 
structions, but  gave  a  peremptory  charge  for  the  plaintiff.  To  all  the 
rulings  of  the  court  the  delendant  excepted. 

L.  S,  Dabney^  for  the  defendant. 

A.  Hemenway  (  W.  If.  Preble  with  him),  for  the  plaintiff. 

KxowLTON,  J.  It  is  conceded  bj-  the  defendant  tliat  it  is  liable  for 
damage  caused  by  smoke  to  the  same  extent  as  if  damage  had  been 
caused  directl}'  by  the  fire  which  produced  the  smoke.  The  question 
before  us  is  whether  the  fire  in  the  chimney  was  witliin  the  contract  of 
insurance  made  by  the  defendant.  The  policy  purports  to  cover  all 
loss  or  damage  b}-  fire,  but  the  defendant  contends  that  in  all  such 
contracts  there  is  an  implied  exception  of  such  fires  as  this  from  which 
the  plaintiff  suffered  loss. 

The  facts  are  not  in  dispute,  and  if  the  defendant's  witness  had  been 
permitted  to  testifv  as  an  expert,  or  if  the  jury  had  used  their  common 
experience  and  common  knowledge  to  find  the  facts  as  tlie  defendant's 
counsel  in  his  opening  contended  that  they  should  be  found,  there  would 
have  been  no  substantial  conflict  between  the  statement  of  the  auditor 
and  the  facts  relied  upon  by  the  defendant. 

A  chimne}-  is  not  intended  to  be  used  as  a  place  in  which  to  kindle 
fires,  or  to  have  fires  for  use  or  employment  in  connection  with  the 
occupation  of  a  I)uilding.  It  is  intended  to  carr}-  off  the  products  of 
combustion.  One  of  the  products  of  combustion  in  a  stove  or  fireplace 
connected  with  a  chimne}'  is  soot,  which  will  accumulate  more  or  less 
in  the  chimney,  and  will  sometimes  take  fire  from  the  flame  in  the  stove 
or  fireplace.  Chimneys  are  constructed  with  a  view  to  guard  against 
accidents  when  such  fires  occur.  Occasional  fires  in  a  chimney  from 
the  ignition  of  soot  are  to  be  expected.  Such  fires  are  not  desired. 
They  are  not  maintained  for  an}-  useful  purpose.  In  a  sense  they  are 
accidental,  for  they  are  not  lighted  intentionally,  but  they  start  from 
time  to  time  without  human  agency  when  a  large  quantity  of  soot  has 
accumulated  and  the  circumstances  chance  to  be  favorable  to  ignition 
from  the  fire  which  is  maintained  in  the  place  intended  for  it. 

The  defendant's  counsel  contends  that  tlie  policy  was  not  intended  to 
appl}'  to  a  fire  which  is  lighted  and  maintained  for  the  ordinary  pur- 
poses for  which  fires  are  used  in  liuildings,  and  which  is  confined  within 
the  place  that  is  fitted  for  such  fires.     He  argues  that,  if  a  stove  should 


728  WAY    V.    ABINGTON    MUTUAL   FIKli    INS.   CO.        [CHAP,  VII. 

be  cracked  and  spoiled  by  a  fire  kindled  in  it  to  warm  the  house,  or  if 
a  fire  in  a  fireplace  should  crack  the  mantel,  or  scorch  valuable  furni- 
ture left  too  near  it,  or  injure  property  by  its  smoke  which  the  chimney 
failed  to  clury  off,  or  if  a  lamp  should  throw  off  soot  or  smoke  in  such 
quantities  as  to  cause  damage  to  property,  in  every  such  case,  if  the 
fire  burned  nothing  but  that  which  was  intended  to  be  burned  for  a 
useful  purpose  in  connection  with  the  occupation  of  the  bouse,  and  if  it 
did  not  pass  beyond  the  limits  assigned  for  it,  the  insurance  company 
would  not  be  liable.     See  Austin  /'.  Drew,  4  Camp.  3G0  ;  s.  c.  Holt 
N.  P.  12G  ;  G  Taunt.  43G,  438;  American  Towing  Co.  v.  German  Ins, 
Co.,  74  Md.  2a;  Scripture  v.  Lowell  Ins.  Co.,  10  Cush.  356.     We  are 
not  disposed  to  question  the  soundness  of  the  general  principle  on  which 
this  contention  is  founded,  and  we  find  it  by  no  means  easy  to  deter- 
mine whether  the  princii)le  should  be  extended  far  enough  to  cover  an 
occasional  fire  in  a  ciiimney  incidental  to  the  ordinary  use  of  a  stove, 
or  whether  such  a  fire  should  be  iield  to  be  one  for  whose  unexpected 
injurious  consequences  an  insurance  company  should  be  liable.     We  are 
inclined  to  the  opinion  that  a  distinction  should  be  made  between  a  fire 
intentionally  lighted  and  maintained  for  a  useful  purpose  in  connection 
Avith  the  occupation  of  a  building  and  a  fire  which  starts  from  such  a 
fire  without  human  agency  in  a  place  where  iires  are  never  lighted  nor 
maintained,  altliough  such  ignition  may  naturally  be  expected  to  occur 
occasionally  as  an  incident  to  the  maintenance  of  necessary  fires,  and 
although  the  place  where  it  occurs  is  constructed  with  a  view  to  pre- 
vent damage  from  such  ignition.     A  fire  in  a  chimney  should  be  con- 
sidered  rather   a  hostile  fire  than  a   friendly  fii-e,  and  as  such,  if  it 
causes  damage,  it  is  within  the  provisions  of  ordinary  contracts  of  fire 
insurance. 

It  is  doubtless  true  that  in  former  years  in  some  parts  of  the  country 
straw  and  other  combustible  materials  have  sometimes  been  put  in 
chimneys  and  set  on  fire  to  burn  out  the  soot.  But  neither  at  the  trial 
of  tins  case  before  the  jury  nor  in  the  argument  before  ns  was  there 
any  suggestion  that  such  a  practice  prevails  or  has  ever  prevailed  in 
Boston,  or  that  this  chimney  was  constructed  with  a  view  to  kindling 
fires  in  it  for  such  a  purpose.  What  our  decision  would  be  if  damage 
Avas  done  by  smoke  from  a  fire  in  a  chimney  intentionally  kindled  to 
burn  out  the  soot,  it  is  unnecessary  now  to  determine. 

It  is  also  to  be  noted  that  there  was  an  accidental  obstruction  of  the 
flue  by  the  falling  of  the  plaster  lining  of  the  chimney,  which  in  some 
aspects  of  the  case  might  be  deemed  an  important  fact  in  favor  of  the 
plaintiff's  claim. 

Exceptions  overruled. 


SECT.  II.]  CITY   FIKE   INS.   CO.   V.   CORLIES.  729 


SECTION   II.    {continued). 
(B)   The  Connection  between  Peril  and  Loss. 

CITY   FIRE   INS.    CO.  v.  J.   &  H.  P.  CORLIES. 

Supreme  Court  of  New  York,  1839.     21  "Wend.  367. 

Error  from  the  Superior  Court  of  the  city  of  New  York.  The  plain- 
tiffs in  error  were  defendants  below.  Tlie  action  was  on  a  polic}'  of 
insurance,  dated  December  9,  1835,  by  wiiicli  the  company  insured  the 
plaintiffs  for  the  period  of  four  months  and  twenty-two  days  against 
loss  or  damage  by  fire,  to  the  amount  of  $3,000,  on  earthen-ware  in 
crates,  contained  in  the  brick,  slated  store  No.  75  Pearl  Street,  New 
York.  In  the  declaration  the  loss  was  alleged  to  have  happened  by 
and  through  the  explosion  of  large  quantities  of  gunpowder  and  by 
fire.  On  the  trial  it  appeared  that  in  the  great  fire,  on  the  morning  of 
the  17th  of  December,  1835,  the  store  No.  75  Pearl  Street  was  blown 
up  with  gunpowder,  and  the  goods  insured  totally  destroyed.  The 
explosion  was  ordered  by  the  mayor  of  the  city,  to  arrest  the  progress 
of  a  fire  then  raging  to  the  east  of  this  store.  The  building  next  to  the 
store,  but  not  the  store  itself,  was  on  fire  at  the  time  of  the  explosion. 
Tiie  buildings  all  around  this  store,  in  every  direction,  took  fire,  and 
were  more  or  less  burnt  or  totally  destroyed  by  the  course  of  the 
flames ;  and  according  to  every  probability  the  fire  would  have  de- 
stroyed the  store  in  question,  with  its  contents,  had  it  not  been  blown 
up.  The  crates,  after  they  fell,  were  consumed  by  the  fire.  The  de- 
fendants moved  for  a  nonsuit  on  the  following  grounds  : 

1.  The  loss  alleged  did  not  arise  from  a  cause  contemplated  by  the 
policy,  but  was  a  remote  consequence  of  the  fire  not  necessarily  arising 
from  it. 

2.  The  mere  fact  of  bringing  gunpowder  upon  the  premises  sus- 
pended the  policy,  although  deposited  without  the  knowledge  of  the 
plaintiff. 

3.  A  loss  by  explosion  of  gunpowder  cannot  be  said  to  be  a  loss  by 
fire,  and  those  cases  in  which  a  recovery  can  be  had  whore  the  goods 
have  been  destroyed  not  by  fire,  but  by  water  or  by  breakage  or  the 
consequences  of  the  fire,  are  cases  where  the  injury  arose  in  the  attempt 
to  save  the  goods  insured  ;  here  the  goods  insured  were  intentionally 
destroyed  to  save  the  property  of  others. 

4.  The  act  was  done  by  the  maj'or  by  virtue  of  his  office  for  the 
benefit  of  the  citizens  at  large,  and  the  corporation  of  the  city  are  lia- 
ble for  his  acts,  even  at  common  law  independently  of  the  statute  ;  if 
he  had  no  authorit}',  then  his  own  was  an  usurped  power,  which  is 
expressly  excepted  by  the  policy. 


730  CITY   FIRE    INS.   CO.    V.    CORLIES.  [CHAP.  VII. 

.5.  This  fire  was  a  general  calamit}',  and  property  destroj-ed  to  put 
an  end  to  it  should  be  a  general  tax  on  the  citizens,  and  not  a  partial 
one  on  this  insurance  company ;  and  in  a  doubtful  case  the  pohc}' 
should  be  so  construed  as  to  lay  a  general  rather  than  a  partial 
contribution. 

The  chief  justice,  before  whom  the  case  was  tried,  denied  the  motion 
for  a  nonsuit,  and  charged  the  jury  that  the  plaintiffs  wore  entitled  to 
a  verdict.  The  defendants  excepted,  and  the  verdict  and  judgment 
having  passed  against  them,  tliey  now  bring  error. 

J.  W.  Gerard,  for  plaintiffs  in  error. 

Z>.  Lord,  Jr.,  for  defendants  in  error. 

By  the  Court,  Bronson,  J.  I.  There  has,  I  think,  been  a  loss  by 
the  peril  insured  against,  within  tlie  meaning  of  the  policy.  In  Grim 
V.  Tiie  Phoenix  Ins.  Co.,  13  Johns.  R.  451,  no  doubt  seems  to  have 
been  entertained,  either  b}'  the  court  or  counsel,  that  a  loss  by  the  ex- 
plosion of  gunpowder  was  a  loss  by  fire.  And  in  Waters  v.  The  Mer- 
chants' L.  Ins.  Co.,  11  Pet.  213,  the  point  was  so  adjudged.  The  court 
was  of  opinion  that  fire  was  the  proximate  cause  of  the  loss. 

II.  According  to  the  terms  of  the  policy,  if  the  building  was  used 
for  the  purpose  of  storing  gunpowder,  the  contract  was,  for  the  time, 
suspended.  And  see  Duncan  v.  The  Sun  Fire  Ins.  Co.,  6  Wend. 
488.  But  placing  gunpowder  with  a  lighted  match  in  the  building,  for 
the  express  purpose  of  producing  an  explosion,  which  immediately  fol- 
lowed, was  a  very  different  thing  from  what  the  parties  contemplated 
when  the}-  inserted  this  provision  in  the  contract.  Whether  the  in- 
surei-s  are  liable  for  this  voluntary  destruction  of  the  property  is  a 
question  yet  to  be  considered.  But  I  think  it  quite  clear  that  they 
have  not  established  the  allegation  that  the  building  was  used  for  the 
storing  of  gunpowder. 

III.  The  building  containing  the  goods  was  destroyed  by  order  of 
the  mayor  of  the  city,  for  the  purpose  of  arresting  the  progress  of  a 
conflagration.  Are  the  insurers  answerable  for  this  voluntary  destruc- 
tion of  the  property?     This  question  has  been  presented  in  a  double 

'form,  —  the  one  supposing  that  the  mayor  acted  with,  and  the  other 
that  he  acted  without,   authority. 

1.  Let  us  first  assume  that  the  mayor  acted  illegally.  If  the  fire  had 
been  kindled  by  an  incendiary,  it  is  not  denied  that  the  insurers  would 
be  answerable.  Why  are  they  not  then  answerable  if  the  mayor  acted 
without  authority?  The  act,  though  not  done  for  a  wicked  purpose, 
was  as  illegal  as  though  it  had  been  the  work  of  a  felon.  The  answer 
attempted  is  that,  although  the  mayor  had  no  authorit}-,  yet  as  he  acted 
colore  officii,  this  is  a  case  of  loss  happening  by  means  of  usurped 
power,  which  is  expressly  excepted  by  the  policy. 

It  is  impossible  to  maintain  that  a  mere  excess  of  jurisdiction  by  a 
lawful  magistrate  is  the  exercise  of  an  usurped  power,  within  the  mean- 
ing of  this  contract.  That  is  not  what  the  insurers  had  in  mind  when 
they  made  the  exception.     It  was  an  usurpation  of  the  power  of  gov- 


SECT.  II.]  CITY   FIRE    INS.    CO.    V.    CORLIES.  731 

eminent,  against  wliich  the\-  intended  to  protect  themselves.  Such  was 
the  interpretation  given  to  the  same  words  in  a  policy  as  earlv  as  the 
year  1767.  Drinkwater  v.  The  London  Assurance,  2  "Wils.  363.  The 
property  insured  was  destroyed  by  a  mob,  which  arose  on  account  of 
the  high  price  of  provisions ;  and  the  insurers  were  held  liable,  not- 
withstanding a  proviso  in  the  policy  that  they  would  not  answer  for  a 
destruction  l)y  "  usurped  power."  Bathurst,  J.,  said,  those  words, 
according  to  the  true  import  thereof  and  the  meaning  of  the  parties, 
could  only  mean  an  invasion  of  the  kingdom  b}-  foreign  enemies  to  give 
laws  and  usurp  the  government,  or  an  internal  armed  force  in  rebellion, 
assuming  the  power  of  government,  by  making  laws,  and  punishing  for 
not  obeying  those  laws.  Wilmot,  C.  J.,  said,  the  words  meant  an 
invasion  from  abroad,  or  an  internal  rebellion,  when  armies  are  em- 
ploj'ed  to  support  it ;  when  the  laws  are  dormant  and  silent,  and  firing 
of  towns  is  unavoidable.  In  Langdale  v.  Mason,  2  Marsh.  Ins.  791  j  it 
was  said  b}"  Lord  Mansfield  that  these  words  were  ambiguous,  but  they 
had  been  the  subject  of  judicial  determination  ;  that  they  must  mean 
rebellion  conducted  b}'  autliority,  —  determined  rebellion,  with  generals 
who  could  give  orders.  And  he  added:  "Usurped  power  takes  in 
rebellion,  acting  under  usurped  authoritj-."  Whatever  doubt  there 
may  have  been  originalh' about  the  meaning  of  the  words  "usurped 
power,"  in  a  policy,  their  legal  import  had  been  settled  long  before 
this  contract  was  made  ;  and  we  cannot  assume  that  these  parties  used 
the  words  in  any  other  than  their  legal  sense. 

2.  But  the  mayor  acted  under  lawful  authority  ;  there  was  no  usur- 
pation of  any  kind.  Whether  he  had  the  concurrence  of  two  aldermen, 
as  the  statute  provides,  or  not,  there  can  be  no  doubt  of  his  common- 
law  power,  as  the  chief  magistrate  of  the  city,  to  destro}'  buildings,  in 
a  case  of  necessity-,  to  prevent  the  spreading  of  a  fire.  Indeed,  the 
same  thing  may  be  done  bj-  an}'  magistrate,  or  even  b}-  a  citizen,  with- 
out official  authorit}'.     The  Mayor  of  N.  Y.  v.  Lord,  17  Wend.  285. 

IV.  If  the  mayor  acted  by  lawful  autliority,  it  is  then  said  that  the 
propert}'  was  destroj-ed  for  tlie  benefit  of  the  citv,  and  that  tlie  corpo- 
ration (not  the  insurers)  must  bear  the  loss.  This  case  does  not  fall 
within  the  statute  charging  certain  losses  on  the  citj',  because  it  does 
not  appear  that  the  ma3-or  had  "the  consent  and  concurrence  of  any 
two  aldermen,"  2  R.  L.  368,  §  81  ;  and  for  the  further  reason,  that  tlie 
proper!}-  would  have  been  consumed  b}-  fire  if  its  destruction  had  not 
been  ordered  b}-  the  magistrate.  The  Mayor  of  N.  Y.  r.  Lord,  17 
Wend.  285.  It  is  said  that  the  corporation  is  liable  at  the  common 
law  for  the  acts  of  the  mayor ;  but  no  authority  was  cited  in  support  of 
the  position,  and  I  am  not  prepared  to  say  that,  in  a  case  like  this,  the 
doctrine  can  be  maintained.  The  inclination  of  my  mind  is  strongl}- 
the  other  wa}'. 

But  suppose  the  city  is  liable,  I  do  not  see  how  that  fact  can  affect 
this  contract.  If  the  insurers  pay  the  loss,  they  may,  perhaps,  have 
an  action  against  the  corporation  of  the  citj';  in  the  name  of  the  as- 


732  SCRIPTURE   V.   LOWELL   MUTUAL   FIRE   INS.   CO.      [CHAP.  VII. 

suvcd,  to  recover  back  the  mone}-.  Mason  v.  Sainsbiny,  2  Mash.  Ins. 
794  ;  3  Doug.  61,  S.  C.  But  however  that  may  be,  the  fact  that  the 
assured  may  have' a  remedy  agahist  the  city,  cannot  change  or  qualify 
the  undertaking  of  the  insurers. 

Tliis  leads  me  to  notice  a  little  more  particularly  the  extent  of  the 
contract.  The  company  agrees  to  make  good  unto  the  assured  all  such 
loss  or  damage  to  the  property  as  shall  happen  by  fire.  Thus  far  there 
is  no  limit  or  qualification  of  the  undertaking.  If  the  loss  happen  by 
fire,  unless  there  was  fraud  on  the  part  of  the  assured,  which  is  not 
pretended  in  this  case,  it  matters  not  how  the  flame  was  kindled. 
AVliether  it  be  the  result  of  accident  or  design,  —  whether  the  torch  be 
applied  by  the  honest  magistrate  or  the  wicked  incendiary;  whether 
the  purpose  was  to  save  a  city,  as  at  New  York,  or  a  country,  as  at 
Moscow,  —  the  loss  is  equally  within  the  terras  of  the  contract.  That 
the  insurers  intended  the  general  undertaking  should  extend  to  every 
possible  loss  by  fire  is  evident  from  the  fact  that  they  afterwards  pro- 
ceed to  specify  particular  losses  by  fire  for  which  they  will  not  be 
answerable.  Columbia  Ins.  Co.  v.  Lawrence,  10  Pet.  507.  The  ex- 
ceptions are  contained  in  the  sixth  condition  of  the  proposals  annexed 
to  the  policy.  It  is  unnecessary  to  recite  the  clause,  because  it  is  not 
pretended  that  this  case  comes  within  any  of  the  exceptions,  save  that 
relating  to  a  loss  happening  by  means  of  "usurped  power,"  and  that 
point  has  already  been  considered. 

There  has  then  been  a  loss  by  fire.  The  case  falls  within  the  gen- 
eral undertaking  of  the  insurers,  and  is  not  affected  by  any  of  the  ex- 
ceptions which  they  thought  proper  to  make  to  the  extent  of  their 
liability.  We  cannot  add  another  exception.  The  insurers  are  bound 
by  their  contract.  Judgment  affirmed. 


SCRIPTURE  V.  LOWELL  MUTUAL  FIRE  INS.  CO. 

Supreme  Judicial  Court  of  Massachusetts,  1852.     10  Cush.  356. 

Assumpsit  upon  a  policy  of  insurance  on  a  dwelling-house,  owned  by 
the  plaintiff,  but  in  the  occupation  of  one  Elbridge  Smith.  The  ten- 
ant's minor  son  carried  a  cask  of  gunpowder  into  the  attic,  without 
tlie  plaintiff's  knowledge,  and  fired  it  with  a  match,  doing  the  damage 
stated  in  the  opinion  of  the  court.  The  case  was  submitted  upon  an 
agreed  statement  of  facts  to  the  Court  of  Common  Pleas,  Perkins,  J., 
w^io  rendered  judgment  for  the  plaintiff  for  the  whole  amount  of  dam- 
age.    The  defendants  appealed  to  this  court. 

I.  S.  Jforse,  for  the  defendants. 

A.  R.  Brown ^  for  the  plaintiff. 

CusHiNG,  J.  The  case  finds  that  a  burning  match  being  applied, 
without  fault  of  the  plaintiff,  to  a  cask  of  gunpowder  in  the  attic  of 
his  house,  the  gunpowder  took  fire,  exploded,  set  fire  to  a  bed  and 


SECT.  II.]      SCRIPTURE   V.   LOWELL   MUTUAL   FIRE   INS.   CO.  733 

clothing,  charred  and  stained  some  of  the  wood-work,  and  blew  off  the 
roof  of  the  house ;  and  the  onlj-  question  in  the  case  is,  whether  the 
loss  thus  occasioned  to  the  building  is  covered  bj-  the  conditions  of  an 
ordinary-  policj-  against  fire.  The  question  ma}-  be  geueralized  thus  : 
B}-  the  ignition  of  gunpowder  within  a  dwelling-house,  damage  is  done 
to  the  house,  that  damage  consisting  in  part  of  combustion,  and  in 
part  of  explosion.  Is  the  whole  damage  covered  by  a  polic}-  insuring 
"  against  loss  or  damage  by  fire?" 

The  very  anomalous  ease  of  Austin  v.  Drewe  has  been  adduced  in 
argument  and  greatly  relied  upon  as  having  apparent  analogy  to  this  ; 
but  when  that  case  is  examined  the  analog}' disappears.^  .  .  .  The  con- 
flicting and  imperfect  reports  of  this  case  have  led  to  various  and  con- 
tradictory misapprehensions  of  its  import.  On  the  one  hand  it  has 
been  supposed  that  the  decision  in  Austin  v.  Drewe  is  put  on  the 
ground  of  carelessness  of  servants  (compare  Hughes  on  Ins.  507-511), 
and  is  thus  in  apparent  contradiction  with  the  decision  of  Dobson  v. 
Sotheby,  Mood.  &  Malk.  90,  in  which  Lord  Tenterden  says,  that 
"  one  of  the  great  objects  of  insuring  is  security  against  the  negligence 
of  servants  and  workmen,"  —  which  doctrine  is  now,  in  regard  to  fire 
policies,  at  least,  the  well-settled  law  both  in  Great  Britain  and  the 
United  States.     1  Phillips  on  Ins.  c.  13,  §  2,  1049. 

Another  authority  supposes  the  point  decided  to  have  been,  that  "in 
order  to  recover  upon  a  policy  against  loss  or  damage  by  fire,  it  is  not 
suflScient  to  show  that  the  property  has  been  damaged  by  the  heat  of 
fires  usually  employed  in  manufacture,  and  incurred  by  the  negligence 
of  the  insured,  or  his  servants,  beyond  its  usual  intensity.  Ellis  on 
Ins.  25."  This  construction  of  the  case  of  Austin  v.  Drewe  is  inexact ; 
for  it  does  not  plainly  indicate  that  the  real  question  in  controversy 
was  of  damage  to  the  subject-matter  of  manufacture. 

On  the  other  hand,  the  decision  in  Austin  v.  Drewe  has  been  assumed 
to  establish  that  "to  bring  a  loss  within  the  risk  insured  against,  it 
must  appear  to  have  been  occasioned  by  actual  ignition,  and  no  dam- 
age occasioned  by  mere  heat,  however  intense,  will  be  within  the  pol- 
icy." 2  Marsh,  on  Ins.  (3d  ed.)  790.  This  proposition  is  not  the 
point  of  the  case  ;  and  it  cannot  be  sound  law  ;  for  it  may  well  happen 
that  serious  damage,  within  the  scope  of  a  fire  policy,  shall  be  done  to 
a  building,  or  to  its  contents,  by  the  action  of  fire  in  scorching  paint, 
cracking  pictures,  glass,  furniture,  mantelpieces,  and  other  objects,  or 
heating  and  thus  actually  destroying  many  objects  of  commerce,  and 
yet  all  this  without  actual  ignition,  — that  is,  visible  inflammation. 

All  these  manifest  errors,  and  the  doubts  they  throw  over  the  case 
of  Austin  V.  Drewe,  are  dispelled  at  once  by  the  report  of  it  in  Holt 
and  in  Campbell,  as  it  was  tried  at  Nisi  Prius.  There  it  appears  that 
the  claim  was  for  damage  to  the  sugars  by  over-heating  only.^  .  .  . 

1  Here  was  stated  Austin  v.  Drewe,  ante,  p.  715  (1816).  —  Ed. 

2  Here  were  quoted  the  Nisi  Prius  reports  of  Austin  v.  Drewe,  ante,  p.  716,  n 
(1815).  — Ed. 


734  SCRIPTURE   V.   LOWELL   MUTUAL   FIRE   INS.   CO.       [CHAP.  VII. 

If,  in  Austin  v.  Drewe,  the  fire  had  been  where  it  ought  not  to  be, 
if,  even  with  careless  management,  it  liad  burned  the  building,  and 
notwithstanding  it  was  lire  maintained  only  for  the  purpose  of  manu- 
facture, then  all  the  observations  of  the  court  go  to  show  that,  in  this 
instance,  as  in  that  of  the  whaleship  mentioned  in  Emerigon  (1  Tr.  de 
Ass.  436),  the  insurers  would  have  been  held  to  be  liable  for  the  loss. 
This,  therefore,  and  this  only,  as  correctly  stated  by  Beaumont  (Ins. 
37),  is  decided  bj-  the  case  of  Austin  v.  Drewe,  namelj-,  that  where  u 
chemist,  artisan,  or  manufacturer  employ's  fire  as  a  chemical  agent,  or 
as  an  instrument  of  art  or  fabrication,  and  the  article,  which  is  thus 
l)urposely  subjected  to  the  action  of  fire,  is  damaged  in  the  process  by 
the  unskilfulness  of  the  operator,  and  his  mismanagement  of  heat  as 
an  agent  or  instrument  of  manufacture,  that  is  not  a  loss  within  a  fire 
polic}-.  This  we  apprehend  is  good  sense  and  sound  law.  But  it  does 
not  touch  at  all  the  present  ease. 

It  has  been  thought  proper  thus  to  analyze  the  case  of  Austin  v. 
Drewe,  because  having  been  variously'  reported  by  four  different  re- 
porters, and  presenting  itself  prominently  in  several  of  the  text-books, 
but  in  nearly  all  of  them  with  more  or  less  of  misconception,  it  has  be- 
come the  starting-point,  in  legal  consti'uction,  of  conflicting  lines  of 
argument  leading  to  sundry'  false  conclusions,  and,  among  others,  that 
of  a  supposed  application  to  the  present  question. 

Some  adjudications  have  also  been  cited  of  questions  arising  in  the 
contingency  of  damage  done  by  lightning.^  .   .   . 

The  principle  adjudged  in  the  cases  of  this  class  will  be  readily  seen 
by  reversing  the  question.  Suppose,  not  as  fact  but  as  mere  supposi- 
tion, a  policy  insuring  against  damage  done  through  electricity-  gene- 
rated by  caloric.  Obviously,  this  would  not  cover  damage  done  by  fire 
only,  electricit}'  not  being  evolved.  So,  in  the  actual  case  reported,  of 
insurance  against  fire  produced  by  lightning,  if  the  effects  be  of  light- 
ning onl}-,  without  exhibition  of  fire,  it  would  not,  according  to  the 
above  decision,  be  within  the  policy.  Or,  suppose  insurance  on  cattle 
against  the  risk  of  death  b}-  fire  alone.  In  that  assumption,  if  the  cattle 
die,  as  they  ma}-,  b}'  a  stroke  of  lightning,  without  a  burn  or  any  other 
action  of  fire  on  their  bodies,  it  would  not  be  the  risk  contemplated  by 
the  contract.     Beaumont  on  Ins.  37. 

The  question  of  loss  by  lightning  is  ver}'  summarily  disposed  of  in 
the  older  authorities,  bj-  treating  electricity'  as  tire  from  heaven.  See 
1  Emerigon,  c.  12,  §  17,  no.  1,  and  the  authors  there  cited.  But  the 
progress  of  knowledge  has  led  to  juster  notions  of  the  nature  of  light- 
ning, and  of  course  to  different  conclusions  touching  its  legal  relations, 
which  are  correctl}-  summed  up  by  a  late  writer  as  follows,  namel}', 
that  fire  includes  lightning  if  there  be  any  mark  of  fire,  but  not  other- 
wise.   Beaumont  on  Ins.  37. 

1  Here  were  summarized  Kenniston  v.  Merrimack  County  Mut.  Ins.  Co.,  ante, 
p.  717  (1843) ;  and  Babcock  v.  Montgomery  County  Mut.  Ins.  Co.,  6  Barb.  637  (1849). 
—  Eu. 


SECT.  II.]      SCRIPTURE   V.   LOWELL   MUTUAL   FIRE   INS.   CO.  735 

These  cases  of  damage  by  lightning  bear  on  the  present  question, 
therefore,  if  at  all,  only  by  very  distant  analogy.  Neither  of  them 
covers  it,  or  has  any  direct  relation  to  it.  To  the  contrary  of  this,  in 
New  York,  at  least,  the  same  courts,  which  decide  that  loss  by  light- 
ning merely  is  not  covered  by  a  fire  policy,  decide  that  loss  by  the  ex- 
l)lusion  of  gunpowder  is.  Tiiere  is  a  series  of  cases  precisely  in  point, 
which  expressly  decide,  or  by  implication  assume,  that  damage  done 
by  the  explosion  of  gunpowder  ignited  within  a  building,  as  well  as 
that  done  by  its  combustion,  is  within  the  risk  of  a  fire  policy.  The 
case  of  Grim  r.  Phanix  Insurance  Company  was  this:  A  vessel,  in- 
sured against  fire,  was  partly  laden  with  gunpowder,  which,  being 
ignited  by  carelessness,  the  vessel  was  blown  up  and  totally  lost.  It 
was  argued  by  eminent  counsel,  and  the  opinion  was  given  by  Thomp- 
son, C.  J.  ;  and  throughout  the  cause  it  seems  to  be  assumed  that  the 
loss  was,  in  respect  to  its  cause,  within  the  policy,  and  the  decision 
was  made  to  depend  on  other  considerations.  13  Johns.  451.  The 
same  conclusion  is  also  assumed  in  the  case  of  Duncan  v.  Sun  Fire  In- 
surance Company,  6  AYend.  488.  In  the  case  of  City  Fire  Insurance 
Company  v.  Corlies,  the  claim  was  on  a  fire  policy  for  merchandise 
destroyed,  not  in  burning,  but  through  the  blowing  up  of  the  building 
wherein  it  was  stored,  by  means  of  gunpowder  ;  and  the  court  expressly 
adjudged  this  to  be  "a  loss  by  the  peril  insured  against,  within  the 
meaning  of  the  policy."  21  Wend.  367.  The  same  point  has  been 
ruled  incidentally  by  the  Supreme  Court  of  the  United  States.  Waters 
V.  Merchants'  Louisville  Insurance  Company,  11  Pet.  225.  Perhaps 
it  may  add  a  little  to  the  weight  of  these  authorities  to  say,  that  the 
same  thing  as  to  loss  b}'  gunpowder  —  sul2^hureo  pulvere  accenso  — 
seems  to  have  been  holden  by  the  older  commercial  jurists  in  Europe. 
Straccha  de  Assec.  gl.  18,  §  2. 

This  court,  to  be  sure,  is  not  bound  b}-  the  decisions  or  opinions 
cited,  but  they  are  entitled  to  great  consideration ;  and  there  is  not,  so 
far  as  we  know,  auy  contrary  adjudication  or  opinion.  Uniformity  of 
decision  is  in  itself  a  desirable  thing.  The  question,  we  admit,  is  a  nice 
one.  Upon  careful  reflection,  however,  we  have  come  to  the  conclu- 
sion that  the  received  opinions  on  the  subject,  and  the  adjudications 
referred  to,  are  in  accordance  with  reason  and  principle.  It  seems  not 
to  be  denied  that  actual  combustion,  produced  by  the  ignition  of  gun- 
powder, is  within  the  present  polic}'.  If,  then,  a  combustible  substance, 
in  the  process  of  combustion,  produces  explosion  also,  it  is  not  easy  to 
perceive  why,  of  the  two  diverse  but  concurrent  results  of  the  combus- 
tion, tlie  one  should  be  ascribed  to  fire  any  less  than  the  other.  The 
plain  fact  here  is,  the  application  of  fire  to  a  substance  susceptible  of 
ignition,  the  consequent  ignition  of  that  substance,  and  immediate 
damage  to  the  premises  thereb}'.  It  is  no  sufficient  answer  to  say  that 
some  of  the  phenomena  produced  are  in  the  form  of  explosion.  All  the 
effects,  whatever  they  may  be  in  form,  are  the  natural  results  of  the 
combustion  of  a  combustible  substance ;    and,  as  the  combustion  is 


736  SCRIPTURE    V.   LOWELL    MUTUAL   FIRE   INS.    CO.       [CHAP.  VII. 

the  action  of  fire,  this  must  be  held  to  be  the  proximate  and  legal  cause 
of  all  the  damage  done  to  the  premises  of  the  plaintiff. 

Our  opinion  excludes,  of  course,  all  damage  by  mere  explosions,  not 
involving  ignition  and  combustion  of  the  agent  of  explosion,  such  as 
tlie  case  of  steam,  or  an}-  other  substance  acting  by  expansion  without 
combustion.  See  Perrin's  Administrator  v.  Protection  Insurance  Co., 
11  Ohio,  146.  It  likewise  excludes  all  damage  occasioned  but  re- 
motely or  consequentially  through  the  agency  of  gunpowder,  such  as 
injury  done  to  a  house  by  falling  fragments  in  the  blasting  of  rocks,  or 
the  shattering  of  a  house  by  the  stroke  of  a  cannon-ball,  in  which  ex- 
amples the  shock  of  a  projectile,  and  not  ignition  or  combustion,  is  the 
proximate  cause  of  the  damage  done.  We  recognize  and  accept,  in  the 
full  force  of  its  application,  the  maxim  :  Injure  non  remota  causa  sed 
proxwia  S2)ectatur.     Bacon's  Max.  1. 

The  legal  relations  of  marine  insurance  have  been  copiously  discussed 
in  many  express  treaties  of  elaborate  erudition,  and  are  considered  in 
a  o-reat  number  of  judicial  decisions,  in  which  the  whole  subject  has 
been  explored  with  wonderful  acuteness  and  comprehension  of  logic 
and  of  learning ;  while  fire  insurance,  as  a  branch  of  legal  knowledge, 
is,  comparatively  speaking,  in  its  rudiments.  The  cases  on  marine  in- 
surance throw  little  if  any  light  on  the  present  question,  except  in  so 
far  as  they  attempt  to  prescribe  a  rule  for  distinguishing  between  what 
is  remote  and  what  is  proximate  cause.  The  conclusion  reached  in  this 
discussion,  as  may  be  seen  by  the  latest  investigation  of  the  point  in 
Great  Britain,  Montoya  v.  London  Assurance  Co.,  6  Welsh.  Hurlst.  & 
Gord.  451,  is  that,  while  for  most  cases  it  is  practicable  to  draw  the 
line,  and  to  formalize  a  rule  between  the  two  classes  of  causes,  yet  in 
other  cases,  according  to  the  general  law  of  nature,  the  two  classes 
approach  and  run  into  one  another  until  the  distinction  vanishes  ;  and 
within  the  limits  of  this  debatable  land  of  differences,  it  is  necessary  to 
apply  judicial  discretion  to  the  particular  questions  as  they  arise,  just 
as  it  is  in  the  not  infrequent  inquiry  whether  a  thing,  or  the  use  or 
measure  of  it,  be  reasonable  or  not.  In  Montoya  v.  London  Assurance 
Co.,  it  was  determined  that  where  the  lower  part  of  a  cargo  is  damaged 
by  sea-water,  and,  by  the  evolution  of  gases  from  the  part  thus  dam- 
aged, or  the  propagation  of  heat  arising  from  fermentation,  the  superior 
part  of  the  cargo  be  damaged  also,  the  loss  on  the  latter  is  by  the  perils 
of  the  sea,  the  involvement  of  the  secondary  effect  in  the  primary  one 
being  an  example  of  causa  proxima. 

In  the  present  case  there  is  no  room  for  question  concerning  a  series 
of  causes,  as  whether  primary  or  secondary,  proximate  or  remote  ;  for 
the  agent  is  one  and  the  same  throughout,  namely,  fire.  The  causa 
was  burning  powder ;  the  causa  causans  was  a  burning  match  ;  at 
each  stage  of  causation  it  was  the  action  of  fire.  Nay,  to  be  exact, 
the  burning  of  the  gunpowder,  like  the  burning  of  the  match,  was  a 
succession  of  several  complex  acts  of  burning.  Yet  fire  is  the  agent 
at  each  of  these  distinct  stages  of  causation.     Suppose  there  was  a 


SECT.  II.]      SCRIPTURE    V.   LOWELL    MUTUAL   FIRE    INS.    CO.  737 

barrel  of  sulphur  in  the  plaintiff's  attic  instead  of  gunpowder  ;  and  this 
being  ignited  with  a  match,  afterwards  the  fire  had  passed  from  tlie 
burning  sulphur  to  the  substance  of  the  house.  This  would  be  recog- 
nized at  once  as  a  case  of  fire.  It  docs  not  change  the  legal  relation 
of  causes  to  substitute  a  barrel  of  burning  gunpowder  for  a  barrel  of 
burning  sulphur.  TLe  only  difference  in  the  elements  of  the  question 
is,  that  the  gunpowder,  when  ignited,  consumes  with  more  of  rapidity 
than  sulphur,  and  the  combustion  is  accompanied  or  followed  by  ex- 
plosion. Still,  the  agent  is  fire,  though  it  acts  in  different  ways  upon 
the  different  successive  subjects  of  its  action,  beginning  with  the  match 
and  terminating  with  the  plaintiff's  house. 

On  the  other  hand,  cases  are  conceivable,  other  than  hy  the  use  of 
gunpowder,  of  explosion  without  any  combustion,  which,  nevertheless, 
being  the  result  of  the  action  of  fire,  are  still,  it  would  seem,  within  the 
range  of  the  general  principle.  Various  mineral  substances  exist,  of 
value  in  commerce  and  the  arts,  which  explode  by  the  action  of  the  fire, 
without  either  ignition  or  combustion.  In  general,  any  close  vessel,  of 
whatever  material  composed,  when  filled  with  an  expansive  fluid,  is 
liable  to  explode  by  the  action  of  heat,  though  it  may  be  that  the  vessel 
and  its  contents  are  alike  incombustible.  The  same  thing  happens, 
under  certain  conditions,  to  some  forms  of  wood,  which,  although  com- 
bustible, may  by  the  action  of  fire  explode  without  ignition  ;  or  which, 
as  in  the  present  case,  of  a  house,  by  having  compressed  within  it  some 
burning  substance,  which  is  explosive  as  well  as  combustible,  like  gun- 
powder, may  suffer  the  double  injury  of  combustion  in  part  and  in  part 
of  explosion. 

If,  however,  the  question  of  consequential  damage  needed  to  be  ex- 
plored for  the  determination  of  the  present  case,  it  would  serve  to  con- 
firm the  conclusion  to  which  we  have  on  other  premises  arrived.  Thus, 
in  Great  Britain,  damage,  which  occurs  consequentially  in  the  case  of  a 
fire,  by  reason  of  confusion  of  mind,  as  in  throwing  fragile  objects  out 
of  the  window,  or  by  sudden  terror  from  alarm,  as  in  leaving  open  the 
tap  of  a  barrel,  and  thus  wasting  the  contents,  is  held  to  be  loss  by 
fire,  according  to  the  usages  of  insurance  offices  or  established  legal 
principle.  Beaumont  on  Ins.  41.  So  it  is  in  the  case  of  a  beam,  cor- 
nice, or  coving,  removed  to  prevent  the  spread  of  conflagration.  Ibid. 
We  understand  the  same  to  be  the  rule  in  the  case,  for  instance,  of  a 
fire  in  the  upper  story  of  a  building,  and  the  destruction  or  damage  of 
goods  in  a  lower  story,  not  by  fire,  but  by  the  water  thrown  into  or 
upon  the  building,  for  the  i)nrpose  of  extinguishing  the  fire.  All  these 
are  fit  illustrations  of  tlie  question  of  merely  consequential  damage. 
Its  legal  relations  may  likewise  be  followed  in  the  familiar  case  of  the 
squib  falling  on  a  party's  premises,  and  by  him  hastily  thrown  off,  and 
so  falling  upon  the  premises  of  another,  and  thus  giving  rise  to  the 
inquiry,  whether  the  first  throwing  or  the  second  throwing  should  be 
taken  as  the  responsible  cause.  Scott  v.  Shepherd,  2  W.  Black.  (2d  ed.  j 
892  and  notes  ;  3  Wils.  403. 

47 


738  SCRIPTURE    V.   LOWELL    MUTUAL   FIRE    INS.    CO.       [CHAP.  VIL 

In  the  hypothesis  that  fire  is  to  be  regarded  as  causa  proxima  in  the 
present  case,  we  can  see  but  one  supposable  defect,  namel}-,  the  sug- 
o-estion  that,  though  it  be  conceded  that  tiie  explosion  of  buining  gun- 
powder, and  its  effects,  are  the  action  of  fire,  yet  tliis  particular  effect 
on  the  building  is  not  exhibited  in  the  form  of  igneous  action.  The 
cases  above  supposed,  of  the  shrivelling  of  some  masterpiece  of  picto- 
rial art,  the  cracking  or  discoloration  of  a  rich  vase  or  gem,  the  burst- 
ing of  a  cask  of  wine  through  the  expansion  of  its  contents,  these,  it 
may  be  said,  are  distinctly  cases  of  damage,  without  ignition  it  is  true, 
but  b}'  the  direct  and  specific  action  of  heat  as  such ;  while  it  is  denied 
that  such  is  the  fact  in  the  present  case  of  the  blowing  up  of  a  dwelling- 
bouse  by  the  ignition  of  gunpowder.  We  do  not  think  the  premises  of 
this  argument  are  sustained  by  the  physical  facts  which  occtwu'ed.  If 
they  were  so,  then  the  nearest  analogy  would  be  of  damage  by  smoke, 
that  is,  the  moisture  thrown  off  by  burning  wood,  and  carrying  with  it 
ashes,  empyreumatic  oil,  and  other  constituent  parts  of  the  wood, 
either  in  their  natural  condition,  or  transformed  bj'  the  process  of  com- 
bustion. Now,  it  is  obvious  that  mere  smoke,  without  any  direct  ac- 
tion of  heat,  may  do  great  damage  to  many  kinds  of  merchandise,  such 
as  delicate  textile  fabrics,  esculent  vegetables,  articles  of  taste,  and 
other  numerous  objects  ;  and  if  a  dwelling  or  a  magazine  take  fire,  and 
some  parts  of  it  only  be  consumed,  but  the  contents  of  apartments,  to 
which  the  actual  fire  does  not  extend,  are  nevertheless  damaged  by  the 
smoke  penetrating  into  and  filling  them,  can  it  be  doubted  that  the  dam- 
age thus  done  is  a  loss  within  the  ordinary  conditions  of  a  fire  policy? 
Semhle^  per  Gibbs,  Chief  Justice,  arguendo^  in  Austin  v.  Drewe,  Holt 
N.  P.  127.  Yet,  incontestably,  damage  by  smoke  is  an  efl^ect  which 
is  not  in  itself  igneous  action,  thougli  it  be  the  result  thereof;  while,  as 
we  conceive,  the  explosion  of  gunpowder  is  igneous  action. 

In  conclusion,  we  think  the  rule  which  we  propose  for  the  present 
case  reconciles  all  the  conditions  involved  in  the  question  ;  is  conform- 
able to  tlie  nature  of  things  ;  and  constitutes  a  coherent  and  consistent 
doctrine,  namel}-,  that  where  the  eflx'cts  produced  are  the  immediate 
results  of  the  action  of  a  burning  substance  in  contact  with  a  building, 
it  is  immaterial  whether  these  results  manifest  themselves  in  the  form 
of  combustion,  or  of  explosion,  or  of  both  combined.  In  either  case, 
tlie  damage  occurring  is  by  the  action  of  fire,  and  covered  by  the  ordi- 
nary terms  of  a  policy  against  loss  by  fire. 

Judgment  for  the  plaintiff} 

1  See  Hay  ward  r.  Liverpool  and  London  Lis.  Co.,  3  Keyes,  456  (1867),  s.  c.  2  Abb. 
N.  Y.  App.  349 ;  Briggs  v.  North  American  and  Mercantile  Ins.  Co.,  "53  N.  Y.  446 
(1873) ;  Transatlantic  F.  Ins.  Co.  v.  Dorsey,  56  Md.  70  (1881) ;  Kenshaw  v.  Missouri 
State  Mnt.  F.  &  M.  Ins.  Co.,  103  Mo.  595,  606-611  (1890). 

In  Mi.Uaudon  v.  New  Orleans  Ins.  Co.,  4  La.  Ann.  15  (1849),  sugar  and  molasses  in 
a  sugar-house  were  destroyed  by  the  explosion  of  a  steam-boiler  used  in  tiie  manufac- 
ture of  sugar,  and  it  was  held  that  the  loss  was  not  covered  by  insurance  against  fire. 
EusTis,  C.  J.,  for  the  court,  said:  — 

"  The  damage  ...  is  confined  exclusively  to  tliat  produced  l)y  the  explosion,  none 


SECT.  II.]  TILTON    V.    H.\MILTON    FIRE    INS.    CO.  739 


TILTON   V.   HAMILTON   FIRE   INS.    CO. 

Superior  Court  of  the  City  of  New  York,  1857. 
1  Bosworth,  367. 

This  action  comes  before  the  court  at  General  Terra,  on  a  verdict 
taken,  subject  to  the  o[)inion  of  the  court,  for  its  decision  of  questions 
of  law  arising  at  the  trial,  and  which  were  there  ordered  to  be  heard, 
in  the  first  instance,  at  the  General  Term.  The  case  made  is  as  fol- 
lows, viz. :  — 

''This  action  was  brought  upon  a  policy  of  insurance  made  by  the 

having  been  done  by  fire.  .  .  .  There  is  a  material  difference  between  the  risk  of  ex- 
])]osion  of  a  steam-boiler  and  that  of  fire,  and  .  .  .  this  difference  is  established  by  the 
popular  and  ordinary  meaning  attached  to  each.  .  .  .  Steam  has  been  for  years  the 
motive  power  in  manufactories  in  England  and  parts  of  the  United  States,  and  acci- 
dents by  explosion  have  often  occurred.  .  .  . 

"  It  is  remarkable  that  no  case  has  been  found  in  which  a  recovery  has  been  had  on 
a  fire  policy  for  a  loss  by  explosion.  It  is  but  fair  to  infer  that  the  risks  are  consid- 
ered as  different.  .  .  . 

"  So  far  as  relates  to  the  insurance,  we  are  unable  to  distinguish  a  loss  occasioned 
by  the  explosion  of  the  boiler  from  that  caused  by  the  breaking  or  derangement  of 
any  other  part  of  the  machinery." 

In  Heuer  v.  Northwestern  National  Ins.  Co.,  144  111.  393  (1893),  goods  and  fixtures 
were  covered  by  a  fire  insurance  policy  providing  that  "  this  company  shall  not  be  lia- 
ble by  virtue  of  this  policy  ...  for  any  loss  or  damage  by  fire  caused  by  means  of  an 
earthquake ;  nor  of  an  invasion,  insurrection,  riot,  civil  commotion,  or  military  or 
usurped  power ;  .  .  .  nor  for  any  loss  caused  by  the  explosion  of  gunpowder,  nor  any 
explosive  substance,  nor  by  lightning  or  explosion  of  any  kind,  unless  fire  ensues,  and 
then  for  the  loss  or  damage  by  fire  only."  The  property  was  not  burned,  but  was  dam- 
aged through  an  explosion  of  illuminating  gas  in  the  building,  and  the  explosion  was 
caused  through  the  accidental  ignition  of  the  gas  by  the  flame  of  a  match.  Magru- 
DER,  J.,  for  the  court,  said:  — 

"  Is  the  loss  to  be  attributed  to  the  explosion,  or  to  the  lighting  of  the  match,  which 
preceded  the  explosion  ?  If  it  is  attributable  to  the  explosion,  the  loss  is  not  covered 
by  the  policy.  .  .  . 

"The  exemption  clause  provides  that  'this  company  shall  not  be  liable  .  .  .  for 
any  loss  caused  by  .  .  .  explosion  of  any  kind,  unless  fire  ensues.'  The  use  of  the 
expression,  'explosion  of  any  kind,'  contemplates  the  existence  of  more  than  one  kind 
of  explosion.  Without  undertaking  to  make  an  accurate  classification,  we  deem  it 
sufficient  to  say,  that  one  kind  of  explosion  is  that  which  is  produced  by  the  '  ignition 
and  combustion  of  the  agent  of  explosion,'  as  where  a  lighted  match  is  applied  to  a 
keg  of  gunpowder,  and  another  kind  of  explosion  is  that  which  does  not  involve  '  igni- 
tion and  combustion  of  the  agent  of  explosion,'  as  where  steam,  or  any  other  sub- 
stance, acts  by  expansion  without  combustion  (Scripture  v.  Lowell  Mut.  F.  Ins.  Co., 
10  Cush.  356).  The  exemption  clause  is  broad  enough  to  embrace  both  kinds  of  ex- 
plosion. As  the  present  case,  where  it  appears  that  a  lighted  match  was  applied  to 
the  illuminating  gas  confined  in  the  basement  of  a  building,  furnishes  an  instance  of 
the  first  kind  of  explosion  above  specified,  it  manifestly  comes  within  the  terms  of  the 
exemption.  .  .  . 

"  There  was  no  fire  prior  to  the  explosion,  and  .  .  .  the  lighted  match  was  not  a 
fire  within  the  policy.  .  .  . 

"  We  think  that  the  loss  in  this  case  resulted  from  the  explosion,  and  not  from  any 
fire  which  preceded  or  followed  the  explosion,  and  that  it  comes  within  the  terms  of 
the  exemption  clause."  —  Ed. 


740  TILTON    V.    HAMILTON    FIRE    INS.    CO.  [CHAP.  VII. 

defendants,  to  recover  from  them  their  proportion  of  the  loss  and 
damage  sustained  by  the  plaintiff  by  the  destruction  or  damage  of  the 
property  insured,  by  a  fire  which  occurred  on  the  morning  of  the  5th  of 
February,  1855. 

"By  the  pleadings  in  the  action,  the  making  of  the  policy  and  the 
occurrence  of  the  fire  were  admitted,  and  also  that  the  goods  of  the 
plaintiff  saved  from  the  fire  were  damaged  to  the  extent  of  nine  hun- 
dred dollars.  In  addition  to  tliis,  the  plaintiff  claimed  that  there  was 
a  total  loss  of  goods  to  the  amount  of  $3,459.35,  covered  by  tlie 
policy. 

"The  defendants  denied  the  total  loss  of  any  goods,  and  claimed 
that  the  plaintiff,  on  presenting  his  claim  to  the  defendants,  had  made 
false  statements  as  to  the  amount  of  his  loss,  whereby,  under  the  terms 
of  the  policy,  he  had  forfeited  his  claim  to  the  amount  of  damage 
admitted  to  have  been  suffered. 

"Tlie  action  came  on  to  be  tried  before  Mr.  Justice  Duer,  and  a 
jury,  on  the  21st  April,  1856. 

"  Upon  the  trial  the  plaintiflf  read  in  evidence  the  policy  of  insurance, 
bearing  date  June  1st,  1854,  whereby  the  defendants  insured  the  plain- 
tiff against  loss  or  damage  by  fire,  to  the  amount  of  81,500,  on  his 
stock  of  ready-made  clothing,  contained  in  the  building  No.  140  Fulton 
Street,  New  York ;  also,  S400  additional  on  the  store  fixtures,  furni- 
ture, &c. ,  for  the  term  of  one  year  thereafter. 

"The  plaintiff  then  offered  evidence  tending  to  show  that  on  Satur- 
day, the  third  day  of  February,  1855,  the  store  was  closed  at  the  usual 
hour  in  the  evening,  and  that  neither  the  plaintiflf  nor  any  of  his  clerks 
again  entered  it.  That  on  Monday  morning,  the  fifth  of  February,  1855, 
when  the  plaintiff  and  his  clerks  came  to  the  store,  they  found  the  build- 
ing entirely  destroyed.  That  neither  the  plaintiff  nor  any  of  his  clerks 
were  present  at  the  fire.  That  in  the  morning  after  the  fire,  the  plain- 
tiff was  notified  by  tlie  agents  of  the  defendants,  that  they  had  removed 
his  goods  from  the  store,  and  that  they  were  stored  in  the  basement  of 
the  Sun  Building,  and  soon  afterwards,  the  plaintiff  having  hired  the 
store  No.  194  Fulton  Street,  the  defendants  delivered  to  him  the  goods 
saved,  which  were  taken  from  the  basement  of  the  Sun  Building  to  the 
store  No.  194  Fulton  Street,  where  an  inventory  was  taken  of  the  same. 
That  by  this  inventory  it  appeared  that  the  value  of  the  goods  saved 
amounted  to  $9,488.66.  Evidence  was  also  offered  by  the  plaintiff, 
tending  to  show  that  on  tlie  night  previous  to  the  fire,  when  the  store 
was  closed,  there  was  a  stock  of  goods  on  hand  of  the  value  of  $12,948.01. 
That  many  goods  whi(-h  were  in  the  store  on  the  evening  previous  to 
the  fire  were  not  among  the  goods  delivered  to  the  plaintiff  after  the  fire. 
That  the  fixtures,  &c.,  covered  by  the  policy  to  the  value  of  $500,  were, 
together  with  the  building,  totally  destroyed  by  the  fire  in  question. 

"The  defendants  gave  evidence  tending  to  show  that  in  making  up 
the  account  of  the  goods  saved  from  the  fire,  the  plaintiff  had  fiaudu- 
lently  undervalued  the  goods,  so  as  to  increase  the  app.arent  amount  of 


SECT.  II.]  TILTON    V.   HAMILTON    FIKE    INS.    CO.  741 

his  total  loss.  The  plaintitF  offered  couuter  evidence  on  this  point, 
tending  to  show  that  the  accounts  were  in  all  respects  just  and  true. 

"  The  defendants  then  offered  evidence  tending  to  show  that  the  fire 
in  question  was  discovered  about  midnight,  in  tlie  third  story  of  the 
building  No.  140  Fulton  Street ;  that  a  few  minutes  thereafter  the  in- 
surance watch  arrived,  broke  open  the  doors,  took  possession  of  the 
store,  and  commenced  moving  the  goods  across  the  street;  that  the 
police  formed  lines  across  the  street,  about  midway  of  the  block  above 
antl  below  the  fire,  to  prevent  persons  approaching  the  fire  ;  that  all 
the  goods  were  removed  from  the  store  before  the  fire  reached  that 
portion  of  the  building  occupied  by  the  plaintiff,  and  were  taken  across 
the  street,  and  piled  up  on  the  sidewalk,  extending  from  the  curbstone 
back  against  the  door  of  a  hotel  then  open  ;  that  the  goods  were  cov- 
ered by  oil-clotlis,  and  policemen  were  stationed  in  charge  to  watch 
them  ;  that  after  all  the  goods  had  been  removed  across  the  street,  they 
were  taken  to  the  Sun  Building,  a  hundred  feet  distant,  and  stored  in 
the  basement,  which  was  locked  up,  and  the  key  retained  by  one  of  the 
insurance  agents  until  delivered  to  the  plaintiff,  the  next  morning  ;  that 
all  the  goods  stored  in  the  Sun  Building  were  delivered  to  the  plaintiff 
the  next  morning. 

"The  plaintiff  gave  evidence  tending  to  show  that  a  large  number 
of  persons  were  admitted  inside  the  lines  formed  b}'  the  police ;  that 
persons  passed  tliem  freel}' ;  that  tliere  were  several  hundred  persons 
assisting  in  removing  the  goods,  including  policemen,  insurance  watch, 
and  others  ;  that  there  was  a  great  deal  of  confusion  ;  and  that  goods 
might  have  been  stolen  and  carried  awa}'  without  being  noticed. 

"The  court  thereupon  charged  the  jury,  amongst  other  matters,  as 
follows  : 

"  '  That  if  the  witnesses  on  the  part  of  the  plaintiff  are  to  be  believed, 
the  plaintiff  had  in  his  store,  on  the  night  of  the  fire,  goods  to  the  value 
of  $12,948.01,  while  the  goods  saved  by  the  defendants  and  delivered 
to  the  plaintiff  at  the  Sun  Building,  on  the  morning  after  the  fire,  only 
amounted  to  $9,488.66,  leaving  a  deficiency  of  $3,459.35,  which  the 
plaintiff  claims  were  lost  or  destroyed  b}'  the  fire.  In  opposition  to 
this  we  have  the  testimony  on  the  part  of  the  defendants,  that  all 
the  plaintiff's  goods  were  removed  b\'  them  from  the  store  before  the 
fire  reached  that  portion  of  the  building.  None  of  the  witnesses,  how- 
ever, can  testify  that  all  the  goods  removed  from  the  store  were  taken 
to  tlie  Sun  Building,  and  these  statements  can  onl}'  be  reconciled  upon 
the  supposition  that  a  portion  of  the  goods  were  abstracted  during  the 
fire.  Although  it  is  a  serious  question,  and  in  my  judgment  a  very 
doubtful  one,  whether  the  insurers,  insuring  against  fire  alone,  are  bound 
to  make  good  any  loss  resulting  from  stealing  the  goods  by  persons  at 
the  fire,  yet,  for  the  purposes  of  this  trial,  I  shall  charge  you  that  it  is 
immaterial  whether  the  goods  were  actually  burned,  or  were  abstracted 
or  stolen  by  persons  at  the  fire.  If  you  are  satisfied  that  the  plaintiflT 
was  not  guilty  of  any  fraud  in  making  the  statement  as  to  the  amount 


742  TILTON    V.   HAMILTON   FIKE    INS.    CO.  [cHAP.  VIL 

of  his  loss,  he  is  entitled  to  your  verdict  for  the  sum  of  $400  insured 
upon  the  fixtures,  and  also  for  three-twcntv-eightlis'ort.hat  pnvtio^^  (if_ 
any)  of  tlie  goods  in  the  store  on  the  niglit  of  the  jirg,  which  were  either   . 
^-^^M^oaJi  burneTFor  abstracted  bj'  persons  at  the  fire.     If  30U  find  for  the  plain- 
tifflof  tlic  full  amouiif'clarmed,  your  verdict  will  be  for  $900.' 

"  The  counsel  for  the  defendants  thereupon  excepted  to  that  portion 
of  the  charge  in  which  his  honor  charged  the  jury  that  the  defendants 
were  liable  for  goods  stolen  at  the  fire. 

•'  The  jury  thereupon  returned  a  verdict  for  the  plaintiff,  for  nine 
hundred  dollars,  which  was  directed  by  the  court  to  be  entered,  subject 
10  the  opinion  of  the  court  upon  the  question  as  to  the  liabilit}-  of  the 
defendants  for  goods  stolen  ;  to  be  heard  in  the  first  instance  at  the 
General  Term,  on  a  case  to  be  made,  with  leave  to  either  party  to  turn 
the  same  into  a  bill  of  exceptions." 

It  was  first  argued  at  the  February  General  Term,  1857,  before  Bos- 
WORTH  and  Hoffman,  JJ.  On  April  11,  1857,  they  severally  delivered 
written  opinions,  and,  disagreeing  in  their  conclusions,  ordered  a  re- 
argument.^ 

The  cause  was  re-argued  on  June  6,  1857,  before  Duer,  C.  J.,  and 
BoswoRTH,  Hoffman,  Slosson,  and  Woodruff,  JJ. 

B.  D.  Field,  for  plaintiff. 

E.  J.  Phelps  and  E.  W.  Stougliton,  for  defendants. 

By  the  Court.  Duer,  C.  J.  The  judge,  upon  the  trial,  charged 
the  jury,  that,  if  they  were  satisfied  that  the  plaintiff  had  sustained  the 
loss  that  was  claimed,  he  was  entitled  to  recover,  as  well  for  the  goods 
abstracted  or  stolen,  as  for  those,  if  any,  destroyed  by  fire.  To  this 
part  of  the  charge,  the  counsel  for  the  defendants  excepted  ;  and  whether 
this  exception  is  well  taken  is  the  single  question  that  we  are  now  re- 
quired to  determine.  In  words  less  technical :  Whether,  as  fire  is  the 
only  risk  mentioned  in  the  policy,  the  defendants  are  answerable  for 
the  loss  of  goods  that,  during  the  course  of,  or  subsequent  to,  their  re- 
moval from  the  building  on  fire,  and  before  any  part  of  them  had  been 
restored  to  the  possession  of  the  assured,  had  been  abstracted  or  stolen? 

The  determination  of  this  question  evidently  depends  upon  the  true 
interpretation  and  just  application  of  the  established  maxim,  that,  in 
determining  the  character  of  a  loss  for  which  an  indemnity  is  claimed 
under  a  contract  of  insurance,  its  proximate  cause  is  alone  to  be  re-  , 
garded ;  so  that,  when  it  appears  that  this  proximate  cause  was  a  peril 
not  covered  by  the  policy,  the  insurers  are  discharged  from  all  liability. 
The  well-known  maxim  of  Lord  Bacon,  In  jure  causa  2)ro:dm.a,  non 
remota,  sj^ectatur,  it  is  admitted,  furnishes,  in  all  cases,  the  controlling 
rule.  Strictly  speaking,  the  proximate  cause  is  that  which  imraediatel}' 
precedes  and  directly  occasions  a  loss ;  and  hence,  if  the  maxim  is  to 
be  understood  in  this  limited  sense,  it  is  plain  that  the  defendants  are 
not  answerable  for  the  loss  that  is  claimed,  since  its  proximate  cause, 
in  this  sense,  was  not  fire,  but  theft,  —  a  risk  which  the  language  of  the 

^  These  opinions  have  not  been  reprinted.  —  Ed. 


SECT.  II.]  TILTON    V.    HAMILTON    FIKE    INS.    CO.  743 

policy  does  not  embrace,  and  against  which  no  indemnity  in  terms  is 
promised. 

It  is  not  pretended,  however,  that  tiie  maxim,  in  its  application  to 
the  contract  of  insurance,  has  ever  been  understood,  or,  without  an 
entire  disregard  of  prior  decisions,  can  now  be  understood,  in  this  strict 
and  limited  sense,  —  a  sense  that,  if  adopted,  would  conHne  the  liability 
of  insurers  to  losses  produced  solely  by  the  direct  agency  of  a  peril 
insured  against,  upon  the  property  insured.  It  is  not  denied  that,  in 
numerous  cases,  where  the  proi)erty  has  not  been  at  all  injured  or 
affected  by  direct  action  of  the  peiil.  the  insurers  have  been  held  re- 
sponsible for  a  subsequent  loss,  even  when  its  immediate  cause  has  been 
an  act  or  event  not  mentioned  in  the  policy.  Nor  is  it  denied  that,  in 
all  such  cases,  the  law  attributes  the  loss  to  the  original  peril,  as  its 
proximate  cause.  Thus,  to  select  a  frequent  and  familiar  instance, 
where  goods  insured  only  against  fire,  and  contained  in  a  building 
actually  on  fire,  are  neither  touched  by  the  flames,  nor  affected  by  the 
heat,  but  are  saturated  by  the  water  used  to  extinguish  the  fire,  and  are 
thereby  damaged  or  rendered  worthless,  it  has  never  been  doubted  that 
the  insurers  are  bound  by  their  contract  to  satisfy  the  loss  ;  nor  that  it 
is  recoverable  as  a  loss  occasioned  by  lire,  although  the  voluntary  appli- 
cation of  water  was,  in  reality,  its  sole  immediate  cause.  And  this 
single  example  is  sufficient  to  prove  that  the  maxim,  Cmisa  proxima^ 
non  remota,  spectatar,  is  not  to  be  strictly  and  literally  construed,  but, 
by  its  received  interpretation,  embraces  consequential  or  incidental 
losses,  as  well  as  those  which  are  direct  and  immediate.  To  enable  us, 
therefore,  to  answer  the  novel  question  now  before  us,  it  will  be  neces- 
sary to  define  the  consequential  losses  that  the  maxim  by  which  we 
must  be  governed  has  been  held  to  embrace,  and  carefully  to  distinguish 
them  from  those,  the  recovery  of  which  it  has  been  held  to  preclude. 
We  must  ascertain,  if  possible,  the  principle  or  grounds  upon  which 
each  class  of  cases  may  justly  be  said  to  rest,  that  we  may  determine 
to  which  class  that  which  is  before  us,  by  a  parity  of  reasoning,  ought 
to  be  referred  ;  and  this  we  shall  now  endeavor  to  do,  by  referring  to  a 
few  of  the  cases  belonging  to  each  class. 

There  are  some  losses,  not  produced  by  any  direct  action  of  a  peril 
insured  against  upon  the  property  insured,  and  therefore  strictly  conse- 
(piential,  which  it  is  admitted  by  all  that  the  insurers  are  bound  to  make 
good.  They  are  responsible  for  every  loss  which  is,  physically,  a  neces- 
sary consequencie  of  the  peril ;  that  is,  for  every  loss  that,  from  the 
nature  of  the  peril,  and  of  the  subject  insured,  when  the  peril  occur?, 
must  inevital)ly  follow.'^  .  .  . 

My  observation  upon  the  cases  that  have  been  cited,  is  :  that  it  can- 
not be  denied  that  in  each  of  them  the  loss  for  which  an  indemnity  was 

1  Here  were  discussed  Montoya  v.  London  Assur.  Co.,  ante,  p.  704,  (1851) ;  Livie 
I'.  Janson,  12  East,  648  (1810) ;  Rice  v.  Homer,  12  Mass.  2.30  (1815);  Patrick  v.  Com- 
mercial Ins,  Co.,  11  Johns.  14  (1814);  Hillier  v.  Allegheny  County  Mut.  Ins.  Co., 
.3  Pa.  470  (1846).  — Ed. 


744  TILTON    V.    HAMILTON   FIRE    INS.    CO.  [CHAP.  VII. 

claimed,  was,  in  one  sense,  a  consequence  of  the  peril  insured  against, 

since  in  each  it  was  certain  that  but  for  the  happening  of  the  peril 

tlie  sea  peril  in  the  first  case,  the  tire  in  the  last  —  no  loss,  or  a  loss  only 
partial,  would  have  occurred  ;  but  as  in  each  case  the  property  insured 
would  have  been  saved,  in  whole  or  in  part,  but  for  the  happenino-  of  a 
subsequent  event  of  risk,  this  subsequent  risk,  as  it  was  the  only  efficient, 
was  properly  held  to  be  the  proximate  cause  of  the  loss,  and  as  it  was  not 
covered  by  the  terms  of  the  policy,  the  insurers  were,  uecessaiily,  dis- 
charged from  its  payment.  In  each  case,  the  peril  insured  against  was 
merely  the  occasion,  and  not  in  any  legal  sense  the  cause  of  loss. 

From  these,  therefore,  and  many  other  cases  in  which  the  insurers 
have  been  exonerated  from  consequential  losses,  it  may  be  safely  de- 
duced, as  a  general  rule,  that  insurers,  whether  on  a  marine  or  fire  policy', 
are  never  liable  for  consequential  losses,  other  than  such  as  are  physi- 
cally or  legally  necessary,  unless  it  api)ears  not  only  that  the  property 
insured  was  involved  in  a  peril  insured  against,  but  that  it  must  have 
perished  from  that  cause,  had  the  peril  continued  to  operate.  In  fewer 
words,  unless  it  appears  that  the  loss,  had  it  not  been  consequential, 
would  have  been  immediate  and  total- 
When  this  necessary  condition  of  the  liability  of  the  insurers  is  proved 
to  have  existed,  the  consequential  losses  for  which  they  have  been  held 
to  be  answerable  may  be  divided  into  two  classes  ;  and  if  the  loss  now 
claimed  can  with  propriety  be  referred  to  either  of  these  classes,  the 
plaintiff  will  be  entitled  to  our  judgment ;  otherwise,  the  verdict  in  his 
favor  must  be  set  aside  and  a  new  trial  granted. 

First :  The  insurer  must  satisfy  every  loss  which  is  shown  to  have 
been,  although  not  a  necessary,  a  natural  consequence  of  the  peril  in- 
sured against ;  and  by  natural  is  evidently  meant  a  usual  and  probable 
consequence,  and  such,  therefore,  as  it  is  reasonable  to  believe  was  in 
the  contemplation  of  the  parties  when  the  insurance  was  effected. 
Hence,  the  insurers  are  bound  to  indemnify  the  assured  against  every 
loss  that  may  be  expected  to  follow  from  the  means  usually  employed 
to  avert  or  diminish  the  peril,  and  save  the  property  insured  from  the 
destruction,  in  which  it  would  otherwise  be  involved  ;  and  it  can  hardly 
be  said  that  their  liability  for  consequential  losses  that  may  with  cer- 
tainty be  referred  to  this  class,  has  ever  been  doubted  or  denied. 

The  examples  that  most  readily  occur,  are,  under  a  marine  policy, 
jettison  of  goods,  or  the  cutting  away  of  a  mast  during  a  storm  ;  and, 
under  a  fire,  the  damage  to  the  goods  from  water,  and  the  injuries  which 
they  suffer  from  haste  and  negligence  in  the  course  of  their  removal 
from  a  building  actually  on  fire. 

The  second  class  of  consequential  losses  for  which  the  insurers  are 
undoubtedly  liable,  as  referable  to  the  peril  insured  against  as  their 
proximate  cause,  embraces  the  cases  in  which  the  property  insured  is 
extricated  from  the  peril  that  otherwise  would  have  led  to  its  destruc- 
tion, by  means  that  could  not  have  been  anticipated  by  the  parties,  but 
by  which  it  is  taken  from  and  never  again  restored  to  the  possession  of 


SECT.  II.]  TILTON   V.    HAMILTON    FIRE    INS.    CO.  74:5 

the  assured,  so  that  to  liiui  the  loss  is  exactly  the  same  that  it  would 
have  been  had  the  peril  continued  to  operate.^  .  .  . 

I  have  already  said  that,  although  the  loss  now  claimed  is  consequen- 
tial, yet  if  it  fall  within  either  of  the  classes  that  have  now  been  stated 
and  explained,  it  is  recoverable  under  the  polic}',  as  a  loss  by  fire,  and 
that  it  falls  within  both  classes,  is  the  conclusion  to  which  we  have  all 
of  us  come,  with  the  exception  of  mj-  brother  Hoffman.  We  think 
that  this  conclusion  is  fully  justified  by  the  decisions  to  which  I  have 
referred,  and  which  we  are  not  aware  are  contradicted  or  shaken  by  any 
other  authorities. 

It  cannot  be  denied,  that  the  facts  wliich  I  have  stated  to  be  the 
necessary  condition  of  the  liability  of  insurers  for  consequential  losses, 
other  than  such  as  are  inevitable,  were  in  this  case  i)roved  to  exist. 
The  goods  were  removed  from  a  building  actually  on  fire,  and  which 
was  destroyed  b}'  the  fire ;  had  they  remained,  their  destruction  was 
certain.  Under  these  circumstances  we  think  the  loss  as  claimed  was 
a  natural  consequence  of  the  peril  insured  against.  When  the  doors  of 
a  warehouse  or  store  on  fire  are  broken  or  thrown  open,  in  order  that 
the  goods  within,  by  their  removal,  may  be  saved  from  the  peril,  a  loss 
of  a  portion  of  them  bj-  plunder  we  cannot  but  think  is  just  as  certainly 
a  natural  consequence  of  the  attempt  to  preserve  them  as  the  damage 
which  they  suffer  from  the  negligence  or  recklessness  of  those  engaged 
in  their  removal.  It  is  a  consequence  that  from  the  fi'equency  of  its 
occurrence  may  be  expected  to  follow,  and  which,  it  is  therefore  reason- 
able to  believe,  was  in  the  contemplation  of  the  parties  when  they  made 
their  contract.  It  is  a  public  and  notorious  fact,  which  as  such  we  ma}'' 
judicially  notice,  that  in  this  city,  and,  indeed,  in  all  crowded  cities, 
losses  from  this  cause  constantly  happen,  and  that  from  the  temptation 
and  facilities  that  a  fire  creates,  it  would  be  difficult  and  almost  impos- 
sible to  prevent  them.  And  when  we  call  to  mind  the  huny,  confusion, 
and  disorder  that  usually  prevail,  and  tlie  habits  and  character  of  those 
who  form  a  large  portion  of  the  crowd  that  usually  assemble  at  a  fire, 
it  would  be  a  matter  of  great  surprise  if  losses  of  this  description  were 
not  as  frequent  as  an  experience  almost  daily  attests  the}*  are. 

It  was  admitted  by  one  of  the  learned  counsel  of  the  defendants,  that 
as  petty  losses  by  theft  not  unfrequently  happen,  it  migiit  not  be  unrea- 
sonable to  hold  that,  for  such  tlie  insurers  are  liable,  as  a  natural  conse- 
quence of  the  peril  insured  against ;  but  he  contended  that,  as  a  loss  by 
theft  of  the  magnitude  of  that  which  is  now  claimed  very  rarely  occurs, 
it  would  be  unjust  to  hold  that  the  defendants  ever  meant  to  assume 
the  risk,  since  it  cannot  be  thought  that  such  a  loss  was  in  the  contem- 
plation of  the  parties  when  they  made  the  contract. 

The  argument  is  plausible,  but  it  implies  a  distinction  for  which  there 
is  no  warrant  or  precedent,  and  to  which  we  cannot  assent.  The  only 
question  is,  whether  a  loss  by  theft  is  from  its  nature  a  consequential 

1  Here  were  discussed  Bondrett  v.  Hentigg,  mite,  p  697  (1816);  Hahn  i;.  Corbett, 
2  Bing.  205  (1824);  Dean  v.  Hornby,  3  E.  &  B.  180  (1854).  — Ed. 


746  TILTON    V.    HAMILTON    FIRE    INS.    CO.  [CHAP.  VII. 

loss,  for  which  the  insurers  are  liable,  and  if  this  be  admitted  or  proved, 
their  obligation  to  satisfy  the  loss,  when  not  exceeding  the  sum  insured, 
cannot  be  varied  by  its  amount. 

If  all  the  costly  furniture  of  a  dwelling-house  were  defaced  and  broken 
by  a  disorderly  crowd  volunteering  their  aid  to  rescue  it  from  a  fire,  we 
cannot  believe  that  the  unusual  amount  of  the  loss  would  be  held  to 
exonerate  the  insurers  from  its  payment.  And  we  see  no  reason  to 
doubt  that  a  loss  by  theft,  if  covered  by  the  policy  at  all,  stands  upon 
the  same  ground. 

But  were  we  prepared  to  say  that,  if  the  loss  now  claimed  cannot  bo 
regarded  as  a  natural  consequence  of  the  peril,  and  is  not  recoverable 
ui)on  that  ground,  it  is  still  certain  that  the  goods  upon  which  it  is 
claimed,  before  their  removal,  were  involved  in  a  peril  that  must  have 
led  to  their  destruction,  and  that,  althougli  saved  from  this  peril,  they 
were  never  restored  to  the  possession  of  the  plaintiff.^  .  .  . 

Here,  it  is  certain  that  the  goods  upon  which  the  loss  is  claimed,  had 
they  remained  in  the  store,  must  have  been  destroyed  by  tlie  fire  ;  and 
equally  so,  that,  since  their  removal  they  have  never  been  restored  to 
the  possession  of  the  plaintiff,  —  the  loss  to  him  is  exactly  the  same  as 
if  they  had  been  consumed  by  the  fire.  So  far  as  he  is  concerned,  they 
were  never  rescued  from  the  peril  in  which  they  were  involved,  and 
which  may,  therefore,  be  justly  considered  the  proximate  cause  of  the 

loss. 

There  is  no  ground  for  the  allegation  that  the  goods  lost  were  in  the 
possession  of  the  plaintiff  when  the  loss  happened.  They  were  taken 
from  his  possession  by  the  persons  who  removed  them,  and  those  per- 
sons were  in  no  sense  his  agents,  or  subject  in  any  respect  to  his  direc- 
tion or  control.  Neither  he  nor  any  person  acting  by  his  authority  was 
present  at  the  fire.  The  case,  moreover,  expressly  states  that  the  goods 
saved  were  taken  possession  of  by  an  agent  of  the  insurers,  who  stored 
them  in  a  building  of  which  he  kept  the  key  ;  and  that  this  key  was  not 
delivered  to  the  plaintiff  until  the  next  morning.  Until  then  the  goods 
saved  were  not  restored  to  his  possession.  Those  that  were  stolen  were 
at  no  time  after  tiieir  removal  in  his  possession.  The  property  remained 
in  him,  but  the  possession  was  gone.     Dean  v.  Hornby,  supra. 

The  result  of  this  discussion  is,  that,  in  our  opinion,  the  jury  were 
rightly  instructed  upon  the  trial, ^  and  that  the  plaintiff  is  entitled 
to  judgment  upon  the  verdict  which  they  rendered,  and  such  is  our 
decision.^  .   .   . 

Hoffman,  J.,  dissenting.*  .  .  . 

^  A  passage  discussing  the  authorities  already  cited  has  beeu  omitted.  —  Ed. 

2  Ace:  Whitehurst  v.  Fayetteville  Mut.  Ins.  Co.,  6  Jones,  N.  Car.  352  (1859);  Inde- 
pendent Mut.  Ins.  Co.  V.  Agnew,  34  Pa.  96  (1859) ;  Newmark  v.  Liverpool  and  London 
F.  &  L.  Ins.  Co.,  30  Mo.  160  (1860) ;  Witherell  v.  Maine  Ins.  Co.,  49  Me.  :200  (1861). 

See  Webb  v.  Protection  Ins.  Co.,  14  Mo.  3  (1850) ;  Leiber  v.  L.,  L.  &  G.  Ins.  Co., 
6  Bush.  639  (1869).  Ed. 

3  Here  was  discussed  Levy  v.  Baillie,  7  Bing.  349  (1831 ).  —  Ed. 
*  This  opinion  has  not  been  reprinted.  —  Ed. 


SECT.  II.]  BKADY   V.   NORTHWESTERN   INS.   CO.  74"; 


BRADY   V.   NORTHWESTERN   INS.   CO. 

Supreme  Court  of  Michigan,  1863.     11  Mich.  425.^ 

Error  to  Oakland  Circuit. 

The  action  was  upon  a  policy  of  fire  insurance  that  covered  a  three- 
stor}-  wooden  warehouse  in  Detroit.  The  polics"  was  for  §2,000,  and 
contained  this  provision  :  "  In  case  of  any  loss  or  damage  .  .  .  it  shall 
be  optional  with  the  company  ...  to  rebuild  or  repair  the  building 
.  .  .  giving  notice  of  their  intention  .  .  .  within  forty  days  after  .  .  . 
proofs  of  loss  .  .  .  and  where  no  such  offer  ...  is  made,  the  loss 
due  and  ascertained  shall  be  payable  in  sixty  days  after  .  .  .  proofs." 
The  plaintiff  introiUiced  evidence  that  the  roof  of  the  building  insured 
had  been  burned  within  the  term  of  the  policy,  that  the  building  was 
worth  from  84,000  to  8-5,000  before  the  fire,  and  that  the  unconsumed 
portion  was  worth  less  than  $100.  The  plaintiff  then  proposed  to  in- 
troduce in  evidence  the  city  charter,  the  ordinances,  and  the  proceedings 
of  the  common  council,  in  order  to  show  that  the  warehouse  was  within 
the  fire  limits,  that  it  could  not  be  rebuilt  without  the  permission  of  the 
common  council,  and  that  such  permission  had  been  refused  ;  but  tlie 
defendant  company  objected  to  the  introduction  of  this  evidence  on 
the  ground  that  it  had  nothing  to  do  with  the  rule  of  damages,  and  the 
court  sustained  the  objection,  whereupon  the  plaintiff  excepted.  The 
plaintiff  admitted  the  receipt  of  8866.50  from  the  defendant  company 
on  account,  and  conceded  that  another  company  was  responsible  for 
one  half  of  the  entire  loss.  The  defendant  company  introduced  evi- 
dence to  show  what  sum  would  have  been  necessary  in  order  to  restore 
tlie  building.  Tjie  court  charged_the  jury  that  the  measure  of  recovery 
was  such  amount  as^would  lie  suflicient  to  place  the  building  in  as  good 
r-nndii-irnTHs  it  was  iirivrreirtTienoss''\hai2i2eiied4- -aiid_ to  tiiis_  estima te 
thel)Iaintiff.£X£e|ited.  The  judgment  having  been  for  the  defendant 
compfTny,  the  plaintiff  appealed. 

G.  V.  J\^.  Lothrop  and  S.  D.  Miller,  for  plaintiff  in  error. 

D.  B.  lJt(ffield,  H.  K.  Clarke,  and  >S'.  T.  Douglass,  for  defendants 
in  error. 

Martix,  C.  J.  The  plaintiff  in  this  case  was  insured  by  tlie  defend- 
ants in  the  sum  of  32,000,  upon  his  warehouse,  on  the  first  day  of  Jan- 
uary, 1856,  for  one  year.  Tlie  policy  of  insurance  contained,  among 
others,  this  provision  :  "This  insurance  (the  risk  not  being  changed) 
may  be  continued  for  such  further  time  as  shall  be  agreed  on  ;  the  pre- 
mium therefor  being  paid  and  indorsed  on  this  policy,  or  a  receipt 
given  for  the  same.''  The  obligation  of  the  defendants  seems  to  have 
been  renewed  every  succeeding  year,  under  this  stipulation  ;  and  upon 

1  The  reporter's  statement  lias  uot  been  reprinted.  —  Eu. 


748  BEADY  V.   NOETHWESTEEN  INS.  CO.      [CHAP.  VII. 

such  renewed  obligation,  dating  from  tlie  first  day  of  January,  18G1, 
this  action  arises. 

Between  the  years  1856  and  1861,  certain  ordinances  were  adopted 
by  the  common  council  of  Detroit  for  preventing  the  restoration  or 
reconstruction,  within  certain  boundaries,  of  wood  buildings  which 
might  be  injured  or  destroyed  by  fire.  After  the  passing  of  these 
ordinances,  the  policy  was  renewed  on  payment  of  the  premium  origi- 
nally stipulated,  and  after  being  countersigned  by  tlie  resident  agent. 
The  question  now  presented  is,  whether  the  liability  of  the  defendant 
is  under  the  promise  of  1856  or  that  of  1861  ;  in  other  words,  was  the 
undertaking  of  1856  made  a  continuous  undertaking,  to  be  construed 
b}'  the  laws  and  ordinances  as  they  existed  in  1856  solely,  or,  by  the 
renewal,  were  the  parties  bound  by  the  laws  and  ordinances  existing 
at  the  time  of  such  renewal? 

We  have  no  doubt  that  each  renewal  of  the  policy  was  a  new  con- 
tract. Each  was  upon  a  new  consideration,  and  was  optional  with 
both  parties.  At  the  expiration  of  tlie  year  over  which  the  original 
polic}'  extended,  the  obligation  of  the  insurer  was  ended,  and  it  was 
only  by  the  concurrence  of  the  will  of  both  parties  that  the  obligation 
could  be  continued.  This  concurrence  is  manifested  b}-  the  payment 
of  a  consideration  b}-  the  one  party,  and  a  renewed  promise  bj-  the 
otlier ;  and  an  obligation  revived  or  continued  under  such  circum- 
stances is  an  original  obligation.  It  must  be  asked  for  b}-  the  one, 
and  may  be  assumed  or  refused  by  the  other ;  and  the  polic}',  which  is 
its  evidence,  is  therefore  onlj-  continued  by  the  positive  act  of  both 
parties.  This  is  according  to  the  terms  of  the  polic}',  and  of  the  cer- 
tificate of  renewal ;  and  tlie  fact  that  the  insurance  company,  b^'  the 
ver}'  terms  of  the  certificate  of  renewal,  required  payment  therefor, 
and  that  such  certificate  should  be  countersigned  by  the  resident  agent 
before  it  should  become  operative,  shows  that  the  company  regard  the 
renewal  as  a  new  contract,  made  at  their  option,  and  dependent  in 
some  degree  upon  the  judgment  and  knowledge  of  such  agent.  Thus, 
if  the  agent  should  find  the  property  depreciated  in  value,  or  the  risk 
increased  from  an}'  cause,  he  could  refuse  to  countersign  the  renewal 
receipt,  and  the  promise  by  the  compan}-  to  renew  the  polic}'  would  be 
thereby  terminated.  Now,  it  is  ver}'  clear  that  all  such  contracts  must 
be  mutual,  and  that  where  a  right  is  reserved  to  a  part}-  to  renew  or 
dissolve  an  obligation,  the  determination  of  such  part}'  to  renew  an 
expired  contract,  if  accepted  by  the  other,  makes  an  original  contract. 
This  contract  of  insurance  is  one  of  indemnit}-  against  loss  by  fire  ; 
and  the  whole  loss  of  which  the  fire  is  the  actual  cause,  is  within  its 
terms  to  the  extent  of  the  indemnity  promised.  Much  is  said  by 
judges  of  the  proximate  and  remote  cause  of  the  loss ;  and  the  dis- 
tinction was  very  elaborately  discussed  by  counsel  in  the  present  case. 
But,  after  careful  consideration,  I  must  confess  that,  to  ni}'  mind,  the 
word  ]>7'oxhnafe  is  unfortunately  used,  and  serves  often  to  mislead  the 
inquirer,  and  to  produce  misapprehension  of  the  real  rule  of  law.   That 


SECT.  II.]  BRADY    V.    NORTHWESTERN    INS.    CO.  749 

which  is  the  actual  cause  of  the  loss,  whether  operating  directly  or  by 
putting  intervening  agencies  —  the  operation  of  which  could  not  be 
reasonably  avoided  —  in  motion,  by  which  the  loss  is  produced,  is  tlie 
cause  to  which  such  loss  should  be  attributed.  If,  in  the  effort  to 
extinguish  fire,  property  is  damaged  or  destroyed  by  water,  the  water 
may  be  said  to  be  the  proximate  cause  of  the  injury  or  destruction  ; 
yet  in  no  just  sense  can  it  be  said  to  be  the  actual  cause.  That  was 
the  fire.  The  fair  and  reasonable  interpretation  of  a  policy  of  insur- 
ance against  loss  by  fire  will  include  within  the  obligation  of  the  in- 
surer every  loss  which  necessarily  follows  from  the  occurrence  of  the 
fire,  to  the' amount  of  the  actual  injury  to  the  subject  of  the  risk,  when- 
ever that  injury  arises  directly  and  immediately  from  the  peril,  or 
necessarily  from  incidental  and  surrounding  circumstances,  the  opera- 
tion and  influence  of  which  could  not  be  avoided. 

Under  this  rule,  what  was  the  plaintiff's  loss  in  the  present  case? 
The  property  insured  was  situated  within  the  fire  limits  of  Detroit, 
within  which  the  reconstruction  or  repair  of  any  wood  building  injured 
by  fire  was  prohibited,  unless  by  leave  of  the  common  council.     The 
charter  and  ordinances  of  the  city  upon  this  subject,  and  the  refusal 
of  the  common  council  to  permit  the  repair  of  the   building   injured, 
were  offered  in  evidence  to  show  tlie  extent  of   the   plaintiff's  loss, 
and  rejected.     This  charter  and  these  ordinances  were  in  existence  at 
the  time  of  the  last  renewal  of  the  policy.    They  were  local  laws  affect- 
ing the  property,  and  the  risk  whicli  the  defendant  assumed,  and  of  which 
the  latter  is  presumed  to  have  had  knowledge,  and  to  have  estimated 
in  renewing  the  policy.     Whether,  therefore,   in   case   of  damage  or 
partial  loss,  the  common  council  would  permit  a  repair  of  the  building, 
was  a  risk  which  the  company  took  upon  itself,  because  the  loss  and 
injury  to  the  plaintiff  might  depend  in  amount  upon  such  action  of  the 
council,  while  such  loss  and  injury  would  be  absolutely  and  actually 
the  consequence  of  the  fire  ;  and  because  by  the  terms  of  the  policy  the 
company  reserved  the  right  to  repair  or  not  at  option,  thus  taking 
the  risk  of  the  power  to  repair,  and  of  all  loss  which  should  accrue  if 
repairing  should  be  impossible  from  any  cause.     To  hold  that  for  an 
injury  to  the  propert}',  which  results,  without  the  fault  of  the  insured, 
in  a  total  loss  to  him,  so  far  as  value  and  use  are  concerned,  the  in- 
sured can  only  receive  compensation  to  the  extent  of  the  appraised 
damage  to  the  materials  of  which  the  building  was  constructed,  and 
which  were  destroyed,  would  establish  a  narrow,  illiberal,  and  illogical 
rule.     The  value  of  the  building  consisted  in  its  adaptation  to  use,  as 
well  as  in  the  materials  of  which  it  consisted ;  and  if  it  could  not  be 
restored  to  use  after  the  fire,  the  loss  was  total,  less  the  value  of  the 
materials  rescued.      In  the  very  pertinent  language  of  the  plaintiff's 
counsel,  "The  contract  was  not  simply  an   agreement  to  pay  for  so 
much  material  as  might  be  damaged  by  fire— to  pay  such  amount  as 
the  material  might  actually  be  worth.     Fixed  by  the  conditions  of  the 
policy  as  the  most  hazardous  of  all  structures,  and  with   a  premium 


760  BRADY  V.   NOKTHWESTEKN  INS.  CO.      [CHAP.  VII. 

adjusted  according!}',  the  insurer  took  the  risk  upon  a  '  three-story 
wood  warehouse/  actually  in  use  as  such.  Tiie  risk  was  not  taken 
upon  a  mere  collection  of  beams,  boards,  and  other  materials,  thrown 
together  without  purpose  or  special  adaptation.  It  was  upon  a  build- 
ing for  trade,  situated  within  a  particular  locality,  within  the  jurisdic- 
tion of  municipal  authorities  vested  with  legislative  powers  for  special 
purposes,  and  subject  to  the  exercise  of  those  powers  ;  "  and  the  par- 
ties must  be  regarded  as  contracting  with  a  full  knowledge  of  all  the 
facts  and  the  law,  and  the  risk  to  which  the  property  was  thereby 
subjected. 

Of  the  power  of  the  common  council  to  pass  the  ordinances  in  ques- 
tion, we  have  no  doubt.  They  contravene  no  provision  of  the  Consti- 
tution as  we  read  it,  and  the}'  were  made  in  the  exercise  of  a  police 
power  necessary  to  the  safety  of  the  city.  A  regulation  of  the  use  of 
property,  or  a  prohibition  of  its  repair  when  partially  destroyed,  can- 
not, to  my  mind,  be  regarded  as  a  condemnation  to  public  use. 

The  court  erred  in  excluding  the  testimony  offered,  and  in  the  rule 
of  damages  given  to  the  jury. 

The  judgment  is  reversed,  and  a  new  trial  ordered. 

Manning  and  Christiancy,  JJ.,  concurred. 

Campbell,  J.  As  I  do  not  concur  in  all  the  views  expressed  by  the 
chief  justice,  and  have  arrived  at  a  different  conclusion  upon  the 
validity  of  the  action  of  the  Circuit  Court,  1  proceed  to  state  the  reasons 
upon  which  I  have  formed  my  opinion. 

I  concur  in  holding  that  if  the  by-law  of  the  city  of  Detroit  is  valid 
and  applicable,  the  plaintiff  should  recover  on  the  basis  of  the  claim 
which  he  sets  up.  ^  .  .  . 

I  am  also  of  opinion,  with  the  chief  justice,  that  the  renewal  of  the 
polic}'  in  controversy  was  in  law  a  new  insurance,  and  subject  to  all 
legal  regulations  in  force  at  the  date  of  such  renewal. 

The  by-law  in  question,  having  been  previously  enacted,  must,  if 
valid,  govern  the  case.     I  do  not,  however,  regard  it  as  valid.   .  .   . 

I  think  there  was  no  error  in  excluding  the  by-law  from  the  case, 
and  that  the  judgment  should  be  affirmed. 

Judgment  reversed,  and  new  trial  order&d.'^ 

1  In  reprinting  this  opinion,  discu.ssion  has  been  omitted.  —  Ed. 

2  Ace:  Hamburg-Bremen  F.  Ins.  Co.  v.  Garlington,  66  Tex.  103  (1886)  ;  Larkin 
V.  Glens  Falls  Ins.  Co.,  80  Minn.  527  (1900). 

See  Brown  v.  Royal  Ins.  Co.,  1  E.  &  E.  853  (1859).  — Ed. 


SECT.  II.]  WHITE   V.   REPUBLIC   FIHE   INS.   CO.  751 


WHITE  V.  REPUBLIC   FIRE   INS.  CO. 
SAME  V.  RELIEF   FIRE   INS.    CO. 

Supreme  Court  of  Maine,  1869.     57  Me.  91.^ 

Assumpsit  on  two  policies  of  insurance  against  loss  or  damage  by 
fire.  Tlie  stock  and  tools  covered  were  in  the  third  story  of  a  building 
in  Portland.  The  great  fire  of  July  4,  1866,  destroyed  the  eastern  por- 
tion of  the  cit}-,  including  the  easterly  side  of  the  first  street  east  of  the 
building,  and  the  southerly  side  of  the  street  just  opposite  that  prop- 
erty. A  heavy  wind  was  blowing  sparks  and  flames  upon  the  building, 
and  the  roof  was  repeatedly  on  fire.  All  occupants  removed  their 
goods.  The  property  left  In  the  building  was  not  damaged.  Other 
facts  appear  in  the  opinion.  The  case  was  withdrawn  from  the  jury 
and  continued  on  report,  the  full  court  to  render  such  judgment  as  tlie 
law  and  the  evidence  required. 

S.  C.  Strout  and  H.  W.  Gage,  for  the  plaintiff. 

Davis  <b  Dntmmond,  for  the  defendants. 

DiCKERSON,  J.  Assumpsit  on  two  policies  of  fire  insurance,  sub- 
mitted on  report. 

On  the  night  of  the  conflagration  of  July  4,  1866,  at  Portland,  the 
plaintiff,  apprehensive  that  the  building  known  as  Ware's  block,  on  the 
northerly  side  of  Federal  Street,  tlie  third  stor}'  of  which  was  occupied 
by  him  for  the  manufacture  of  brushes,  would  be  destroyed  bv  fire, 
removed  his  stock,  consisting  of  bristles  and  manufactured  brushes, 
and  his  tools,  from  the  building.  The  block  was  not  destroyed  or  in- 
jured b}'  the  fire  ;  and  the  plaintiff  brings  this  action  to  recover  the 
damages  thus  done  to  his  stock  and  tools,  and  for  the  expense  incurred 
in  removing  them. 

The  important  and  interesting  question  is  raised  whether  the  plain- 
tiff's loss  is  covered  by  the  policy'.  In  general,  the  assured  is  entitled 
to  indemnity,  unless  the  loss  happens  from  the  qualities  or  defects  of 
the  subject  insured,  his  own  fault,  or  some  peril  for  which  he  is  answer- 
able.    1  Phillips  on  Ins.  639. 

It  is  argued  b}-  the  learned  counsel  for  the  defendants  that  this  is  not 
a  loss  b}'  fire  ;  that  fire  was  not  the  proximate  cause  of  the  damage, 
and  that  therefore  the  loss  is  not  covered  by  the  policy.  While  it  has 
been  held  that  a  loss  by  lightning  without  combustion  is  not  a  loss  by 
fire,  it  has  also  been  held  that  the  loss  of  a  building  b}'  being  blown  up 
by  gunpowder,  and  demolished  to  stop  a  conflagration,  is  within  the 
terms  of  a  fire  policj*.  Babcock  v.  Montgomery  Co.  Mut.  Ins.  Co.,  6 
Barb.  637  ;  Keniston  v.  Merrimack  Co.  Mut.  Ins.  Co.,  14  N.  H.  341 ; 
City  Ins.  Co.  v.  Corlies,  21  Wend.  367. 

Damage  done  to  goods  by  having  water  thrown  upon  them  in  extin- 

1  The  statement  has  been  rewritten.  —  Ed. 


752  WHITE   V.   REPUBLIC   FIRE   INS.   CO.  [CHAP.  VII. 

guisliing  a  fire,  and  a  loss  of  goods  b}'  theft  after  they  have  been  re- 
moved from  a  fire,  are  covered  by  the  policy.  Hillier  v.  Allegheny  Ins. 
Co.,  3  Penn.  470  ;  Witherell  v.  Maine.  Ins.  Co.,  49  Me.  200. 

A  bolt  ma}'  be  loosened,  or  a  timber  started  in  a  storm,  without  caus- 
ing any  loss  until  the  subsequent  action  of  the  water  or  climate,  or  the 
greater  strain  of  a  different  cargo  has  so  augmented  the  injury  as  to 
cause  the  loss  of  the  vessel ;  and  yet  such  a  loss  is  a  loss  by  the  storm. 
Stephenson  v.  Piscataquis  Ins.  Co.,  54  Me.  76. 

So  if,  after  a  storm  has  subsided,  the  boat  is  lost  by  reason  of  the 
disabled  condition  of  the  ship,  in  consequence  of  damage  done  during 
the  storm,  it  is  a  loss  by  the  storm.  Potter  v.  Ocean  Ins.  Co.,  3 
Sum.  27. 

In  these  and  like  cases  the  direct  proximate  cause  of  the  damage  or 
loss  is  not  to  be  found  in  the  fire,  or  the  storm,  but  in  the  water,  the 
removal  of  the  goods,  the  action  of  the  climate,  or  strain  of  the  cargo, 
or  the  disabled  state  of  the  ship.  If  courts  were  required  to  hold  that 
no  loss  is  caused  by  a  policy-  of  insurance  unless  the  peril  insured 
against  is  directly  operating  upon  the  subject  insured  at  the  time  of  the 
ultimate  catastrophe,  the}-  would  deny  the  right  to  recover  in  many 
cases  where  it  has  long  been  recognized  by  courts  of  the  highest  au- 
thorit}-.  The  legal  maxim,  causa  proxima  spectatnr^  is  by  no  means 
of  unusual  application  in  its  strict  technical  sense. 

If  a  loss  from  demolishing  a  building  with  gunpowder  to  stay  the 
progress  of  a  conflagration  comes  within  the  terms  of  a  fire  polic}', 
ought  not  the  damages  and  expense  of  removing  such  building  to  be 
recoverable  if  tlie  object  in  view  could  be  as  speedily  and  successfully 
accomplished? 

In  such  cases  is  not  the  fire,  the  impending  conflagration,  the  exist- 
ing operating  cause  alike  of  the  destruction  of  the  building  or  of  its 
removal  from  danger?  Is  the  assured  entitled  to  fecover  damages  for 
one  of  the  effects  of  the  same  procuring  cause,  and  not  for  the  other? 
If  by  reason  of  the  immobility  of  real  estate,  and  the  necessity  of  speedy 
action  on  such  occasions,  it  becomes  necessary  to  demolish  a  l)uilding, 
at  the  cost  of  the  underwriters,  to  prevent  it  and  other  property  from 
being  destroyed  by  fire,  does  not  the  analogy  of  the  law  require  that 
they  should  also  be  chargeable  for  the  damage  and  expense  of  saving 
personal  property  from  destruction  by  removing  it  to  a  place  of  safety? 
Is  not  the  producing  cause  of  l)otli  results  the  same? 

So  if  the  underwriters  are  liable  for  damage  done  to  goods  by  having 
water  thrown  upon  the  building  in  which  they  are  stored,  to  extinguish 
the  fire,  ought  they  not  also  to  be  liable  for  damage  done  to  goods,  in 
time  of  imminent  peril,  by  throwing  water  upon  the  building  containing 
them  to  prevent  it  and  them  from  destruction,  though  actual  ignition 
has  not  taken  place?  In  both  cases,  technically  speaking,  the  water, 
and  not  the  fire,  is  the  direct  proximate  cause  of  the  damage.  It  is 
neither  the  policy  of  the  law  nor  public  policy  to  make  it  for  the  inter- 
est of  the  assured,  in  case  of  fire,  to  postpone  the  use  of  the  means  for 


SECT.  II.]  ^V11ITE    V    REPUBLIC    FIRE   INS.    CO.  753 

extinguishing  the  fire,  and  the  removal  of  the  goods,  until  the  building 
containing  tlieni  is  actually  on  fire.  In  man}-,  if  not  most  cases,  such 
delay  would  be  tantamount  to  consigning  both  goods  and  building  to 
destruction.  Would  the  interests  of  insurance  companies  or  the  public 
morals  be  subserved  by  the  establishment  of  such  a  policy? 

The  question  presented  is  one  of  considerable  difficulty,  and  one  upon 
which  thv3  authorities  are  at  variance.  While  tiie  Supreme  Court  of 
Illinois,  in  a  case  like  the  one  at  bar,  have  held  that  the  underwriters 
are  liable  for  the  damage  to  the  goods  and  the  expense  of  removing 
them,  the  court  in  Pennsylvania  have  denied  them  liabiUty.  Case  o. 
Hartford  Ins.  Co.,  13  111.  676;  Hillier  r.  Allegheny  Ins.  Co.,  3  Penn. 
470.  We  think  the  liability  of  the  underwriters,  in  these  and  similar 
cases,  depends  very  much  upon  the  imminence  of  the  peril,  and  the 
reasonableness  of  the  means  used  to  effect  the  removal.  The  necessity 
for  removal  is  analogous  to  the  necessity  that  justifies  the  sale  of  a  dis- 
abled vessel  by  the  water.  It  is  not  to  be  determined  by  the  result 
alone,  but  by  all  the  circumstances  existing  at  the  time  of  the  fire.  The 
necessity  for  removal  need  not  be  actual,  that  is,  the  building  may  not 
have  been  actually  burned,  since  this  may  have  been  prevented  by  a 
change  in  the  direction  or  force  of  the  wind,  the  more  skilful  or  etfi- 
cient  management  of  the  fire  engines,  or  the  sudden  happening  of  a 
shower,  or  a  like  unforeseen  event.  But  the  imminence  of  the  peril 
must  be  apparent,  and  such  as  would  prompt  a  prudent  uninsured  per- 
son to  remove  the  goods ;  it  must  be  such  as  to  inspire  a  conviction 
that  to  refrain  from  removing  the  goods  would  be  the  violation  of  a 
manliest  moral  duty  ;  the  damage  and  expense  of  removal,  too,  must 
be  such  as  might  reasonably  be  incurred  under  the  circumstances  of 
the  occasion.     Angel  on  Fire  Ins.  §  117. 

When  such  a  case  exists,  we  think  it  the  better  opinion  to  hold  that 
the  undei-writers  are  chargeable  for  the  damage  and  expense  of  remov- 
in<^'-  the  <yoods,  as  this  result  seems  most  in  accordance  with  i-eason,  the 
analogies  of  the  law,  and  public  policy.  Such,  also,  is  the  conclusion 
of  Mr.  Philli[)s,  the  learned  commentator  on  the  law  of  insurance.  "  It 
seems,"  he  says,  "to  be  the  better  doctrine,  and  the  one  most  closely 
analogous  to  the  jurisprudence  on  the  subject  of  insurance  generally, 
that  the  underwriters  are  liable  for  such  damage  and  expense  reason- 
aV)ly  and  expediently  incurred,  as  being  directly  occasioned  by  the  peril 
insured  against."     1  Phillips'  Ins.  645-6. 

The  doctrine  we  maintain  on  this  subject  is  applicable  to  a  large 
class  of  cases  recognized  by  the  law  of  insurance,  and  is  found  in  tiiat 
well-established  principle  of  the  law  of  insurance,  that  insurance  against, 
or  an  exception  of  a  peril,  besides  the  consequences  immediately  follow- 
ing it,  may  include  also  a  loss  or  expense  arising  on  account  of  it,  al- 
though what  is  insured  against  or  excepted  does  not  actually  occur, 
provided  the  peril  insured  against,  or  excepted,  is  the  efficient  acting 
or  imminent  cause  or  occasion  of  the  loss  or  expense.      1  Phillips'  Ins. 

§  1131. 

48 


754  LYNN   GAS,    ETC.   CO.   V.   MERIDEN   FIEE    INS.    CO.       [CHAP.  VII. 

The  proximity  of  tlie  fire  to  the  building  occupied  by  the  plaintiff, 
its  rapid  progress,  terrible  intensity,  and  fearful  ravages,  leave  no  rea- 
son to  doubt  but  the  goods  were  removed  tlirough  a  reasonable  appre- 
hension that  they  would  be  destroyed  b^-  fire  if  suffered  to  remain. 
Their  situation,  too,  in  the  third  story,  requiring  earlier  attention,  ren- 
dered their  condition  more  hazardous  than  if  they  had  been  on  the  first 
floor.  A  prudent  uninsured  person  could  scarcely  have  omitted  the 
precaution  taken  by  the  plaintiff. 

In  removing  the  goods  the  plaintiff  was  bound  to  exercise  that  rea- 
sonable degree  of  care  which  was  suited  to  the  circumstances  of  the 
occasion ;  and,  when  we  consider  the  situation  of  the  goods,  the  immi- 
nence of  the  peril,  and  the  terror  and  consternation  naturally  excited 
by  the  progress  and  fury  of  the  conflagration,  we  are  not  prepared  to 
sa}'  that  he  did  not  exercise  such  care. 

Under  the  rule  for  apportioning  the  damages  between  the  two  de- 
fendant companies,  agreed  upon  by  the  parties,  if  the  court  should 
find  that  the  plaintiff  is  entitled  to  recover,  the  plaintiff  is  to  have 
judgment  against  the  Relief  Insurance  Company  for  the  sum  of  one 
thousand  two  hundred  and  twent3--nine  dollars  and  seventy-six  cents, 
and  interest  from  the  date  of  the  writ ;  and  also  against  the  Ilepu])lic 
Insurance  Compau}^  for  six  hundred  and  seventy-three  dollars  and 
sixty-eight  cents,  and  interest  from  date  of  the  writ.^ 

Appleton,  C.  J.,  Walton,  Barrows,  and  Tapley,  JJ.,  concurred. 

Cutting  and  Danforth,  JJ.,  did  not  concur. 


LYNN  GAS    AND   ELECTRIC    CO.   v.    MERIDEN    FIRE   INS. 
CO.    AND   Others. 

Supreme  Judicial  Court  of  Massachusetts,  1893.     158  Mass.  570.^ 

Actions  were  brought  against  several  companies  upon  fire  insurance 
policies  of  the  Massachusetts  standard  form.  The  cases  were  tried  to- 
gether. The  policies  covered  a  building  and  contents  used  in  the  busi- 
ness of  furnishing  electricity  for  electric  lighting.  While  the  policies 
were  in  force,  a  fire  occurred  in  the  wire  tower,  which  was  that  part  of 
the  building  from  which  wires  for  electric  lighting  were  caiTied.  The 
tower  and  its  contents  were  but  slightly  injured,  and  the  fire  was  soon 
extinguished.  Simultaneous!}',  a  fly-wheel  and  pulleys  in  a  remote  part 
of  the  building  were  disrupted,  and  thus  this  remote  part  of  the  building 
and  the  machinery  contained  therein  suffered  serious  damage.  The 
plaintiff's  theory  as  to  the  connection  of  this  damage  with  the  fire  was 

1  See  Iloltzman  v.  Franklin  Ins.  Co.,  4  Crancli  C.  C.  295  (18.3.3) ;  Case  v.  Hartford 
F.  Ins.  Co.,  13  111.  676  (18.52);  Talamon  v.  Home  Ins.  Co.,  16  La.  Ann.  426  (1862). 
—  Ed. 
^  The  statement  has  been  rewritten.  —  Ed. 


SECT.  II.]      LYNN   GAS,   ETC.   CO.   V.   MERIDEN   FIRE   INS.   CO.  755 

that  the  fire  caused  a  short  circuit,  iis  is  more  fully  stated  iu  the  opinion. 
The  defendants'  theory  was  that  the  slipping  of  a  belt  caused  both  the. 
fire  and  the  disruptiun  of  the  machinery,  and  that  a  defective  pulley 
contributed  to  the  disaster. 

The  defendants  aslied  instructions  :  (1)  That  tliey  were  not  liable  for 
damage  by  disruption  of  machinery  unless  fire  was  the  immediate  oper- 
ating cause  of  such  disruption  ;  (2)  that  if  the  fire  in  the  tower  was 
inadequate  to  produce  the  disruption  without  the  intervention  of  some 
nearer  cause,  the  fire  was  not  the  proximate  cause  of  such  disruption, 
and  the  defendants  were  not  hable  therefor ;  (3)  that  if  the  disruption 
of  machinery  and  wreck  of  building  would  not  have  occurred  but  for 
some  defect  in  the  machinery,  or  some  failure  of  the  machinery  to  per- 
form its  office,  such  defect  or  failure  not  being  caused  by  the  fire,  such 
defect  or  failure  was  the  immediate  cause  of  damage,  and  the  defendants 
were  not  liable  therefor;  and  (4)  that  if  the  damage  by  disruption  was 
not  occasioned  by  the  direct  action  of  fire,  but  was  a  consequence  of 
defective  machinery,  or  of  neglect  of  the  engine  by  a  servant,  such  de- 
fect or  neglect  was  the  proximate  cause  of  such  damage,  and  the  defend- 
ants  were  not  liable  therefor. 

The  presiding  justice,  Hammond,  J.,  refused  to  give  these  instruc- 
tions, but  stated  the  various  theories  of  the  facts  and  said  :  — 

*'I  instruct  you  as  the  law  of  this  case,  that  if  you  are  satisfied  that 
by  action  of  the  fire  this  short-circuiting  was  effected  in  the  tower,  and 
that  the  short-circuiting  in  the  tower  was  the  cause  of  the  crash  below, 
the  loss  is  a  loss  or  damage  b}'  fire  within  the  meaning  of  the  polic}',  and 
that  it  is  not  necessary  that  you  should  be  satisfied  that  anything  below 
was  burning.  If  you  are  satisfied  that  the  short-circuiting  was  caused 
by  the  fire  in  the  tower,  and  would  not  have  existed  but  for  that  fire, 
whether  it  be  caused  by  flame,  by  the  interposition  of  partially  consumed 
particles  of  wood  falling  from  tlie  burning  substance,  by  the  heated  air, 
or  by  the  heating  of  tlie  lightning  arresters,  that  is,  if  the  short  circuit 
occurred  and  was  caused  by  the  action  of  the  fire  iu  any  one  of  those 
ways  and  would  not  have  occurred  but  for  the  fire,  and  that  the  short- 
circuiting  in  the  tower  was  the  cause  of  the  crash  below,  then  the  crash 
below  is  to  be  attributed  to  fire  within  the  meaning  of  the  policy,  and 
the  damage  is  a  damage  by  fire  within  the  meaning  of  the  policy,  and 
that  this  is  so  although  you  maj'  be  satisfied  that  the  pulleys  were  de- 
fective, and  if  not  so  would  not  have  burst,  but  would  have  withstood 
the  strain  caused  by  the  short-circuiting.  And  I  rule,  as  matter  of  law, 
that  if  the  damage  was  caused  in  that  way  it  was  a  loss  or  damage  by 
fire.  .  .  .  It  is  not  necessaiy  that  you  should  be  satisfied  the  defendants' 
theory  is  correct  in  order  to  find  for  the  defendants,  but  jou  must  be 
satisfied  that  the  plaintiff's  theory  is  correct  in  order  to  find  for  the 
plaintiff",  and  if  you  are  in  doubt  as  to  which  way  the  evidence  prepon- 
derates on  this  claim  of  the  plaintiff  your  verdict  should  be  for  the 
defendants.  You  are  not  here  to  ascertain  the  cause  of  that  fire  except 
to  this  extent,  namely,  whether  the  plaintiff's  view  of  the  cause  is  correct 
or  uqK" 


756  LYNN    GAS,   ETC.    CO.    V.   MERIDEN   FIRE    INS.    CO.       [CHAP.  VII. 

The  defendants  excepted  to  the  refusal  to  give  the  four  instructions 
requested,  and  excepted  to  such  part  of  the  instructions  given  as  were 
inconsistent  with  those  requests. 

The  jury  found  for  the  plaintiff  for  the  full  damage. 

/S.  Lincohi  tb  J.  I>.  JBrycuit,  for  the  defendants. 

W.  H.  Niles,  for  the  i)laintiff. 

Knowlton,  J.  The  only  exception  relied  on  by  the  defendants  in 
these  cases  is  that  relating  to  the  claim  for  damage  to  the  machinery 
used  in  generating  electricity  and  to  the  building  from  a  disruption  of 
the  machiner}'.  This  machinery  was  in  a  part  of  the  building  remote 
from  the  fire,  and  none  of  it  was  burned.  In  his  charge  to  the  jury  the 
judge  stated  the  theory  of  the  plaintiff  as  follows :  "  The  plaintiff  says 
the  position  of  the  lightning  arresters  in  the  vicinity  of  the  fire  was  such 
that  by  reason  of  the  fire  in  the  tower  a  connection  v?as  made  between 
them  called  a  short  circuit ;  that  the  short  circuit  resulted  in  keeping 
back  or  in  bringing  into  the  dynamo  below  an  increase  of  electric  cur- 
rent that  made  it  more  difficult  for  this  armature  to  revolve  than  before, 
and  caused  a  higher  power  to  be  exerted  upon  it,  or  at  least  caused 
greater  resistance  to  the  machinery  ;  that  this  resistance  was  transmitted 
to  the  pulley  by  which  this  armature  was  run,  through  the  belt ;  that 
that  shock  destroyed  that  pulley  ;  that  by  the  destruction  of  that  pulley 
the  main  shaft  was  disturbed  and  the  succeeding  pulleys  up  to  the  jack- 
puUe}'  were  ruptured ;  that  by  reason  of  pieces  flying  from  the  jack- 
pulley,  or  from  some  other  cause,  the  fly-wheel  of  the  engine  was 
destroyed,  the  governor  broken,  and  everything  crushed;  —  in  a  word, 
that  the  short  circuit  in  the  tower  by  reason  of  the  fire  caused  an  extra 
strain  upon  the  *belt  through  the  action  of  electricity,  and  that  caused 
the  damage."  The  plaintiff  contended  that  the  short  circuit  was  pro- 
duced by  the  fire,  either  by  means  of  heat  on  the  horns  of  the  lightning 
arresters,  or  by  a  flame  acting  as  a  conductor  between  the  two  horns, 
or  in  some  other  wo^y.  The  jury  found  that  the  plaintiff's  theory  of  the 
cause  of  the  damage  was  correct,  and  the  question  is  whether  the  judge 
was  right  in  ruling  that  an  injury  to  the  machiner}"  caused  in  tliis  wa}' 
was  a  "loss  or  damage  by  fire"  within  tlie  meaning  of  the  policy. 

The  subject-matter  of  the  insurance  was  the  building,  machiner}', 
dynamos,  and  other  electrical  fixtiu-es,  besides  tools,  furniture,  and 
supplies  used  in  the  business  of  furnishing  electricity  for  electric  light- 
ing. The  defendants,  when  the}'  made  their  contracts,  understood  that 
the  building  contained  a  large  quantity  of  electrical  machinerj',  and  that 
electricity  would  be  transmitted  from  the  dynamos,  and  would  be  a 
powerful  force  in  and  about  the  building.  They  must  be  presumed  to 
have  contemplated  such  effects  as  fire  might  naturally  produce  in  con- 
nection with  machinery  used  in  generating  and  transmitting  strong 
currents  of  electricity. 

The  subject  involves  a  consideration  of  the  causes  to  which  an  effect 
should  be  ascribed  when  several  conditions,  agencies,  or  authors  con- 
tribute to  produce  an  effect.     The  defendants  contend  that  the  appli- 


SECT.  II.]       LYNN    GAS,    ETC.    CO.    V.    MERIDEN    FIRE    INS.    CO.  757 

cation  of  the  principle  which  is  expressed  by  the  maxim,  In  jure  non 
reniota  causa  sed  2^^oxi?na  spectatur,  relieves  them  from  liability  in 
these  cases.  It  has  often  been  necessary  to  determine,  in  trials  in  court, 
what  is  to  be  deemed  the  responsible  cause  which  furnishes  a  foundation 
for  a  claim  when  several  agencies  and  conditions  have  a  share  in  causing 
damage,  and  the  best  rule  that  can  be  formulated  is  often  difficult  of 
application.  When  it  is  said  tliat  the  cause  to  be  sought  is  the  direct 
and  proximate  cause,  it  is  not  meant  that  the  cause  or  agency  which  is 
nearest  in  time  or  place  to  the  result  is  necessarily  to  be  chosen.  Free- 
man V.  Mercantile  Accident  Association,  156  Mass.  351.  The  active 
efficient  cause  that  sets  in  motion  a  train  of  events  which  brings  about  a 
result  without  the  intervention  of  any  force  started  and  working  activelj- 
from  a  new  and  independent  source  is  the  direct  and  proximate  cause 
referred  to  in  the  cases.  McDonald  v.  Snelling,  14  Allen,  290  ;  Perley 
V.  Eastern  Railroad,  98  Mass.  414,  419  ;  Gibney  v.  State,  137  N.  Y.  529. 
In  Milwaukee  &  St.  Paul  Railway  v.  Kellogg,  94  U.  S.  469,  474,  Mr. 
Justice  Strong,  who  also  wrote  the  opinions  in  Insurance  Co.  v.  Trans- 
portation Co.,  12  Wall.  194,  and  in  Western  Massachusetts  Ins.  Co.  ^•. 
Transportation  Co.,  12  Wall.  201,  which  are  much  relied  on  b}'  the  de- 
fendants, used  the  following  language  in  the  opinion  of  the  court :  "The 
primary  cause  may  be  the  proximate  cause  of  a  disaster,  though  it  ma}' 
operate  through  successive  instruments,  as  an  article  at  the  end  of  a 
chain  may  be  moved  by  a  force  applied  to  the  other  end,  tliat  force  being 
the  proximate  cause  of  the  movement,  or  as  in  the  oft  cited  case  of  the 
squib  thrown  in  the  market-place.  2  Bl.  Rep.  892.  The  question 
always  is,  AA^as  there  an  unbroken  connection  l)etween  the  wrongful  act 
and  the  injury,  a  continuous  operation?  Did  the  facts  constitute  a 
continuous  succession  of  events,  so  linked  together  as  to  make  a  natural 
whole,  or  was  there  some  new  and  independent  cause  intervening  be- 
tween the  wrong  and  the  injmy?" 

If  this  were  an  action  against  one  who  negligently  set  the  fire  in  the 
tower,  and  thus  caused  the  injury  to  the  machinery,  it  is  clear,  on  the 
theory  of  the  plaintiff,  that  the  negligent  act  of  setting  the  fire  would 
be  deemed  the  active  efficient  cause  of  the  disruption  of  the  machinery 
and  the  consequent  injury  to  the  building.  It  remains  to  inquire  whether 
there  is  a  different  rule  in  an  action  on  a  policy  of  fire  insurance. 

Under  our  statute  creating  a  liability  for  damages  received  from  de- 
fects in  highways,  it  is  held  that  the  general  rule  is  so  far  modified  that 
there  can  be  no  recovery  unless  the  defect  is  the  sole  cause  of  the  acci- 
dent; but  this  doctrine  rests  on  the  construction  of  the  statute.  Tis- 
dale  V.  Norton,  8  Met.  388  ;  Marble  r.  Worcester,  4  Gray,  395  ;  Jenks 
r.  Wilbraham,  11  Gray,  142;  McDonald  v.  Snelling,  14  Allen,  290; 
Babson  v.  Rockport,  101  Mass.  93. 

In  suits  brought  on  policies  of  fire  insurance,  it  is  held  that  the  inten- 
tion of  the  defendants  must  have  been  to  insure  against  losses  where 
the  cause  insured  against  was  a  means  or  agency  in  causing  the  loss, 
even  though  it  was  entirely  due  to  some  other  active,  efficient  cause 


758  LYNN    GAS,    ETC.    CO.    V.    MERIDEN    FIRE    INS.    CO.       [CIIAP.  VII. 

which  made  use  of  it,  or  set  it  in  motion,  if  the  original  efficient  cause 
%ras  not  itself  made  a  subject  of  separate  insurance  in  the  contract  be- 
tween the  parties.  For  instance,  wliere  the  negligent  act  of  the  insured, 
or  of  anybody  else,  causes  a  fire,  and  so  causes  damage,  although  the 
iieo-ligent  act  is  the  direct,  proximate  cause  of  the  damage,  through  the 
fire,  which  was  the  passive  agency,  tlie  insurer  is  held  liable  for  a  loss 
caused  by  the  fire.  J(jhnson  /'.  Berkshire  Ins.  Co.,  4  Allen,  388  ;  \Yalker 
V.  Maitland,  5  B.  &  Aid.  171  ;  Waters  v.  Merchants'  Louisville  Ins.  Co., 
11  Pet.  213  ;  Peters  v.  Warren  Ins.  Co.,  14  Pet.  99  ;  General  Ins.  Co. 
V.  Sherwood,  14  How.  351  ;  Insurance  Co.  v.  Tweed,  7  Wall.  44.  This 
is  the  only  particular  in  which  the  rule  in  regard  to  remote  and  proxi- 
mate causes  is  applied  differently  in  actions  on  fire  insurance  policies 
from  the  application  of  it  in  other  actions.  A  failure  sometimes  to  rec- 
ognize this  rule  as  standing  on  independent  grounds,  and  established 
to  carry  out  the  intention  of  the  parties  to  contracts  of  insurance,  has 
led  to  confusion  of  statement  in  some  of  the  cases.  The  difficulty  in 
applying  the  general  rule  in  complicated  cases  has  made  the  interpre- 
tation of  some  of  the  decisions  doubtful;  but  on  principle,  and  by  the 
weight  of  authority  in  many  well-considered  cases,  we  think  it  clear 
that,  apart  from  the  single  exception  above  stated,  the  question.  What 
is  a  cause  which  creates  a  liability?  is  to  be  determined  in  the  same 
way  in  actions  on  policies  of  fire  insurance  as  in  other  actions.  Scrip- 
ture V.  Lowell  Ins.  Co.,  10  Cush.  356  ;  New  York  &  Boston  Despatch 
Express  Co.  v.  Traders'  &  Mechanics'  Ins.  Co..  132  Mass.  377  ;  St.  John 
V.  American  Ins.  Co.,  1  Kernan,  516  ;  General  Ins.  Co.  v.  Sherwood,  14 
How.  351  ;  Insurance  Co.  v.  Tweed,  7  Wall.  44  ;  Waters  v.  Merchants' 
Louisville  Ins.  Co.,  11  Pet.  2'13,  225;  Livie  v.  Janson,  12  East,  648; 
lonides  v.  Universal  Ins.  Co.,  14  C.  B.  (n.  s.)  259  ;  Transatlantic  Ins. 
Co.  IK  Dorsey,  56  Md.  70 ;   United  Ins.  Co.  v.  Foote,  22  Ohio  St.  340. 

In  the  present  case,  tlie  electricity  was  one  of  the  forces  of  nature,  — 
a  passive  agent  working  under  natural  laws,  —  whose  existence  was 
known  when  the  insurance  [policies  were  issued.  Upon  the  theory 
adopted  by  the  jury,  the  fire  worked  througli  agencies  in  the  building, 
the  atmosphere,  the  metallic  machinery,  electricity,  and  other  things; 
and  working  precisely  as  the  defendants  would  have  expected  it  to  work 
if  they  had  thoroughly  understood  the  situation  and  the  laws  applicable 
to  the  exisiting  conditions,  it  put  a  great  strain  on  the  machinery  and 
did  great  damage.  No  new  cause  acting  from  an  independent  source 
iuten-ened.  The  fire  was  the  direct  and  proximate  cause  of  the  damage 
according  to  the  meaning  of  the  words  "  direct  and  proximate  cause," 
as  interpreted  by  the  best  authorities.  The  instructions  to  the  jury 
were  full,  clear,  and  correct,  and  the  defendants'  requests  for  instruc- 
tions were  rightly  refused.  Exceptions  overruled.^ 

1  On  proximate  cause  in  fire  cases,  see  also:  — 
Welles  V.  Boston  Ins.  Co.,  6  Tick.  182  (1828)  ; 
St.  John  V.  American  Mnt.  F.  &  M.  Ins.  Co.,  11  N.  Y.  .516  (1854). 
Caballero  iv  Home  Ins.  Co.,  1.5  La.  Ann.  217  (1860)  ; 


SECT.  II.]      LYNN    GAS,    ETC.    CO.    V.    MEEIDEN    FIKE   INS.    CO.  759 

Everett  v.  London  Assurance,  19  C.  B.  n.  s.  126  (1865)  ; 

Marsden  v.  City  and  County  Assur.  Co.,  L.  R.  1  C.  P.  232  (1866) ; 

Insurance  Co.  v.  Tweed,  7  Wall.  44  (1868); 

Insurance  Co.  i\  Transportation  Co.,  12  Wall.  194  (1870) ; 

German  Ins.  Co.  v.  Sherlock,  25  Ohio  St.  33  (1874) ; 

Insurance  Co.  i-.  Boon,  95  U.  S.  117  (1877) ; 

Xew  York  and  Boston  Despatch  Express  Co.  i'.  Traders'  and  Mechanics'  Ins, 

Co.,  132  Mass.  377  (1882); 
Ermentrout  v.  Girard  F.  &  M.  Ins.  Co.,  63  Minn.  305  (1895)  j 
German  F.  Ins.  Co.  v.  Roost,  55  Ohio  St.  581  (1897).  — Ed. 


76Q  AMICABLE   SOCIETY   V.   BOLLAND.  [CHAP.  VII. 

SECTION  III. 

Jjife  Insurance. 
{A)  Death. 

AMICABLE   SOCIETY,  Appellants,  v.  BOLLAND  and  Others, 

Respondents. 

House  of  Lords,  1830.     4  Bligh,  n.  s.  194.^ 

In  Hilary  Term,  1825,  the  respondents  filed  a  bill  in  the  Court  of 
Chancery  against  J.  C.  Disney  and  wife,  Sir  E.  Home,  J.  Birch,  and 
the  appellants,  stating,  among  other  things,  that  in  1815  Henry  Faunt- 
leroy  effected  insurance  upon  his  life  with  the  appellants  in  a  policy 
payable  to  his  executors,  administrators,  or  assigns,  that  Fauntleroy 
paid  the  premiums  from  1815  until  his  death,  that  in  1819  Fauntleroy 
made  a  gratuitous  assignment  of  the  policy  to  Sir  E.  Home  and  J. 
Birch,  in  trust  for  the  wife  of  J.  C.  Disney,  that  in  1824  a  commission 
of  bankrupt  issued  against  Fauntleroy,  under  which  his  estate  and 
effects  became  vested  in  the  respondents  as  his  assignees  under  such 
commission,  and  that  later  in  1824  Fauntleroy  died. 

It  was  prayed,  among  other  things,  that  the  assignment  to  Sir  E. 
Home  and  J.  Birch  be  set  aside,  that  the  respondents  be  declared  en- 
titled to  the  policy  and  the  proceeds,  that  the  appellants  be  decreed  to 
pay  what  was  so  due  to  tiie  respondents,  and  that  J.  C.  Disney  and 
wife.  Sir  E.  Home,  and  J.  Birch  be  decreed,  if  necessary,  to  assign 
the  policy  to  the  respondents. 

The  appellants'  answer  was  to  the  effect  that  Fauntleroy  was  exe- 
cuted for  a  felony. 

The  respondents  having  settled  witli  the  claimants  under  the  assign- 
ment of  1819  and  having  obtained  a  reassignment,  the  cause  came  on 
to  be  heard  before  the  Master  of  the  Rolls,  Sir  John  Leach,  and  it 
was  decreed  that  the  appellants  should  pay  to  the  respondents  the  pro- 
ceeds of  the  policy.     The  appeal  was  against  this  decree. 

For  the  appellants.  Sir  C.  Wetherell  and  Mr.  Rose. 

For  the  respondents,  Sir  E.  B.  Sugden,  S.  G.,  and  Mr.  Koe. 

The  Lord  Chancellor.^  The  circumstances  of  the  case  are  shortly 
these:  In  January,  1815,  Henry  Fauntleroy  insured  his  life  with  the 
Amicable  Insurance  Society.  In  the  month  of  May  in  the  same  year 
he  committed  a  forgery  on  the  Bank  of  England.  He  continued  to 
pay  the  premiums  upon  this  insurance  for  a  considerable  period  of  time. 

1  8.  c.  2  Dow  &  C.  1.     The  statement  lias  been  rewritten.     Before  the  Master 
of  the  Rolls  the  case  is  reported  subnom.    Bollaiui  v.  Disney,  3  Kuss.  351  (1827).  — Ed. 
^  Lord  Lynduurst.  —  Ed. 


SECT.  III.]  AMICABLE    SOCIETY   V.    HOLLAND.  761 

In  the  3'ear  1824  he  was  apprehended,  and  on  the  29th  of  October  in 
that  jear  he  was  declared  a  bankrupt,  and  an  assignment  of  his  effects 
was  made  to  the  respondents.  On  the  following  da}-,  the  30th  of 
October,  he  was  tried  for  this  forger}- ;  he  was  found  guilty,  sentenced 
to  death,  and  in  the  month  of  November  following  was  executed. 

The  question  under  these  circumstances  is  this :  whether  the  assign- 
ees can  recover  against  the  insurance  compan}-  the  amount  of  this 
insurance  ;  that  is  to  say,  whether  a  party,  effecting  with  an  insurance 
company  an  insurance  upon  his  life,  and  afterwards  committing  a 
capital  feIon\%  being  tried,  convicted,  and  tinally  executed,  —  whether, 
under  such  circumstances,  the  parties  representing  him,  and  claiming 
under  him,  can  recover  the  sum  insured  in  the  policy  so  effected.  I 
attended  to  the  argument  at  the  bar,  in  conjunction  with  the  noble 
lord  ^  now  present,  and  we  have  both  come  to  the  conclusion  that  the 
assignees  cannot  maintain  this  suit. 

It  appears  to  me  that  this  resolves  itself  into  a  verj*  plain  and  simple 
consideration.  Suppose  that  in  the  policy  itself  this  risk  had  been  in- 
sured against :  that  is,  that  the  partv  insuring  had  agreed  to  pa}'  a 
sura  of  money  year  by  year,  upon  condition  that  in  the  event  of  his 
committing  a  capital  felony,  and  being  tried,  convicted,  and  executed 
for  that  felony,  his  assignees  shall  receive  a  certain  sum  of  money  —  is 
it  possible  that  such  a  contract  could  be  sustained?  Is  it  not  void 
upon  the  plainest  principles  of  public  policy?  Would  not  such  a  con- 
tract (if  available)  take  away  one  of  those  restraints  operating  on  the 
minds  of  men  against  the  commission  of  crimes,  namely,  the  interest 
we  have  in  the  welfare  and  prosperity  of  our  connections?  Now,  if  a 
policy  of  that  description,  with  such  a  form  of  condition  inserted  in  it 
in  express  terms,  cannot,  on  grounds  of  puV>lic  policy,  be  sustained, 
how  is  it  to  be  contended  that,  in  a  policy  expressed  in  such  terms  as 
the  present,  and  after  the  events  which  have  happened,  —  that  we  can 
sustain  such  a  claim?  Can  we,  in  considering  this  policy,  give  to  it  the 
effect  of  that  insertion,  which  if  expressed  in  terms  would  have  ren- 
dered the  policy,  as  far  as  that  condition  went,  at  least,  altogether 
void  ? 

Upon  this  short  and  plain  ground,  therefore,  independently  of  the 
more  complicated  arguments  referred  to  by  the  counsel  at  the  bar,  in 
the  discussion  of  this  case,  I  think  that  this  policy  cannot  be  sustained, 
and  that  the  respondents  are  not  entitled  to  recover.  I  submit,  there- 
fore, that  the  judgment  of  the  court  below  ought,  under  these  circum- 
stances, to  be  reversed.  Judgment  reversed.'^ 

1  Lord  Radn-or.  — Rep. 

2  Acc. :  Burt  v.  Union  Central  L.  Ins.  Co.,  105  Fed.  R.  419  (C.  C.  A.,  Fifth  Circuit, 
1900),  where  a  person  procured  insurance  on  his  own  life,  later  made  au  assignment  of 
the  policy,  tlien  was  convicted,  after  a  plea  of  insanity,  of  a  murder  committed  subse- 
quently to  the  assignment,  and  finally  was  executed  ;  and  it  was  held  that  a  demurrer 
lay  to  the  petition  in  which  the  assignees,  after  setting  forth  the  conviction  and 
execution,  alleged  that  the  insured  person  did  not  commit  the  murder  and  in  fact  wsi3 
insane.  —  Ed. 


762  BORRADAILE   V.   HUNTETl.  [CHAP.  VII. 


BORRADAILE,  Executor,  v.  HUNTER. 
Common  Pleas,  1843.     5  M.  &  G.  639. ^ 

This  was  an  action  of  covenant  upon  a  policy  procured  by  W.  Borra- 
daile  upon  his  own  life,  payable  to  his  executors.  The  policy  provided 
that  "  in  case  the  assured  shall  die  upon  the  seas,  ...  or  go  bej'ond 
the  limits  of  Europe,  or  enter  into  .  .  .  naval  or  military  service,  .  .  . 
or  jhall  die  by  his  own  hands^or  by  the  hands  of  justice,  or  in  conse- 
quence of  a  duel,  or  if  the  age  of  the  said  assured  does  now  exceed 
thirty-six  years,  .  .  .  this  policy  shall  be  void."  The  pleadings  raised 
the  issue  whether  W.  Borradaile  died  by  his  own  hands.  It  was  proved 
that  he  threw  himself  into  the  Thames  and  was  drowned.  Evidence 
was  given  to  show  that  he  was  insane.  The  jury  returned  a  verdict 
that  "  Mr.  Borradaile  voluntarily  threw  himself  from  the  bridge  with 
the  intention  of  destroying  himself;  but,  at  the  time  of  committing  the 
act,  he  was  not  capable  of  judging  between  right  and  wrong."  The 
verdict  was  entered  for  the  defendant,  with  liberty  for  the  plaintiff  to 
move  that  it  be  entered  for  him  for  the  damages  that  had  been  as- 
sessed b}'  the  jury.  A  rule  nisi  to  set  aside  the  verdict  was  obtained 
accordingl}'. 

Channell,  Serjt.  (with  whom  was  W.  H.  Watson) .^  showed  cause. 

Sir  T.  Wilde,  Serjt.,  and  B.  V.  Hichards,  in  support  of  the  rule. 

Cu7\  adv.  vidt. 

The  learned  judges,  not  being  unanimous,  now  delivered  their  judg- 
ments seriatim^  as  follows  :  — 

Maule,  J.  In  the  judgment  I  am  about  to  deliver  I  have  not  stated 
the  facts,  not  having  adverted  to  the  circumstance  of  my  opinion  being 
delivered  the  first ;  they  will,  however,  no  doubt  be  fully  stated  by  the 
learned  judge  before  whom  the  cause  was  tried. 

I  have  had  much  doubt  in  this  case,  but  the  conclusion  at  which  I 
have  at  last  arrived  is,  that  the  verdict  for  the  defendant  was  right. 
The  question  is,  what  is  the  meaning,  in  the  policy  on  the  testator's 
life,  of  the  words  "  in  case  the  assured  shall  die  by  his  own  hands"? 

In  construing  these  words,  it  is  proper  to  consider,  first,  what  is  their 
meaning  in  the  largest  sense,  which,  according  to  the  common  use  of 
language,  belongs  to  them  ;  and,  if  it  should  appear  that  that  sense  is 
larger  than  the  sense  in  which  they  must  be  understood  in  the  instru- 
ment in  question,,secondly,  what  is  the  object  for  which  the}*  are  used. 
They  ought  not  to  be  extended  beyond  their  ordinary  sense,  in  order 
to  comprehend  a  case  within  their  object,  for  that  would  be  to  give 

1  8.  c.  5  Scott  N.  R.  418. 

The  statement  has  been  rewritten.  —  Ed. 


SECT,  in]  BORKADAILE    V.   IIU2nTER.  76b 

effect  to  an  intention  not  expressed ;  nor  can  the}'  be  so  restricted  as 
to  exclude  a  case  both  within  their  object  and  within  their  -ordinary 
sense,  without  viohiting  the  fundamental  rule  which  requires  that  effect 
should  be  given  to  such  intention  of  the  parties  as  they  have  nsed  tit 
words  to  express. 

The  words  in  question  in  their  largest  ordinar}'  sense  compreliend  all 
cases  of  self-destruction,  and  certainly  include  the  case  of  the  present 
testator ;  but,  as  it  is  admitted  that  in  their  largest  sense  tliey  compre- 
hend many  cases  not  within  their  meaning,  as  used  on  the  present  oc- 
casion, it  is  to  be  considered  whether  the  case  of  the  testator  falls 
witliin  the  object  for  which  they  are  used  in  this  policy.  A  policy  by 
which  the  sura  insured  is  payable  on  the  death  of  the  assured  in  all 
events,  gives  him  a  pecuniary  interest  that  he  should  die  immediately, 
rather  than  at  a  future  time,  to  the  extent  of  the  excess  of  the  value  of 
a  present  payment  over  a  deferred  one,  and  offers  therefore  a  tempta- 
tion to  self-destruction  to  this  extent.  To  protect  the  insurers  against 
the  increase  of  risk  arising  out  of  this  temptation  is  the  object  for  which 
the  condition  in  question  is  inserted.  It  ought,  therefore,  to  be  so  con- 
strued as  to  include  those  cases  of  self-destruction  in  which,  but  for  the 
condition,  the  act  might  have  been  committed  in  order  to  accelerate  the 
claim  on  the  policy,  and  to  exclude  those  in  which  the  circumstances, 
supposing  the  policy  to  have  been  unconditional,  would  show  that  the 
act  could  not  have  been  committed  with  a  view  to  pecuniary  interest. 
This  principle  of  construction  requires  and  accounts  for  the  exclusion 
from  the  operation  of  the  condition  of  those  cases  falling  within  the 
general  sense  of  its  words,  to  which  it  is  admitted  not  to  appk, — 
such  as  those  of  accident  and  deliiium.  To  apply  it  to  the  present 
case :  it  appears  by  the  finding  of  the  jury,  that  the  testator  volunta- 
rily threw  himself  into  the  water,  intending  to  destroy  liis  life,  but 
that  at  the  time  he  did  so  he  was  not  capable  of  judging  between  right 
and  wrong ;  and,  as  a  man  who  drowns  himself  voluntarily  may  do 
it  to  found  a  claim  on  a  policy,  though  he  may  not  think  it  wrong  to 
do  so,  or  though  his  mind  may  be  so  diseased  that  he  does  not  know 
right  from  wrong,  —  which,  as  I  understand  the  finding  of  the  jury, 
was  the  case  with  the  testator,  —  it  seems  to  me  that  the  object  of  the 
condition  would  not  be  effected  unless  it  comprehended  such  a  case  of 
self-destruction. 

For  these  reasons,  I  think  the  defendant  ought  to  retain  the  verdict, 
though  I  cannot  but  distrust  my  opinion  when  it  differs  from  the  judg- 
ment of  the  Lord  Chief  Justice.  It  is  also  impossible  not  to  feel  that 
the  condition  in  question  is.  in  respect  of  the  amount  of  forfeiture,  a 
hard  one,  as  it  goes  beyond  what  is  necessary  to  remove  the  temptation 
to  suicide  arising  out  of  the  claim  acquired  by  the  death  of  the  party. 
That  object  would  be  effected  bv  reducing  the  claim  in  case  of  suicide, 
to  the  amount  for  which  the  policy  could  have  been  sold  immediately 
before  the  death  of  the  assured,  as  completely  as  by  a  forfeiture  of  the 
whole. 


764  BORKADAILE    V.    HUNTER.  [CHAP.  VII. 

Erskine,  J.^  .  .  .  The  language  adopted  by  the  society  is  certainly 
not  well  selected ;  because,  if  taken  literally,  this  case,  and  all  other 
cases  in  which  the  work  of  self-destruction  might  be  effected  otherwise 
than  b}'  the  hands  of  the  assured,  would  be  excluded  from  the  operation 
of  the  proviso ;  while  all  cases  of  unintentional  self-destruction  by  the 
hands  of  the  assured  would  be  included  in  it.  But  it  was  ver}-  properl3' 
conceded  by  the  counsel  for  the  plaintiff,  that  the  clause  must  receive  a 
reasonable  construction,  according  to  the  plain  and  obvious  intention 
of  the  parties,  as  collected  from  the  whole  of  the  instrument,  and, 
therefore,  that  the  proviso  might  be  construed  as  if  the  words  had  been, 
"  if  the  assured  shall  die  by  his  own  act."  .  .  . 

It  has  been  argued,  on  the  part  of  the  plaintiff,  that,  as  the  ver}'  ob- 
ject of  a  life  insurance  is  to  secure  a  provision  for  a  surviving  family 
against  the  fatal  consequences  of  decease  in  the  assured,  if  the  act  oc- 
casioning the  death  can  be  traced  as  the  result  of  a  diseased  mind,  tlie 
case  conies  within  the  main  scope  and  object  of  the  contract  of  insur- 
ance. This  argument  would  have  been  unanswerable  if  the  policy  had 
been  wholly  silent  on  the  subject,  as  in  the  case  of  The  Amicable  Life 
Insurance  Company  v.  Bolland,  Selw.  N.  P.  10th  ed.  1033,  4  Bligh, 
N.  s.  194,  2  Dow  «fe  CI.  1  ;  or  if  the  proviso  had  been  couclied  in  terms 
pointed  onl^-  to  acts  resulting  from  a  criminal  intention  ;  but  the  very 
object  of  a  proviso  like  the  present  is  to  take  out  of  the  operation  of 
the  general  terms  of  the  polic}',  death  resulting  from  causes  which 
would  otherwise  fall  within  the  general  scope  of  the  contract,  although, 
ex  abundcoiti  cauteld,  it  also  includes  cases  which  the  law  itself  would 
except,  as  those  of  criminal  suicide,  and  death  by  sentence  of  the  law, 
or  duelling.  .  .   . 

It  is  well  known  that  the  conduct  of  insane  patients  is,  in  some  de- 
gree, under  the  control  of  their  hopes  and  fears,  and  that  especially 
their  affection  for  others  often  exercises  a  swa}-  over  their  minds  where 
fear  of  death,  or  of  personal  suffering,  might  have  no  influence ;  and 
insurers  might  well  desire  not  to  part  with  this  restraint  upon  the  mind 
and  conduct  of  the  assured,  nor  to  release  from  all  pecuniary  interest 
in  the  continuance  of  the  life  of  the  assured  those  on  whose  watchful- 
ness its  preservation  might  depend  ;  and  they  might,  further,  most 
reasonably  desire  to  exclude  from  all  questions  between  themselves 
and  the  representatives  of  the  assured  the  topic  of  criminality  so  likely 
to  excite  the  compassionate  prejudices  of  a  jury,  which  were  most  pow- 
erfully appealed  to  on  the  trial  of  this  cause.  .  .  . 

And,  when  I  find  the  terms  "shall  commit  suicide,"  that  have  been 
popularly  understood  and  judicially  considered  as  importing  a  criminal 
act  of  self-destruction,  exchanged  for  terms  not  hitherto  so  construed, 
it  mny,  I  think,  be  fairly  inferred  that  the  terms  adopted  were  intended 
to  embrace  all  cases  of  intentional  self-destruction,  unless  it  can  be 

1  The  concurring  opinions  of  Erskink  and  Coltman,  J.J.,  and  the  dissenting 
opinion  of  Tindal,  C.  J.,  have  not  been  reprinted  in  full. —Ed. 


SECT.  III.]  BORHADAILE    V.    HUNTER.  765 

collected  from  the  immediate  context  that  the  parties  used  them  in  a 
more  limited  sense.   .   .   . 

Other  conditions  precede  and  follow  this  clause  which  involve  no 
criminality  of  intention,  to  some  of  which  conditions  no  sucli  intention 
could  bv  any  fair  inference  be  possibly  attached,  and  to  others  (which 
are  also  open  to  the  inference  arising  from  the  context)  the  courts  of 
law  have  decided  that  no  such  inference  does  attach.   .  .   . 

CoLTMAN,  J.  .  .  .  But  it  is  urged,  that,  in  this  case,  the  words  of  the 
exception  are  not  to  be  construed  in  a  literal  sense  ;  for,  many  cases 
may  be  put  which  fall  within  the  literal  terms  of  the  exception,  which 
vet  cannot  reasonably  be  supposed  to  fall  within  the  intention  of  the 
contracting  parties  ;  as,  if  in  a  state  of  delirium  a  man  should  remove 
bandages  from  a  vein  which  had  been  opened,  without  being  aware  of 
the  consequences,  or  should  take  poison  b}-  mistake.  It  may  be  true 
that  there  may  be  certain  acts  done  by  the  hands  of  a  party  which  oc- 
casion his  death,  where,  such  acts  not  having  been  done  intentionally 
by  the  party,  he  might  not  be  considered  as  having  died  by  his  own 
hands  within  the  meaning  of  the  policy.  In  such  cases,  a  limitation 
not  expressed  might,  perhaps,  though  not  without  some  violence  to  the 
words,  be  introduced  in  construing  the  words  of  the  exception,  where 
such  a  limitation  is  necessary  to  give  effect  to  what  is  assumed  to  be 
the  clear  intention  of  the  contracting  parties ;  yet  it  will  not  follow  that 
a  further  limitation  ought  to  be  introduced  in  a  case  where  there  is  no 
sufficient  ground  for  inferring  that  such  a  construction  is  in  accordance 
with  the  intention  of  the  contracting  parties.  .  .  . 

It  was  further  urged  on  behalf  of  the  plaintiff,  that,  at  any  rate,  to 
bring  a  case  within  the  meaning  of  the  exception  there  must  be  an 
intention  in  the  party  to  die  by  his  own  hands  ;  and  it  was  urged  that 
an  insane  person  could  not  be  considered  as  having  any  intention  ;  that 
bv  an  intention  was  meant  a  controllable  intention  ;  that  it  was  like 
the  case  of  a  man  who  should  find  himself  suddenl}'  on  the  brink  of  a 
precipice  and  irresistibh-  impelled  to  throw  himself  down  it.  But  the 
fact  in  this  case  dees  not  bear  out  the  argument ;  there  is  no  ground 
for  saying  that  Mr.  Borradaile  acted  under  any  such  uncontrollable 
impulse  ;  on  the  contrary,  the  jury  have  found  that  he  did  the  act  vol- 
untarih",  which  implies  that  he  had  power  to  do  the  act  or  to  abstain 
from  it.   .   .   . 

TiNDAL,  C.  J.  .  .  .  As  the  result  of  the  finding  of  the  jury  is,  that 
the  assured  killed  himself  intentionall}',  but  not  feloniousk,  the  short 
question  before  us  becomes  this,  whether  the  defendant  can  make  out 
(for  it  lies  on  him  to  establish  the  affirmative)  that  the  death  of  the 
assured  under  those  circumstances  falls  within  the  meaning  of  the  words 
in  the  proviso  "dying  by  his  own  hands."  And  it  appears  to  me  that 
he  cannot ;  but  that,  looking  at  the  words  themselves,  and  the  context 
and  position  in  which  they  are  found,  a  felonious  killing  of  himself,  and 
no  other,  was  intended  to  be  excepted  from  the  policy.  .  .  .  The  ex- 
pression —  "  dying  by  his  own  hand  "  —  is,  in  fact,  no  more  than  the 


766  LIFE    INSURANCE    CO.    V.   TERRY.  [CHAP.  VII. 

translation  into  English  of  the  word  of  Latin  origin  —  "  suiciile  ;  " 
but,  if  the  exception  had  run  in  the  terms  "  shall  die  by  suicide,  or  by 
the  hands  of  justice,  or  in  consequence  of  a  duel,"  surely  no  doubt 
could  have  arisen  that  a  felonious  suicide  was  intended  thereby  ;  and, 
if  so,  ought  a  different  construction  to  prevail  because  the  English  term 
is  found  in  the  policy  instead  of  the  Latin  ?  .  .  . 

I  therefore  found  the  opinion  at  which  I  have  arrived  in  this  case 
upon  the  consideration  that  the  insurers  intended  by  the  proviso  to 
confine  their  exemption  from  liability  to  the  case  of  felonious  suicide 
only  ;  that,  if  they  intended  the  exception  to  extend  both  to  the  case 
of  felonious  self-destruction  and  self-destruction  not  felonious,  they 
ought  so  to  have  expressed  it  clearly  in  the  policy  ;  and  that,  at  all 
events,  if  they  have  left  it  doubtful  on  the  face  of  the  policy  whether 
it  is  so  confined  or  not,  that  doubt  ought,  in  my  opinion,  to  be  deter- 
mined against  them  ;  for  it  is  incumbent  on  them  to  bring  themselves 
within  the  exception,  and,  if  their  meaning  remains  in  doubt,  they  have 
failed  so  to  do.  .  .  .  Jiid<i  discharged^ 


LIFE   INSURANCE  COMPANY  v.  TERRY. 

Supreme  Coukt  of  the  United  States,  1872.     15  Wall.  580.^ 

PLruor  to  the  Circuit  Court  for  the  District  of  Kansas. 

Mary  Terry  brought  an  action  in  the  court  below  against  the  Mutual 
Life  Insurance  Company  of  New  York,  to  recover  the  sum  of  $2,000, 
claimed  by  her  as  due  upon  a  policy  of  insurance  on  the  life  of  her 
husband  George  Terry,  made  and  issued  to  her  as  his  wife. 

The  policy  contained  a  condition,  of  which  a  portion  was  in  these 
words  :  — 

"If  the  said  person,  whose  life  is  hereby  insured,  .  .  .  shall  die  by 
his  own  hand,  .  .  .  this  policy  shall  be  null  and  void." 

Within  the  term  of  the  policy,  George  Terry  died  from  the  effects  of 
poison  taken  by  him. 

Evidence  was  given  tending  to  show  that  at  the  time  he  took  the 
poison  lie  was  insane.  Evidence  was  also  given  tending  to  show  that 
at  that  time  he  was  sane,  and  capable  of  knowing  the  consequences  of 
the  act  he  was  about  to  commit. 

1  Ace:  Clift  V.  Schwabe,  3  C.  B.  437  (Ex.  Ch.  1846),  ("commit  suicide  or  dio  hy 
duelling  or  the  hands  of  justice  ")  ;  Dean  v.  Americau  Mut.  L.  Ins.  Co.,  4  Allen,  96 
(1862),  ("  die  by  his  own  hand,  or  in  consequence  of  a  duel,  or  by  the  hands  of  justice, 
or  ill  tlie  known  violation  of  .  .  .  law  ") ;  Cooper  v.  Massachusetts  Mut.  L.  Ins.  Co., 
102  Mass.  227  (1869),  ("die  l)y  suicide");  Van  Zandt  v.  Mutual  Benefit  L.  Ins.  Co., 
53  N.  Y.  169  (1873),  ("die  by  his  own  hands  ").  —  Ed. 

2  s.  c.  iu  the  Circuit  Court,  sub.  nom.  Terry  v.  Life  Ins.  Co.,  1  Dillon,  403  (1871). 
—  Ed. 


SECT.  III.]  LIFE  INSURANCE   CO.   V.   TERRY.  767 

Thereupon  the  counsel  for  the  defendant  requested  the  court  to  in- 
struct the  jury  thus  :  — 

^'- First.  If  the  jury  beUeve  from  the  evidence  in  the  case,  that  the 
said  George  Terry  destroyed  his  own  life  ;  and  that,  at  the  time  of 
self-destiuclion,  he  had  sufficient  capacity  to  understand  the  nature  of 
the  act  wiiich  he  was  about  to  commit,  and  tlie  consequences  which 
would  result  from  it,  then,  and  in  that  case,  the  plaintiff  cannot  recover 
on  the  policy  declared  on  in  this  case. 

"  Seco)id.  That  if  the  jury  believe  from  the  evidence  that  the  self- 
destruction  of  the  said  George  Terry  was  intended  by  him,  he  iiaving 
sufficient  capacity  at  the  time  to  understand  the  nature  of  the  act  which 
be  was  about  to  commit,  and  the  consequences  which  would  result  from 
it,  then,  and  in  that  case,  it  is  wholly  immaterial  in  the  present  case 
that  he  was  impelled  thereto  by  insanity,  which  impaired  his  sense  of 
moral  responsibiUty,  and  rendered  him,  to  a  certain  extent,  irrespon- 
sible for  liis  action." 

The  court  refused  to  give  either  of  these  instructions,  and  charged  as 
follows :  — 

"It  being  agreed  that  the  deceased  destroyed  his  life  by  taking 
poison,  it  is  claimed  by  defendant  that  he  '  died  by  his  own  hand,' 
within  the  meaning  of  the  policy,  and  that  they  are,  therefore,  not 
liable. 

"This  is  so  far  true  that  it  devolves  on  the  plaintiff  to  prove  such 
insanity  on  the  part  of  the  decedent,  existing  at  the  time  he  took  the 
poison,  as  will  relieve  the  act  of  taking  his  own  life  from  the  'effect 
which,  by  the  general  terms  used  in  the  policy,  self-destruction  was  to 
have,  namel}',  to  avoid  the  policy. 

"  It  is  not  every  kind  or  degree  of  insanity  which  will  so  far  excuse 
the  party  taking  his  own  life  as  to  make  the  company  insuring  liable. 

"To  do  this,  the  act  of  self-destruction  must  have  been  the  conse- 
quence of  the  insanity,  and  the  mind  of  the  decedent  must, have  been 
so  far  deranged  as  to  have  made  him  incapable  of  using  a  rational 
judgment  in  regard  to  the  act  which  he  was  committing. 

"  If  he  was  impelled  to  the  act  by  an  insane  impulse  which  the  rea- 
son that  was  left  him  did  not  enable  him  to  resist,  or  if  his  reasoning 
powers  were  so  far  overthrown  by  his  mental  condition  that  he  could 
not  exercise  his  reasoning  faculties  on  the  act  he  was  about  to  do,  the 
company  is  liable.  On  the  other  hand,  there  is  no  presumption  of  law, 
prima  facie  or  otherwise,  that  self-destruction  arises  from  insanity, 
and  if  you  believe  from  the  evidence  that  the  decedent,  although  ex- 
cited, or  angry,  or  distressed  in  mind,  formed  the  determination  to 
take  his  own  life,  because,  in  the  exercise  of  his  usual  reasoning  facul- 
ties, he  preferred  death  to  life,  then  the  company  is  not  liable,  because 
he  died  by  his  own  hand  within  the  meaning  of  the  policy." 

The  cause  came  to  this  court  on  exceptions  to  the  refusal  of  the 
court  to  give  the  instructions  requested  by  the  insurance  company,  and 
to  the  charge  wliich  was  actually  given. 


768  LIFE  INSUKANCE  CO.  V.    TERRY.        [CHAP.  VIL 

Messrs.  jff".  £^.  and  J.  T.  Davies,  for  the  plaintiff  in  error. 

Mr.   W.  W.  JVevison,  contra. 

Mr.  Justice  Hunt  delivered  the  opinion  of  the  court. 

The  request  for  instructions  inade  by  the  counsel  of  the  insurance 
compan}'  proceeds  upon  the  theor}'  that  if  the  deceased  had  sufficient 
mental  capacity  to  understand  the  nature  and  consequences  of  his  act, 
that  is,  that  he  was  about  to  take  poison,  and  that  his  death  would  be 
the  result,  he  was  responsible  for  his  conduct,  and  the  defendant  is 
not  liable  ;  and  the  fact  that  his  sense  of  moral  responsibilit}'  was  im- 
paired by  insanity  does  not  affect  the  case. 

The  charge  proceeds  upon  the  theory  that  a  higher  degree  of  mental 
and  moral  power  must  exist;  that  although  the  deceased  had  the  capa- 
city' to  know  that  he  was  about  to  take  poison  and  that  his  death 
would  be  the  result,  yet,  if  his  reasoning  powers  were  so  far  gone  that 
he  could  not  exercise  them  on  the  act  he  was  about  to  commit,  its 
nature  and  effect,  or  if  he  was  impelled  by  an  insane  impulse  which  his 
impaired  capacity  did  not  enable  him  to  resist,  he  was  not  responsible 
for  his  conduct,  and  the  defendant  is  liable. 

It  may  not  be  amiss  to  notice  that  the  case  does  not  present  the 
point  of  what  is  called  emotional  insanit}',  or  mania  transitoria,  that 
is,  the  case  of  one  in  the  possession  of  his  ordinary  reasoning  faculties, 
who  allows  his  passions  to  convert  him  into  a  temporary  maniac,  and 
while  in  this  condition  commits  the  act  in  question.  This  case  is  ex- 
pressly excluded  by  the  last  clause  of  the  charge,  in  which  it  is  said 
that  anger,  distress,  or  excitement  does  not  bring  the  case  within  the 
rule,  if  the  insured  possesses  his  ordinal-}' reasoning  faculties.-^  .   .  . 

There  is  a  conflict  in  the  authorities  which  cannot  be  reconciled. 

The  propositions  embodied  in  the  charge  before  us  are  in  some  re- 
spects different  from  each  other,  but  in  principle  they  are  identical. 
The\'  rest  upon  the  same  basis,  —  the  moral  and  intellectual  incapacity 
of  the  deceased.  In  each  case  the  ph3-sical  act  of  self-destruction  was 
that  of  George  Terry.  In  neither  was  it  trul}'  his  act.  In  the  one 
supposition  he  did  it  wlien  his  reasoning  powers  were  overthrown  and 
he  had  not  power  or  capacity  to  exercise  them  upon  the  act  he  was 
about  to  do.  It  was  in  effect  as  if  liis  intellect  and  reason  were 
blotted  out  or  had  never  existed.  In  the  other,  if  he  understood  and 
appreciated  the  effect  of  his  act,  an  uncontrollable  impulse  caused  b}' 
insanity  compelled  its  commission.  He  had  not  the  power  to  refrain 
from  its  commission,  or  to  resist  the  impulse.  Each  of  the  princii)les 
put  forth  by  the  judge  rests  upon  the  same  basis,  —  that  the  act  was 
not  the  voluntary  intelligent  act  of  the  deceased.^  .  .  . 

The  question  of  sanity  has  usually  been  presented  upon  the  validity 
of  an  agreement,  the  capacity  to  make  a  will,  or  ui)on  responsibilit\' 
for  crime.  If  Terry  had  made  an  agreement  under  the  circumstances 
stated  in  the  charge,  a  jury  or  a  court  would  have  been  justified  in  pro- 

1  The  statement  of  the  authorities  has  been  omitted.  —  Ed. 

2  Here  followed  a  discussion  of  the  causes  of  insanity.  — Ed. 


SECT.  III.]  LIFE    INSURANCE    CO.    V.   TERRY.  769 

nonncing  it  invalid.  A  will,  then,  made  b}-  him,  would  have  been 
rejected  by  the  surrogate  if  offered  for  probate.  If  upon  trial  for  a 
criminal  offence,  upon  all  the  authorities,  he  would  have  been  entitled 
to  a  charge,  that  upon  proof  of  the  facts  assumed,  the  jur}-  must  acquit 
him. 

We  think  a  similar  principle  must  control  the  present  case,  although 
the  standard  ma\-  be  different. 

We  hold  the  rule  on  the  question  before  us  to  be  this  :  If  the  assured, 
being  in  the  possession  of  his  ordinary  reasoning  faculties,  from  anger, 
pride,  jealousy,  or  a  desire  to  escape  from  the  ills  of  life,  intentionally 
takes  his  own  life,  tlie  proviso  attaches,  and  there  can  be  no  recovery. 
If  the  death  is  caused  by  the  voluntary  act  of  the  assured,  he  knowing 
and  intending  that  his  death  shall  be  the  result  of  his  act,  but  when  his 
reasoning  faculties  are  so  far  impaired  that  he  is  not  able  to  understand 
the  moral  character,^  the  general  nature,  consequences,  and  effect  of 
the  act  he  is  about  to  commit,  or  when  he  is  impelled  thereto  by  an. 
insane  impulse,  which  he  has  not  the  power  to  resist,^  such  death  is  not 
within  the  contemplation  of  the  parties  to  the  contract,  and  the  insurer 
is  liable. 

In  the  present  instance  the  contract  of  insurance  was  made  between 
Mrs.  Terry  and  the  company,  the  insured  not  being  in  form  a  party  to 
the  contract.  Such  contracts  are  frequently  made  by  the  insured  him- 
self, the  policy  stating  that  it  is  for  the  benefit  of  the  wife,  and  that  in 
the  event  of  death  the  money  is  to  be  paid  to  her.  We  see  no  differ- 
ence in  the  cases.  In  each  it  is  the  case  of  a  contract,  and  is  to  be  so 
rendered  as  to  give  effect  to  the  intention  of  the  parties.  Nor  do  we 
see  any  difference  for  this  purpose  in  the  meaning  of  the  expressions, 
"commit  suicide,"  "take  his  own  life,"  or  "die  by  his  own  hands." 
With  either  expression,  it  is  not  claimed  that  accidental  self-destruc- 
tion, death  in  endeavoring  to  escape  from  the  flames,  or  the  like,  is 
within  the  proviso.  Judgment  affirmed.^ 

Mr.  Justice  Strong  dissented. 

1  Ace:  Breasted  v.  Farmers'  L.  &  T.  Co.,  4  Hill  73  (1843),  s.  c.  in  the  Court  of 
Appeals,  8  N.  Y.  299  (1853),  ("die  by  his  own  hand")  ;  Phadeuhauer  v.  Germania 
L.  Ins.  Co.,  7  Heisk.  567  (1872),  ("  die  by  suicide  or  by  his  own  hands") ;  Life  Asso- 
ciation V.  Waller,  57  Ga.  533  (1876),  ("  die  by  suicide  ") ;  Insurance  Co.  v.  Rodel,  95 
U.  S.  232  (1877),  ("  die  by  his  own  hand  ") ;  Connecticut  Mut.  L.  Ins.  Co.  v.  Groom, 
86  Pa.  92  (1878),  ("die  by  suicide  ")  ;  Manhattan  L.  Ins.  Co.  v.  Broughton,  109  U.  S. 
121  (1883),  ("die  by  suicide");  Schultz  v.  Ins.  Co.,  40  Ohio  St.  217  (1883),  ("under 
any  circumstances,  die  by  his  own  hand")  ;  Michigan  Mut.  L.  Ins.  Co.  v.  Naugle,  130 
Ind.  79  (1891),  ("  die  by  hisown  hand  ") ;  Connecticut  Mut.  L.  Ins.  Co.  v.  Akens,  l.'iO 
U.  S.  468  (1893),  ("  self-destruction  ...  in  any  form,  e.xcept  .  .  .  the  direct  result  of 
disease  or  of  accident  occurring  without  the  voluntary  act  of  the  insured  ").  —  Ed. 

2  Ace:  Estabrook  v.  Union  Mut.  L.  Ins.  Co.,  54  Me.  224  (1866) ;  Scheffer  v.  Na- 
tional L.  Ins.  Co.,  25  Minn.  5,34  (1879).  — Ed. 

3  See  Van  Zandt  v.  Mutual  Benefit  L.  Ins.  Co.,  55  N.  Y.  169,  178-179  (1873). 
—  Ep. 

49 


770  BIGELOW   V.   BERKSHIRE    LIFE    INS.    CO.  [CHAP.  VII. 


BIGELOW  V.   BERKSHIRE   LIFE   INSURANCE   CO. 
Supreme  Court  of  the  United  States,  1876.     93  U.  S.  284. 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Northern 
District  of  IlUnois. 

This  is  an  action  on  two  policies  issued  by  the  defendant  on  the  life 
of  Henr\^  W.  Bigelow.  Each  contained  a  condition  in  avoidance,  if 
the  insured  should  die  by  Suicide,  sane  or  insane ;  and  in  such  case  the 
company  agreed  to  pay  to  the  party  in  interest  the  surrender  value  of 
the  policy  at  the  time  of  the  death  of  Bigelow.  The  defendant  pleaded 
that  Bigelow  died  from  the  effects  of  a  pistol-wound  inflicted  upon  his 
person  by  his  own  hand,  and  that  he  intended  by  this  means  to  destroy 
his  life.  To  this  the  plaintiffs  replied,  that  Bigelow,  at  the  time  when 
he  inflicted  the  pistol-wound  upon  his  person  by  his  own  hand,  was  of 
unsound  mind,  and  wholly  unconscious  of  the  act.  A  demurrer  to  this 
replication  was  sustained  by  the  court  below,  and  the  plaintiffs  bring 
the  case  liere  for  review. 

Mr.  Thomas  Hoyiie,  for  the  plaintiff  in  error. 

Mr.  H.  G.  Miller^  contra. 

Mr.  Justice  Davis  delivered  the  opinion  of  the  court. 

There  has  been  a  great  diversity  of  judicial  opinion  as  to  whether 
self-destruction  by  a  man,  in  a  fit  of  insanity,  is  within  the  condition  of 
a  life  policy,  where  the  words  of  exemption  are  that  the  insured  "shall 
commit  suicide,"  or  "shall  die  by  his  own  hand."  But  since  the  de- 
cision in  Life  Ins.  Co.  v.  Terry,  15  Wall.  580,  the  question  is  no  longer 
an  open  one  in  this  court.  In  that  case  the  words  avoiding  the  policy 
were,  "shall  die  by  his  own  hand  ; "  and  we  held  that  they  referred  to 
an  act  of  criminal  self-destruction,  and  did  not  apply  to  an  insane  per- 
son who  took  his  own  life.  But  the  insurers  in  this  case  have  gone 
further,  and  sought  to  avoid  altogether  this  class  of  risks.  If  tliey  have 
succeeded  in  doing  so,  it  is  our  duty  to  give  effect  to  the  contract ;  as 
neither  the  policy  of  the  law  nor  sound  morals  forbid  them  to  make  it. 
If  they  are  at  liberty  to  stipulate  against  hazardous  occupations,  un- 
liealthy  climates,  or  death  by  the  hando  of  the  law,  or  in  consequence 
of  injuries  received  when  intoxicated,  surely  it  is  competent  for  them  to 
stipulate  against  intentional  self-destruction,  whether  it  be  the  voluntary 
act  of  an  accountable  moral  agent  or  not.  It  is  not  perceived  why  they 
cannot  limit  their  liability,  if  the  assured  is  in  proper  language  tokl  of 
the  extent  of  the  limitation,  and  it  is  not  against  public  policy.  The 
words  of  this  stipulation,  "shall  die  by  suicide  (sane  or  insane),"  must 
receive  a  reasonable  construction.  If  they  be  taken  in  a  strictly  literal 
sense,  their  meaning  might  admit  of  discussion  ;  but  it  is  obvious  that 
they  were  not  so  used.  "  Shall  die  by  his  own  hand,  sane  or  insane," 
is,  doubtless,  a  more  accurate  mode  of  expression  ;  but  it  does  not  more 
clearly  declare  the  intention  of  the  parties.     Besides,  the  authorities 


SECT.  III.]  BIGELOW   V.   BERKSHIRE    LIFE   INS.   CO.  771 

uniformly  treat  the  terms  "suicide"  and  "dying  by  one's  own  liand," 
in  policies  of  life  insurance,  as  synonymous,  and  the  popular  understand- 
ing accords  with  this  interpretation.  Chief  Justice  Tindal,  in  Borra- 
daile  v.  Hunter,  5  Mann.  &  Gr.  668,  says,  "The  expression  'dying  by 
his  own  hand,'  is,  in  fact,  no  more  than  the  translation  into  English  of 
the  word  of  Latin  origin,  'suicide.'"  Life  insurance  companies  indis- 
criminately use  either  plirase,  as  conveying  the  same  idea.  If  the 
words,  "  shall  commit  suicide,"  standing  alone  in  a  policy,  import  self- 
murder,  so  do  the  words,  "shall  die  by  his  own  hand."  Either  mode 
of  expression,  when  accompanied  by  qualifying  words,  must  receive 
the  same  construction.  This  being  so,  there  is  no  difficulty  in  defining 
the  sense  in  which  the  language  of  this  condition  should  be  received. 
Felonious  suicide  was  not  alone  in  the  contemplation  of  the  parties. 
If  it  had  been,  there  was  no  necessity  of  adding  anything  to  the  gen- 
eral words,  which  had  been  construed  by  many  courts  of  higli  authority 
as  not  denoting  self-destruction  by  an  insane  man.  Such  a  man  could 
not  commit  felony  ;  but,  conscious  of  the  physical  nature,  although  not 
of  the  criminality,  of  the  act,  he  could  take  his  own  life,  with  a  settled 
purpose  to  do  so.  As  the  line  between  sanit}'  and  iiisanit\"  is  often 
sliadowy  and  difficult  to  define,  this  company  thought  proper  to  take 
the  subject  from  the  domain  of  controversy,  and  by  express  stipulation 
preclude  all  liability  by  reason  of  tlie  death  of  the  insured  by  his  own 
act,  whether  he  was  at  the  time  a  responsible  moral  agent  or  not. 
Nothing  can  be  clearer  than  that  the  words,  "sane  or  insane,"  were 
introduced  for  the  purpose  of  excepting  from  the  operation  of  the  policy 
any  intended  self-destruction,  whether  the  insured  was  of  sound  mind 
or  in  a  state  of  insanity.  These  words  have  a  precise,  definite,  well- 
understood  meaning.  Xo  one  could  be  misled  by  them  ;  nor  could  an 
expansion  of  this  language  more  clearly  express  the  intention  of  the 
parties.  In  the  popular,  as  well  as  the  legal,  sense,  suicide  means,  as 
we  have  seen,  the  death  of  a  party  by  his  own  voluntary  act ;  and 
this  condition,  based  as  it  is  on  the  construction  of  this  language,  in- 
formed the  holder  of  the  polic}-  that,  if  he  purposely  destroyed  his  own 
life,  the  company  would  be  relieved  from  liability.  It  is  unnecessary  to 
discuss  the  various  phases  of  insanity  in  order  to  determine  whether  a 
state  of  circumstances  might  not  possibly  arise  which  would  defeat  the 
condition.  It  will  be  time  to  decide  that  question  when  such  a  case  is 
presented.  For  the  purposes  of  this  suit  it  is  enough  to  say,  that  the 
policy  was  rendered  void  if  the  insured  was  conscious  of  the  physical 
nature  of  his  act,  and  intended  by  it  to  cause  his  death,  although  at 
the  time  he  was  incapable  of  judging  between  right  and  wrong,  and  of 
understanding  tlie  moral  consequences  of  what  he  was  doing. 

Insurance  companies  have  only  recently  inserted  in  the  provisos  to 
their  policies  words  of  limitation  corresponding  to  those  used  in  this 
case.  There  has  been,  therefore,  but  little  occasion  for  courts  to  pass 
upon  them.  But  the  direct  question  presented  here  was  before  the  Su- 
preme Court  of  Wisconsin  in  1874,  in  Pierce  'v.  The  Travellers'  Life 


772  '  BILLINGS    V.    ACCIDENT   INS.    CO.  [CHAP.  VII. 

Insurance  Compan}-,  34  Wis.  389,  and  received  the  same  solution  we 
have  given  it.  More  words  were  there  used  tlian  are  contained  in  this 
proviso ;  but  the  effect  is  the  same  as  if  they  had  been  omitted.  To 
sa}'  that  the  compan}'  will  not  be  liable  if  the  insured  shall  die  by  "sui- 
cide, felonious  or  otherwise,"  is  the  same  as  declaring  its  non-liability, 
if  he  shall  die  by  "suicide,  sane  or  insane."  Tliej"  are  equivalent 
phrases.  Neither  the  reasoning  nor  the  opinion  of  that  court  is  at  all 
affected  by  the  introduction  of  words  which  are  not  common  to  both 
policies. 

It  remains  to  be  seen  whether  the  court  below  erred  in  sustaining  the 
demurrer.  The  replication  concedes,  in  effect,  all  that  is  alleged  in  the 
plea  ;  but  avers  that  the  insured  at  the  time  "  was  of  unsound  mind,  and 
wholly  unconscious  of  the  act."  These  words  are  identical  with  those 
in  the  replication  to  the  plea  in  Breasted  v.  Farmers'  Loan  and  Trust 
Compan}',  4  Hill,  73  ;  and  Judge  Nelson  treated  them  as  an  averment 
that  the  assured  was  insane  when  he  destroyed  his  life.  The}'  can  be 
construed  in  no  other  way.  If  the  insured  had  perished  by  the  acci- 
dental discharge  of  the  pistol,  the  replication  would  have  traversed  the 
plea.  Instead  of  this,  it  confesses  that  he  intentionally  took  his  own 
life ;  and  it  attempts  to  avoid  the  bar  by  setting  up  a  state  of  insanity. 
The  phrase,  "  wholl}"  unconscious  of  the  act,"  refers  to  the  real  nature 
and  character  of  the  act  as  a  crime,  and  not  to  the  mere  act  itself. 
Bigelow  knew  that  he  was  taking  his  own  life,  and  showed  sufficient 
intelligence  to  emploj-  a  loaded  pistol  to  accomplish  his  purpose  ;  but 
he  was  unconscious  of  the  great  crime  he  was  committing.  His  dark- 
ened mind  did  not  enable  him  to  see  or  appreciate  the  moral  character 
of  his  act,  but  still  left  him  capacity  enough  to  understand  its  physical 
nature  and  consequences. 

In  the  view  we  take  of  the  case,  enough  has  been  said  to  show  that 
the  court  did  not  err  in  holding  that  the  replication  was  bad. 

Judgment  affirmed^ 


BILLINGS   V.   ACCIDENT  INS.   CO. 

Supreme  Court  of  Vermont,  1891.     64  Vt.  78. 

Assumpsit  upon  a  policy  of  life  insurance.  Plea,  the  general  issue, 
and  notice  of  special  nnatter.  Trial  b}-  jur}'  at  the  March  Term, 
Rutland  County,  1889,  Ross,  J.,  presiding.  The  plaintiff  offered 
certain  evidence,  as  stated  in  the  opinion,  which  the  court  refused 

^  Ace:  Adkins  v.  Columbia  L.  Ins.  Co.  70  Mo.  27  (1879),  ("by  his  own  act  and 
intention,  whether  sane  or  insane")  ;  Streeter  v.  Western  Union  Mut.  L.  &  A.  Soc, 
6.5  Mich.  199  (1887),  ("by  his  own  hand,  sane  or  insane");  Tritschler  v.  Keystone 
Mut.  Benefit  Assn.,  180  Pa  205  (1897),  ("  by  suicide,  feloniously  or  otherwise,  sane  or 
insane").  —  Ed. 


SECT.  III.]  BILLIN'GS    V.    ACCIDENT    INS.    CO.  773 

to  admit.  Thereupon  the  case  was  withdrawn  from  the  jur}-,  and 
passed  to  tlie  Supreme  Court  upon  the  exception  of  the  plaintiff  for 
the  determination  of  the  question  raised  l)\'  this  olTer. 

Uromley  &  Clark,  and  H.  A.  Harmwi,  for  the  plaintiff. 

Henry  Ballard  and  J.  C.  Baker,  for  the  defendant. 

Taft,  J.  It  is  a  condition  of  the  policy  in  question  that  it  shall  not 
cover  a  case  if  death  results  from  suicide  (sane  or  insane).  It  is  not 
denied  hy  the  plaintiff  but  that  the  assured  died  from  the  effects  of  a 
pistol  shot  fired  by  himself ;  but  she  insists  and  offered  testimony  to 
show  that,  when  the  insured  so  fired  the  shot,  his  mind  had  become  so 
dominated  and  controlled  by  an  unnatural  impulse  to  fire  said  pistol 
into  his  own  forehead  that  his  will  could  not  resist  said  impulse,  and 
that  he  did  not  voluntarily  or  intentionally  fire  the  same,  but  in  obedi- 
ence to  such  impulse.  That  at  the  time  when  said  shot  was  so  fired, 
deceased  had  "  become  mentally  incapable  of  understanding  and  appre- 
ciating the  physical  nature  and  consequences  of  the  act  he  was  then 
committing,  and  did  not  understand  or  appreciate  the  same,  and  did 
not  then  know  nor  recognize  the  fact  that  by  so  firing  that  pistol  he 
would  take  his  own  life." 

Life  insurance  companies  long  since  inserted  in  their  contracts  a 
clause  of  non-liability  in  case  the  assured  died  by  "  suicide  "  or  •''  by  his 
own  hand,"  which  courts  have  construed  as  synonymous  terms.  In 
construing  this  clause,  courts  have  widely  differed,  some  —  notably 
those  of  England,  Massachusetts,  and  New  York  —  holding  that  no 
recovery  can  be  had  in  case  of  self-destruction,  however  insane  the  act 
of  the  assured  might  have  been,  while  others,  including  this  court,  in 
Hathaway  v.  National  Life  Ins.  Co.,  48  Vt.  335,  have  held  that  when 
one's  reason  and  judgment  had  become  so  impaired  that  his  mind  was 
overthrown,  and  he  could  not  resist  the  insane  idea  that  he  must  take 
his  own  life,  although  his  mind  in  that  condition  contrived  the  means, 
and  his  physical  strength  carried  them  out  and  took  his  life,  that  such 
self-destruction  did  not  void  the  policy.  After  the  decisions  holding 
companies  liable  in  case  of  suicide  by  the  assured  while  insane,  many 
companies  inserted  the  condition  of  non-liability  in  case  of  "  suicide, 
sane  or  insane."  This  clause  has  been  before  the  courts  for  construc- 
tion, and  the  decisions  generall}'  are,  that  a  company  is  not  liable  if 
the  assured  designedly  dies  b}-  his  own  hand,  /.  e.,  if  he  commits  the  act 
intentionally  with  knowledge  of  its  consequences,  although  unconscious 
of  its  criminal  character.  This  is  as  far  as  many  of  the  courts  have 
been  required  to  go  upon  the  facts  before  them,  but  the  question  has 
arisen  in  some  instances  as  to  the  liabilit}-  of  the  insurer  in  case  the 
assured  destroys  himself  in  such  an  insane  condition  as  to  be  incapable 
of  understanding  the  physical  nature  and  consequences  of  the  act  he 
was  doing ;  did  not  know  that  by  firing  the  pistol,  hanging  himself,  or 
doing  like  acts,  he  would  take  his  own  life.  That  the  insurer  is  liable 
in  •such  cases  is  maintained,  apparently,  in  Mut.  B.  L.  Ins.  Co.  v.  Davies, 
87  Ken.  541 ;  and  Adkins  v.  Col,  L.  Ins.  Co.,  70  Mo.  27,  and  perhaps 


774  BILLINGS    V.    ACCIDENT   INS.   CO.  [CHAP.  VIL 

some  other  cases.     We  think  tlie  contrary  rule  the  better  doctrine. 
The  parties  contracted,  and  the  condition  is  expressed  in  terms  not 
easily  misunderstood  ;   the  words  are  "  nor  will  it  (the  policy)  cover 
death  or  injury'  resulting  from   suicide   (sane  or  insane).*'     It  is  no;; 
contended  that  the  insured  was  in  any  way  misled,  nor  that  the  con- 
tract was  contrary  to  sound  morals  or  public  policy.     If  the  insured 
can  contract  against  hazardous  occupations,  residence  witliin  the  trop- 
ics in  July  and  August,  death  in  a  duel,  by  the  hands  of  the  law,  in 
war,  or  when  intoxicated,  why  can  they  not  limit  their  liability  in  case 
of  suicide,  felonious  or  otherwise?     It  is  our  duty  to  construe  the  con- 
tract made  by  the  parties,  not  contract  for  them.     The  better  construc- 
tion to  give  a  term  or  phrase  in  a  contract  is  the  one  according  to  its 
ordinary  and  common  meaning,  as  mankind  would  generally  understand 
it.     The  defendant  evidently  was  unwilling  to  incur  the  perils  of  in- 
sanity, and  this  clause  limiting  its  liability  was  inserted  for  its  protec- 
tion.    It  was  a  valid  contract.     The  defendant  had  the  right  to  say 
that  it  would  not  hold  itself  responsible  for  the  acts  of  the  assured 
committed  when  insane,  and  the  question  is,  can  the  court  with  such  a 
contract  before  it,  attempt  to  measure  the  degrees  of  insanity?     The 
construction  contended  for  by  the  plaintiff  renders  the  words  "  sane  or 
insane"  immaterial  surplusage,  of  no  force  whatever.     They  must  have 
been  inserted  for  some  purpose.     Felonious  suicide  was  not  alone  in 
the  contemplation  of  the  parties  to  the  contract.     If  it  had  been  there 
was  no  necessity  of  adding  anything  to  the  general  words.     The  de- 
fendant says  that  by  force  of  them  we  are  not  to  be  liable  in  case  the 
assured  dies  by  suicide,  sane  or  insane,  and  the  only  answer  is,  it  is 
true  the  assured  died  by  his  own  hand  when  insane  ;  but  he  was  very 
insane,  in  fact  so  insane  that  when  he  took  his  life  he  did  not  know 
what  he  was  doing,  nor  the  effect  of  his  acts.     If  we  adopt  this  con- 
struction of  the  contract,  we  add  to  it  an  element  not  agreed  to  by  the 
parties.     If  the  death  of  the  assured  was  caused  in  the  manner  iind 
nnder  the  circumstances  stated  in  the  plaintiff's  offer  of  evidence,  the 
defendant  is  not  liable.     There  was  nothing  in  the  evidence  nor  offer 
of  evidence  tending  to  show  an  accidental  discharge  of  the  pistol,  nor 
that  death  resulted  from  anything  save  the  pistol  shot  fired  by  the  as- 
sured.    We  hold  there  can  be  no  recovery  if  the  assured  committed  the 
fatal  act  otherwise  than  accidentally  ;  that  the  clause  "  suicide,  sane  or 
insane,"  was  intended  to,  and  does  include  self-destruction  irrespective 
of  the  assu red's  mental  condition  at  the  time  of  the  act  which  caused 
his  death.     This  is  the  better  rule,  in  that  it  gives  effect  to  the  contract 
made  by  the  parties,  and  the  logical  conclusion  of  the  better  considered 
cases.     De  Gogorza  v.  Knick.  Life  Ins.  Co.,  65  N.  Y.  232 ;  Pierce  v. 
Trav.  Ins.  Co.,  34  Wis.  389  ;  Scarth  v.  Security  M.  L.  Society,  75  Iowa, 
346  (39  N.  ^y.  Rep.  658)  ;  Bigelow  r.  Berk.  L.  Ins.  Co.,  93  U.  S.  284  ; 
Chapman  v.  Rep.  L.  Ins.  Co.,  6  Biss,  238  (5  Big.  L.  &  A.  Ins.  110)  ; 
Riley  v.  Hart.  L.  &  A.  Ins.  Co.,  25  Fed.  Rep.  315;  Streeter  v.  West 
U.  M.  L.  A.  Soc,  65  Mich.  .199. 


SECT.  III.]  RITTER    V.    MUTUAL   LIFE   INS.    CO.  775 

The  construction  of,  and  ruling  of  the  court  upon,  the  clause  of  the 
contract  in  question  is  sustained.^ 

Under  the  agreement  of  the  parties  the  cause  is  remanded. 
EowELL,  MuNSON,  and  Start,  JJ.,  concur. 
Tyler  and  Thompson,  JJ.  ,  dissent. 


RITTER   V.   MUTUAL   LIFE   INS.    CO. 
Supreme  Court  of  the  United  States,  1898.     169  U.  S.  139.^ 

Certiorari  to  tlie  Circuit  Court  of  Appeals  for  the  Tiiird  Circuit. 

The  action  was  brought  by  the  executor  of  William  M.  Runk  upon 
six  policies  of  life  insurance,  each  bearing  date  November  10,  1801,  one 
for  §20,000,  one  for  815,000,  and  four  for  §10,000  each.  Each  policy 
was  to  the  effect  that,  "in  consideration  of  tlie  ai)plication,  .  .  .  hereby 
made  a  part  of  this  contract,"  the  company  promised  to  pay  the  amount 
of  the  polic}'  to  "William  M.  Runk,  of  Philadelphia,  Pa.,  his  executors, 
administrators,  or  assigns,"  upon  the  death  of  the  said  Runk,  upon  the 
condition  that  the  annual  premiums  must  be  paid  in  advance.  The 
premiums  were  duly  paid.'  Runk  died  on  October  5,  1892.  The  de- 
fence was  that  Runk  committed  suicide.  At  the  trial,  the  defendant 
offered  in  evidence  the  applications,  each  of  which  contained  a  warranty 
and  agreement  that  Runk  would  not  die  by  his  own  act,  whether  sane 
or  insane,  within  two  years.  Tiiis  evidence  was  rejected,  because  the 
applications  were  not  attached  to  the  policies  as  required  by  Laws  of 
Pennsylvania,  1881,  No.  23.  p.  20. 

Evidence  was  given  to  the  effect  that  Runk  was  insured  to  the  amount 
of  8500,000,  that  prior  to  taking  tlie  policies  in  litigation  he  had  em- 
bezzled large  sums  and  was  without  resources  of  his  own,  and  that  on 
the  day  before  his  death  he  wrote  a  letter  saying  tliat  he  could  only  pay 
his  debts  with  his  life. 

After  various  requests  for  instructions,  the  instructions  actualh'  given 
contained  this  passage  :  "  If  this  man  understood  the  consequences  and 
effects  of  what  he  was  doing  or  contemplating,  to  himself  and  to  others, 
if  he  understood  the  wrongfulness  of  it,  as  a  sane  man  would,  then  he 
was  sane,  so  far  as  we  have  occasion  to  consider  the  subject ;  otherwise 
he  was  not.  Here  the  insured  committed  suicide,  and,  as  the  evidence 
shows,  did  it  for  the  purpose  ...  of  enabling  the  executor  to  recover 
on  the  policies,  and  use  the  money  to  pay  his  obligations.  I  therefore 
charge  3'ou  that  if  he  was  in  a  sane  condition  of  mind  at  the  time,  as  I 

1  See  De  Gogorza  v.  Knickerbocker  L.  Ins.  Co.,  65  N.  Y.  232,  241-242  (1875); 
Penfold  V.  Universal  L.  Ins.  Co.,  8.5  N.  Y.  317,  322-323  (1881);  Northwestern  Miit. 
L.  Ins.  Co.  V.  Hazelett,  105  Ind.  212  (1885) ;  Scarth  r.  Security  Mut.  L.  Ins.  Society,  75 
Iowa,  346  (1888) ;  Mutual  Benefit  L.  Ins.  Co.  v.  Daviess,  87  Ky.  541  (1888) ;  Spruill  v. 
Northwestern  Mut.  L.  Ins.  Co.,  120  N.  Car.  141,  143-144,  150-151  (1897).— Ed. 

2  The  statement  has  been  based  upon  the  opinion.  —  Ed. 


776  rJTTEE   V.    MUTUAL   LIFE    INS.    CO.  [CIIAP.  VIL 

have  described,  able  to  understand  the  moral  character  and  consequences 
of  his  act,  liis  suicide  is  a  defence  to  this  suit.  The  only  question,  there- 
fore, for  consideration  is  this  question  of  sanity.  ...  In  the  absence  of 
evidence  on  the  subject  he  must  be  presumed  to  liave  been  sane.  The 
presumption  of  sanity  is  not  overthrown  by  the  act  of  committing  sui- 
cide. Suicide  may  be  used  as  evidence  of  insanity,  but  standing  alone 
it  is  not  sufficient  to  establish  it.  .  .  .  If  you  find  him  to  have  been  in- 
sane, as  I  have  described,  your  verdict  will  be  for  the  plaintiff.  Other- 
wise it  will  be  for  the  defendant." 

There  was  a  verdict  in  favor  of  the  defendant,  upon  which  judgment 
was  entered,  and  that  judgment  was  affirmed  in  the  Circuit  Court  of 
Appeals.     28  U.  S.  App.  G12. 

Mr.  Richard  C.  Dale  and  IMr.  George  Tacher  Bispham,  for  plain- 
tiff in  error.     Mr.  John  Hampton  Barnes  was  on  their  brief. 

Mr.  Joh7i  G.  Johnson,  for  defendant  in  error.  INIr.  Charles  P.  /Sher- 
man and  Mr.  Edward  Lyman  Short  were  on  his  brief. 

Mr.  Justice  Harlan  delivered  the  opinion  of  the  court.^  .  .  . 

No  error  of  law  having  been  committed  in  respect  of  tlie  issue  as  to 
the  insanity  of  the  assured,  it  is  to  be  taken  as  the  result  of  the  verdict 
that  he  was  of  sound  mind  when  he  took  his  life. 

This  brings  us  to  the  question  whether  the  insurance  company  was 
liable  —  assuming  that  it  was  not  a  part  of  the  contract  enforceable  in 
Pennsylvania,  that  the  assured  should  "  not  die  by  his  own  act  whether 
sane  or  insane,"  within  two  years  from  tlie  date  of  the  policy. 

It  is  contended  that  the  court  erred  in  saying  to  the  jury,  as  in  effect 
it  did,  that  intentional  self-destruction,  the  assured  being  of  sound  mind, 
is  in  itself  a  defence  to  an  action  upon  a  life  policy,  even  if  such  policy 
does  not,  in  express  words,  declare  that  it  shall  be  void  in  tha  event  of 
self-destruclion  when  the  assured  is  in  sound  mind.  But  is  it  not  an 
implied  condition  of  such  a  policy  that  the  assured  will  not  purposel}', 
when  in  sound  mind,  take  his  own  life,  but  will  leave  the  event  of  his 
death  to  depend  upon  some  cause  other  than  wilful,  deliberate  self- 
destruction?  Looking  at  the  nature  and  object  of  life  insurance,  can 
it  be  supposed  to  be  within  the  contemplation  of  either  party  to  the 
contract  that  the  company  shall  be  liable  upon  its  promise  to  pay,  where 
the  assured,  in  sound  mind,  hy  destroying  his  own  life,  intentionally 
precipitates  the  event  upon  the  happening  of  which  sucli  liability  was 
to  arise? 

Life  insurance  imports  a  mutual  agreement,  whereby  the  insurer,  in 
consideration  of  the  payment  by  the  assured  of  a  named  sum  annually 
or  at  certain  times,  stipulates  to  pay  a  larger  sum  at  the  death  of  the 
assured.  The  company  takes  into  consideration,  among  otlier  things, 
the  age  and  health  of  tlie  parents  and  relatives  of  the  applicant  for  in- 
surance, together  with  his  own  age,  course  of  life,  habits,  and  present 
pljysical  condition  ;  and  the  premium  exacted  from  the  assured  is  deter- 
mined by  the  probable  duration  of  his  life,  calculated  upon  the  basis  of 

1  After  statiug  the  case  aud  discussing  the  definition  of  insanity.  — Ed. 


SECT.  Til.]  BITTER   V.    MUTUAL    LIFE    INS.    CO.  777 

past  experience  in  the  business  of  insurance.  Tlie  results  of  that  expe- 
rience are  disclosed  by  standard  life  and  annuity  tables  showing  at  any 
age  the  probable  duration  of  life.  These  tables  are  deemed  of  such 
value  that  they  may  be  admitted  in  evidence  for  tlie  purpose  of  assisting 
tlie  jury  in  an  action  for  personal  injury,  in  wliich  it  is  necessary  to 
ascertain  the  compensation  the  plaintitf  is  entitled  to  recover  for  the 
loss  of  what  he  might  have  earned  in  his  trade  or  profession  but  for 
sucli  injury.  Vicksburg  &  Meridian  Railroad  v.  Putnam,  118  U.  S. 
545,  554.  If  a  person  should  apply  for  a  policy  expressly  providing 
that  tlie  company  should  pay  the  sura  named  if  or  in  the  event  the  as- 
sured, at  any  time  during  the  continuance  of  the  contract,  committed 
self-destruction,  being  at  the  time  of  sound  mind,  it  is  reasonably  cer- 
tain that  the  application  would  be  instantly  rejected.  It  is  impossible 
to  suppose  that  an  application  of  that  character  would  be  granted.  If 
experience  justifies  this  view,  it  would  follow  that  a  policy  stipulating 
generally  for  the  payment  of  the  sum  named  in  it  upon  the  death  of  the 
assured,  should  not  be  interpreted  as  intended  to  cover  the  event  of 
death  caused  directly  and  intentionally  by  self-destruction  whilst  the 
assured  was  in  sound  mind,  but  only  death  occurring  in  the  ordinary 
course  of  his  life. 

That  the  parties  to  the  contract  did  not  contemplate  insurance  against 
death  caused  by  deliberate,  intentional  self-destruction  when  the  assured 
was  in  sound  mind,  is  apparent  from  the  "provisions,  requirements, 
and  benefits  "  referred  to  in  and  made  part  of  the  polic}-.  They  show 
that  tlie  policy  was  issued  on  the  twenty-year  distribution  plan,  and 
was  to  be  credited  with  its  distributive  share  of  surplus  apportioned  at 
the  expiration  of  twenty  years  from  the  date  of  issue ;  that,  after  three 
full  annual  premiums  were  paid,  the  company'  would,  upon  the  legal 
surrender  of  the  polic}',  before  default  in  the  payment  of  any  premium, 
or  within  six  months  thereafter,  issue  a  non-participating  policy  for  a 
paid-up  insurance,  payable  as  provided,  for  the  amount  required  by  the 
provisions  of  the  New  York  statute  of  May  21,  1879,  Laws  of  New 
York,  c.  347  ;  that  the  assured  was  entitled  to  surrender  the  polic}'  at 
the  end  of  the  first  period  of  twenty  years  "and  the  full  reserve  com- 
puted by  the  American  table  of  raortalit}',  and  four  per  cent  interest, 
and  the  surplus,  as  defined  above,  will  be  paid  therefor  in  cash ; "  that 
if  the  assured  surrendered  the  policy  the  total  cash  value  at  the  option 
of  the  policyholder  should  be  applied  "to  the  purchase  of  an  annuity 
for  life,  according  to  the  published  rates  of  the  company  at  the  time  of 
surrender ; "  that  after  two  years  from  the  date  of  the  policy  the  only 
conditions  that  should  be  binding  on  the  holder  of  the  policy  were  that 
"  he  shall  pay  the  premiums  at  the  time  and  place  and  in  the  manner 
stipulated  in  the  polic}',  and  that  the  requirements  of  the  company  as 
to  age,  and  military  or  naval  service  in  time  of  war,  shall  be  observed  ;" 
that  in  all  other  respects,  if  the  polic}'  matured  after  the  expiration  of 
two  years,  the  payment  of  the  sum  insured  should  not  be  disputed  ;  and 
that  the  part^'  whose  life  was  insured  should  always  wear  a  suitable 


778  PJTTEK    V.   MUTUAL   LIFE    INS.    CO.  [CHAP.  VII. 

truss.  These  provisions  of  the  contract  tend  to  show  that  the  death 
referred  to  in  the  policy  was  a  death  occurring  in  the  ordinary  course 
of  the  life  of  the  assured,  and  uot  by  his  own  violent  act  designed  to 
bring  about  that  event. 

In  the  case  of  fire  insurance  it  is  well  settled  that  although  a  policy, 
in  the  usual  form,  indemnifying  against  loss  by  fire,  may  cover  a  loss 
attributable  merely  to  tlie  negligence  or  carelessness  of  tlie  insured,  un- 
affected by  fraud  or  design,  it  will  not  cover  a  destruction  of  the  prop- 
erty by  the  wilful  act  of  the  assured  himself  in  setting  fire  to  it,  not  for 
the  purpose  of  avoiding  a  peril  of  a  worse  kind,  but  with  the  intention 
of  simply  effecting  its  destruction.  Much  more  should  it  be  held  that 
it  is  not  contemplated  by  a  policy  taken  out  by  the  person  whose  life  is 
insured  and  stipulating  for  the  payment  of  a  named  sum  to  himself,  his 
executors,  administrators,  or  assigns,  that  the  company  should  be  liable, 
if  his  death  was  intentionally  caused  by  himself  when  in  sound  mind. 
When  the  policy  is  silent  as  to  suicide,  it  is  to  be  taken  that  the  subject 
of  the  insurance,  that  is,  the  life  of  the  assured,  shall  not  be  intention- 
ally and  directly,  with  whatever  motive,  destroyed  by  him  when  in  sound 
mind.  To  liold  otherwise  is  to  say  that  the  occurrence  of  the  event 
upon  the  happening  of  which  the  company  undertook  to  pay,  was  in- 
tended to  be  left  to  his  option.  That  view  is  against  the  very  essence 
of  the  contract. 

There  is  another  consideration  supporting  the  contention  that  death 
intentionally  caused  by  the  act  of  the  assured  when  in  sound  mind  — 
the  policy  being  silent  as  to  suicide  —  is  not  to  be  deemed  to  have  been 
within  the  contemplation  of  the  parties  ;  that  is,  that  a  different  view 
would  attribute  to  them  a  purpose  to  make  a  contract  that  could  not  be 
enforced  without  injury  to  the  public.  A  contract,  the  tendency  of 
which  is  to  endanger  the  public  interests  or  injuriously  affect  the  public 
good,  or  which  is  subversive  of  sound  morality,  ought  never  to  receive 
the  sanction  of  a  court  of  justice  or  ])e  made  the  foundation  of  its  judg- 
ment. If,  therefore,  a  policy  —  taken  out  by  the  person  whose  life  is 
insured,  and  in  which  the  sum  named  is  made  payable  to  himself,  his 
executors,  administrators,  or  assigns  —  expressly  provided  for  the  pay- 
ment of  the  sum  stipulated  when  or  if  the  assured,  in  sound  mind,  took 
his  own  life,  the  contract,  even  if  not  prohibited  by  statute,  would  be 
held  to  be  against  public  policy,  in  that  it  tempted  or  encouraged  the 
assured  to  commit  suicide  in  order  to  make  provision  for  those  depend- 
ent upon  him,  or  to  whom  he  was  indebted. 

Is  the  case  any  different  in  principle  if  such  a  policy  is  silent  as  to 
suicide,  and  the  event  insured  against  —  the  death  of  the  assured  — is 
bi-ought  about  by  his  wilful,  deliberate  act  when  in  sound  mind?  Light 
will  l)e  tlirown  on  this  question  by  some  of  the  adjudged  cases,  having 
more  or  less  bearing  upon  the  precise  point  now  before  this  court  for 
determination.^  .  .  . 

1  Here  were  stated  or  quoted  Life  Ins.  Co.  v.  Terry,  ante,  p.  766  (1872) ;  Borr.idaile 
V.  Hnnter,  ante,  p.  762  (1843) ;  ITartman  v.  Keystone  Ins.  Co.,  21  Pa.  466,  479  (1853); 


SECT.  III.]  SEILER   V.    ECONOMIC    LIFE   ASSOCIATION.  779 

For  the  reasons  we  have  stated,  it  must  be  held  that  the  death  of  the 
assured,  WilHam  M.  Rank,  if  dircctl}-  and  intentionally  caused  by  him- 
self, when  in  sound  mind,  was  not  a  risk  intended  to  be  covered,  or 
which  could  legally  have  been  covered,  by  the  policies  in  suit. 

The  case  presents  other  questions,  but  they  are  of  minor  importance, 
and  do  not  affect  the  substantial  rights  of  the  parties. 

We  perceive  no  error  of  law  in  the  record,  and  the  judgment  is 

Affirmed. 

Mr.  Justice  Peckham  did  not  take  part  in  the  consideration  or  de- 
cision of  this  case. 


SEILER  ET  AL.,  Appellees,  v.  ECONOMIC  LIFE 
ASSOCIATION,  Appellant. 

Supreme  Court  of  Iowa,  1898.     105  Iowa,  87.^ 

Appeal  from  Clinton  District  Court,  Hon.  P.  B.  Wolfe,  Judge. 

Action  was  brought  upon  two  policies  issued  to  Joseph  Seller,  on 
Aug.  31,  1895,  for  the  benefit  of  the  plaintiffs.  Seller  committed  sui- 
cide on  Oct.  7,  1895.  The  policies  contained  no  condition  against 
suicide.  The  defendant,  in  its  answer,  set  up  two  defences  :  (1)  that 
Seller  while  in  a  sound  mental  condition  took  his  own  life  ;  and  (2)  that 
Seller  procured  the  policies  with  intent  to  defraud  the  company.  A 
demurrer  to  the  first  defence  was  sustained,  and  the  defendant  ex- 
cepted. A  demurrer  to  the  second  defence  was  overruled,  and  upon 
this  single  issue  of  fact  the  case  went  to  the  jury,  resulting  in  verdict 
and  judgment  for  the  plaintiffs.  The  defendant  appealed,  assigning 
fift3'-nine  errors,  including  the  sustaining  of  the  demurrer,  the  exclusion 
of  evidence,  the  refusal  and  giving  of  instructions,  and  the  ruling  that 
the  plaintiffs  were  entitled  to  open  and  close. 

Hayes  &  Schuyler,  for  appellant. 

Calvin  H.  George^  for  appellees. 

Waterman,  J.'^  .  .  .  The  question  thus  presented  by  the  ruling  on 
the  demurrer  is:  If  a  policy  of  insurance  on  life,  containing  no  stipu- 
lation as  to  suicide,  is  taken  out  in  good  faith  by  the  assured,  will  it  be 
avoided,  as  against  a  beneficiary  named  therein,  b\  the  fact  that  the 
assured  thereafter,  while  sane,  deliberately  and  purposely  took  his  own 
life?  The  authorities  are  not  many  on  the  subject,  and  they  are  not 
seriously  in  conflict.  While  there  are  a  number  of  cases  in  which  some- 
New  York  Mut.  L.  Ins.  Co.  v.  Armstrong,  117  U.  S.  591,  600  (1886) ;  Hatch  v.  Mu- 
tual L.  Ins.  Co.,  120  Mass.  550,  552  (1876);  Supreme  Commamlery  r.  Aiusworth, 
71  Ala.  4.36,  446  (1882) ;  Amicable  Society  v.  Bolland,  ante,  p  760  (1830) ;  Buuyon  on 
Life  Assurance,  3d  ed.,  96;  Moore  v.  Woolsey,  4  E.  &  B.  243,  2.54  (1854).— En. 

1  The  statement  has  been  based  upon  the  opinion.  —  En. 

2  Only  so  much  of  the  opinion  has  been  reprinted  as  deals  with  the  sustaining  of  the 
demurrer.  —  Ed. 


780  SEILER   V.    ECONOMIC   LIFE    ASSOCIATION.         [CHAP.  VII. 

thing  bas  been  said  upon  this  matter  in  tlie  wa}'  of  dicta,  there  is  but 
one  in  which  it  has  been  expressly  decided  that  tlie  suicide  of  the 
assured,  if  sane,  will  avoid  a  policy  that  contains  no  provision  of  for- 
feiture in  such  case,  and  that  is  Ritter  v.  Insurance  Co.,  18  Sup.  Ct. 
Rep.  300,  decided  at  the  October  Term,  last,  of  the  P'ederal  Supreme 
Court.  The  opinion  in  this  case  in  the  Circuit  Court  of  Appeals  appears 
in  17  C.  C.  A.  537,  and  70  Fed.  Rep.  954.  This  last  citation  is  given 
because  we  shall  have  occasion  to  refer  to  this  opinion  in  the  course  of 
what  we  shall  say.  It  was  held  in  the  Ritter  Case  that  there  could  be 
no  recovery  on  a  policj-  of  insurance  by  the  executor  of  one  who,  while 
sane,  intentionally  took  his  own  life,  even  though  the  policy  contained 
no  clause  of  forfeiture  because  of  such  act.  We  think  that  case  is 
readil}'  distinguishable  from  the  case  at  bar.  In  the  Ritter  Case  the 
action  was  brought  by  the  personal  representative  of  the  assured,  w^hose* 
claim  had  to  be  made  through  the  wrongdoer,  while  here  the  suit  is  in- 
stituted by  beneficiaries  named  in  the  policy,  and  who  claim  in  their 
own  right.  An  investigation  will  disclose  that  the  distinction  we  make 
is  material,  and  supported  b}'  authority.  In  Moore  v.  Woolsc}',  4  El. 
&  Bl.  243,  the  policy  contained  a  stipulation  avoiding  it,  as  far  as 
regarded  the  executors  and  administrators  of  the  assured,  if  he  died 
by  his  own  hand,  but  leaving  it  in  force  to  the  extent  of  an}-  interest 
acquired  by  a  third  person.  Tlie  plea  was  that  the  assured  had  com- 
mitted suicide.  Replication  that  one  Kettle,  before  the  death  of  the 
assured,  had  acquired  by  assignment  an  interest  in  the  polic}'.  Upon 
these  issues,  Lord  Campbell,  delivering  the  opinion,  said:  "  If  a  man 
insures  his  life  for  a  year,  and  commits  suicide  within  the  3'ear,  his 
executors  cannot  recover  upon  the  polic}',  as  the  owner  of  a  ship,  who 
insures  her  for  a  year,  cannot  recover  upon  the  polic}',  if  within  the 
year  he  cause  her  to  be  sunk.  A  stipulation  that  in  either  ease  upon 
such  an  event  the  policy  would  give  a  right  of  action  would  be  void." 
This  is  the  language  quoted  in  the  Ritter  Case,  and  it  was  obiter  onlv. 
But  Lord  Campbell  said  something  more,  and  something  not  only  per- 
tinent to  the  issues  l)efore  him,  but  that  has  direct  application  to  the 
matter  we  are  considering.  He  continues  :  "  But  where  a  man  insures 
his  own  life,  we  can  discover  no  illegality  in  a  stipulation  that  if  the 
policy  should  afterwards  be  assigned,  bona  fide,  for  a  valuable  consid- 
eration, or  a  lien  upon  it  should  afterwards  be  acquired,  bona  fide,  for 
a  valuable  consideration,  it  might  be  enforced  for  the  benefit  of  others, 
whatever  may  be  the  means  of  his  death.  .  .  .  The  supposed  induce- 
ment to  commit  suicide  under  such  circumstances  cannot  vitiate  the 
condition,  more  than  the  inducement  which  the  lessor  may  be  supposed 
to  have  to  commit  murder  should  render  invalid  a  beneficial  lease 
granted  for  lives.  Wiien  we  are  called  upon  to  nullify  a  contract  on 
the  ground  of  public  policy,  we  must  take  care  that  we  do  not  lay  down 
a  rule  wliich  may  interfere  with  the  innocent  and  useful  transactions  of 
mankind."  If  public  polic}'  does  not  stand  in  the  way  of  a  recoverv 
by  an  assignee,  we  can  discern  no  reason  win-  it  should  in  the  case  of 


SECT.  III.]  SEILER    V.    ECONOMIC   LIFE   ASSOCIATION.  781 

a  beneficiar}'  named  in  the  contract.     It  ma}-  be  said  that  the  assignee 
spoken  of  is  one  whose  claim  rests  upon  a  consideration  paid.     To  this 
we  would  say  that  the  claim  of  the  beneficiary  is  also  based  upon  a  con- 
sideration paid  by  the  assured.     If  it  should  further  be  said  that  public 
policj'  does  not  bar  a  recovery  by  the  assignee  because  the  interests  of 
creditors  furnish  little  or  no  motive  for  the  self-destruction  of  the  as- 
sured, our  answer  would  be  this  :  The  motives  for  suicide  are  manifold 
and  varied.     An  inquiry  as  to  what  inducement  is  most  likely  to  im])cl 
one  to  the  act  is  profitless,  for  an}'  rule  of  law  that  would  prevent  a 
recovery  b}'  these  plaintiffs  would  operate  in  like  manner  against  a 
mere  creditor,  if  he  were  the  beneficiary-  named.     And,   further,   we 
might  call  attention  to  the  Ritter  Case,  in  which  the  assured  admit- 
tingl}'  sacrificed  his  life  for  the  benefit  of  his  creditors.    In  the  opinion 
in  the  Ritter  Case  in  the  Circuit  Court  of  Appeals  it  is  said  :  "In  the 
cases  brought  to  our  attention  where  suicide  during  sanity,  by  the  per- 
son whose  life  was  insured,  was  held  not  to  be  a  valid  defence,  the 
policy  was  issued  for  the  benefit  of  some  other  person,  or  an  independ- 
ent interest,  by  assignment  or  otherwise,  had  been  acquired  by  a  third 
person."     Here  is  the  distinction  plainly  made.     So,  also,  in  the  opin- 
ion of  Mr.  Justice  Harlan  on  appeal,  we  think  the  same  idea  is  expressed. 
In  commenting  on  an  expression  used  in  another  case,  he  says :  ''This 
observation  was  irrelevant  to  the  case  before  the  court,  and  cannot  be 
regarded  as  determining  the  point  in  judgment.     If  it  was  meant  there 
should  be  a  recovery  by  the  personal  representative,  ...  we  cannot 
concur  in  that  view."     Another  and  a  convincing  reason  for  thinking 
that  the  doctrine  announced  in  the  Ritter  Case  was  not  intended  to  go 
fui'ther  than  to  deny  a  right  of  recovery  to  the  personal  representatives 
of  the  assured  is  that  no  one  of  the  several  cases  in  which  beneficiaries 
named  in  the  contract  have  been  held  entitled  to  recover  was  mentioned 
in  that  opinion.    We  shall  now  refer  to  these  cases  :  Fitch  v.  Insurance 
Co.,  59  N.  Y.  559,  is  the  first.     Suit  was  brought  by  the  widow,  to 
whom  the  policy  was  payable.    The  contract  contained  no  clause  avoid- 
ing it  in  case  of  suicide  by  the  assured.     One  defence  tendered  was 
that  the  assured  took  his  own  life.     Evidence  to  sustain  it  was  ex- 
cluded by  the  trial  court.     In  affirming  this  ruling  the  Court  of  Appeals 
says :    ' '  The    policy  contained  no   stipulation  that   it  should  be  void 
in  case  of  the  death  of  the  insured  bv  suicide.     It  was  not  taken  out 
for  the  benefit  of  Fitch,  but  of  his  wife  and  children.     Although  they 
were  bound  by  his  representations,  and  any  fraud  he  may  have  com- 
mitted in  taking  out  the  policy,  the  policy  having  been  obtained  through 
his  agency,  yet  they  were  not  bound  b}-  any  acts  or  declarations  done 
or  made  by  him  after  the  issue  of  the  policy,  unless  such  acts  were  in 
violation  of  some  condition  of  the  policy.     In  Darrow  y.  Society,  116 
N.  Y.  537  (22  N.  E.  Rep.  1093),  the  plaintiff  was  the  beneficiary  under 
the  contract.     The  assured  committed  suicide.     There  was  a  provision 
in  the  policy  that  it  should  'Mie  void  if  the  member  herein  shall  die  in 
consequence  of  a  duel,  or  by  the  hands  of  justice,  or  in  violation  of,  or 


782  SEILER   V.   ECONOMIC    LIFE    ASSOCIATION.         [CHAP.  YII. 

an  attempt  to  violate,  an}-  criminal  law  of  the  United  States,  or  of  any 
state  or  country  in  which  the  member  may  be."  Held  that,  suicide  not 
being  a  crime  in  New  York,  the  condition  of  the  policy  was  not  vio- 
lated, and  the  plaintiff  could  recover.  Kerr  v.  Association,  39  Minn. 
174  (39  N.  W.  Rep.  312),  is  a  case  similar  in  priHciple  to  the  last. 
The  same  holding  in  favor  of  a  beneficiary  has  been  made  by  this  court 
in  Goodwin  v.  Societ}-,  sujyra.  The  policy  sued  upon  there  provided 
for  its  forfeiture  in  the  event  of  suicide  within  two  years,  and  by  its 
express  terms  it  was  incontestable  after  that  time.  After  tlie  lapse  of 
that  period  the  assured  took  his  own  life.  The  policy  was  issued  to 
the  wife.  In  an  action  by  her,  we  held  she  could  recover.  Now,  if 
suicide  is  a  risk  that  the  company  is  forbidden,  by  considerations  of 
public  policy,  to  take,  it  could  not  have  been  held  as  within  the  agree- 
ment not  to  contest ;  for,  if  a  contract  to  insure  as  against  the  risk  of 
suicide  is  void,  the  waiver  here  must  have  been  invalid,  and  tlie  defence 
should  have  been  sustained.  The  question  was  brought  directly  to  the 
attention  of  the  court  in  argument,  as  appears  from  the  language  of 
the  opinion.  These  are  the  cases  which  we  have  been  able  to  find. 
We  wish  now  to  add  a  few  words  on  principle,  by  way  of  emphasis 
of  a  thought  already  expressed.  It  is  not  the  wrongdoer  who  makes 
claim  here,  nor  any  representative  whose  rights  are  to  be  measured  by 
those  of  the  wrongdoer,  but  persons  who  acquired  an  interest  at  the 
time  the  policy  was  taken  out,  and  who  are  not  in  any  way  responsible 
for  the  loss  under  it.  The  defendant  might  well  have  guarded  against 
this  contingency  in  its  contract.  Not  having  done  so,  we  think  it  is 
now  in  no  position  to  complain.  .  .  . 

The  judgment  beloic  will  be  affirmed} 

1  Ace:  Morris  v.  State  Mut.  L.  Assur.  Co.,  183  Pa.  563  (1898)  ;   Patterson  v.  Nat- 
ural Premium  Mut.  L.  Ins.  Co.,  100  Wis.  118  (1898). 

On  the  peril  insured  against  in  life  insurance,  see  also  :  — 
Howell  V.  Knickerbocker  L.  Ins.  Co.,  41  N.  Y.  276  (1871) ; 
Insurance  Co.  v.  Seaver,  19  Wall.  531  (1873) ; 
Hatch  V.  Mutual  Life  Ins.  Co.,  120  Mass.  550  (1876) ; 
New  York  Mut.  L.  Ins.  Co.  v.  Armstrong,  117  U.  S.  591,  598-600  (1886)  ; 
Smith  V.  National  Benefit  Society,  123  N.  Y.  85  (1890) ; 
Cleaver  v.  Mutual  Reserve  Fund  L.  Assn.,  '92,  1  Q.  B.  147  (C.  A.,  1891) ; 
Holdom  V.  Ancient  Order  of  United  Workmen,  159  111.  619  (1896) ; 
Sohmidt  i;.  Northern  L.  Assu.,  83  N.  W.  Rep.  800  (Iowa,  1900).  —  Ed, 


SECT.  III.]       SINCLAIR   V.    JLVIIITIME   PASSENGERS*   ASSUR.    CO.  783 


SECTION  III.  (continued). 

(B.)     Accident 

SINCLAIR,  Administratrix,  v.  MARITIME  PASSENGERS' 
ASSURANCE   CO. 

Queen's  Bench,  18G1.     3  E.   &  E.  478.^ 

Case  stated  by  consent,  and  by  order  of  Blackburn,  J.,  for  the 
opinion  of  the  court,  without  pleadings. 

Macnaniara,  for  the  plaintiff. 

Geary ^  for  the  defendants. 

Cxir.  adv.  vult. 

Cockburn,  C.  J.,  now  delivered  the  judgment  of  the  court.^  This 
was  an  action  brought  by  the  administratrix  of  one  Lawrence  Sinclair, 
on  a  policy  of  insurance  effected  by  the  deceased  with  the  defendants, 
whereby  he,  being  then  about  to  proceed  on  a  foreign  voyage  as  mas- 
ter of  a  vessel,  was  insured  to  the  extent  of  a  reasonable  compensation 
against  any  personal  injury  from  or  by  reason  of  or  in  consequence  of 
any  accident  which  might  happen  to  hira  upon  any  ocean,  sea,  river, 
or  lake  ;  and  in  the  sum  of  £100  for  the  benefit  of  his  personal  repre- 
sentative, in  the  event  of  the  assured  dying  from  the  effects  of  any 
such  injury  within  three  months  of  its  occurrence.  The  assured  being 
with  his  ship  in  the  Cochin  River,  on  the  southwest  coast  of  India,  while 
doing  dut}'  on  the  ship  was  (as  it  is  termed  in  the  special  case)  struck 
down  b}"  a  sunstroke^JVgoiJjie^effects^f  which  he  died  in  the  course  of 
the  same  day^  The  "question  is,  whether,  under  such  circumstances, 
the  death  of  the  deceased  can  be  said  to  have  arisen  from  accident, 
within  the  meaning  of  the  pohcy.  We  are  of  opinion  that  it  cannot, 
and  that  our  judgment  nuist  be  for  the  defendants. 

It  is  difficult  to  define  the  term  "accident,"  as  used  in  a  policy  of 
ttiis  nature,  so  as  to  draw  with  perfect  accurac}'  a  boundarj-  line  be- 
tween injury  or  death  from  accident,  and  injuiy  or  death  from  natural 
causes,  such  as  shall  be  of  universal  application.  At  the  same  time 
we  think  we  may  safely  assume  that,  in  the  term  "accident"  as  so 
used,  some  violence,  casualty,  or  vis  mnjor,  is  necessarily  involved. 
AVe  cannot  think  disease  produced  by  the  action  of  a  known  cause  can 
be  considered  as  accidental.  Thus  disease  or  death  engendered  l\v 
exposure  to  heat,  cold,  damp,  the  vicissitudes  of  climate,  or  atmos- 
pheric influences,  cannot,  we  think,  properly  be  said  to  be  accidental ; 
unless,  at  all  events,  tlie  exposure  is  itself  brought  about  by  circum- 
stances which  may  give  it  the  character  of  accident.     Thus  (by  way  of 

1  The  reporter's  statement  has  not  been  reprinted.  —  Ed. 
*  CocKBLRX,  C  J.,  and  Hill,  J.  —  Rep. 


784  SCHNEIDER    V.    PROVIDENT   LIFE    INS.    CO.  [CHAP.  VII. 

illustration),  if,  from  the  effects  of  ordinary  exposure  to  the  elements, 
such  as  is  common  in  the  course  of  navigation,  a  mariner  should  catch 
cold  and  die,  such  death  would  not  be  accidental ;  although  if,  being 
obliged  b}-  shipwreck  or  other  disasters  to  quit  the  ship  and  take  to  the 
sea  in  an  open  boat,  he  remained  exposed  to  wet  and  cold  for  some 
time,  and  death  ensued  therefrom,  the  death  might  properly  be  held  to 
be  the  result  of  accident.  It  is  true  that,  in  one  sense,  disease  or  death 
through  the  direct  effect  of  a  known  natural  cause,  such  as  we  have 
referred  to,  may  be  said  to  be  accidental,  inasmuch  as  it  is  uncertain 
beforehand  whether  the  effect  will  ensue  in  any  particular  case.  p:x- 
posed  to  the  same  malaria  or  infection,  one  man  escapes,  another  suc- 
cumbs. Yet  diseases  thus  arising  have  always  been  considered,  not  as 
accidental,  but  as  proceeding  from  natural  causes. 

In  the  present  instance,  the  disease  called  sunstroke,  although  the 
name  would  at  first  seem  to  imply  something  of  external  violence,  is, 
so  far  as  we  are  informed,  an  inflammatory  disease  of  the  brain, 
brought  on  by  exposure  to  the  too  intense  heat  of  the  sun's  rays.  It  is 
a  disease  to  which  persons  exposing  themselves  to  the  sun  in  a  tropical 
climate  are  more  or  less  liable,  just  as  persons  exposed  to  the  other 
natural  causes  to  which  we  have  referred  are  lial)le  to  disastrous  conse- 
quences therefrom.  The  deceased  in  tlie  discharge  of  Ins  ordinary 
duties  about  his  ship  became  thus  affected  and  so  died. 

We  think,  for  the  reasons  we  have  given,  that  his  death  must  be 
arisen  from  a  "  natural  cause,"  and   not  from 


^^  accident,"  within  the  meaning  of  this  policy.     There  must  be  judg- 
ment for  the  defendants.  Judgment  for  the  defendants} 


SCHNEIDER  v.  PROVIDENT   LIFE   INSURANCE   CO. 
Supreme  Court  of  Wisconsix,  1869.     24  Wis.  28, 

Appeal  from  the  Circuit  Court  for  Dane  County. 

Action  upon  a  policy  of  insurance  against  personal  injury  arising  from 
accident  and  causing  death.  The  plaintiff  appealed  from  a  judgment 
of  nonsuit,  the  grounds  of  which  will  appear  from  the  opinion. 

Alden.  S.  Sanborn  (with  S.  U.  Pinney,  of  counsel),  for  the  appellant. 

Palmer,  Hooker  <S:  Pitkin,  for  respondent. 

Paine,  J.  This  action  was  upon  a  policy Jr^^wiiich  Bruno  Schngjder 
was  insured  against  injury  or  death  by  accident.  He  attempted  to  get 
on  a  train  of  cars  while  in  slow  motion,  and  fell  under  them  and  was 
killed.  The  policy  contained  a  clause  that  the  company  should  not  be 
liable  for  any  injury  happening  to  the  assured  by  reason  of  his  "  wjlfullz 

1  Arx.  :  Dozier  v.  Fidelity  aud  Casualty  Co.,  46  Fed.  R.  446  (C.  C,  W.  D.  Mo. 

ISJl).  — Ed. 


SECT.  III.]  SCHNEIDER    V.    PKOVIDENT   LIFE    INS,    CO.  785 

a n d  wantonly  exposino;  himself  to  any  unnecessary  danger  or  periL' ' 
Aiuf,  on  the  trial,  the  plaintiff  was  nonsuited,  upon  the  ground  that  tlie 
death  was  within  this  exception. 

But  the  uositiou  most  stronoly  urged  by  the  respondent's  counsel  in 
this  court  was  that,  inasmuch  as  the  negligence  of  the  deceased  contrib- 
uted to  produce  the  injury,  therefore  the  death  was  not  occasioned  by 
an  accident  at  all,  within  the  meaning  of  the  policy.  I  cannot  assent 
to  this  proi)Osition.  It  would  establish  a  limitation  to  the  meaning  of 
the  word  "accident"  which  has  never  been  established,  either  in  law  or 
common  understanding.  A  very  large  proportion  of  those  events  which 
are  universally  called  accidents  happen  through  some  carelessness  of 
the  party  injured,  which  contributes  to  produce  them.  Thus,  men  are 
injured  by  the  careless  use  of  fire-arms,  of  explosive  substances,  of  ma- 
chinery, the  careless  management  of  horses,  and  in  a  thousand  ways, 
where  it  can  readily  be  seen  afterward  that  a  little  greater  care  on  their 
part  would  have  prevented  it.  Yet  such  injuries,  having  been  unex- 
pected, and  not  caused  intentionally  or  by  design,  are  always  called 
accidents,  and  properly  so.  Nothing  is  more  common  than  items  in 
the  newspapers  under  the  heading,  "  accidents  through  carelessness." 

Tliere  is  nothing  in  the  definition  of  the  word  that  excludes  the  negli- 
gence of  the  injured  party  as  one  of  the  elements  contributing  to  pro- 
duce the  result.  An  accident  is  defined  as  "an  event  that  takes  place 
witliout  one's  foresight  or  expectation  ;  an  event  which  proceeds  from 
an  unknown  cause,  or  is  an  unusual  effect  of  a  known  cause,  and,  there- 
fore, not  expected." 

An  accident  may  happen  from  an  unknown  cause.  But  it  is  not 
essential  that  the  cause  should  be  unknown.  It  may  be  an  unusual 
result  of  a  known  cause,  and  therefore  unexpected  to  the  party.  And 
such  was  the  case  here,  conceding  that  the  negligence  of  the  deceased 
was  the  cause  of  the  accident. 

It  is  true  that  accidents  often  happen  from  such  kinds  of  negligence. 
But  still,  it  is  equally  true  that  they  are  not  the  usual  result.  If  they 
were,  people  would  cease  to  be  guilty  of  such  negligence.  But  cases 
in  which  accidents  occur  are  very  rare  in  comparison  with  the  number 
in  which  there  is  the  same  negligence  without  any  accident.  A  man 
draws  his  loaded  gun  toward  him  by  the  muzzle  —  the  servant  fills  the 
lighted  lamp  with  kerosene  — a  hundred  times  without  injury.  The 
next  time  the  gun  is  discharged,  and  the  lamp  explodes.  The  result 
was  unusual,  and  therefore  as  unexpected  as  it  had  been  in  all  the  pre- 
vious instances.  So  there  are,  undoubtedly,  thousands  of  persons  who 
get  on  and  off  from  cars  in  motion  without  accident,  where  one  is  in- 
jured. And,  therefore,  when  an  injury  occurs,  it  is  an  unusual  result, 
and  unexpected,  and  strictly  an  accident.  Tliere  are  not  many  author- 
ities on  the  point.^  .  .  . 

1  Here  were  discussed  TheoUald  c.  Kailway  Passengers'  Assur.  Co.,  10  Ex.  45 
(1854),  aud  Trew  v.  Kailway  Passengers'  Assur.  Co.,  6  II.  &  N.  839  (Ex.  Cli ,  18GI). 
—  Ed. 

60 


786  ACCIDENT   INS.   GO.   V.    CRANDAL.  [CHAP.  VII. 

The  question  whether  the  injured  party  was  guilty  of  negligence  con- 
tributino"  to  the  accident  does  not  arise  at  all  in  this  class  of  cases.  I 
think  tliat  is  the  true  conclusion,  both  upon  principle  and  authority,  so 
far  as  there  is  any  upon  the  subject ;  and  the  only  questions  ai"e,  first, 
whether  the  deatli  or  injury  was  occasioned  by  an  accident  within  the 
general  meaning  of  the  policy,  and,  if  so,  whether  it  was  within  any  of 
the  exceptions. 

This  conclusion  is  also  very  stronglv_sup]2orted  by  that  provision  of 
the  jToIicy  under  which  the  ptaTntiff~wasuonsuited.  That  necessarily 
implIesThat  any  degree  of  negligence,  falling  short  of"  wilful  and  wanton 
exposure  to  unnecessary  danger,"  would  not  prevent  a  recovery.  Such 
a  provision  would  be  entirely  superfluous  and  unmeaning  in  such  a  con- 
tract, if  the  observance  of  due  care  and  skill  on  the  part  of  the  assured 
constituted  an  element  to  his  right  of  action,  as  it  does  in  actions  for 
injuries  occasioned  by  the  negligence  of  the  defendant. 

The  question,  therefore,  remains,  whether  the  attempt  of  tlie  de(;eased 
to  get  upon  the  train  was  within  this  provision,  and  constituted  a  "  wil- 
ful and  wanton  exposure  ot  liimseli  to  unnecessary  clanger."  I  cannot 
think  so.^  .  .  . 

Judgment  reversed.      Venire  facias  de  7iovo  awarded.' 


ACCIDENT  INS.  CO.  v.  CRANDAL. 
Supreme  Court  of  the  United  States,  1887.     120  U.  S.  527.* 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Northern 
District  of  Illinois. 

Tlie  action  was  upon  an  accident  insiirancg^po^icv  procured  by  E.  M. 
Craudal,  and  made  payable  to  his  wife.  The  policy  provided  that  "this 
insurance  shall  not  extend  ...  to  death  or  disability  which  may  have 
been  caused  wholly  or  in  part  by  bodily  infirmities  or  disease,  .  .  . 
and  no  claim  shall  be  made  under  this  policy  when  the  death  or  injury 
may  have  been  caused  .  .  .  by  suicide,  or  by  freezing,  or  sunstroke, 
or  self-inflicted  injuries."  The  defence  was  suicide.  The  jury  found  a 
special  verdict  to  the  efl'ect,  among  other  things,  that  PI  M.  Cranda| 
lianged  himself,  and  thereof  died  on  the  same  day,  and  that  he  was 
insane  at  the  time  of  his  act  of  self-destruction.  On  this  verdict,  judg- 
ineiit  was  given  for  the  plaintift'.  A  motion  for  a  new  trial  was  over- 
ruled.    Thereupon  the  defendant  sued  out  this  writ  of  error. 

^  The  discus.sion  of  this  point  lias  not  been  reprinted.  —  Ed. 
2  See  Provident  L.  Ins.  and  Investment  Co.  v.  Martin,  32  Md.  310  (1870). 
Compare  Stan(hird  Ins.  Co.  v.  Langston,  60  Ark.  381  (1895).  — Ed. 
8  8.  c.  in  the  Circuit  Court,  sub  nam.     Crandal  v.  Accident  Ins.  Co.,  27  Fed.  R.  40 
(1886). 

The  statement  has  been  rewritten.  —  Ed. 


SECT.  HI.]  ACCIDENT   INS.    CO.    V.   CRANDAL,  787 

Mr.  Emerson  B.  TtittJe^  for  plaintiflf  in  error. 

Mr.  George  C.  Frij,  for  defendant  in  error. 

Mr.  Justice  Gkay  ^   .   .   .  delivered  the  opinion  of  the  court. 

The  single  question  to  be  decided  therefore  is,  whether  a  policy  of 
insurance  against  '•  bodily  injuries,  eflfected  through  external,  acciden- 
tal, and  violent  means,"  and  occasioning  death  or  complete  disabilit}'  to 
do  business ;  and  providing  that  "  this  insurance  shall  not  extend  to 
death  or  disabilit}'  which  ma}-  have  been  caused  wholly  or  in  part  by 
bodily  infirmities  or  disease,  or  by  suicide,  or  self-inflicted  injuries," 
covers  a  death  by  hanging  one's  self  while  insane. 

The  decisions  upon  the  effect  of  a  policy  of  life  insurance,  which 
provides  that  it  shall  be  void  if  the  assured  "  shall  die  by  suicide," 
or  "  shall  die  by  his  own  hand,"  go  far  towards  determining  this 
question.  .   .  . 

In  this  state  of  the  law,  there  can  be  no  doubt  that  the  assured  did 


not  die  'Oby  suicide,"  within  the  meaning  of  this  policy;  and  the  same 
reasons  are  conclusive  against  holding  that  he  died  by  "  self-inflicted 
injuries."  If  self-killing,  "  suicide,"  "dying  by  his  own  hand,"  cannot 
be  predicated  of  an  insane  person,  no  more  can  "self-inflicted  injuries  ;" 
for  in  either  case  it  is  not  his  act. 

Nor  does  the  case  come  within  the  clause  which  provides  that  the  in- 
surance shall  not  extend  to  "  death  or  disability  which  may  have  been 
caused  wholly  or  in  part  by  bodily  infirmities  or  disease." 

If  insanity  could  be  considered  as  coming  within  this  clause,  it  would 
be  doubtful,  to  say  the  least,  whether,  under  the  rule  of  the  law  of  insur- 
ance which  attributes  an  injur}'  or  loss  to  its  proximate  cause  onl}',  and 
in  view  of  the  decisions  in  similar  cases,  the  insanit}'  of  the  assured,  or 
anything  but  the  act  of  hanging  himself,  could  be  held  to  be  the  cause 
of'his  death.  Scheffer  v.  Railroad  Co.,  105  U.  S.  249,  252  ;  Trew  v. 
Railway  Passengers'  Assurance  Co.,  5  H.  &  N.  211,  and  6  H.  &  N.  839, 
845;  Reynolds  v.  Accidental  Ins.  Co.,  22  Law  Times  (n.  s.)  820  r 
Winspear  v.  Accident  Ins.  Co.,  42  Law  Times  (n.  s.)  900  ;  affirmed, 
6  Q.  B.  D.  42;  Lawrence  v.  Accidental  Ins.  Co.,  7  Q.  B.  D.  216,  221  ; 
Scheiderer  v.  Travellers'  Ins.  Co.,  58  Wis.  13. 

But  the  words  "  bodil}-  infirmities  or  disease  "  do  not  include  insan- 
ity. Although,  as  suggested  by  Mr.  .Justice  Hunt  in  Life  Ins.  Co.  v. 
Terry,  15  "Wall.  589,  insanit}'  or  unsoundness  of  mind  often,  if  not 
always,  is  accompanied  by,  or  results  from,  disease  of  the  bod}',  still, 
in  the  common  speech  of  mankind,  mental  are  distinguished  from  bodily 
diseases.  In  the  phrase  "bodily  infirmities  or  disease,"  the  word 
"bodily"  grammatically  applies  to  "disease,"  as  well  as  to  "infirmi- 
ties ; "  and  it  cannot  but  be  so  applied,  without  disregarding  the  fun- 
damental rule  of  interpretation,  that  policies  of  insurance  are  to  be 
construed  most  strongly  against  the  insurers  who  frame  them.     The 

1  In  reprinting  the  opinion,  it  has  seemed  necessary  to  omit  passages  on  procedure 
and  on  life  insurance  as  distinguished  from  accident  insurance  and  on  the  effect  of  the 
application.  —  Ed. 


788         UNITED    STATES    MUTUAL    ACC.    ASSOC.    V.    BARRY.       [cHAP.  VII. 

prefix  of  "  bodily"  hardly  affects  the  meaning  of  "infirmities,"  and  it 
is  difficult  to  conjecture  any  purpose  in  inserting  it  in  this  proviso, 
other  than  to  exclude  mental  disease  from  the  enumeration  of  the  causes 
of  death  or  disability  to  which  the  insurance  does  not  extend.  .  .   . 

The  death  of  the  assured  not  having  been  the  effect  of  any  cause 
specified  in  the  proviso  of  the  policy,  and  not  coming  within  any  war- 
ranty in  the  application,  the  question  recurs  whether  it  is  within  the 
general  words  of  thejeading  sentence  of  the  tJoUcy.  by  which  he  iQe^, 
clared  to  be'  insurecT^against  bodily  injuries  effected  through  external^^ 
accidental,  and  viole"nt  means."  This  sentence  does  not,  like  the  pn> 
viso,  speak  of  what  the  injnr3Ts  "  caused  by  ;  "  but  it  looks  only  to  the 
"means"  by  which  it  is  effected.  No  one  doubts  that  hanging  jsa 
violent  means  of  death.  As  it  affects  the  body  from  without,  it  is  ex- 
ternal,  just  as  suffocation  by  drowning  was  held  to  be,  in  the  cases  of 
Trew,  Reynolds,  and  Winspear,  above  cited.  And,  according  to  the 
decisions  as  to  suicide  under  policies  of  life  insurance,  before  referred 
to,  it  cannot,  when  done  by  an  insane  person,  be  held  to  be  other  than 
accidental. 

The  result  is,  that  the  judgment  of  the  Circuit  Court  in  favor  of  the 
plaintiff  was  correct,  and  must  be  Affirmed.^ 


UNITED   STATES   MUTUAL   ACCIDENT   ASSOCIATION 

V.  BARRY. 

Supreme  Court  of  the  United  States,  1889.     131  U.  S.  100.^ 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Eastern  Dis- 
trict of  Wisconsin. 

Action  was  brought  b}'  Theresa  A.  Barry  upon  a  policy  whereby  the 
association  accepted  John  S.  Barry  as  a  member,  and  promised  to  pay 
to  Theresa  A.  Barry,  his  wife,  the  proceeds  of  an  assessment  "  within 
sixty  days  after  sufficient  proof  that  said  member  .  .  .  shall  have  sus- 
tained bodily  injuries  effected  through  external,  violent,  and  accidental 
means,  within  the  intent  and  meaning  of  the  by-laws  of  said  association 
and  the  conditions  hereunto  annexed,  and  such  injuries  alone  shall  have 
occasioned  death.  .  .  .  Provided  always,  that  benefits  under  this  cer- 
tificate shall  not  extend  to  hernia,  nor  to  any  bodily  injury  of  which 
there  shall  be  no  external  and  visible  sign,  nor  to  any  bodily  injury 
happening  directlj-  or  indirectly  in  consequence  of  disease,  nor  to  any 
death  or  disability  which  may  have  been  caused  wholly  or  in  part  by 

1  See  Games  v.  Iowa  State  Traveling  Men's  Assn.,  IOC  Iowa,  281  (1898).  —  Ed. 

2  8.  c.  in  the  Circuit  Court,  ml  nom.  Barry  v.  United  States  Mut.  Ace.  Assn.,  23 
Fed.  R.  712  (188.5). 

The  statement  has  been  rewritten,  and  passages  not  bearing  on  the  definition  of  an 
accident  have  been  omitted.  —  Ed. 


SECT.  III.]       UNITED    STATES    MUTUAL    ACC.    ASSOC.    V.    BARRY.  789 

bodily  infirmities  or  disease  existing  prior  or  subsequent  to  the  date  of 
the  certificate,  .  .  .  nor  to  anj'  case  except  where  the  injury  is  the 
proximate  or  sole  cause  of  the  disability  or  death.  .  .  .  And  these 
benefits  shall  not  be  held  to  extend  ...  to  any  case  of  death,  .  .  . 
unless  the  claimant  under  this  certificate  shall  establish  by  direct  and 
positive  proof  that  the  said  death  or  personal  injury  was  caused  by  ex- 
ternal violence  and  accidental  means,  and  was  not  the  result  of  desi^^n 
either  on  the  part  of  the  member  or  of  any  other  person.'' 

The  testimony  indicated  that  John  S.  Barry,  while  in  good  health, 
jumped  from  a  platform  that  was  four  or  fivp  fppf  from  thp  aionn.] ; 
that  he  landed  upon  his  feet  very  heavily,  as  if  he  had  come  down  sol- 
idly upon  his  heels  ;  that  the  jarring  of  his  body  produced  a  stricture 
of  the  duodenum,  and  that  on  account  of  this  stricture  he  died  in  nine 
da  vs. 


To  rulings  on  evidence  and  on  instructions  the  defendant  took 
numerous  exceptions  ;  and,  more  particularly,  the  defendant  excepted 
to  the  bracketed  parts  of  the  following  passages  in  the  charge  to  the 
jury :  — 

"  If  you  find  that  injury  was  sustained,  then  the  next  question  is. 
Was  it  effected  through  external,  violent,  and  accidental  means?  This 
is  a  pivotal  point  in  the  case,  and  tiierefore  vitally  important.  The 
means  must  have  been  external,  violent,  and  accidental.  Did  an  acci- 
dent occur  in  the  means  through  wliich  the  alleged  bodily  injury  was 
efl!ected? 

["The  jumping  ofl"  the  platform  was  the  means  by  which  the  injury, 
if  anj'  was  sustained,  was  caused.] 

["  Now,  was  there  anything  accidental,  unforeseen,  involuntary, 
unexpected,  in  the  act  of  jumping,  from  the  time  tiie  deceased  left  the 
platform  until  lie  alighted  on  the  ground  ?] 

["The  term  'accidental'  is  here  used  in  its  ordinary,  popular  sense, 
and  in  that  sense  it  means  'happening  by  chance  ;  Huexpectedly  tak- 
ing place ;  not  according  to  the  usual  course  of  things ; '  or  not  as 
expected." 

["  In  other  words,  if  a  result  is  such  as  follows  from  ordinary*  means 
voluntarily  employed  in  a  not  unusual  or  unexpected  way,  then,  I  sup- 
pose, it  cannot  be  called  a  result  eflfected  by  accidental  means.] 

["  But  if  in  the  act  which  precedes  the  injury  something  unforeseen, 
unexpected,  unusual,  occurs,  which  produces  the  injury,  then  the  injury 
has  resulted  from  the  accident  or  through  accidental  means.] 

["We  understand,  from  the  testimony,  without  question,  that  the 
deceased  jumped  from  the  platform  with  his  eyes  open,  for  his  own 
convenience,  in  the  free  exercise  of  his  choice,  and  not  from  any  peril- 
ous necessity.  He  encountered  no  obstacle  in  jumping,  and  he  alighted 
on  the  ground  in  an  erect  posture.  So  far  we  proceed  without  diffi- 
culty ;  but  3-ou  must  go  further  and  inquire,  and  here  is  the  precise 
point  on  which  the  question  turns  :  Was  there  or  not  any  unexpected 
or  unforeseen  or  involuntary  movement  of  the  body,  from  the  time  Dr. 


790  UNITED    STATES    MUTUAL    ACC.    ASSOC,    V.   BAERY.       [CHAP,  YII. 

BariT  loft  the  platform  until  he  reached  the  ground,  or  in  the  act  of 
aligliting?  Did  he  or  not  alight  on  the  ground  just  as  he  intended  to 
do?  Did  he  accomplish  just  what  he  intended  to,  in  the  way  lie  in- 
tended to?  Did  he  or  not  unexpectedly  lose  or  relax  his  self-control, 
in  his  downward  movement?  Did  his  feet  strike  the  ground  as  he 
intended  or  expected,  or  did  they  not?  Did  he  or  not  miscalculate  the 
distance,  and  was  there  or  not  any  involuntary  turning  of  the  body,  in 
the  downward  movement,  or  in  the  act  of  alighting  on  the  ground? 
Tiiese  are  points  directly  pertinent  to  the  question  in  hand.] 

"  And  I  instruct  you  that  if  Dr.  Barry  jumped  from  the  platform  and 
alighted  on  the  ground  in  the  way  lie  intended  to  do,  and  nothing 
unforeseen,  unexpected,  or  involuntary  occurred,  changing  or  affecting 
the  downward  movement  of  his  body  as  he  expected  or  would  naturally 
expect  such  a  movement  to  be  made,  or  causing  him  to  strike  the 
ground  in  any  different  way  or  position  from  tliat  which  he  anticipated 
or  would  naturally  anticipate,  then  any  resulting  injury  was  not  effected 
through  any  accidental  means.  [But  if,  in  jumping  or  alighting  on  the 
ground,  there  occurred,  from  any  cause,  any  unforeseen  or  involuntary 
movement,  turn,  or  strain  of  the  body,  which  brought  about  the  alleged 
injury,  or  if  there  occurred  any  unforeseen  circumstance  which  inter- 
fered with  or  changed  such  a  downward  movement  as  he  expected  to 
make,  or  as  it  would  be  natural  to  expect  under  such  circumstances, 
and  as  caused  him  to  alight  on  the  ground  in  a  different  position  or 
■way  from  that  which  he  intended  or  expected,  and  injury  thereby  re- 
sulted, then  the  injury  would  be  attributable  to  accidental  means."] 

The  verdict  was  for  the  plaintiff. 

Mr.  B.  IC  Miller,  Jr.^  for  plaintiff  in  error. 

Mr.  William  F.  Vilas,  for  defendant  in  error. 

Mr.  George  Mc  Whoeter  and  Mr.  C.  B.  Bice  filed  a  brief  for  defend- 
ant in  error. 

Mr.  Justice  Blatchford  ^  .  . .  delivered  the  opinion  of  the  court.  .  .  . 

It  is  further  urged  that  there  was  no  evidence  to  suppoi't  the  verdict 
because  no  accident  was  shown.  We  do  not  concur  in  this  view.  The 
two  companions  of  the  deceased  jumped  from  the  same  platform,  at  the 
same  time  and  place,  and  alighted  safely.  It  must  be  presumed  not 
onh-  that  the  deceased  intended  to  alight  safely,  but  thought  that  he 
would.  The  jury  were,  on  all  the  evidence,  at  liberty  to  say  that  it 
w as  an  accident  that  he~did  not,  ilie  court  properly  instructed  the m 
flTatfhe  jumping  off  the  platform  was  the  means  b}"  which  the  injury, 
if  an}'  was  sustained,  was  caused  ;  that  the  question  was,  whether  there 
was  anything  accidental,  unforeseen,  involuntarj',  unexpected,  in  the 
act  of  jumping,  from  the  time  the  deceased  left  the  platform  until  he 
alighted  on  the  ground  ;  that  the  term  "accidental"  was  used  in  the 
policy  in  its  ordinary,  popular  sense,  as  meaning  "  happening  by 
chance  ;  unexpectedl}'  taking  place  ;  not  according  to  the  usual  course 

^  In  reprinting  the  opinion,  pa.ssages  not  bearing  upon  the  quotations  from  tlie 
charge  have  been  omitted.  —  Ed. 


SECT.  III.]         FIDELITY    AND    CASUALTY   CO.    V.    JOHNSON.  791 

of  things  ,•  or  not  as  expected  ; "  tliat,  if  a  result  is  such  as  follows 
from  ordinary  means,  voluntarily-  employed,  in  a  not  unusual  or  unex- 
pected way,  it  cannot  be  called  a  result  -effected  b}-  accidental  means ; 
hut  that  if,  in  the  act  which  precedes  the  injury,  something  unforeseen, 
unexpected,  unusual  occurs  which  produces  the  injury,  then  the  injury 
has  resulted  through  accidental  means.  The  jury  were  further  told,  no 
exception  being  taken,  that,  in  considering  the  case,  thej'  ought  not  to 
adopt  theories  without  proof,  or  substitute  bare  possibility  for  positive 
evidence  of  facts  testified  to  by  credible  witnesses ;  that  where  the 
weight  of  credible  testimony  proved  the  existence  of  a  fact,  it  should 
be  accepted  as  a  fact  in  the  case ;  but  that  where,  if  at  all,  proof  was 
wanting,  and  the  deficienc}'  remained  throughout  the  case,  the  allega- 
tion of  fact  should  not  be  deemed  established. 

In  Martin  v.  Travellers'  Ins.  Co.,  1  Foster  &  Fin.  505,  the  policy 
was  against  any  bodily  injury  resulting  from  any  accident  or  violence, 
"provided  that  the  injury  should  be  occasioned  by  an}'  external  or 
material  cause  operating  on  the  person  of  the  insured."  In  the  course 
of  his  business  he  lifted  a  heavy  burden,  and  injured  his  spine.  It  was 
objected  that  he  did  not  sustain  bodily  injury  by  reason  of  an  accident. 
The  plaintiff  recovered. 

In  North  American  Ins.  Co.  v.  Burroughs,  69  Penn.  St.  43,  the  policy 
was  against  death  'Mn  consequence  of  accident,"  and  was  to  be  opera- 
tive only  in  case  the  death  was  caused  solely  by  an  '•  accidental  injury." 
It  was  held  that  an  accidental  strain,  resulting  in  death,  was  an  acci- 
dental injury  within  the  meaning  of  the  policy,  and  that  it  included 
death  from  any  unexpected  event  happening  by  chance,  and  not  occur- 
ring according  to  the  usual  course  of  things. 

The  case  of  Southard  v.  Railwa}'  Passengers'  Assurance  Co.,  34 
Conn.  574,  is  relied  on  by  the  defendant.  That  case,  though  pending 
in  a  State  court  in  Connecticut,  was  decided  b}'  an  arbitrator,  who  was 
then  the  learned  district  judge  of  the  United  States  for  the  District  of 
Connecticut.  But  if  there  is  anything  in  that  decision  inconsistent  with 
the  present  one,  we  must  dissent  from  its  views.  .  .  . 

We  see  no  error  in  anything  excepted  to  by  the  defendant,  and  the 
judgment  is  Affirmed.^ 


FIDELITY   AND   CASUALTY   CO.  v.  JOHNSON. 

Supreme  Court  of  Mississippi,  1895.     72  Miss.  333. 

From  the  Circuit  Court  of  Pike  County,  Hon.  W.  P.  Cassedy,  Judge. 

Action   by   appellee  against  appellant  on  an   insurance  policy  for 

Si, 000,  insuring  the  husband  of  appellee,  an  employee  of  the  Illinois 

1  See  North  American  L.  &  A.  Ins.  Co.  v.  Burroughs,  69  Pa.  43  (1871) ;  Feder  r. 
Iowa  State  Traveling  Men's  Assn.,  107  Io'.va,  5.38  (1899);  Standard  L.  &  A.  Ins.  Co. 
V.  Schmaltz,  66  Ark.  588  (1899).  —Ed. 


792  FIDELITY   AND.  CASUALTY    CO.    V.    JOHNSON.        [CIIAP.  VII. 

Central  Railroad  Compan}',  against  "■  bodily  iniuries  sustained  through 
external,  violent,  and  accidental  means."  The  assured  was  hanged  by 
a_mob  during  tliejjjeofthe  policy.  Flaintitt  recovered  judgment  for 
the  full  amount  of  the  policy^  IVIotion  for  new  trial  overruled.  De- 
fendant appealed.  The  opinion  contains  such  further  statement  of  the 
case  as  is  necessar}'  to  an  understanding  of  the  questions  decided. 

A.  C.  McJVair,  for  appellant. 

W.  B.  Mixo7i  and  J.  B.  Steimberger,  for  appellee. 

Woods,  J.,  delivered  the  opinion  of  the  court.^  .  .  . 

The  court  refused  to  charge  the  jHuy  for  appellant  as  asked  in  its 
twelfth  instruction.  This  instruction  reads  as  follows :  "  If  the  jur}' 
believe,  from  the  evidence  in  this  case,  that  John  Johnson  came  to  his 
death  by  the  hands  of  a  mob,  his  death  was  not  the  result  of  an  acci- 
dent, and  this  case  is  not  within  the  terms  and  conditions  of  the  policy 
sued  on,  and  the  jury  will  find  for  defendant."  By  the  terms  of  the 
policy,  indemnity  against  "  bodily  injuries  sustained  through  external, 
violent,  and  accidental  means  "  was  secured  by  the  insured.  That  John- 
son came  to  his  death  by  external  and  violent  means  is  not  denied,  but 
death  by  hanging  at  the  hands  of  a  mob,  it  is  said  by  appellant's 
counsel,  is  foreign  to  our  preconceived  ideas  as  to  what  constitutes  an 
accident. 

According  to  lexicographers,  an  accident  is  a  sudden,  unforeseen, 
and  unexpected  event.  It  has  been  held  b}'  courts  adopting  this  or 
an}-  similar  definition  that  where  a  man  was  killed  b}'  robbers,  that 
this  was  a  case  of  death  by  accident  in  the  sense  in  which  that  word  is 
used  in  accident  insurance  policies.  So,  too,  it  has  been  held  that 
death  from  a  blow  struck  by  one  who  has  attempted  to  blackmail  the 
assured  was  an  accident  covered  by  an  accident  insurance  policy.  In 
these  and  all  like  cases  in  which  death  occurs  by  violent  means  exte r- 
nal  totheniaii^^andjigainst  or  wittiout  intention  or  concurrence  of  will 
'orPthe  part  of  the  man,  death  may  properly  be  called  an  accidentj^  A 
learned  and  laborious  writer  states  the  true  rule  for  determining  whether 
injuries  are  accidental.  With  great  simplicity,  clearness,  and  strength, 
Biddle  says :  "  An  injury  may  be  said  objectively  to  be  accidental, 
though  subjectively  it  is  not ;  and,  if  it  occur  without  the  agenc}'  of  the 
insured,  it  may  logically  be  termed  accidental,  though  it  was  brought 
about  designedly  b}-  another  person."  See  Biddle  on  Insurance  and 
the  numerous  cases  cited  l)y  him  in  his  elaborate  consideration  of  this 
subject  in  iiis  vol.  2,  chapter  10,  beginning  at  page  780.  See,  too, 
Bacon's  Benefit  Societies  and  Life  Insurance,  vol.  2,  chapter  15,  and 
the  many  cases  there  cited.  There  is,  upon  authority,  hardly  room  for 
controversy  as  to  the  rightfulness  of  the  action  of  the  court  below-ioju. 
refusing  to  charge  the  jury  that  death  by  lianging  at  the  hands  of  a 
mob  was  not  an  accident.  There  is  evidence  to  support  the  verdict, 
and  we  are  not  authorized  to  substitute  another  finding,  more  in  con- 

^  Passages  as  to  procedure  and  as  to  payment  of  dues  have  been  omitted.  —  Ed. 


SECT.  III.]      WESTERN  COMMERCIAL  TRAVELERS'  ASSN.  V.  SMITH.       793 

sonance  with  our  views  of  the  testimon}',  for  that  of  the  jury,  which 
rests  upon  sufficient  proof.  We  find  no  reversible  error,  and  the  judg- 
ment of  the  trial  court  is  Affirmed.^ 


WESTERN   COMMERCIAL  TRAVELERS'   ASSN.  v.  SMITH. 

Circuit  Couut  of  Appeals  of  the  United  States,  Eighth  Circuit, 
1898.     85  Fed.  R.  401.^ 

In  error  to  the  Circuit  Court  of  the  United  States  for  the  Eastern 
District  of  Missouri. 

i^.  N.  Jadson  (C.  S.  Taussig  and  Louis  R.  Tatum,  on  the  brief), 
for  plaintiff  in  error. 

S.  L.  Sicarts  {E.  M.  Merriman  and  George  H.  Sanders,  on  the 
brief),  for  defendant  in  error. 

Before  Sanborn  and  Thayer,  Circuit  Judges,  and  Philips,  District 
Judge. 

Sanborn,  Circuit  Judge.  The  Western  Commercial  Travelers'  Asso- 
ciation, the  plaintiff  in  error,  has  sued  out  a  writ  to  reverse  a  judgment 
against  it  upon  a  certificate  of  insurance  against  accident  which  is  issued 
to  Freeman  O.  Smith,  one  of  its  members,  for  the  benefit  of  Sarah  L. 
Smith,  the  defendant  in  error.  A  jury  was  waived,  the  court  tried  the 
case  and  made  a  special  finding  of  the  facts,  and  the  error  assigned  is 
that  tlie  facts  found  do  not  support  the  judgment  (1)  because  they  show 
that  immediate  notice  of  the  accident  or  injury  was  not  given  to  the 
association,  as  required  by  the  policy,^  and  (2)  because  they  fail  to 
show  that  the  death  of  the  member  was  produced  "  by  bodily  injuries 
effected  by  external,  violent,  and  accidental  means." 

^  These  are  the  facts  relative  to  the  two  questions  thus  raised,  which 
appear  from  the  pleadings  and  the  findings  :  The  certificate  upon  which 
tlie  suit  is  based  secured  to  the  member,  Freeman  O.  Smith,  indemnity 
in  various  amounts  for  total  disabilit}',  for  the  loss  of  an  arm  or  a  leg, 
or  one  arm  and  one  leg,  and  for  the  loss  of  both  arms  or  both  legs,  by 
accident ;  and  it  also  secured  to  his  beneficiary,  the  defendant  in  error, 
indemnity  for  his  death  produced  "  by  bodily  injuries  effected  by  exter- 
nal, violent,  and  accidental  means  "  alone.    .   .   . 

In  the  latter  part  of  August,  1895,  while  this  certificate  was  in 
force.  Freeman  O.  Smith,  who  was  a  strong  and  healthy  man,  com- 
menced wearing  a  pair  of  new  shoes.  About  September  6,  1895,  the 
friction  of  one  of  the  shoes  against  one'onTiF'l'eL't,  uiiexpect^^dlTand 
without  design  on  his  part,  produced  an  abrasion  of  the  skin  of  onc~of 
his  toes.     He  gave  the  abrasion  reasonable  attention,  but  it  neverthe- 


1  Ace:  Lovelace  v.  Travelers'  Protective  Assn.,  126  Mo.  104  (1894).  —  Ed. 

2  8.  c.  56  U.  S.  App.  .393,  and  29  C.  C.  A.  223.  —  Ed. 

2  Passages  as  to  notice  have  not  been  reprinted.  —  Ed. 


« 

794     WESTERN  COMMERCIAL  TRAVELERS'  ASSN.  V.  SMITH.      [cHAP.  VIL 

less  caused  blood  poisoning  about  Se^ember  26.  1805,  which  resulted 
lnTnsjieath3L.Octobe^  .  . 

It  is  earnestly  contended,  however,  that  the  death  was  not  caused 
by  bodily  injuries  effected  by  external,  violent,  and  accidental  means 
(1)  because  the  disease  of  blood  poisoning  was  the  cause,  and  the  abra- 
sion of  Mie  skin  of  the  toe  was  only  the  occasion,  the  locality  in  which 
the  disease  first  appeared,  and  (2)  because  the  abrasion  of  the  skin  was 
not  an  accident,  hut  was  made  in  the  ordinary  course  of  things.  The 
contract  does  not  differ,  in  respect  to  the  subject  presented  by  this 
proposition,  from  those  which  have  been  repeatedly  considered  by  this 
court,  and  we  slate  its  legal  effect  briefly,  because  the  reasons  and 
authoricies  in  support  of  our  views  here  have  been  frequently  set  forth 
in  the  opinions  of  this  comt  wliich  are  cited  below. 

If  the  death  was  caused  by  a  disease,  witliout  any  bodily  injury  in- 
flicted by  external,  violent,  and  accidental  means,  as  in  the  case  of  the 
malignant  pustule  (Bacon  o.  Association,  123  N.  Y.  304,  25  N.  E.  399), 
and  as  in  the  case  of  sunstroke  (Sinclair  v.  Assurance  Co.,  3  El.  &  El. 
478;  Dozier  v.  Casualty  Co.,  46  Fed.  446),  the  association  was  free 
from  liability  by  the  express  terms  of  the  certificate.  If  thj  deceased 
suffered  an  accident,  but^t  the  lime  he^sustained_it  he  was  already 
suffering  from  a  disease  oi-  bodih;  ijifix'mity,  an^l  if  the  accident^ would 
iK)t~liavc^causedJiis  death  i^  he  had  not  been  affected  by  the  disease^ or 
infirmity,  buF  he  died  because  l^he^ccideTrt  aggravated  the  disease,  or 
t¥e  disease  aggravated  the  eflfects  of  the  accident,  as  in  the  case  oTthe 
insured"  wHb  was  sin)jecr'to  sTicli  aTodiiyinfffmity  that  a  short  run, 
followed  by  stooping,  whiclLWOukL  not  have  inj^-ed  a  healthy  man, 
<2^*/,  produceCai30)Dlexy  (Insurance  Co.  r.  Selden,  24  C.  C.  A.  92,  78  Fed. 
^J  f  '  '  285)7  the  association  was  exempt  from  liability,  because  the^  death^vas 
^*-^  .  caused  partlynSy  dTseaTe^_an(Li)art^-  l)y  jiccident.     If  the  death  was 

causedT)y  bodTly  injuries  effected  by  external,  Violent,  and  accidental 
means  alone,  the  association  was  liable  to  pay  the  promised  indemnity. 
If  the  death  was  caused  by  a  disease  which  was  not  the  result  of  any 
bodil}"  infirmity  or  disease  in  existence  at  tlte  time  of  the  accident,  but 
which  was  itself  caused  by  the  external,  violent,  and  accidental  means 
which  produced  the  bodily  injury,  the  association  was  equally  liable  to 
pay  the  indemnit}'.  In  such  a  case,  the  disease  is  an  effect  of  the  acci- 
dent, the  incidental  means  |)roduced  and  used  by  the  original  moving 
cause  to  bring  about  its  fatal  effect,  a  mere  link  in  the  chain  of  causa- 
tion between  the  accident  and  the  death,  and  the  death  is  attributable, 
not  to  the  disease,  but  to  the  causa  causans,  to  the  accident  alone. 
Insurance  Co.  v.  Melick,  27  U.  S.  App.  547,  560,  561,  12  C.  C.  A. 
544,  552,  and  65  Fed.  178,  186;  Railway  Co.  v.  Callaghan,  12  U.  S. 
App.  541,  550,  6  C.  C.  A.  205,  210.  and  56  Fed.  988,  994;  Railway 
Co.  V.  Kellogg,  94  U.  S.  469,  475  ;  Association  v.  Shryock,  36  U.  S. 
App.  658,  663,  20  C.  C.  A.  3,  5,  and  73  Fed.  774,  776. 

Now,  the  finding  of  the  facts  made  by  the  trial  court  is  conclusive  in 
this  case,  and  the  only  question  here  presented  is  whether  those  facts 


SECT.  III.]      WESTERN  COMMERCIAL  TRAVELERS*  ASSN.  V.  SMITPL       795 

■warrant  the  judgment  below.  That  court  has  found  that  the  deceased 
was  an  exceptionally  strong  and  liealtli}"  man  when  the  abrasion  in 
question  was  produced.  It  has  found  that  the  wearing  of  the  new  slioc 
produced  the  al)rasion  on  September  G,  181)5,  that  tliis  abrasion  was 
the  cause  of  blood  poisoning  on  September  26,  1895,  and  that  the  blood 
poisoning  produced  the  death  on  October  3,  1895.  Tiie  question 
wliether  the  death  was  produced  b}-  the  abrasion  or  by  the  disease  is, 
therefore,  extracted  from  this  case.  There  is  no  ground  for  the  con- 
tention that  the  disease  of  blood  poisoning  was  an  intervening  and  in- 
dependent cause  of  the  death,  because  the  finding  of  the  court  below  is 
that  that  disease  was  a  mere  link  in  the  chain  of  causation  between  the 
abrasion  which  produced  it  and  the  death  which  it  produced. 

Tlie  onl}-  question  remaining,  therefore,  is  wliether  or  not  the  abra- 
sion of  the  skin  of  the  toe  was  produced  by  accidental  means.  If  it 
was,  the  death  was  so  produced ;  and  if  it  was  not,  there  was  no  acci- 
dent, and  consequently  no  cause  of  action.  The  contract  was  that  the 
association  would  pay  the  promised  indemnity  for  any  death  caused 
"by  bodily  injuries  effected  by  external,  violent,  and  accidental  means." 
There  is  no  claim  that  the  friction  of  the  slioe  which  caused  the  abra- 
sion was  not  external  and  violent.  The  contention  is  that  it  was  not 
accidental.  The  significance  of  this  word  "accidental"  is  best  per- 
ceived by  a  consideration  of  the  relation  of  causes  to  their  effects. 
The  word  is  descriptive  of  means  which  produce  effects  which  are  not 
their  natural  and  probable  consequences.  The  natural  consequence  of 
means  used  is  the  consequence  which  ordinarily  follows  from  their  use, 
—  the  result  which  may  be  reasonably  anticipated  from  their  use,  and 
which  ought  to  be  expected.  The  probable  consequence  of  the  use  of 
given  means  is  the  consequence  which  is  more  likely  to  follow  from 
their  use  than  it  is  to  fail  to  follow.  An  effect  which  is  the  natural 
and  probable  consequence  of  an  act  or  course  of  action  is  not  an  acci- 
dent, nor  is  it  produced  by  accidental  means.  It  is  either  the  result  of 
actual  design,  or  it  falls  under  the  maxim  that  every  man  must  be  held 
to  intend  the  natural  and  probable  consequence  of  his  deeds.  On  the 
other  hand,  an  effect  which  is  not  the  natural  or  probable  consequence 
of  the  means  which  produced  it,  an  effect  which  does  not  ordinarily 
follow  and  cannot  be  reasonaVily  anticipated  from  the  use  of  those 
means,  an  effect  which  the  actor  did  not  intend  to  produce  and  which 
ho  cannot  be  charged  with  the  design  of  producing  under  the  maxim  to 
which  we  have  adverted,  is  produced  l)y  accidental  means.  It  is  pro- 
duced by  means  which  were  neither  designed  nor  calculated  to  cause  it. 
Such  an  effect  is  not  the  result  of  design,  cannot  be  reasonably  antici- 
pated, is  unexpected,  and  is  produced  by  an  unusual  combination  of 
fortuitous  circumstances  ;  in  other  words,  it  is  produced  by  accidental 
means.  Railway  Co.  v.  Elliott,  12  U.  S.  App.  381,  386,  387,  389, 
5  C.  C.  A.,  347,  350,  351,  353,  55  Fed.  919,  942,  953,  955. 

Was  the  abrasion  of  the  skin  of  the  toe  of  the  deceased  the  natuial 
and  probable  consequence  of  wearing  new  shoes?    It  must  be  conceded 


796      WESTERN  COMMERCIAL  TRAVELERS'  ASSN.  V.  SMITH.      [CHAP.  VII. 

that  new  shoes  are  not  ordinarily  woi'u  with  the  design  of  causing 
abrasions  of  the  skin  of  the  feet,  and  the  trial  court  has  found  tliat  the 
abrasion  upon  the  toe  of  the  deceased  was  produced  unexpectedly,  and 
without  any  design  on  his  part  to  cause  it.  An  abrasion  of  the  skin, 
certainly,  is  not  the  probable  consequence  of  the  use  of  new  shoes  ;  for 
it  cannot  be  said  to  follow  such  use  more  frequently  than  it  fails  to 
follow  it.  Nor  can  such  an  abrasion  be  said  to  be  the  natural  conse- 
quence of  wearing  such  shoes,  —  the  consequence  which  ordinarily 
follows,  or  which  might  be  reasonably  anticipated.  How,  then,  can  it 
fail  to  be  the  chance  result  of  accidental  means,  —  means  not  designed 
or  calculated  to  produce  it?  If  the  deceased,  without  design,  had 
slipped,  and  caused  an  abrasion  of  the  skin,  as  he  was  walking  down 
the  street,  or  had  punctured  the  skin  of  his  foot  bj-  stepping  on  a  nail 
in  his  room,  or  had  pierced  it  with  a  nail  in  his  shoe  as  he  was  drawing 
it  upon  his  foot,  there  could  have  been  no  doubt  that  these  injuries 
were  produced  by  accidental  means ;  and  it  is  difficult  to  understand 
wh}-  an  abrasion  of  tiie  skin,  produced  unexpected!}'  and  without  de- 
sign, by  friction  caused  by  wearing  a  new  shoe,  does  not  fall  within  the 
same  category. 

In  McCarthy  v.  Insurance  Co.,  8  Biss.  362,  Fed.  Cas.  No.  8,682,  it 
is  held  that  death  from  the  rupture  of  a  blood-vessel  caused  by  swing- 
ing Indian  clubs  for  exercise  ma}'  be  a  death  from  bodily  injury  caused 
by  accidental  means.  In  Martin  u.  Insurance  Co.,  1  Fost.  &  F.  505,  a 
total  disabilit}'  caused  b}*  straining  the  back  while  lifting  a  heav}'  bur- 
den was  declared  to  be  a  disability  produced  by  accident.  In  Insurance 
Co.  V.  Burroughs,  69  Pa.  St.  43,  51,  the  court  said  that  an  accident  is 
"  an  event  that  takes  place  without  one's  foresight  or  expectation  ;  an 
event  which  proceeds  from  an  unknown  cause,  or  is  an  unusual  effect 
of  a  known  cause,  and  therefore  not  expected ;  chance  ;  casualty  ; 
contingency,"  —  and  held  that  a  strain  of  the  abdominal  muscles,  pro- 
duced by  pitching  hay,  which  caused  an  inflammation  that  resulted  in 
death,  was  an  accident.  Death  by  drowning,  by  involuntaril}-  inhaling 
illuminating  gas,  or  by  fright,  is  death  by  accidental  means.  Trew  v. 
Assurance  Co.,  6  Hurl.  &  N.  839  ;  Mallory  v.  Insurance  Co.,  47  N.  Y. 
52  ;  Paul  v.  Insurance  Co.,  112  N.  Y.  472,  20  N.  E.  347  ;  McGlinchey 
V.  Casualty  Co.,  80  Me.  251,  14  Atl.  13.  In  Insurance  Co.  v.  Melick, 
27  U.  S.  App.  547,  12  C.  C.  A.  544,  and  65  Fed.  178,  this  court 
affirmed  a  judgment  based  upon  a  verdict  that  a  death  caused  by  lock- 
jaw, which  was  produced  by  a  shot  wound  unexpectedly  inflicted  upon 
himself  b}'  the  deceased,  without  design,  was  a  death  caused  by  bodily 
injury  produced  by  accidental  means  alone.  In  Association  v,  Barry, 
131  U.  S.  100,  9  Sup.  Ct.  755,  three  persons  jumped  from  the  same 
platform  at  the  same  time  and  place.  Two  of  them  alighted  in  safety, 
while  the  third  suffered  a  stricture  of  the  duodenum  which  produced  a 
disease  which  caused  his  death.  The  Supreme  Court  affirmed  a  judg- 
ment founded  upon  a  verdict  that  his  death  was  the  result  of  bodily 
injuries  effected  through  external,  violent,  and  accidental  means,  and 
aoproved  an  instruction  to  the  jury  that :  — 


SECT.  III.]       WESTERN  COMMERCIAL  TRAVELERS*  ASSN.  V.  SMITH.        797 

"  The  term '  accidental '  was  used  in  the  polic}'  in  its  ordinary,  popu- 
lar sense,  as  meaning  '  happening  b\-  chance  ;  unexpectedly  taking 
place  ;  not  according  to  the  usual  course  of  things,  or  not  as  expected  ' ; 
that,  if  a  result  is  such  as  follows  from  ordinary  means,  voluntarily' 
employed,  in  a  not  unusual  or  unexpected  way,  it  cannot  be  called  a 
result  effected  by  accidental  means  ;  but  that  if,  in  the  act  which  pre- 
cedes the  injur}',  something  unforeseen,  unexi)ected,  unusual  occurs, 
which  produces  the  injury,  then  the  injury  has  resulted  through  acci- 
dental means."' 

We  are  unable  to  distinguish  the  case  at  bar  from  those  to  which  we 
have  referred,  and  tlie  case  last  cited  is  of  controlling  authority  in  this 
court.  The  ablg^"  "^  ^*^^  ^^'"  "^  ^^^  ^Q^  ^^  ^^^^  deceased  was  unex- 
pectedly  caused,  without  design  on  his  part,  by  unforeseen,  unusuaT. 
and  unexpected  friction  in  the  act  of  wearing  the  shoe  which  preceded 
the  injuryT  It~v\'as  not  the  natural  or  probable  consequence  of  that  act, 
and  it  was,  therefore,  produced  by  accidental  means.  The  judgment 
below  must  be  affirmed,  with  costs  ;  and  it  is  so  ordered.^ 

^  In  Northwestern  Travellers'  Assn.  v.  London  Guarantee  and  Ace.  Co.,  10  Mani- 
toba, 537  (189.5),  the  policy  insured  against  "bodily  injuries  effected  through  external 
violent  and  accidental  means,"  but  did  "  not  e.xtend  to  death  or  disability  caused  by  an 
injury  of  which  there  shall  be  no  external  or  visible  signs,  or  wholly  or  in  part  by  bodily 
infirmity  or  disease  .  .  .  nor  to  any  case  except  where  some  injury  effected  as  aforesaid 
is  the  proximate  and  sole  cause  of  the  disability  or  death."  While  the  insured  was 
travelling  over  the  prairie  in  a  severe  snow-storm,  his  wagon  broke  down.  Being  too 
numb  to  walk,  the  insured  sent  the  driver  for  assistance ;  but  the  driver  lost  his  way, 
and,  before  a.ssistance  came,tlie  weather  became  still  colder  and  the  insured  was  frozen 
to  death.  The  case  was  tried  without  a  jury,  and  a  verdict  was  rendered  against  the 
insurer.  This  verdict  was  sustained  by  the  Queen's  Bench  of  Manitoba. 
On  the  perils  covered  by  an  accident  policy,  see  also  :  — 

Theobald  v.  Railway  Passengers'  Assur.  Co.,  10  Ex.  45  (1854) ; 

Trew  V.  Railway  Passengers'  Assur.  Co.,  6  H.  &  N.  839  (Ex.  Ch.,  1861); 

Fitton  I'.  Accidental  Death  Ins.  Co  ,  17  C.  B.  n.  s.  122  (1864); 

Smith  V.  Accident  Ins.  Co.,  L.  R.  5  Ex.  302  (1870) ; 

Northrup  v.  Railway  Passenger  Assur.  Co.,  43  N.  Y.  516  (1871) ; 

Ripley  v.  Insurance" Co.,  16  Wall.  336  (1872)  ; 

Winspear  v.  Accident  Ins.  Co.,  6  Q.  B.  D.  42  (C.  A.  1880) ; 

Lawrence  v.  Accidental  Ins.  Co.,  7  Q.  B.  D.  216  (1881 ) ; 

Rodev  V.  Travelers'  Ins.  Co.,  3  N.  M.  316  (1886)  ; 

McGlinchev  v.  Fidelitv  and  Casualty  Co.,  80  Me.  251  (1888) ; 

Travelers'  Ins.  Co.  v.  McConkey,  127  U.  S.  661  (1888) ; 

Isitt  I'.  Railway  Passengers  Assur.  Co.,  22  Q.  B.  D.  504  (1889) ; 

Paul  V.  Travelers'  Ins.  Co  ,  112  X.  Y.  472  (1889)  ; 

Cornish  v.  Accident  Ins  Co.,  23  Q.  B    1).  453  (C.  A.,  1889) ; 

Bacon  v.  United  States  Mut.  Ace.  A.ssn.,  123  N.  Y.  304  (1890) ; 

Pickett  V.  Pacific  Mut.  L.  Lis  Co  ,  144  Pa.  79  (1.S91 )  ; 

Hamlyn  v.  Crown  Accidental  Ins.  Co ,  [1893]  1  Q.  B.  750  (C.  A.) ; 

American  Ace.  Co.  v.  Reigart,  94  Ky.  547  (1893) ; 

Menneiley  v.  Employers'  Liability  Assur.  Corp  ,  148  N.  Y.  596  (1896) ; 

Travelers'  Ins  Co.  v.  Dunlap,  160  III  642  (1896) ; 

McGlother  v.  Provident  Mut.  Ace    Assn.,  60  U.  S.  App.  705  (Eighth  Circuit, 
1898),  s.  c.  32  C.  C.  A.  318,  and  89  Fed.  R.  685 ; 

Fidelity  and  Casualty  Co.  v.  Sittig,  181  111.  Ill  (1899).  —Ed. 


798  LEWIS   V.   KUCKEK.  [CHAP.  VIII. 


CHAPTER  VIII. 

THE  AMOUNT  OF   RECOVERY. 


Assecuratus  eniin  iwn  qucerit  lucrum,  sed  agit  ne  in  damno  sit. 

Straccha  de  Assecurationibus,^  glossa  XX.,  num.  4  (1569). 


SECTION  I. 

Marine  Insurance, 

(A)  Genebal  Principles,  especially  as  to  Partial  Losses. 

LEWIS   V.  RUCKER. 

King's  Bench,  1761.     2  Burr.  IIGT.^ 

•This  was  an  action,  in  behalf  of  Bourdieu,  upon  a  policy  insuring  a 
cargo  of  sugars,  coffee,  and  indigo,  from  St.  Thomas  to  Hamburg. 
The  clayed  sugars  were  valued  at  £30  a  hogshead,  and  the  Muscovado 
sugars  at  £20  a  hogshead.  The  sugars  were  warranted  free  from  aver- 
age under  five  per  cent.  The  sea-water  got  in,  and  every  hogshead  of 
sugar  was  damaged.  On  account  of  the  damaged  state  of  the  sugars, 
it  was  necessary  to  make  sale  immediately-.  The  sugars  sold  at  £20 
Os.  8d.  a  hogshead.  If  not  damaged,  they  would  have  then  brought 
£23  7s.  8d.  a  hogshead.  Just  before  the  cargo  reached  Hamburg,  the 
price  of  sugars  fell  suddenly  by  reason  of  the  proposal  of  a  congress  and 
the  expectation  of  peace.  Upon  the  cessation  of  these  causes  the  price 
rose  again  ;  and  if  the  sugars  could  have  been  kept,  as  the  owners  had 
intended,  more  than  £30  a  hogshead  would  have  been  received.  The 
defendant  paid  into  court  a  sum  determined  by  taking  such  proportion 
of  the  sum  at  which  the  sugars  were  valued  in  the  policy  as  the  price 
of  the  damaged  sugars  bore  to  the  price  of  sound  sugars  at  Ham- 
burg. Lord  Mansfield  left  it  to  the  jury  whether  the  difference  be- 
tween the  sound  and  the  damaged  sugars  at  the  port  of  delivery  ought 
to  be  the  rule,  or  whether  the  necessity  of  an  immediate  sale,  certainly 
occasioned  by  the  damage,  and  the  loss  thereby,  should  be  taken  into 

1  See  ante,  p.  I,  n.  2.  —  Ed. 

*  The  statement  has  been  based  upon  the  opiuiou.  —  Ed. 


SECT.  I.]  LEWIS   V.    RUCKER.  799 

consideration.  Upon  verdict  for  the  defendant,  the  plaintiff  obtained 
a  rule  for  the  defendant  to  show  cause  why  the  verdict  should  not  be 
set  aside  and  a  new  trial  had.  Cur.  adv.  vult. 

Lord  Mansfield,  C.  J.^  .  .  .  The  special  jury  (amongst  whom  there 
were  many  knowing  and  considerable  merchants)  found  the  defendant's 
rule  of  estimation  to  be  right,  and  gave  their  verdict  for  him.  They 
understood  the  question  very  well,  and  knew  more  of  the  subject  of  it 
than  anybody  else  present,  and  formed  their  judgment  from  tlieir  own 
notions  and  experience,  without  much  assistance  from  anything  that 
passed.  .  .  . 

No  fact  is  disputed.  The  only  question  is  whether,  all  the  facts 
being  agreed,  the  jury  have  estimated  the  damage  by  a  proper 
measure. 

To  make  the  matter  more  intelligible,  I  will  first  state  the  rule  by 
which  the  defendant  and  jury  have  gone  ;  and  then  I  will  examine 
whether  the  plaintiff  has  shown  a  better. 

The  defendant  takes  the  proportion  of  the  difference  between  sound 
and  damaged  at  the  port  of  deliver}-,  and  pays  that  proportion  upon 
the  value  of  the  goods  specified  in  the  policy  ;  and  has  no  regard  to  the 
price  in  monev,  which  either  the  sound  or  damaged  goods  bore  in 
the  port  of  delivery.  He  says  the  proportion  of  the  difference  is  equally 
the  rule,  whether  the  goods  come  to  a  rising  or  a  fulling  market.  For 
instance,  suppose  the  value  in  the  policy  £30,  —  thej-  are  damaged,  but 
sell  for  £40,  if  they  had  been  sound  the}'  would  have  sold  for  £50,  — 
the  difference  is  a  fifth  ;  the  insurer  then  must  pay  a  fifth  of  the  prime 
cost,  or  value  in  the  policy  (that  is,  £6).  E  concerso,  if  they  come 
to  a  losing  market,  and  sell  for  £10,  being  damaged,  but  would  have 
sold  for  £20  if  sound,  the  difference  is  one-half:  the  insurer  must  pay 
half  the  prime  cost,  or  value  in  the  policy  (that  is,  £15). 

To  this  rule  two  objections  have  been  made. 

1st  objection.  That  it  is  going  by  a  different  measure  in  the  case  of 
a  partial  from  that  which  governs  in  tiie  case  of  a  total  loss  ;  for,  upon 
a  total  loss,  the  prime  cost,  or  value  in  the  policy,  must  be  paid. 

Answer.  The  distinction  is  founded  in  the  nature  of  the  thing.  In- 
surance is  a  contract  of  indemnity  against  the  perils  of  the  voyage  ;  the 
insurer  engages,  so  far  as  the  amount  of  the  prime  cost,  or  value  in  the 
policy,  ''that  the  thing  shall  come  safe;"  he  has  nothing  to  do  with 
the  market ;  he  has  no  concern  in  any  profit  or  loss  which  may  arise  to 
the  merchant  from  the  goods  ;  if  tliey  be  totally  lost,  he  must  pay  the 
prime  cost,  — that  is,  the  value  of  the  thing  he  insured  at  the  outset ; 
he  has  no  concern  in  any  subsequent  value. 

So  likewise,  if  part  of  the  cargo,  capable  of  a  several  and  distinct 
valuation  at  the  outset,  be  totally  lost;  as  if  there  be  100  hogsheads  of 

1  Statements  of  the  facts  and  of  the  arguments  have  been  omitted.  Apparent  mis- 
prints have  been  corrected  in  accordance  with  the  suggestions  in  2  Evans'  View  of 
Lord  Mansfield's  Decisions,  16-21. — Ed. 


800  LEWIS   V.   KUCKER.  [CHAP.  \'III. 

sugar,  and  ten  happen  to  be  lost,  the  insurer  must  pa}'  the  prime  cost  of 
those  ten  hogsheads,  without  an}-  regard  to  the  price  for  which  the  other 
ninety  may  be  sold. 

But  where  an  entire  individual,  as  one  hogshead,  happens  to  be 
spoiled,  no  measure  can  be  taken  from  the  prime  cost  to  ascertain  the 
quantity  of  such  damage ;  but  if  you  can  fix  whether  it  be  a  third, 
fourth,  or  fifth  worse,  the  damage  is  fixed  to  a  mathematical  certainty. 
How  is  this  to  be  found  out?  Not  by  any  price  at  tlie  outset  port; 
but  it  must  be  at  the  port  of  deliver}-,  where  the  voyage  is  completed 
and  the  whole  damage  known.  Whether  the  price  there  be  high  or  low, 
in  either  case  it  equall}-  shows  whether  the  damaged  goods  are  a  third, 
a  fointh,  or  a  fifth  worse  than  if  they  had  come  sound  ;  consequently, 
whether  the  injury  sustained  be  a  third,  fourth,  or  fifth  of  the  value  of 
the  thing:  and,  as  the  insurer  pays  tiie  whole  prime  cost,  if  the  thing 
be  wholly  lost ;  so,  if  it  be  only  a  third,  fourth,  or  fifth  worse,  he  pays 
a  third,  fourth,  or  fifth  of  the  value  of  the  goods  so  damaged. 

2d  ohj.  The  next  objection  with  which  this  case  has  been  much 
entangled  is  taken  from  this  being  a  valued  policy. 

I  am  a  little  at  a  loss  to  apply  the  arguments  drawn  from  thence.  It 
is  said  "  that  a  valued  is  a  wager  policy  (like  interest  or  no  interest)  ; 
if  so,  there  can  be  no  average  loss,  and  the  insured  can  only  recover  as 
for  a  total,  abandoning  what  is  saved,  because  the  value  specified  is 
fictitious." 

Ans.  A  valued  policy  is  not  to  be  considered  as  a  wager  polic}-,  or 
like  "  interest  or  no  interest ;  "  if  it  was,  it  would  be  void  by  the  act  of 
19  G.  2,  c.  37.  The  only  effect  of  the  valuation  is  fixing  the  amount 
of  the  prime  cost,  just  as  if  the  parties  admitted  it  at  the  trial ;  but  in 
every  argument,  and  for  every  other  purpose,  it  must  be  taken  that 
the  value  was  fixed  in  such  a  manner  as  that  the  insured  meant  only 
to  have  an  indemnit}-. 

If  it  be  undervalued,  the  merchant  himself  stands  insurer  of  the  sur- 
plus. If  it  be  much  overvalued,  it  must  be  done  with  a  bad  view ; 
either  to  game,  contrary  to  the  19th  of  the  late  king,  or  with  some  view 
to  a  fraudulent  loss ;  therefore  the  insured  never  can  be  allowed  in  a 
court  of  justice  to  plead  that  he  has  greatl}-  overvalued,  or  that  his 
interest  was  a  trifle  only. 

It  is  settled,  "  that  upon  valued  policies,  the  merchant  need  onl}- 
prove  some  interest,  to  take  it  out  of  19  G.  2,  because  the  adverse 
part}'  has  admitted  the  value ;  and  if  more  was  required,  the  agreed 
valuation  would  signify  nothing."  But  if  it  should  come  out  in  proof 
that  a  man  had  insured  £2,000,  and  had  interest  on  board  to  the  value 
of  a  cable  only,  there  never  has  been,  and  I  believe  there  never  will  be, 
a  determination,  that  by  such  an  evasion  the  act  of  parliament  may  be 
defeated. 

There  are  many  conveniences  from  allowing  valued  policies ;  but 
where  they  are  used  merely  as  a  cover  to  a  wager,  they  would  be 
considered  as  an  evasion. 


SECT.  I.]  LEWIS    V.   IIUCKER.  801 

The  effect  of  the  valuation  is  only  fixing,  conclusively,  the  prime 
cost.  If  it  be  an  open  policy,  the  prime  cost  must  be  proved  ;  in  a 
valued  policy  it  is  agreed. 

To  argue  "  that  there  can  be  no  adjustment  of  an  average  loss  upon 
a  valued  policy,"  is  directl}'  contrary  to  the  very  terms  of  the  policy 
itself.  It  is  expresslv  subject  to  average,  if  the  loss  upon  sugars  ex- 
ceed £5  per  cent ;  if  it  was  not,  the  consequence  would  not  be  that 
ever}'  partial  loss  must  thereby  become  total ;  but  the  event,  to  entitle 
the  insured  to  recover,  would  not  happen  unless  there  was  a  tot^l  loss. 
Consequent!}",  the  plaintiffs  in  this  case  would  not  be  entitled  to  recover 
at  all ;  for  there  is  no  color  to  say  this  was  a  total  loss.  Besides, 
the  plaintiffs  have  taken  to  the  goods,  and  sold  them. 

In  opposition  to  the  measure  the  jury  have  gone  b\',  the  plaintiffs  con- 
tend that  they  ouglit  to  be  paid  the  whole  value  in  the  policy  upon  one 
of  tw^o  grounds. 

1st.  Because  the  general  rule  of  estimating  should  be  the  difference 
between  the  price  the  damaged  goods  sell  for  and  the  prime  cost  (or 
value  in  the  policy).  Here  the  damaged  sold  at  £20  Os.  8cl.  per  hogs- 
head, and  the  underwriter  should  make  it  up  £30. 

A)is.  It  is  impossible  this  should  be  the  rule.  It  would  involve  the 
underwriter  in  the  rise  or  fall  of  the  market ;  it  would  subject  him, 
in  some  cases,  to  pay  vastly  more  than  the  loss  ;  in  others  it  would 
deprive  the  insured  of  any  satisfaction,  though  there  was  a  loss'. 

For  instance,  suppose  the  prime  cost  or  value  in  the  polic}-  £30  per 
hogshead ;  the  sugars  are  injured  ;  the  price  of  the  best  is  ,£20  a  hogs- 
head, the  price  of  the  damaged  is  £19  10s.  The  loss  is  about  a  fortieth, 
and  the  insurer  would  be  to  pay  above  a  third. 

Suppose  they  come  to  a  rising  market,  and  the  sound  sugars  sell  for 
£40  a  hogshead,  and  the  damaged  for  £35,  the  loss  is  an  eighth;  yet 
the  insurer  would  be  to  pay  nothing. 

The  second  ground  upon  which  the  plaintiff  contends  that  the  £30 
should  be  made  up,  is,  that  it  appears  the  sugars  would  have  sold  for 
that  price  if  the  damage  from  the  sea-water  had  not  made  an  immediate 
sale  necessar}'. 

The  moment  the  jury  brought  in  their  verdict,  I  was  satisfied  that 
they  did  right  in  totally  disregarding  the  particular  circumstances  of 
this  case ;  and  I  wrote  a  memorandum,  at  Guildhall,  in  my  note- 
book, "that  the  verdict  seemed  to  me  to  be  right." 

As  I  expected  the  other  cause  would  be  tried,  I  thought  a  good  deal 
of  the  point,  and  endeavored  to  get  what  assistance  1  could  by  convers- 
ing with  some  gentlemen  of  experience  in  adjustments.  The  point  has 
now  been  very  fully  argued  at  the  bar ;  and  the  more  I  have  tliought, 
the  more  I  have  heard,  upon  the  subject,  the  more  I  am  convinced  that 
the  jury  did  right  to  pay  no  regard  to  these  circumstances. 

The  nature  of  the  contract  is,  "  that  the  goods  shall  come  safe  to 
the  port  of  delivery  ;  or  if  they  do  not,  to  indemnify  the  plaintiff  to  the 
amount  of  the  prime  cost,  or  value  in  the  policy."     If  they  arrive,  but 

51 


802  LEWIS    V.    RUCKER.  [CHAP.   VIII. 

lessened  in  value,  through  damages  received  at  sea,  the  nature  of  an 
iudemnit}'  speaks  demonstrably,  that  it  must  be  by  putting  the  mer- 
chant in  the  same  condition  (relation  being  had  to  the  prime  cost  or 
value  in  the  policy)  which  he  would  have  been  in  if  the  goods  had 
arrived  free  from  damage ;  that  is,  by  paying  such  proportion  or  ali- 
quot part  of  the  prime  cost,  or  value  in  the  polic}',  as  corresponds  witli 
the  proportion,  or  aliquot  part  of  the  diminution  in  value  occasioned  by 
the  damage. 

The  duty  accrues  upon  the  ship's  arrival  and  landing  her  cargo 
at  the  port  of  dehvery;  the  insured  has  then  a  right  to  demand  sat- 
isfaction. The  adjustment  never  can  depend  "upon  future  events  or 
speculations.    How  long  are  thej-  to  wait?  a  week,  a  month,  or  a  year? 

In  this  case,  the  price  rose  ;  but  if  the  congress  had  taken  place, 
or  a  peace  bad  been  made,  the  price  would  have  fallen.  The  defend- 
ant did  not  insure  "  that  there  should  be  no  congress  or  peace."  It  is 
true  Mr.  Bourdieu  acted  upon  political  speculation,  and  ordered  the 
sugars  to  be  kept  till  the  price  should  be  £30  or  upwards  ;  but  no  pri- 
vate scheme  or  project  of  trade  of  tlie  insured  can  affect  the  insurer ; 
he  knew  nothing  of  it.  The  defendant  did  not  undertake  that  the 
sugars  should  bear  a  price  of  £30  a  hogshead. 

If  speculative  destinations  of  the  merchant,  and  the  success  of  such 
speculations,  were  to  be  regarded,  it  would  introduce  the  greatest  in- 
justice and  inconvenience.  The  underwriter  knows  nothing  of  them. 
The  orders  here  were  given  after  the  signing  of  the  policy.  But  the 
decisive  answer  is,  that  the  underwriter  has  nothing  to  do  with  the 
price,  and  that  the  right  of  the  insured  to  a  satisfaction,  where  goods 
are  damaged,  arises  immediately  upon  their  being  landed  at  the  port 
of  delivery. 

"We  are  of  opinion  that  the  plaintiffs  are  not  entitled  to  have  the  price 
for  which  the  damaged  sugars  were  sold  made  up  £30  per  hogshead  ; 
and  it  seems  to  us  as  plain  as  any  proposition  in  Euclid,  that  the  rule 
by  which  the  jury  have  gone  is  the  right  measure. 

The  rule  must  be  discharged.''^ 

1  See  Johnson  v.  Sheddon,  2  East,  581  (1802);  Lawrence  v.  New  York  Ins.  Co., 

3  Johns.  Cas.  217  (1802);  Tunnov.  Edwards,  12  East,  488  (1810);  Goldsmid  i;.  Gillies, 

4  Tauut.  803  (1812).  —Ev. 


SECT.  I.]  USHER   V.   NOBLE.  803 

NEWBY  V.   REED. 

Nisi  Prius,  King's  Bench,  1763.     1  W.  Bl.  416. 

It  was  ruled  b}'  Lord  Mansfield,  C.  J.,  and  agreed  to  be  the  courso 
of  practice,  that  upon  a  double  insurance,  though  the  insured  is  not  on- 
titled  to  two  satisfactions,  yet,  upon  the  first  action,  he  may  recovci' 
tlie  whole  sum  insured,  and  may  leave  the  defendant  therein  to  recover 
a  rateable  satisfaction  from  the  other  insurers.^ 


USHER  V.  NOBLE. 

King's  Bench,  1810.     12  East,  639. 

This  was  an  action  upon  a  policy-  of  insurance  subscribed  by  the 
defendant  for  £200,  on  goods  on  board  the  "General  Miranda"  at 
and  from  Jamaica  to  London.  In  tiie  declaration  the  loss  was  thus 
averred  :  That  the  ship,  having  the  goods  on  board,  was,  in  the  river 
Thames,  and  before  the  discharge  of  the  goods  at  London,  by  the  mere 
danger  of  the  seas,  and  force  and  violence  of  the  tide  and  winds,  and 
the  pressure  of  other  ships,  strandotl  and  sunk,  and  the  goods  thereb}' 

1  In  Godin  v.  London  Ass.  Co.,  1  Burr.  489,  490  (1758),  Lord  Maxsfield,  C.  J., 
for  the  court,  said  :  — 

"  Before  the  introduction  of  wagering  policies,  it  was,  upon  principles  of  conven- 
ience, very  wisely  established,  '  that  a  man  should  not  recover  more  than  he  had  lost.' 
Insurance  was  considered  as  an  indemnity  only,  in  case  of  a  loss :  and  therefore  the  sat- 
isfaction ought  not  to  exceed  the  loss.  This  rule  was  calculated  to  prevent  fraud  ;  lest 
the  temptation  of  gain  should  occasion  unfair  and  wilful  losses. 

"  If  the  insured  is  to  receive  but  one  satisfaction,  natural  justice  says  that  the  sev- 
eral insurers  shall  all  of  them  contribute  pro  rata,  to  satisfy  that  loss  against  which 
they  have  all  insured. 

"  No  particular  cases  are  to  be  found,  upon  this  head ;  or,  at  least,  none  have  been 
cited  by  the  coun,sel  on  either  side. 

"  Where  a  man  makes  a  double  insurance  of  the  same  thing,  in  such  a  manner  that 
he  can  clearly  recover  against  several  insurers,  in  distinct  policies,  a  double  satisfaction, 
the  law  certainly  says,  '  that  he  ought  not  to  recover  doubly  for  the  same  loss,  but  be 
content  with  one  single  satisfaction  for  it.'  And  if  the  same  man  really,  and  for  his 
own  proper  account,  insures  the  same  goods  doubly,  though  both  insurances  be  not 
made  in  his  own  name,  but  one  or  both  of  them  in  the  name  of  another  person,  j-et 
that  is  just  the  same  thing;  for  the  same  person  is  to  have  the  benefit  of  both  policies. 
And  if  the  whole  sliould  be  recovered  from  one,  he  ought  to  stand  in  the  place  of 
the  insured,  to  receive  contribution  from  the  other,  who  was  equally  liable  to  pay 
the  whole." 

See  Eogers  v.  Davis,  2  Park  Ins.  (8th  ed.),  601  (N.  P.  1766);  Davis  i:  Gildart, 
2  Park  Ins.  (8th  ed.)  601  (N.  P.  1767)  ;  Thurston  v.  Koch,  4  Dall.  348  (U.  S.  C.  C, 
D.  Pa.,  1800) ;  Potter  v.  Marine  Ins.  Co.,  2  Mason,  475  (1822) ;  American  Ins.  Co.  v. 
Griswold,  14  Wend.  399  (183.5) ;  McAllister  v.  Hoadley,  76  Fed.  R.  1000  (U.  S.  D.  C, 
S.  D.  N.  Y.,  1896).  — Ed. 


304  USHER    V.    NOBLE.  [CHAP.  VIIT. 

totally  lost.  The  declaration  also  contained  the  money  counts.  The 
defendant  pleaded  nofi  assu77ipsU,  and  paid  £14  into  court  generally 
upon  the  whole  declaration.  And  at  the  trial  before  Lord  Ellen- 
borough,  C.  J.,  at  Guildhall,  a  verdict  was  found  for  the  plaintiff  for 
the  damages  laid  in  the  declaration,  subject  to  the  opinion  of  the 
court  upon  this  ca.se.  (It  being  agreed  that  the  amount  of  the  damage 
should  be  settled  l)y  arbitration,  if  the  court  should  be  of  opinion  that 
the  plaintiff  was  entitled  to  recover  anything  beyond  the  sum  paid  into 
court). 

On  the  4th  October,  1807,  the  ship  "General  Miranda"  arrived 
from  Jamaica  with  tlie  plaintiff's  goods  insured  on  board  in  the 
river  Thames,  and  anchored  near  the  entrance  into  the  West  India 
docks.  Shorth'  afterwards,  and  as  soon  as  the  necessary  forms  were 
complied  with,  the  vessel  left  her  anchorage  in  the  I'iver  for  the  purpose 
of  entering  these  docks,  in  order  to  unload  her  cargo  there  ;  but  on  her 
near  approach,  and  when  about  to  go  through  the  dock  gates,  she  was 
wrongfully  refused  admittance,  and  ordered  back  by  the  servants  of 
the  company,  under  whose  direction  and  management  these  docks  were 
placed.  Upon  tliis  she  returned  back  to  the  river,  and  endeavored  to 
regain  a  place  of  safety  there  ;  but  this  was  found  impracticable  ;  and 
the  best  thing  that  could  be  done  was  to  moor  her  to  a  chain  near  the 
entrance  to  the  docks,  at  which  several  other  vessels  that  had  returned 
from  such  entrance  had  previousl}-  moored.  This  was  accordingh'  done, 
and  the  "  General  Miranda,"  being  the  vessel  nearest  the  shore,  was  at 
the  falling  of  the  tide  forced  bv  the  violence  of  the  current  and  pressure 
of  the  other  ships  upon  a  shoal  or  bank  of  the  river,  and  was  there 
bilged  and  stranded  ;  and,  in  consequence,  a  part  of  the  plaintiff's  goods 
consisting  of  coffee  was  greatly  damaged.  In  consequence  of  this  the 
plaintiff  brought  an  action  against  the  West  India  Dock  Company,  and 
recovered  a  verdict  against  them  for  the  amount  of  the  loss,  estimated 
according  to  the  market  price  of  coffee  in  London  at  the  time  when  the 
loss  took  place,  but  which  was  less  than  the  prime  cost  of  the  coffee  at 
Jamaica.  The  defendant  obtained  a  judge's  order  for  liberty  to  inspect 
and  take  copies  of  the  statement  of  the  loss,  and  the  following  was 
delivered  as  such  copy  :  — 

"  Statement  of  average  per  '  General  Miranda,'  Orr. 

Jamaica  to  London. 

Amount  of  goods  per  invoice  No.  1  &  2,      •  £       5.  d. 

and  bills  of  lading  No.  3  «&  4 6326     0     1 

Insuring   £7600   to    cover,  as   under, 

£6750  at  15  gs.  per  cent 1063     2     6 

850       12 107     2     0 

£7600  Policy 19     0    0 

Carried  over 1189     4     6     6326     0     1 


SECT.  I.] 


USHER    V.    NOBLE. 


805 


Brought  over 1189  4 

Commission  ^  per  cent  for  effecting  ...  38  0 
Commission  |  per  cent  for  settling  in  case 

of  loss   .    ". 38  0 

Deduct 
Amount   of  sound   coffee   and   wood  per 
invoice  No  5,  and  landing  account  No. 

6&7 2570    3 

Insurance   on  £8085   to  cover,   as  under, 
£2740  at  15  gs.  per  cent  .     .  413  11     0 

345 43     9     4 

Policy  for  £3085 7  14     3 

Commission    ^    per    cent     for 

effecting 15     8     6 

Ditto  I  per  cent   for  recovery 

in  case  of  loss 15     8     6 

513  11 


Add 
General  average  per  Mr.  Parkinson,  award  No.  8 


Deduct 
Proceeds   of  damaged   coffee  per  A  sale, 

No.  9 

Recovered   from  West  India 

Dock   Company  per  state- 

ment,i  No.  10 .'     .     .     .     .     2741  15     8 
From  which  deduct  extra  law 

expenses 98  18     8 


£ 

G326 


174  12     9 


2642  17    0 


s.  d. 
0     1 


1265     4     6 
7591     4    7 


3083  14     9 


4507 

189 


10 
5 


4696  14     3 


2817     9     9 
1879     4     6 


If  £7600  :  1879  :  :  £100 

Ansicer,  £24  :  14 :  6i  per  cent  exclusive  of  return  of  premium  for 
sailing  in  company  with  armed  ship. 

1  The  West  India  Dock  Company 
Cwt. 
To  amount  of  loss  on  748  2  10  damaged  coffee,  per  "  General  Miranda," 

averaged  per  account  sales  of  sound  coffee,  per  said  vessel,  430  3  12  of       £       s.   a. 

sound  coffee  having  netted  £1569  13s.  Id 2727     4     0 

Amount  of  general  average 189     4     5 

2916     8     5 
Deduct 
Proceeds  of  damaged  coffee 174  12    9 


2741   15     8 


—  Rep. 


g06  USHER   V.    NOBLE.  [CHAP.  VIII. 

The  only  question  at  the  trial  was,  by  what  measure  the  damage  was 
to  be  estimated  between  the  assured  and  the  underwriters.  The  plain> 
tiff  contended  that  he  was  entitled  to  such  proportion  of  the  prime  cost 
as  would  correspond  with  the  proportion  of  the  diminution  of  the  market 
price  occasioned  b}-  injury  which  the  coffee  had  sustained,  according  to 
the  rule  laid  down  in  Lewis  v.  Rucker,  2  Burr.  1169.  If  this  measure 
should  be  adopted,  the  sura  paid  into  court  was  insufficient.  The  de- 
fendant contended  that  the  case  of  Lewis  v.  Rucker  did  not  apply  to 
this  case  ;  and  that  the  plaintiff  was  only  entitled  to  the  difference  be- 
tween the  actual  value  of  the  damaged  and  sound  coffee  at  the  market 
price  in  London,  when  the  ship  arrived  ;  and  according  to  which  rule 
he  had  received  a  compensation  from  the  West  India  Dock  Company, 
who  had  beeu  the  cause  of  the  loss.  If  the  plaintiff  were  entitled  to 
recover  according  to  the  prime  cost,  it  was  admitted  that  the  £7  per  cent 
paid  into  court  was  not  enough  to  cover  the  whole  extent  of  the  defend- 
ant's liability,  the  ulterior  amount  of  which  was  agreed  to  be  settled  b}' 
arbitration.  If  the  plaintiff  were  entitled  to  recover  only  according  to 
the  actual  value  of  the  coffee  in  London  when  the  loss  took  place,  the 
sum  paid  into  court  was  sufficient  to  i-ecover  the  defendant's  liabilit}'. 
The  question  therefore  was  whether  the  plaintiff  were  entitled  to  i-ecover 
anything  beyond  the  sum  paid  into  court?  If  he  were,  the  present  ver- 
dict was  to  stand,  and  the  amount  to  be  settled  by  arbitration  ;  if  not, 
a  nonsuit  was  to  be  entered. 

Abbott,  for  the  plaintiff. 

Car)\  fur  the  defendant. 

Lord  ELLENI30UOUGH,  C.  J.  As  the  court  will  have  to  promulgate  a 
rule  which  will  bind,  in  future  in  similar  cases,  it  will  perhaps  be  more 
willingly  acquiesced  in  if  delivered  upon  more  mature  deliberation  ;  we 
will  therefore  take  further  time  before  we  give  our  opinion.  The  ques- 
tion will  be  whether  every  case  be  not  in  effect  the  case  of  a  valued 
policy  so  far  as  it  involves  this  consideration,  and  consequently  within 
the  rule  laid  down  in  Lewis  v.  Rucker.  Where  the  parties  have  put  an 
express  valuation  on  the  subject-matter  of  the  insurance,  that  rule  is 
admitted  to  govern  ;  and  the  question  is  whetlier  general  usage  has  not 
estal)lished  the  invoice  price  as  the  basis  of  the  value  in  all  other  cases 
where  the  policy  is  open.  Some  rule  there  must  be,  and  I  rather  think 
iliat  the  one  laid  down  in  Lewis  v.  Rucker  was  adopted  as  being  upon 
the  whole  the  most  convenient  in  all  cases. 

The  case  stood  over  for  further  consideration  till  this  term,  when  his 
Lordship  delivered  the  opinion  of  the  court. 

It  is  admitted  that  the  assured  is  entitled  to  an  indemnity,  and  no 
more  ;  but  by  what  standard  of  value  the  indemnity  sought  should  be 
regulated  is  the  question.  In  the  case  of  a  valued  policy,  the  valuation 
iu  the  policy  is  the  agreed  standai'd  ;  in  case  of  an  open  policy",  the 
iiivoice  price  at  the  loading  |)ort,  including  premiums  of  insurance  and 
commission,  is,  for  all  i)in-|)oses  of  eitlier  total  or  average  loss,  the  usual 
standard  of  calculation  resorted  to  for  the^  purpose  of  ascertaining  this 


SECT.  I.]  BYRNES   V.    NATIONAL   INS.   CO.  807 

value.  The  selling  or  market  price  at  the  port  of  deliver}'  cannot  be 
alone  the  standard ;  as  that  does  not  include  premiums  of  insurance 
and  commission  which  must  be  brought  into  the  account,  in  order  to 
constitute  an  indemnit}'  to  an  owner  of  goods  who  has  increased  the 
original  amount  and  value  of  his  risk  by  the  verj'  act  of  insuring.  The 
pi'oportion  of  loss  is  necessarily  calculated  through  another  medium, 
namely,  b}'  comparing  the  selling  price  of  the  sound  commodity  with  the 
damaged  part  of  the  same  commodit}'  at  the  port  of  delivery.  The  dif- 
ference between  these  two  subjects  of  comparison  affords  the  proportion 
of  loss  in  any  given  case;  i.  e.,  it  gives  the  aliquot  part  of  the  orig- 
inal value,  which  may  be  considered  as  destroyed  by  the  perils  insured 
against,  and  for  which  the  assured  is  entitled  to  be  recompensed.  When 
this  is  ascertained,  it  only  remains  to  apply  this  liquidated  proportion 
of  loss  to  the  standard  by  which  the  value  is  calculated,  i.  e.,  to  the 
invoice  price,  being  itself  calculated  as  before  stated  ;  and  you  then  get 
the  1-half,  the  l-^^'ii  ov  l-8th  of  the  loss  to  be  made  good  in  terms  of 
money.  This  rule  of  calculation  is  generall}'  favorable  to  the  under- 
writer, as  the  invoice  price  is  less  in  most  cases  than  the  price  at  the 
port  of  delivery ;  but  the  assured  may  obviate  this  inconvenience  by 
making  his  policy  a  valued  one,  or  by  stipulating  that,  in  case  of  loss, 
the  loss  shall  be  estimated  according  to  the  value  of  like  goods  at  the 
port  of  delivery.  In  the  absence  of  any  ex[)ress  contract  on  the  subject, 
the  general  usage  of  the  assured  and  underwriters  supplies  the  defect  of 
stipulation  and  adopts  the  invoice  value,  with  the  additions  I  have  men- 
tioned as  the  standard  of  value  for  this  purpose.  In  this  case,  after  re- 
ceiving the  money  paid  by  the  West  India  Dock  Company,  the  assured 
is  left  short  of  his  full  reimbursement  (even  on  the  defendant's  own  cal- 
culation) by  the  premiums  of  insurance  at  15  guineas  per  cent  commis- 
sion, and  extra  costs  of  suit,  for  which  no  allowance  was  made  by  the 
West  India  Dock  Company  ;  so  that  quacunque  via  data,  the  £7  per 
cent  paid  into  court  is  too  little.  The  consequence  is  that  the  verdict 
must  stand,  subject  to  the  reference  of  account  to  an  arbitrator,  as 
agreed  by  the  case. 


BYRNES   AND   Others  v.   NATIONAL   INSURANCE   CO. 

Supreme  Court  of  New  York,  1823.     1  Cow.  265. 

Assumpsit  upon  a  policy  of  insurance.  The  ship  "Hercules,"  owned 
by  the  plaintiffs,  was  insured  by  the  defendants,  on  a  voyage  from 
New  York  to  Liverpool,  and  at  and  from  thence  to  New  York,  to  the 
amount  of  810,000,  by  policy  in  the  usual  form,  dated  October  19,  1820. 
In  coming  down  the  river,  after  leaving  the  dock  at  Liverpool  on  her 
return  voyage,  she  got  aground,  and  was  obliged  to  put  back,  unload 
her  cargo,  and  repair.     She  had  been  copper-sheathed  about  two  years 


308  BYRNES   V.   NATIONAL   IXS.   CO.  [CHAP.  VIII. 

before,  and  some  of  the  sheathing  having  been  rubbed  off  by  grounding, 
a  part  of  it  was  taken  off  and  replaced  by  new  sheatliing,  also  of  copper. 
The  bills  and  costs  of  her  repairs,  adjusted,  and  admitted,  between  the 
parties  to  be  particular  average,  after  deducting  the  usual  allowance  of 
one  third,  new  for  old,  amounting  to  $1,612.76,  all  of  which  the  defend- 
ants paid,  except  $279.26,  their  liability  to  pay  which  depended  upon 
the  determination  of  the  question  hereafter  mentioned,  and  which  sura 
was  retained  by  them  until  the  question  should  be  decided  by  this  court. 
The  tradesmen  who  furnished  the  copper  for  re-sheatliing  the  ship,  re- 
tained and  credited  in  their  account  the  value  of  the  old  copper  taken 
off  the  vessel,  as  far  as  it  went,  in  part  payment.  The  new  copper 
furnished  amounted  to  £358  5s.  8^.,  and  the  old  copper  received  by 
them  amounted  to  £188  10s.  They  rendered  their  bill  accordingly, 
charging  the  new  copper  furnished  and  crediting  the  old  copper  re- 
ceived by  them,  which  left  a  balance  due  them  of  £169  15s.  8f/.,  which 
the  plaintiffs  paid,  and  which  balance  only  they  charged  in  their  ac- 
count of  particular  average.  Upon  this  balance  the  deduction  of  one 
third  new  for  old  was  made.  But  the  defendants  insisted  that  they 
had  a  right  to  claim  the  deduction  or  allowance  of  one  third,  new  for 
old,  upon  the  whole  amount  of  the  bill  for  new  copper  used  in  the 
repair,  including  the  £188  10s.  which  was  paid  for  b}'  the  old  copper 
taken  b}-  the  tradesmen.  On  the  other  hand,  the  plaintiffs  contended, 
that  the  deduction  in  respect  of  the  copper  ought  to  be  made  only  on 
the  balance  of  £109  15s.  8d.,  paid  In*  them  to  the  tradesmen,  and  for 
which  only  they  made  their  claim  on  the  defendants.  If  the  defend- 
ants were  right  in  their  position,  then  the  particular  average  had  been 
fully  paid,  and  it  was  agreed  that  the}-  would  be  entitled  to  judgment; 
but  that,  if  the  plaintiffs  were  right,  then  the}'  would  be  entitled  to 
judgment  for  the  S279.26,  with  interest  from  23d  June,  1821,  that  being 
the  amount  of  the  deduction  claimed,  of  the  one  third  new  for  old,  on 
the  sum  of  £188  10s.  paid  by  the  old  copper.  A  copy  of  the  trades- 
men's bill  as  furnished,  and  of  the  adjustment  between  the  parties,  was 
annexed  to  the  case ;  and  a  cognovit  was  given  to  cover  the  amount, 
if  tiie  court  should  be  of  opinion  with  the  plaintiffs. 

W.  Slossofi,  for  the  plaintiffs. 

t/".  Wells,  contra. 

Curia,  per  Sutherland,  J.  The  general  rule  is  unquestionable 
tliat,  in  the  adjustment  of  a  claim  made  by  the  insured  upon  the  undei-- 
writers  for  repairs  put  upon  a  vessel,  the  underwriters  are  entitled  to  a 
deduction  of  onel,hn-(.l  from_the]^ex])enses  of  the  repairs  ;  ^  or,  in  other 
words,  that  they  are  bound  to  pay  burtwolTiTrds^  the  expense.  This 
deduction  of  one  third  new  for  old,  as  it  is  termed,  is  allowed  upon 
tiie  supposition  that  the  vessel,  after  l^eing  repaired,  is  in  better  condi- 
tion tl\an  she  was  at  the  commencement  of  the  voyage,  in  consequence  of 
new  materials  having  been  substituted  for  old.     And,  as  tlie  contract 

*  Stevenson  Average,  159;  Da  Costa  v.  Newnham,  2  T.  R.  407  ;  Smith  v.  Bell, 
2  Caines'  Cas.  153;  Dunham  v.  Commercial  lus.  Co.,  11  Johns.  315.  —  Kep. 


SECT.  I.]  BYRNES   V.   NATIONAL   INS.    CO.  809 

of  the  underwriters  is  one  of  indemnit}'  merely,  it  is  equitable  that  a 
deduction  should  be  made  in  their  favor,  from  the  cost  of  the  repairs, 
equal  to  the  enhanced  condition  of  the  vessel. 

To  avoid  the  inconvenience  and  embarrassment  of  an  inquiry  in  each 
particular  case  into  the  difi'erence  in  value  between  the  present  and 
former  condition  of  the  vessel,  it  has  been  established  as  a  general  rule 
that  this  difference  shall  be  estimated  at  one  third  of  the  cost  of  the 
repairs. 

In  the  English  courts,  if  the  inquiry  is  sustained  and  the  repairs  are 
made  when  the  vessel  is  new,  that  is,  in  her  first  voyage,  no  deduction 
is  allowed  to  the  underwriters ;  because  the  vessel  being  new,  it  is  not 
to  be  supposed  that  she  is  put  in  better  condition  b}*  the  repairs.  But 
in  this  court  that  distinction  has  not  been  adopted ;  and  the  deduction 
is  made  alike,  whether  the  vessel  is  new  or  old.^ 

This  being  the  general  principle,  the  question  is  presented  in  this 
.case,  whether  the  value  of  the'  old  materials,  whatever  it  may  be,  is  to 
be  deducted  from  the  gross  amount  of  repairs,  and  the  deduction  of 
one  third  new  for  old  made  from  the  balance  ;  or  whether  the  one  third 
is  to  be  deducted  from  the  gross  amount,  and  the  old  materials  to 
belong  to  the  underwriters.  For  instance,  suppose  the  gross  amount 
of  repairs  to  be  four  hundred  dollars  —  the  old  materials  to  be  worth 
one  hundred  dollars.  The  assured  contend  that  the  amount  is  to  be 
thus  stated  :  — 

Repairs $400.00 

Deduct  value  of  old  materials 100.00 

Balance 300.00 

Deduct  one  third  new  for  old 100.00 

To  be  paid  by  underwriters $200.00 

The  underwriters,  on  the  contrary,  contend  that  the  true  principle  of 
settlement  is  as  follows  :  — 

Repairs •  .     .     .     $400.00 

Deduct  one  third  new  for  old 133.33 

266.67 
Deduct  also  old  materials  applied  to  repairs    .     .     .       100.00 

$166.67 

This  question  has  never  arisen,  that  I  can  find,  either  in  the  English 
courts  or  our  own  ;  and,  although  cases  will  not  frequently  occur  in  which 
the  old  materials  will  be  of  sufficient  value  to  induce  a  discussion  of  it, 
some  rule  upon  the  subject  ought  to  be  established.  It  seems  to  me 
to  resolve  itself  into  the  inquiry  to  whom  do  the  old  materials  belong? 

1  Duuham  v.  Commercial  lus.  Co.,  11  Johus.  315.  —  Rep. 


810  RYDER   V.   PHCENIX   INS.    CO.  [CHAP.  VIII. 

If  tbey  belong  to  the  assured  there  is  an  end  of  the  question  ;  for 
having  been  applied  by  them  to  the  payment  of  the  repairs,  j^ro  tanto, 
the  assurer  cannot  possibly  claim  any  further  benefit  from  them.  If 
there  is  anything  in  tlie  nature  of  an  abandonment  of  them  to  the 
underwriters,  then  the  principle  contended  for  by  the  defendant  may 
be  well  founded.  But  there  is  notliing  like  an  abandonment.  The 
assured  do  not,  and  could  not,  claim  from  the  underwriters  the  gross 
amount  of  repairs.  They  can  only  claim  the  difference  between  tliat 
amount  and  the  value  of  the  old  materials  ;  for  to  that  extent  only  are 
they  injured,  and  an  indemnity  is  all  that  they  can  claim.  It  is  more 
analogous  to  the  adjusting  of  a  partial  loss,^  in  which  case  the  title  to 
the  goods  remains  in  the  assured. 

The  rule,  therefore,  seems  to  me  to  be  this :  to  apply  the  old  mate- 
rials towards  payment  of  tlie  new,  and  to  allow  the  deduction  of  the 
one  third  new  for  old  upon  the  balance.  This  rule  is  simple,  and 
capable  of  universal  application.  It  affords  full  indemnity  to  the  as- 
sured, and  gives  to  the  underwriters  all  the  benefit  that  the  principle, 
upon  which  the  practice  of  deducting  one  third  new  for  old  has  been 
estal)lished,  will  justify.  Tiie  plaintififs  are,  therefore,  entitled  to  judg- 
ment for  §279.26,  with  interest  from  the  3d  daj'  of  June,  1821,  as 
stated  in  the  case. 

Judgment  for  the  jylaintiffs  accordingly. ^ 


RYDER  AND  Another  v.   PHCENIX  INSURANCE   CO. 
Supreme  Judicial  Court  of  Massachusetts,   1867.     98  Mass.  185. 

Contract  on  a  policy  of  insurance  against  the  usual  marine  risks, 
made  by  the  defendants  June  26,  1866,  for  one  year  from  June  14, 
1866,  on  the  barque  "  Dreadnaught,"  for  seven  thousand  eight  hundred 
dollars,  payable  to  the  plaintiffs.  The  vessel  was  valued  at  thirty 
thousand  dollars  in  the  policy,  on  the  face  of  which  was  printed  the 
following  clause : 

"It  is  hereby  agreed,  that  if  the  insured  shall  have  made  any  other 
insurance  upon  the  barque  aforesaid,  prior  in  date  to  this  policy-,  then 
the  said  insurance  company  shall  be  answerable  only  for  so  much  as 
the  amount  of  such  prior  insurance  may  be  deficient  towards  fully  cov- 
ering the  i)roperty  hereby  insured,  whether  for  the  whole  voyage,  or 
from  one  port  of  lading  or  discharge  to  another;  and  the  said  insur- 
ance company  shall  return  the  premium,  or  a  ratable  part  thereof,  upon 
so  much  of  the  sum  by  them  insured,  or  for  such  part  of  the  voyage  as 

1   Vide  Lawrence  v.  New  York  Ins.  Co.,  3  .Johns.  Cas.  217  ;  Lewis  v.  Rucker,  2  Burr. 
1167,  1170;  .Johnson  i-.  Sheiliion.  2  East,  hM   —Hep. 
*  Acr.:  Brooks  i-.  Oriental  Ins.  Co.,  7  Tick.  259  (1828). 
See  Wallace  v.  Ohio  las.  Co.,  4  (31iio,  234  (1829).  — Ed. 


SECT.  I.]  RYDER    V.    l'H<ENIX    INS.    CO.  811 

they  shall  be  exonerated  fiom  by  such  prior  insurance  ;  provided,  that 
no  return  pieiniuin  shall  be  made  for  any  passage  whereon  the  risk  has 
once  commenced.  And  in  case  of  any  insurance  upon  the  said  barque, 
whether  it  be  for  the  whole  or  part  of  the  voyage,  subsequent  in  date 
to  tliis  policy,  the  said  insurance  company  shall,  nevertheless,  be  an- 
swerable to  the  full  extent  of  the  sum  herein  insured,  wiihout  right  to 
claim  contribution  from  such  subsequent  insurers  ;  and  shall  accord- 
ingly be  entitled  to  retain  the  premium  by  them  received,  in  the  same 
manner  as  if  no  such  subsequent  insurance  had  been  made.  And,  in 
ease  of  loss,  such  loss  shall  be  paid  in  sixty  days  after  proof  and 
adjustment  thereof." 

The  declaration  contained  also  a  count  in  money  had  and  received 
for  the  premium  of  seven  hundred  and  forty-two  dollars  paid  upon  this 
policy. 

'iae  case  was  submitted  to  the  determination  of  the  court  on  agreed 
facts,  the  material  part  of  which  was  as  follows  : 

The  barque  was  totally  lost  at  sea  on  August  2,  1866.  The  defend- 
ants, a  corporation  established  under  the  laws  of  New  York  and  doing 
business  in  this  Commonwealth  under  the  laws  thereof,  admit  that  they 
had  due  notice  of  the  loss,  and  that  after  proof  and  adjustment  thereof 
more  than  sixty  days  elapsed  before  this  action  was  brought.  The 
plaintitl's,  on  June  26,  1866,  and  at  the  time  of  the  loss,  had  other  sub- 
sisting policies  on  the  barque,  from  the  Triton,  the  New  England,  and 
the  Equitable  Insurance  Companies,  to  the  amount  of  twenty-two 
thousand  dollars,  against  the  same  risks  as  the  policy  made  by  the 
defendants.  The  Columbian  Insurance  Company,  a  corporation  estab- 
lished under  the  laws  of  New  York  and  doing  business  in  Boston  by  an 
agent  under  the  statutes  of  this  Counnonwealth,  had  also,  in  November 
and  December,  1865,  made  three  policies,  amounting  in  all  to  the  sum 
of  twenty-four  thousand  dollars,  on  the  same  property  and  against  the 
same  risks,  each  for  a  year,  which  expired  in  November,  1866.  In  all 
these  various  policies,  as  in  that  made  by  the  defendants,  the  vessel 
was  valued  at  thirty  thousand  dollars.  In  January,  1866,  the  Columbian 
Insurance  Company  became  notoriously  insolvent,  and  the  plaintiffs 
proposed  to  pay  the  premiums  due  on  their  policies  therein  up  to  the 
time  when  the  vessel  had  been  last  heard  from,  and  to  cancel  the  same  ; 
but  this  proposition  w\as  not  accepted.  In  February,  1866,  a  judgment 
•was  entered  by  the  Supreme  Court  of  New  York  declaring  that  com- 
pany dissolved  and  appointing  receivers  of  their  property.  [The  pro- 
ceedings in  that  case  are  stated  in  Taylor  r.  Columbian  Insurance  Co. 
14  Allen,  353.]  The  receivers  so  appointed  have  never  paid,  and  it  is 
now  unlikely  that  they  will  ever  pay,  any  dividends  to  the  creditors  of 
the  company. 

a.  II.  Dana,  J^r.,  and  L.  S.  Dabjiey,  for  the  plaintiffs. 

B.  R.  Curtis  and  G.  L.  Roberts,  for  the  defendants. 

Gray,  J.  In  case  of  double  insurance,  that  is,  of  two  insurances  on 
the  same  interest  at  the  same  time  and  against  the  same  risks,  the 


812 


RYDER   V.   PHCENIX    INS.    CO.  [CHAP.  VIII. 


general  maritime  law  and  the  custom,  understanding  and  practice  of 
merchants  have  often  differed  from  tlie  common  law  as  to  the  propor- 
tions in  which  the  different  underwriters  should  contribute,  and  the 
mode  of  enforcing  their  liability. 

By  the  general  maritime  law  and  the  French  ordinance  of  1681,  in 
case  of  two  policies  upon  the  same  property,  tlie  amount  of  the  first  of 
which  equalled  its  full  value,  that  alone  was  binding,  and  the  second 
underwriters  were  exempt,  and  returned  the  premium,  reserving  one 
half  per  cent ;  and  if  the  first  policy  did  not  amount  to  the  whole 
value  of  tlie  property,  the  second  underwriters  answered  for  the  surplus 
only.  2  Valin,  73,  and  authorities  cited.  As  was  observed  by  Mr. 
Justice  Paterson  in  Thurston  v.  Koch,  4  Dall.  350,  "  the  solvency  of 
the  first  insurer  to  the  full  value  being  assumed,  the  ordinance  is  predi- 
cated on  the  principle  that  there  remains  no  property  to  be  insured, 
and  of  course  no  risk  to  be  run."  A  like  rule  prevailed  by  custom  of 
merchants  in  England  in  the  latter  part  of  the  seventeenth  century. 
Malynes  Lex  Merc.  112,  118  ;    African  Co.  v.  Bull,  1  Show.  132. 

Before  the  American  Revolution  the  rule  of  the  common  law  was 
declared  and  established,  that  in  this,  as  in  any  case  of  two  sureties 
for  the  same  debt,  the  creditor  might  recover  the  whole  amount  from 
either,  leaving  him  to  sue  tlie  aElierlor  conInbution.~~Uoclin  v.  London 
Assui-ance  Co° ,  1  Burr.  492,^95  ;'  Millar  on  Ins.  266  ;  Marshall  on  Ins., 
part  1,  c.  4,  §  4.  See  also  Fisk  v.  Masterman,  8  M.  &  W.  165  ;  Bruce 
V.  Jones,  1  H.  &  C.  769.  In  the  leading  American  case  of  Thurston  v. 
Koch,  4  Dall.  348,  xxxii,  decided  in  the  Circuit  Court  of  the  United 
States  in  Pennsylvania  in  1800,  the  law  of  England,  as  thus  estab- 
lished before  the  Declaration  of  Independence,  was  held  to  be  binding 
as  law  here,  although  the  usage  in  Philadelphia  for  years  had  been  to 
settle  losses  in  accordance  with  the  French  ordinance  and  the  early 
English  custom.  And  that  decision  has  been  uniformly  recognized  and 
followed,  in  the  absence  of  express  stipulation  to  the  contrary  in  the 
policy.  Craig  v.  Murgatroyd,  4  Yeates,  161  ;  American  Insurance  Co. 
V.  Griswold,  14  Wend.  461,  473,  493  ;  Millaudon  v.  Western  Insurance 
Co.,  9  La.  27;  Cromie  v.  Kentucky  &  Louisville  Insurance  Co.,  15  B. 
Monr.  432  ;  3  Kent  Com.  (6th  ed.),  280,  281. 

But  this  rule,  which  obliges  the  assured  to  pay  a  double  premium 
while  he  secures  only  one  insurance,  and  allows  him  to  elect,  at  any 
time  within  the  period  of  the  statute  of  limitations,  which  insurer  he 
will  sue  and  compel  to  seek  contribution  of  the  other  (who  may  mean- 
while have  become  insolvent),  has  proved  so  unsatisfactory  to  mer- 
chants and  underwriters,  that  clauses  substantially  reviving  the  older 
rule  have  been  generally  introduced  in  this  country.  And  such  a 
clause  is  contained  in  the  policy  now  in  suit. 

The  manifest  purpose  of  this  clause  is  in  case  of  loss  to  fix  by  the 
policy  itself  the  amount  for  which  tlie  underwriter  shall  be  responsible, 
unaffected  by  the  subsequent  insolvency  of  either  underwriter  or  by  any 
cboicc  of  the  assured.     Insurance  of  the  solvency  of  an  insurer  is  per- 


SECT.  I.]  RYDER   V.   PHCENIX   INS.   CO.  813 

mitted  and  practised  on  the  continent  of  Europe,  but  has  never  been 
in  use  in  England  or  America.  Marshall  on  Ins.,  part  1,  c.  4,  §  3  ; 
3  Kent  Com.  280.  The  contingenc}*  in  which  the  liability  of  the 
defendants  is  limited  by  their  policy  is  not  "  if  there  shall  be  an}*  prior 
insurance  actually  existing  at  the  time  of  the  loss,"  but  "  if  the  insured 
shall  have  made  any  other  insurance  prior  in  date  "  upon  the  same 
property,  in  which  is  of  course  implied  "  against  the  same  risks,  and 
outstanding  at  the  time  of  obtaining  the  second  insurance."  The 
amount  for  which  these  defendants  as  second  insurers  shall  be  answer- 
able is  declared  to  be,  not  that  amount  which  the  prior  insurers  may 
be  unable  to  pa}',  but  "  so  much  as  the  amount  of  such  prior  insurance 
may  be  deficient  towards  fully  covering  the  property  hereby  insured, 
whether  for  the  whole  voyage,  or  from  one  port  of  lading  or  discharge 
to  another."  In  other  words,  it  is  determined,  not  by  the  amount  which 
can  be  recovered  of  the  prior  insurers,  dependent  upon  the  contiugenc}' 
of  their  solvency,  but  by  the  sum  insured  by  them,  as  expressed  on 
the  face  of  their  policy.  The  premium  to  be  returned  is  not  merely 
upon  so  much  of  the  sum  insured  as  the  defendants  shall  not  be 
required  to  pa}-,  by  reason  of  its  being  recovered  of  the  earlier  under- 
writers, but  upon  so  much  of  the  sum  or  for  such  part  of  the  voyage 
insured  by  them  as  they  "shall  be  exonerated  from  by  such  prior 
insurance,"  that  is,  by  the  fact  of  being  thereby  alread}'  insured. 

The  stipulation  does  not  indeed  apply  unless  both  policies  according 
to  their  terms  cover  the  property  at  the  time  and  place  of  the  loss.  It 
was  therefore  held  in  Kent  v.  Manufacturers'  Insurance  Co.,  18  Pick. 
19,  that  if  the  first  policy  had  expired  by  its  own  limitation  of  time 
before  the  loss,  the  second  insurers  were  liable.  But  the  court  said, 
in  illustration  of  the  proposition  that  the  clause  regulated  the  extent  of 
the  liability  which  the  second  underwriters  incurred,  "  If,  for  example, 
the  subsequent  policy  covers  the  same  vessel,  voyage  and  risks,  as 
■were  covered  by  the  prior  policy,  the  assured  would  not  by  the  terms 
of  the  contract  be  entitled  to  recover  anything  upon  the  subsequent 
policy.  And  it  is  well  settled  that  nothing  done  by  the  parties  to  the 
first  policy  after  the  execution  of  the  second  can  alter  the  relative  situa- 
tion of  the  parties  to  the  latter,  as  fixed  by  the  terms  of  their  own- 
contract.  It  was  therefore  held  by  Mr.  Justice  Story  that  a  discharge 
of  the  first  policy  by  agreement  of  the  parties  to  it,  after  the  making 
of  the  second  policy,  though  before  any  risk  attached  under  the  latter, 
had  no  effect  upon  it.  Seamans  v.  Loring,  1  Mason,  127.  In  Mac}' 
V.  Whaling  Insurance  Co.,  9  Mot.  354,  this  court  approved  of  that 
decision  ;  and  held  that  the  cancelling  of  the  first  policy  after  the 
making  of  a  second  containing  a  clause  like  that  now  in  question,  even 
before  the  loss,  did  not  increase  the  liability  of  the  second  insurers  ; 
for,  by  a  construction  whicli  would  allow  it  such  an  operation,  as  was 
said  by  Mr.  Justice  Hubbard,  speaking  for  the  court,  "  Tiie  relations 
of  the  parties  are  altered  injuriously  to  the  second  underwriters  without 
their  consent,  and  the  effect  is  not  only  to  increase  the  risk  dii'ectly, 


814  RYDER    V.    PHCENIX   INS.    CO.  [CHAP.  VIII. 

but  its  tendency,  if  allowed,  would  be  to  make  the  subsequent  under- 
writers insurers  of  the  solvency  of  the  prior ;  because,  on  any  misfor- 
tune happening  to  the  prior  underwriters,  by  which  their  ability  to  pay 
losses  should  be  impaired  or  destroyed,  the  party  would  cancel  bis 
policy  to  enable  him  to  resort  to  his  subsequent  insurers  for  losses  for 
which  they  would  not  be  accountable  in  case  of  the  continuance  of  the 
prior  policy."  See  also  McKira  v.  Phoenix  Insurance  Co.,  2  Wash. 
C.  C.  95  ;  Murray  ?;.  Insurance  Co.  of  Pennsylvania,  Id.  189. 

The  facts  agreed  in  this  case  show  that  at  the  time  of  the  making  of 
the  policy  in  suit  the  plaintiffs  held  other  policies  prior  in  date  upon 
the  same  propert3',  to  its  full  valuation  against  the  same  risks,  which 
had  not  been  then  cancelled,  and  which  would  not  expire  according  to 
their  terms  until  after  the  time  when  the  loss  happened.  Upon_the 
grounds  alrcadv  stated,  njitlier  tiie  insolvency  of  the  Columbian  Insur- 
ance  Company  and  the  want  of  funds  to_pa3'  its  liabilities,  nor  any 
di3charge~bf  those^liabilities  without ^h e  defendants'  consent  since  they 
made  their  policy,  could  increase  th  el  i  ability  whicbjhe\iby_ihe  terms 
of  that  policy  had  assumed.  We  need  not  particularly  consider  the 
effect  of  the  proceedings  in  the  courts  of  New  York;  for,  even  if  the 
corporation  was  thereb}-  dissolved  (which  is  by  no  means  clear),  its 
liabilities  would  be  no  moi'c  thrown  upon  the  defendants,  who  were  not 
sureties  for  the  payment  of  their  debts  nor  insurers  of  their  solvency, 
than  if  the  prior  underwriters,  being  natural  persons,  had  died  or 
become  insolvent  without  performing  their  agreement.  The  ver}' 
statutes  of  New  York,  upon  which  the  plaintiffs  rely,  by  providing  a 
mode  in  which  the  policies  of  an  insolvent  corporation  may  be  cancelled 
imply  that  if  not  so  cancelled  they  continue  to  be  existing  contracts. 
Rev.'  Sts.  of  N.  Y.  (5  ed.)  part  3,  tit.  4,  c.  8,  §  86.  Leroy  v.  State 
Insurance  Co.,  2  Edw.  Ch.  673  ;  In  re  Croton  Insurance  Co.,  8  Barb. 
Ch.  643. 

The  cases  of  fire  insurance,  cited  for  the  plaintiffs,  in  which  this 
court  has  held  that  a  polic}',  declared  on  its  face  to  be  void  in  case  of 
previous  insurance  on  the  same  property,  or  in  case  of  obtaining  sub- 
sequent insurance,  was  valid  if  the  only  other  insurance  was  void  for 
misrepresentation  or  by  its  own  terms,  have  no  application  to  this 
case  ;  for  they  were  not  decided,  as  the  learned  counsel  argued,  upon 
the  gi'ound  that  such  other  insurance  was  worthless  and  could  not 
be  enforced,  but  upon  the  ground  that  it  was  in  law  and  in  fact  no 
insurance. 

As  the  defendants'  policy  never  attached,  the  plaintiffs,  as .  was 
admitted  at  the  argument,  are  entitled,  upon  the  second  count  in  their 
declaration,  to  Judgment  for  a  return  of  premium  } 

1  See  Carleton  v.  China  Mut.  Ins.  Co.,  174  Mass.  280  (1899).  — Ed. 


SECT.  I.]  SIIAWE   V.   FELTON.  815 


SECTION   I.  (conti7med). 
(B)   Valued  Policies. 

SHAWE  V.   FELTON. 

King's  Bench,  1801.     2  East,  109. 

This  was  an  action  on  a  policj'  of  insurance  on  the  ship  "  Indian," 
and  goods,  valued  at  £6,600,  on  a  voj'age  at  and  from  Liverpool  to  the 
coast  of  Africa,  during  her  stay  and  trade  there,  and  from  thence  to  her 
port  or  ports  of  discharge,  sale,  and  final  destination  in  the  West  Indies 
and  America,  and  until  she  was  moored  twent3'-four  hours  in  safet}'. 
At  the  trial  before  Lord  Kenyon,  C.  J.,  at  the  last  Sittings  at  Guildhall, 
it  was  proved  that  the  ship  was  seaworthy  when  she  sailed  from  Liver- 
pool ;  and  it  was  not  disputed  that  the  insurers  were  interested  in  the 
ship  and  outfit  (including  provisions  and  sea- stores  laid  in  for  the  slaves, 
which  were  to  be  taken  in  on  the  coast  of  Africa,  and  also  wages  ad- 
vanced to  the  crew)  to  the  extent  of  the  value  insured.  The  ship  arrived 
on  the  coast  of  Africa,  took  in  a  cargo  of  slaves  there,  and  proceeded 
to  Deraerara.  In  the  course  of  her  vo3-age  thither,  and  in  calm  weather, 
she  met  with  a  violent  concussion,  described  to  resemble  an  earthquake, 
from  which  she  received  so  much  damage  that  it  was  with  the  greatest 
difficulty  she  was  kept  afloat  by  pumping  until  she  reached  Demerara, 
almost  a  wreck,  where  she  was  obliged  to  be  lashed  alongside  of  a 
hulk  to  keep  her  from  sinking ;  and  in  attempting  to  remove  her  from 
thence  to  the  shore,  a  few  days  afterwards,  she  sunk,  although  the  dis- 
tance was  only  about  fifty  yards.  At  the  time  of  her  arrival  at  Deme- 
rara her  stores  were  considerably  expended.  The  ship  was  originall}' 
destined  there,  in  the  first  instance,  with  directions  to  the  captain  to 
proceed  to  other  ports  and  places  in  case  he  could  not  dispose  of  the 
slaves  there  at  a  certain  average  price.  And  his  letter  of  instructions 
from  his  owners  contained  the  following  direction  :  "As  your  vessel  is 
not  according  to  the  late  act  of  Parliament,^  we  would  have  you  sell  her 
in  the  West  Indies,  provided  you  can  procure  £1,200,  but  expect  you 
will  get  from  £1,500  to  £1,200.  Should  3'ou  not  dispose  of  her,  you 
will  procure  what  freight  j-ou  can  for  Liverpool."  In  fact,  the  vessel 
having  been  survej'ed  at  Deraerara,  and  condemned  as  unserviceable, 
was  sold  only  for  £388.  In  consequence  of  this,  the  captain  was  obliged 
to  dispose  of  all  the  slaves  there,  not  indeed  so  advantageously  as  he 

1  This  was  one  of  the  several  acts  which  passed  for  the  regulation  of  the  African 
slave  trade ;  limiting  the  number  of  slaves  to  the  tonnage,  and  requiring  the  vessels  to 
be  of  a  certain  build.  The  act  alluded  to  was  to  take  place  after  the  voyage  in  question 
commenced.  —  Rep. 


816  SHAWE    V.    FELTON,  [CHAP.  VIII. 

might  otherwise  have  done  had  he  been  enabled  to  proceed  to  other 
places,  but  still  so  as  to  cover  the  average  price  to  which  he  was  lim- 
ited by  his  instructions.  The  plaintiff  gave  notice  of  abandonment  to 
the  underwriters,  and  recovered  as  for  a  total  loss  on  the  ship ;  and  the 
verdict  was  taken  for  the  full  amount  of  the  sum  insured,  it  being  a 
valued  policy. 

A  rule  was  obtained,  calling  on  the  plaintiff  to  show  cause  why  the 
verdict  should  not  be  set  aside  and  a  new  trial  had,  on  the  grounds  that 
the  subject  matter  of  the  insurance  was  so  much  reduced  from  the  origi- 
nal value  at  the  time  of  the  loss  (if  it  were  to  be  considered  as  a  total 
loss),  tliat  the  sum  valued  in  the  policy  ought  not  to  conclude  the  under- 
writer. That  a  policy,  though  valued,  was  still  iiojnore  than  a  contract 
of  JndemnTty,  and  was  only  meant  to  t5Ind  the  partleswhen  the  subject- 
matter  continiicdjiearly  in  tlie  same  state  as  at  first,  allowing  for  usu al 
wear  and  tear.  That  in  particular  it  ought  not  to  conclude  in  this  case  ; 
because  not  only  the  actual  worth  of  the  ship  was  by  the  owner's  own 
confession  of  so  much  less  than  the  stipulated  value,  but  also  the  stores 
which  were  included  in  the  insurance  were  profitably  expended  by  liim 
in  the  purchase  and  sustenance  of  the  slaves,  all  of  whom  liad  been 
brought  to  an  advantageous  market ;  and  therefore,  so  far  from  the 
plaintiff  having  incurred  any  loss  in  this  respect  for  which  he  was  en- 
titled to  an  indemnity,  he  was  in  fact  a  considerable  gainer  by  the 
adventure. 

The  Attorney-General  (Sir -E(:?ioar<:?iaio),  Erskine^  Park,  and  Wood, 
showed  cause  against  the  rule. 

Gibbs  and  Cassels,  in  support  of  the  rule. 

Lord  Kenyon,  C.  J.  The  jury  had  no  doubt  but  that  the  ship  was 
seaworthy  when  she  sailed,  and  that  there  was  a  total  loss ;  for  though 
she  arrived  at  Demerara,  she  was  never  moored  twenty-four  hours,  nor 
a  moment  in  safety.  She  came  there  a  perfect  wreck,  having  received 
her  death's  wound  at  sea,  and  was  with  the  utmost  difficulty  kept  afloat 
till  all  the  people  on  board  were  landed.  It  is  not  pretended  now  that 
there  was  any  fraud  in  the  case ;  but  it  is  contended  that  the  under- 
writer is  not  bound  by  the  valuation  in  the  polic}'.  It  is  of  little  conse- 
quence to  inquire  what  my  opinion  would  have  been  upon  the  subject 
of  valued  policies  in  the  year  1746,  immediately  after  the  Stat,  of  the 
19  Geo.  II.  passed  :  for  very  soon  after  they  were  decided  to  be  legal  by 
as  cautious  and  upright  and  painstaking  a  judge  as  ever  presided  in 
this  court  (Lord  C.  J.  Lee).  He  was  succeeded  by  Sir  Dudley  Ryder, 
and  this  latter  by  Lord  Mansfield ;  and  during  all  this  period  such  poli- 
cies have  been  sanctioned  b}- one  uniform  course  of  decisions.  All  this 
is  now  supposed  to  be  wrong ;  and  the  rules  by  whicli  this  and  other 
commercial  nations  have  so  long  regulated  their  dealings  is  now  wished 
to  l)e  disturbed  ;  but  I  will  not  lend  my  aid  to  oi)en  such  a  new  and 
wide  door  of  litigation,  much  exceeding  everything  tliat  has  gone  be- 
fore. If  we  were  to  enter  into  the  calculations  which  have  been  con- 
tended for,  every  valued  policy  would  be  to  be  opened.     Every  man's 


SECT.  I.]  SIIAWE    V.    FELTON'.  817 

meal  on  board  a  ship  would  take  from  the  value  of  the  original  outfit 
Is  this  to  be  endured  ?  Will  good  faith  admit  of  it?  Where  is  the  line 
to  be  drawn  between  a  greater  or  less  diminution  of  the  value?  There- 
fore as  the  rule  and  practice  of  valued  policies  have  been  acted  upon 
and  sanctioned  since  the  passing  of  the  statute,  I  am  not  one  who  wish 
quieta  movere. 

Grose,  J.  We  are  desired  by  this  motion  to  open  a  valued  policy, 
contrary  to  the  practice,  and  in  a  case- where  no  fraud  is  imputed  ;  for 
doing  which  no  authority  has  been  cited.  If  we  were  to  admit  it  in  this 
instance,  it  would  be  required  in  every  other  ;  and  thus  a  door  would 
be  opened  to  endless  litigation.  Therefore,  to  avoid  great  injustice  to 
individuals,  and  great  public  inconvenience,  I  think  we  are  ])Ound  to 
refuse  the  application. 

Lawrence,  J.  As  the  practice  of  binding  parties  as  to  the  amount 
of  their  interest  by  valued  policies  has  obtained  ever  since  the  Stat,  of 
Geo.  II.,  it  would  require  very  strong  reasons  to  show  that  it  is  wrong. 
That  statute  was  passed  to  prohibit  mere  wagering  policies  by  persons 
insuring  who  had  no  interest  in  the  thing  insured,  and  therefore  it  avoids 
policies  made,  interest  or  no  interest,  or  without  further  proof  of  inter- 
est than  tlie  policy  itself.  The  effect  therefore  of  a  valued  policy  is  not 
to  conclude  the  underwriter  from  showing  that  the  assured  had  no  inter- 
est, and  that  in  fact  it  was  a  mere  wagering  policy  within  the  statute  4 
but  in  order  to  avoid  disputes  as  to  the  quantum  of  the  assured'^  inter- 
est, the  parties  agree  that  it  shall  be  estimated  at  a  certain  value.  Here 
it  is  not  pretended  that  the  subject  matter  of  the  insurance  was  not  at 
first  of  the  value  estimated  in  the  policy.  Then  how  does  this  differ 
from  tlie  case  of  an  open  policy  in  this  respect?  Would  it  not  be  suffi- 
cient for  the  assured  in  an  open  policy  to  prove  that  at  the  time  the 
ship  sailed  the  subject-matter  of  the  insurance  was  of  such  a  value?  Is 
not  that  the  period  to  look  to,  and  not  the  state  of  the  thing  at  the  time 
of  the  total  loss  happening?  If  on  account  of  the  peculiar  nature  of  an 
African  voyage  there  ought  to  be  a  difference  in  this  respect  between 
these  and  other  trading  adventurers,  the  underwriters  may,  if  they 
please,  introduce  a  special  clause  in  the  policy  to  provide  for  the  dimi- 
nution in  value  by  the  expenditure  of  stores  and  provisions  in  the 
purchase  and  sustaining  of  the  slaves.  As  it  stands  at  present,  there 
appears  no  ground  for  making  any  such  distinction. 

Le  Blaxc,  J.  The  present  is  an  extreme  case,  because  the  loss 
happened  at  the  last  period  of  the  voyage  at  which  it  could  happen. 
But  the  same  thing  must  occur  more  or  less  in  every  policy  upon  ship 
and  outfit.  The  value  of  the  property  must  be  continually  diminishing, 
and  if  the  loss  happen  at  the  latter  end  of  a  long  voyage,  no  doubt  the 
property  must  be  considerably  deteriorated  at  the  time  by  the  usual 
wear  and  tear  ;  and  yet  it  is  never  objected  that  the  underwriter  is  not 
liable  for  the  original  value.  As  to  the  owner  himself  having  estimated 
the  value  of  the  property  at  so  much  less  than  the  sum  at  which  it  was 
insured,  many  things  may  happen  to  render  a  vessel  of  less  value 

52 


g^g  SIIAWE    V.    FELTON.  [CHAP.  YIIT. 

when  the  voyage  is  concluded,  although  the  subject  matter  exists ;  the 
amount  of  the  repairs  required,  &c.  The  rule  having  been  so  long  laid 
down  as  to  valued  policies,  it  is  too  late  to  open  it  again. 

Mule  discharged.^ 

1  In  Grant  v.  Parkinson,  3  Doug.  16  (1781),  Lord  Mansfield,  C.  J.,  said :  "Before 
the  statute,  nothing  was  so  common  as  a  valued  policy;  and  then,  at  the  trial  tjiere 
^sas  no  necessity  to  prove  either  value  or  interest,  whether  tlie  words  '  witiiout  further 
rroof  than  the  policy '  were  or  were  not  added.  Then  this  statute  was  made ;  and  m 
the  construction  of  it,  it  has  been  held,  whether  right  or  wrong  it  is  now  immaterial  to 
inquire  that  a  valued  policy  is  not  void,  but  it  is  sufficient  if  the  party  proves  some  in- 
terest '  The  other  side  may  show  that  this  is  a  mere  evasion  of  the  act ;  but  in  general 
nothing  is  necessary  on  a  valued  policy  but  to  prove  some  actual  interest.  In  the  pres- 
ent case  the  insurance  is  made  by  a  contractor  for  spruce  beer  on  the  profits  to  arise 
from  a  cargo  of  molasses.  If  the  ship  arrives,  the  profit  is  certain.  The  policy  is  not 
meant  to  conceal  the  interest,  but  to  get  rid  of  the  proof  of  the  quantum." 

In  Barker  v.  Jauson,  L.  K.  3  C.  P.  303  ( 1868),  a  ship  worth  more  than  £8,000  sailed 
from  England,  and  on  the  outward  voyage  was  injured  to  such  air  extent  that  the  cost 
of  repairs  would  exceed  the  value  when  repaired.     While  the  ship  was  at  Calcutta  in 
this  condition,  the  owners,  in  ignorance  of  the  facts,  obtained  insurance  for  £6,000  in 
a  time  policy  that  valued  the  ship  at  £8,000.     During  the  time  of  this  policy,  and 
before  repairs  had  been  executed,  the  ship  was  lost  in  a  storm.     The  jury  found  that 
the  vessel  was  a  ship  at  the  time  of  the  storm.     It  was  held,  that  the  policy  attached,  . 
and  that,  although  because  of  the  original  damage  the  owners  had  recovered  £7,000 
from  other  underwriters  as  for  a  partial  loss,  the  valuation  could  not  be  opened. 
BoviLL  C.  J.,  said  :  "  There  is  no  doubt,  however,  now  that  the  parties  may  use  either 
an  open' or  a  valued  policy.     In  this  case  both  parties  have  agreed  upon  a  time  policy 
(in  which  there  is  no  warranty  of  seaworthiness),  and  have  further  agreed  that,  what- 
ever its  condition  may  have  been  at  the  time  when  the  policy  attached,  they  will  treat 
the  value  of  the  vessel  as  of  a  certain  amount,  and  both  parties  acting  in  good  faith  are 
willing  to  be  bound  by  that  valuation.     If  such  be  the  agreement  of  tlie  parties,  upon 
what  principle  would  the  court  be  justified  in  setting  it  aside?     An  exorbitant  valua- 
tion may  be  evidence  of  fraud,  but  when  the  transaction  is  bonajide,  the  valuation 
agreed   upon  is   binding."      And  Montague   Smith,  J.,  said:  "It  has  been  found 
convenient  that  the  value  of  a  ship  should  be  agreed  on,  and  stated  in  the  policy,  in 
order  to  avoid  such  inquiries  as  that  now  brought  before  us.     If  we  were  to  grant  this 
rule,  it  would  become  a  question  of  degree  in  each  case  whether  the  difference  in  value 
was  sufficient  to  entitle  the  parties  to  re-open  tlie  valuation.     A  thousand  things  might 
lei-sen  the  value  of  a  vessel  between  the  time  of  a  policy  being  made  and  the  time  of  its 
attaching,  such  as  natural  decay,  worms,  or  the  ship  becoming  a  drug  in  the  market ; 
aud  all  the  evils  intended  to  be  avoided  by  this  kind  of  policy  would  arise  again.     The 
estimated  value,  if  excessive,  may  often  be  evidence  of  fraud,  or  of  an  intention  to  make 
a  wagering  policy ;  but  here  it  is  admitted  that  there  was  no  intention  to  value  the 
vessel  beyond  what  was  reasonable  and  fair.     I  think  there  is  no  pretence,  either,  for 
saving  that  there  was  a  mistake;  it  is  a  misuse  of  the  term,  for  the  intention  was  to 
avoid  all  questions  as  to  what  was  the  real  value  of  the  ship,  and  both  parties  were 
aware  that  it  could  not  at  the  time  be  ascertained  with  certainty  what  that  value 


was. 


See  Lidgett  v.  Secretan,  L.  K.  6  C  P.  616  (1871).  —Ed. 


SECT.  I.]  FOKBES   V.   ASPINALL.  819 

FOEBES  AKD  Another  v.  ASPINALL. 
King's  Bekch,  1811.     13  East,  323. 

This  case  came  before  the  court  upon  a  motion  for  a  new  trial  in  an 
action  on  a  policy  of  insurance,  in  which  the  plaintiffs  had  recovered  a 
verdict  at  the  Sittings  after  last  Trinity  Term  at  Guildhall.  It  was  first 
moved  in  the  last  term,  when  a  rule  to  show  cause  was  granted  ;  and  it 
was  afterwards  argued  at  length  in  the  same  term  by  the  Attorney- 
General,  Scarlet  and  Richardson,  on  the  part  of  the  plaintiffs,  and  by 
Park  and  Littledale  for  the  defendant.  The  court  took  till  this  term  to 
consider  of  their  judgment ;  in  delivering  which  the  Lord  Chief  Justice 
went  so  fully  into  the  arguments  urged  and  the  cases  cited  at  the  bar, 
that  it  is  unnecessar}'  to  repeat  them. 

The  insurance,  as  it  concerne(l_this  case,  was  on  freight  valued  at_ 
£6,500  upon  the  ship  "  Qiiswickjl'-  at  and  from  any  port  or  ports  in 
Hayti  to  Liverpool,  or  her  port  of  discharge  in  the  United  Kingdom." 
The  declaration  alleged  that  on  the  9lh  of  July,  1808,  the  ship  was  in 
safety  in  a  certain  port  in  Hayti,  and  that  divers  goods  and  merchan- 
dises were  then  and  there  loaded  on  board  to  be  carried  on  the  voyage 
insured  ;  that  the  plaintiffs  were  interested  in  the  freight,  &c.  to  the 
amount  insured;  and  that  on  the  loth  July,  the  ship,  with  the  goods 
on  board,  was  lost  by  the  perils  of  the  seas,  and  the  plaintiffs  thereby 
lost  their  freight,  &c. 

The  facts  proved  and  admitted  were  that  the  plaintiffs  were  the 
owners  of  the  ship  "Chiswick";  that  she  sailed  from  Liverpool  with 
the  goods  to  Hayti  to  trade  there,  and  to  bring  home  a  return  cargo  of 
produce,  and  arrived  at  Hayti  on  the  4th  of  July,  1808,  with  goods  to 
be  there  bartered  for  other  goods  to  be  brought  back  to  Liverpool. 
Part  of  the  goods  were  accordingly  bartered  and  exchanged  for  fift}-- 
five  bales  of  cotton,  which  were  shipped  on  board  at  Jaquemel  (on  the 
south  side  Of  Hayti),  the  remaining  part  of  her  outward  cargo  was  still 
on  board,  and  would  in  all  probability  have  been  exchanged  for  other 
goods,  but  for  the  loss  after-mentioned.  That  the  ship  proceeded  from 
Jaquemel  to  An  Cayes,  another  port  of  Ha3'ti,  to  barter  away  the  resi- 
due of  her  outward  cargo,  and  to  complete  her  lading  home  ;  and  with 
such  cargo,  and  the  fifty-five  bales  on  board,  was  in  safety  on  the 
15th  of  July,  when,  by  the  perils  of  the  seas,  she  was  driven  on  shore 
and  lost.  That  the  defendant  settled  for  the  freight  of  the  fifty-five 
bales  of  cotton,  without  prejudice  to  the  plaintiffs  claim  for  further  loss 
of  freight,  if  they  were  entitled  to  it.  That  the  remaining  part  of  the 
outward  cargo,  though  damaged,  was  saved  from  the  wreck,  and,  in 
twelve  days  after  the  loss  of  the  ship,  was  exchanged  for  250  tons  of 
coffee  and  100  tons  of  wood,  the  freight  of  which  would  have  been  of 
larger  value  than  the  sum  insured  on  freight^  if  the  ship  had  not  been 
lost. 


820 


FORBES   V.   ASPINALL.  [CHAP.  VIII. 


Lord  P:llenborough,  C.  J.,   now  delivered  the  judgment  cf  the 

court. 

This  was  a  motion  for  a  new  trial  in  an  action  upon  a  policy  of  in- 
surance "  at  or  from  any  port  or  ports  in  Hayti  to  Liverpool,"  &c.,  on 
freight  valued  at  £6,500.  The  ship  had  sailed  from  Liverpool  to  Hayti 
with  a'ca^TiTteiidedlor  barter ;  had  bartered  away  part  of  her  out- 
ward cargo,  and  taken  in  fifty-tive  bales  of  cotton  in  part  of  her  return 
cargo;  and  was  proceeding  from  one  port  in  Hayti  to  another;  viz., 
from  Jaquenel  to  Au  Cayes,  to  barter  away  the  residue  of  her  outward 
cargo,  and  to  complete  her  lading  home,  when  she  met  with  an  accident 
by  the  perils  of  the  seas  which  occasioned  a  total  loss.  If  the  plaintiffs 
he  only  entitled  to  a  satisfaction  for  a  partial  loss,  that  satisfaction  has 
already  been  made,  and  a  nonsuit  should  be  entered.  But  the  plain- 
tiffs contend  that  as  this  was  a  valued  policy,  and  as  part  of  the  goods 
to  be  carried  upon  the  freight  insured  were  on  board  at  the  time  of  the 
loss,  they  are  entitled  to  claim  their  verdict  for  a  total  loss.  Freight  is 
the  profit  earned  by  the  ship-owner  in  the  carriage  of  goods  on  board 
his  ship,  and  an  insurance  upon  freight  is  an  insurance  made  in  order 
to  secure  that  profit  to  the  ship-owner  in  case  he  is  prevented  by  any  of 
the  perils  insured  against  from  actually  earning  such  profit.  An  insur- 
ance upon  freight  has  no  reference  to  the  hull  of  the  ship,  or  to  its 
outfit  for  the  voyage,  both  of  which  are  protected  by  insurance  upon  the 
ship  ;  but  its  sole  object  is  to  protect  the  assured  from  being  deprived, 
by  any  of  the  perils  insured  against,  of  the  profit  he  would  otherwise 
earn  by  the  carriage  of  goods.  To  recover,  therefore,  in  any  case  upon 
a  policy  upon  freight,  it  is  incumbent  on  the  assured  to  prove  that  unless 
some  of  the  perils  insured  against  had  intervened  to  prevent  it,  some 
freight  would  have  been  earned  ;  and  where  the  policy  is  open,  the 
actual  amount  of  the  freight,  which  would  have  been  so  earned,  limits 
the  extent  of  the  underwriter's  liability.  In  every  action  upon  such  a 
policy  evidence  is  given,  either  that  goods  were  put  on  board,  from  the 
carriage  of  which  freight  would  result,  or  that  there  was  some  contract, 
under  which  the  ship-owner,  if  the  voyage  were  not  stopped  by  the 
perils  insured  against,  would  have  been  entitled  to  demand  freight ;  and 
in  either  case,  if  the  policy  be  open,  the  sum  payable  to  the  ship-owner 
for  freight,  together  with  the  premiums  of  insurance  and  commission 
tl)ereupon,  is  the  extent  to  which  the  underwriters  are  chargeable.  In 
this  case,  therefore,  as  there  was  no  contract  under  which  the  ship- 
owner could  claim  freight  but  for  goods  actually  shipped  on  the  home- 
ward voyage,  the  assured  could  have  made  no  claim,  had  this  been  an 
o|)cn  polic}',  but  to  the  extent  of  the  actual  freight  on  the  fifty-five  bales 
of  cotton,  wiiich  were  shipped  for  this  country,  and  of  the  premiums  and 
commission  thereon.  And  indeed  that  point  has  been  settled  against 
tliis  very  plaintiff  in  an  action  on  an  open  policy  on  this  very  risk,  in 
Forbes  and  Another  v.  Cowie,  in  Mr.  Pai'k's  Addenda  to  the  last  edi- 
tion, p.  004.  The  question  then  is,  whetlier  it  makes  an}'  essential 
difTercnce,  that  this  is  the  case  of  a  valued  policy?     And  we  are  of 


SECT.  I.]  FORBES   V.  ASPINALL.  82^ 

opinion,  upon  full  consideration,  that  it  does  not.  The  object  of  valu- 
ation in  a  polic}-  is  to  fix  b^-  agreement  between  the  parties  an  estimate 
upon  the  subject  insured,  and  to  supersede  the  necessity  of  proving  the 
actual  value,  bj'  specifying  a  certain  sum  as  the  amount  of  that  value. 
In  fixing  that  sum,  if  the  assured  keep  fairh-  within  the  principle  of 
insurances,  which  is  merely  to  obtain  an  indemnity,  he  will  never  fo 
beA'ond  the  first  cost,  in  the  case  of  the  goods  ;  adding  thereto  onl}-  the 
premium  and  commission,  and,  if  he  think  fit,  the  probable  profit;  and 
in  the  case  of  freight,  he  will  not  go  beyond  the  amount  of  what  the 
ship  would  earn,  with  the  premiums  and  commission  thereupon.  The 
valuation,  however,  in  the  case  of  goods,  looks  to  all  the  goods  intended 
to  be  loaded  ;  and  in  the  case  of  freight,  it  looks  to  freight  upon  all  the 
goods  the  ship  is  intended  to  cany  upon  the  voyage  insured;  and  if 
b}'  the  perils  insured  against  in  a  valued  polic}-  on  goods,  part  onh-  of 
the  goods  intended  to  be  covered  be  lost,  the  valuation  must  be  opened, 
and  the  assured  can  only  recover  in  respect  of  that  part ;  and  so,  if  by 
the  perils  insured  against  the  freight  of  part  only  of  the  goods  to  be 
carried  6e^ lost,  the  assured  can  only  recover  in  respect  of  that  loss. 
according  to  the  proportion  which  that  part  bears  to  the  whole  suuiat 
wHlclTthc^entire  freightwns  pstimfitod  in  tlip  vnlimhinn.  Tr,  for  instance, 
tlTelnsiirance  be  generally  upon  goods,  and  the  goods  intended  to  be 
protected  be  500  hogsheads  of  sugar,  and  a  valuation  be  made  accord- 
inglj',  but  the  sliip  by  accident  takes  on  board  100  only,  and  sails,  and 
is  afterwards  lost  by  one  of  the  perils  insured  against  with  those  100 
on  board,  can  it  be  contended  that  the  assured  shall  recover  to  the  full 
amount  of  the  valuation,  that  is  for  the  whole  500,  when  he  has  lost 
onl\'  100?  So  in  the  case  of  freight,  if  the  ship  would  carry  500  tons, 
and;  in  fixing  the  valuation,  the  assured  calculate  his  freight  upon  500 
tons,  but  when  he  reaches  the  loading  port  he  can  get  10  tons  only 
upon  freight,  and  sails  upon  the  voyage  insured  with  those  10  tons  only, 
is  it  to  be  allowed  that  if  the  ship  be  lost  by  any  of  the  perils  insured 
against,  and  he  thereby  lose  freight  upon  10  tons,  he  shall  be  entitled 
to  the  valuation  which  includes  the  freight  upon  500  tons?  And  vet 
to  this  extent  the  plaintiffs  argument  in  tliis  case  is  carried.  The 
proposition  is  monstrous  :  instead  of  consigning  the  policy,  as  it  ought 
to  be  consigned,  to  a  contract  as  nearly  as  ma}-  be  of  indemnity,  against 
what  may  be  lost  in  respect  of  freight  by  the  perils  insured  against,  it 
converts  it  into  a  contract  of  indemnity  against  a  different  class  of  acci- 
dents, which  ma}'  operate  to  prevent  the  assured  from  being  able  to 
procure  a  full  cargo  upon  freight,  and  may  make  it  the  interest  of  tho 
assured,  which  it  never  ought  to  be,  that  a  loss  should  happen.  I'he 
court,  therefore,  will  look  for  ver}-  strong  authorities  before  they  yield 
to  such  a  proposition.  It  was  pressed,  upon  the  argument,  that  in  the 
case  of  a  valued  policy,  if  nny  interest  be  proved  to  be  on  board,  and 
there  be  no  fraud,  a  total  loss  will  entitle  the  assured  to  recover  tlie 
sum  specified  in  the  valuation.  And  to  that  position  we  accede,  with 
this  limitation,  that  is,   provided  there  is  a  total  loss,  by  any  of  the 


g22  HAIGH    V.    DE   LA    COUR.  [CHAP.  VIII. 

perils  insured  against,  of  the  whole  subject-matter  of  insurance  to  which 
tlie  valuation  applied,  viz.,  of  all  the  intended  cargo  of  goods,  where 
the  insurance  was  on  goods  ;  and  of  all  the  intended  freight,  where  the 
insurance  was  upon  freight.  But  if  it  be  meant  to  carr}-  that  position 
to  this  extent,  that  the  underwriter  is  not  at  liberty  to  inquire  what  was 
intended  to  have  been  included  in  the  valuation,  or  when  he  has  ascer- 
tained that  point,  that  he  cannot  reduce  the  sum  below  the  valuation, 
bv  proving  that  a  part  only  of  what  was  included  in  the  valuation  has 
been  lost  by  a  peril  insured  against ;  we  deny  the  position  when  so 
extended.^  ...  In  a  case,  therefore,  circumstanced  as  this  is,  where 
the  valuation  was  with  reference  to  freight  upon  a  complete  cargo; 
■where  a  complete  cargo,  or  anything  like  a  complete  cargo,  never  was 
in  fact  obtained,  and  for  all  that  appears  never  might  have  been  ob- 
tained ;  where  there  was  no  contract  by  any  person  to  load  a  complete 
cargo,  or  pay  dead  freight,  but  the  ship  was  a  mere  seeking  ship ;  we 
cannot  feel  ourselves  warranted  in  saying  that  there  has  been  a  total 
loss  b}-  any  peril  insured  against  of  tliat  which  the  insurance  was  in- 
tended to  cover,  and  which  the  valuation  contemplated,  viz.,  freight 
upon  a  complete  cargo  ;  but  are  obliged  to  pronounce  that  no  loss  by 
the  perils  insured  against  is  made  out  beyond  the  loss  of  freight  upon 
part  of  a  cargo  onl}-,  viz.,  upon  the  fifty-five  bales  of  cotton  ;  that  the 
assured  are  therefore  not  entitled  to  recover  a  total  loss,  but  an  appor- 
tionment only,  according  to  the  measure  of  their  actual  loss  :  and  as 
that  apportionment  has  been  already  allowed  to  the  plaintiffs,  that  there 
must  be  a  new  trial. ^ 


HAIGH  AND  Others,  Assignees,  v.  DE   LA   COUR. 
Nisi  Prius,  Common  Pleas,  1812.     3  Camp.  319. 

This  was  an  action  on  a  policy  of  insurance  on  goods  valued  at 
£.5,000  on  board  the  "  Maria"  at  and  from  London  to  Pernambucco. 

In  this  case  the  defendant  had  signed  an  adjustment,  on  invoices  and 
bills  of  lading  being  produced  to  him  which  had  been  furnished  b}'  the 
assured,  represcnting_that  goods  above  the  value  of  £5j3Q(Lhad  been 
shipped^j3y  them  on  board  _the^  "  Maria."  These  invoices  were  now 
proved  to  have  been  fictitious  and  the  bills  of  lading  to  have  been  inter- 
polated after  they  were  signed  by  the  captain.  In  fact,  goods  were 
shipped  by  the  bankrupts  to  the  v.alue  of ^^400  and' no  "more.  ThF 
siiip  was  afterwards  run  away  with  and  carried  to  the  West  Indies, 

^  Here  were  discussed  Shawe  v.  Felton,  ante,  p.  815  (1801),  and  Montgomery  f. 
Eggiuton,  3  T.  R.  362  (1789)  —  Ed. 

■^  Arc:  Rickman  r.  Carstairs.  .5  B.  &  Ad.  651  (1833);  Tobin  v.  Harford,  17  C.  B. 
N.  s.  528  (Ex.  Ch.  1864)  ;  Denoou  i-.  Home  and  Colonial  Assur.  Co.,  L.  R.  7  C.  P.  341 
(1872). 


SECT.  I.]  BRUCE    V.    JONES.  823 

where  the  cargo  was  disposed  of  b}-  a  person  whom  the  bankrupts  piit 
on  board  in  quality  of  supercargo. 

Shepherd^  Serjt.,  for  the  plaintiffs,  allowed  they  could  not  recover  to 
the  full  amount  of  the  valuation  in  the  policy,  but  insisted  that  as  there 
were  some  goods  on  board  belonging  to  the  bankrupts,  the  assignees 
had  a  right  to  the  verdict //ro  tmito.  This  could  only  be  looked  upon 
as  a  case  of  short  interest. 

Sir  James  Mansfield,  C.  J.     If  the  bajikrnpts  intenrkcl  from  the 

beginning  to  cheat  the  underwriters,  the  assignees  can  recover  nothing. 

The  fraud  entirely  vjti  a.tes  the  contract. 

• ~  Plaintiffs  nonsuited.^ 

Shepherd  and  Best,  Serjts.,  and  Copley,  for  the  plaintiffs. 

Lens  and  Vaughan,  Serjts.,  and  Camjjhell,  for  the  defendant. 


BRUCE   V.   JONES. 
Exchequer,  1863.     1  H.  &  C.  769. 

Declaration  on  a  policy  of  insurance  for  £2,400  on  the  ship  "  Hero," 
on  a  vovage  from  Cardiff  to  Manilla,  and  in  which  the  ship  was  valued 
at  £3,200  and  underwritten  by  the  defendant  for  £125.  The  declara- 
tion alleged  a  total  loss. 

Plea  {inter  alia).  That  the  plaintiff  made  other  policies  of  insurance 
on  the  same  ship  on  the  same  voyage,  viz.,  a  pohcy  dated  the  30th  of 
Julv,  1860,  in  which  the  said  ship  was  valued  at  £3,000,  which  said 
policy  was  underwritten  for  sums  amounting  altogether  to  £725  ;  a 
policy  dated  the  8th  May,  1861,  in  which  the  same  ship  was  valued  at 
£8,000,  and  the  pohcy  underwritten  for  £500  ;  a  policy  dated  the  20th 
June,  1861,  in  which  the  same  ship  was  valued  at  £5,000,  and  under- 
written for  the  sum  of  £3,450.  Averments  :  that  the  said  ship  men- 
tioned and  insured  in  each  of  the  said  policies  was  the  same  ship,  and 
the  risk  intended  to  be  covered  the  same  risk  ;  that  the  said  ship  was 
lost  after  the  making  of  the  said  policies,  and  that  divers  of  the  said 
several  insurers  upon  the  said  ship,  whose  names  were  subscrilied  to 
the  said  policies  other  than  the  policy  in  the  declaration  mentioned, 
paid  to  the  plaintiff,  and  the  plaintiff  accepted  and  received  of  and  from 
the  said  underwriters,  sums  amounting  altogether  to  the  sum  of  £3,200,, 
and  the  plaintiff  then  and  thereby  became  satisfied  and  indemnified  for 
the  said  loss  of  the  said  ship  as  agreed  upon  in  the  said  policy  in  the 
declaration  mentioned.     Issue  thereon. 

At  the  trial,  before  Willes,  J,,  at  the  last  Liverpool  Summer  Assizes, 
it  appeared  that  the  policy  in  question,  which  was  dated  the  6th  August, 

1  In  Tonides  r.  Pender,  L.  R.  9  Q.  T5.  531  (1374),  s  c.  quoted  ante,  p.  167  n.,  it  was 
held  that  a  marine  policy  is  invalidated  by  non-disclosnre  of  such  excessive  over-valua- 
tioD  as  woul  1  be  deemed  material  by  a  reasonable  underwriter.  —  Ed. 


824  BRUCE    V.    JONES.  [CHAP.  VIII. 

1860,  was  effected  at  Liverpool  for  £2,400  on  tlie  plaintiff's  ship 
"  Hero,"  valued  at  £3,200,  and  was  underwritten  by  the  defendant  for 
£125.  The  loss  of  the  ship  having  been  proved,  the  defendant  gave  in 
evidence  three  other  policies  effected  by  the  plaintiff  on  the  same  ship 
for  the  same  voyage,  viz.,  a  policy  effected  at  Bristol,  dated  the  SOtli 
July,  1860,  for  £725,  in  which  the  ship  was  valued  at  £3,000  ;  anotlier 
effected  at  Aberdeen,  dated  the  8th  May,  1861,  for  £500,  in  which  the  ship 
was  valued  at  £3,000  ;  and  another  effected  in  London,  dated  the  20th 
June,  1861,  for  £3,450,  in  which  the  ship  was  valued  at  £5,000.  There 
was  conflicting  evidence  as  to  the  real  value  of  the  ship.  The  plaintiff 
had  received  from  the  underwriters  of  the  Bristol  polic}'  £492  6s.  6f7., 
from  the  underwriters  of  the  Aberdeen  policy  £684  7s.,  and  from  the 
underwriters  of  the  London  policy  £1,950,  amounting  in  the  whole  to 
£3,126  13s.  6d. 

The  learned  judge,  in  leaving  tlie  question  of  damage  to  the  jury, 
told  them  that  insurance  was  a  contract  of  indemnity,  and  tliat,  for  the 
purpose  of  the  present  action  and  as  between  the  plaintiff  and  defend- 
ant, the  value  agreed  upon  and  stated  in  the  policy  must  be  taken  as 
the  real  value  of  the  ship,  viz.,  £3,200,  and  that  as  the  plaintiff  was 
entitled  to  recover  in  respect  of  a  total  loss,  he  was  entitled  to  be  in- 
demnified to  that  amount ;  but  that  the  sums  which  the  plaintiff  had 
received  on  the  three  other  policies,  amounting  to  £3,126  13s.  Qd.,  must 
be  deducted  from  tlie  agreed  value  ;  so  that  there  would  only  be  due  on 
the  policy  on  which  this  action  was  brought  £73  6s.  6<r?.,  of  which  the 
defendant's  proportion  as  one  of  the  underwriters  was  £3  16s.,  which 
was  all  that  the  plaintiff  was  entitled  to  recover  against  him  ;  that  the 
fact  that  the  ship  had  been  valued  at  a  larger  sum  in  another  policy 
ought  not  to  be  taken  into  consideration.  The  jury  found  a  verdict 
for  the  plaintiff  for  £3  16s. 

Brett,  in  last  Michaelmas  Term,  obtained  a  rule  fnsi  for  a  new  trial, 
on  the  ground  of  misdirection  as  to  the  measure  of  damages ;  against 
which 

Ediimrd  James  (with  whom  was  Mihcard)  showed  cause  (Jan.  23). 
The  direction  of  the  learned  judge  was  correct.  The  plaintiff  is  only 
entitled  to  recover  from  the  defentlant  the  balance  of  the  amount  in- 
sured, after  giving  credit  for  the  sums  already  received  by  the  plaintiff 
under  the  other  policies.  Insurance  is  a  contract  of  indemnity  :  if  there 
be  an  open  policy,  the  assured  is  entitled  to  recover  the  value  of  the 
ship ;  but  where  there  is  a  valued  policy  the  sum  stated  in  it  is  the 
agreed  value  as  between  the  parties,  and  the  assured  cannot  recover 
more.  In  Bousfield  v.  Barnes,  4  Camp.  228,  the  plaintiff  had  effected 
two  policies,  one  for  £600,  valued  at  £6,000,  and  the  other  for  £6,000, 
vahied  at  £8,000.  The  ship  having  been  wrecked,  the  underwriters 
paid  him  the  £6,000,  and  he  then  sued  upon  the  other  policy.  Evi- 
dence was  adduced  that  the  ship  was  worth  more  than  £8,000,  and 
on  that  ground  it  was  held  that  he  was  entitled  to  recover.  Lord 
Ellenborough  there  said :  "  I  will  take  care  that  the  assured  do  not 


SECT.  I.]  BRUCE    V.   JONES.  825 

recover  upon  the  whole  more  than  the  real  value  of  the  subject-matter 
insured.  But  I  think  it  is  not  enough  for  the  underwriters  on  a  par- 
ticular policy  to  show  that  the  assured  has  received  from  another 
quarter  the  amount  of  the  valuation  in  that  polic}-,  unless  this  amounts 
in  point  of  fact  to  a  complete  indemnit}-."  Where  a  person  effects  two 
policies  of  insurance  in  each  of  which  the  same  value  is  declared,  he  is 
bound  bj-  that  sum  :  Irving  v.  Richardson,  1  Moo.  &  R.  153  ;  Morgan 
V.  Price,  4  Exch.  615.  [Wilde,  B.  —  Insurance  is  a  contract  of  indem- 
nity as  respects  the  true  value  ;  and  therefore,  to  the  extent  to  which 
the  assured  has  been  damnified  he  is  entitled  to  recover.  But  where 
the  i)olicy  is  valued  the  assured  is  estopped  from  saying  that  he  has 
sustained  damage  to  a  greater  extent  than  the  agreed  value.]  In  Park 
on  Insurance,  vol.  2,  p.  600,  8th  ed.,  it  is  said  :  "  Where  a  man  has 
made  a  double  insurance,  he  may  recover  his  loss  against  which  of  the 
underwriters  he  pleases,  but  he  can  recover  for  no  more  than  the 
amount  of  his  loss."  In  Lewis  v.  Rucker,  2  Burr.  1167,  1171,  Lord 
Mansfield,  C.  J.,  said:  "The  only  effect  of  the  valuation  is  fixing  the 
amount  of  the  prime  cost;  just  as  if  the  parties  admitted  it  at  trial; 
but  in  every  argument,  and  for  every  other  purpose,  it  must  be  taken 
that  the  value  was  fixed  in  such  a  manner  as  that  the  insured  meant 
onl}-  to  have  an  indemnity." 

Brett  and  Quain^  in  support  of  the  rule.  It  is  not  contended  that 
an  underwriter  is  liable  to  pay  more  than  the  agreed  value  of  the  ship 
as  between  him  and  the  assured ;  but  he  is  not  entitled  to  any  deduc- 
tion in  respect  of  sums  received  by  the  assured  on  other  policies.  The 
sum  stated  in  each  policy  is  not  the  actual  but  the  agreed  value  of  the 
ship.  It  is  well  known  that  the  value  of  a  ship  varies  according  to  the 
demand  for  shipping.  It  depends  on  the  state  of  trade,  not  on  the  cost 
of  the  ship.  A  ship  ma}'  be  undervalued  at  one  time  and  overvalued  at 
another,  and  therefore  to  avoid  all  dispute  the  parties  agreed  to  a  value 
by  which  they  shall  be  bound.  Here  the  plaintiflT,  having  sustained  a 
total  loss,  is  prima  facie  entitled  to  recover  the  agreed  value.  The 
defendant  admits  the  loss,  but  gives  in  evidence  policies  between  the 
plaintiff  and  other  underwriters  for  the  purpose  of  showing  that  he  has 
been  paid.  But  those  documents  being  in  evidence  must  be  taken  for 
all  purposes.  For  instance,  the  London  policy  being  given  in  evidence 
for  the  purpose  of  showing  a  payment  under  it  of  £1,950,  it  must  be 
taken  that  at  the  time  that  policy  was  effected  the  ship  was  of  the  value 
stated  in  it,  viz.,  £5,000,  and  therefore  only  two  fifths  of  its  value  has 
been  paid  under  that  policy.  Again,  under  the  Bristol  policy,  £492 
has  been  paid,  which  is  only  one  sixth  of  the  agreed  value  ;  and  und^r 
the  Aberdeen  policy  £684  has  been  paid,  which  is  only  seven  thirty- 
seconds  of  the  agreed  value.  This  mode  of  calculation  shows  a  mucii 
larger  sum  due  to  the  plaintiff  on  tiie  present  policy  than  was  found  by 
the  jury.  In  Arnouhl  on  Insurance,  vol.  1.  p.  346,  2d  ed.,  it  is  said  that 
the  rule  established  by  Lord  Mansfield  is  as  follows  :  "  In  case  of 
over-insurance,  the  different  sets  of  policies  are  considered  as  making 


326  BRUCE    V.   JONES.  [CHAP.  VIII. 

but  one  insurance,  and  are  good  to  the  extent  of  the  value  of  the  effects 
put  in  risk ;  the  assured  can  recover  on  the  different  policies  no  more 
than  their  value,  but  he  may  sue  the  underwriters  on  either  of  the  poli- 
cies, and  recover  from  those  he  so  sues* to  the  full  extent  of  his  loss, 
supposing  it  to  be  covered  by  the  policy  on  which  he  elects  to  sue, 
leaving  the  underwriters  on  that  policy  to  recover  a  ratable  sum,  by 
way  of  contribution,  from  the  underwriters  on  the  other  policy."  Kefci- 
ence  is  there  made  to  Newby  v.  Reed,  1  W.  Black.  416,  which  was  a 
case  of  open  policies,  and  the  question  is  whether  the  same  rule  applies 
to  valued  policies  in  each  of  which  a  different  value  is  stated.  If  tlie 
rule  contended  for  by  the  defendant  is  to  prevail,  this  strange  conse- 
quence will  follow,  that  supposing  the  plaintiff  sued  on  all  the  policies 
except  the  London  one,  and  recovered  their  full  amount,  he  would  re- 
ceive upon  those  policies  £3,625,  and  he  might  then  sue  upon  the 
London  policy  and  recover  £1,375,  being  the  difference  between 
£3,625  and  £5,000,  the  agreed  value  in  the  London  policy.  So  that 
the  amount  which  the  plaintiff  would  be  entitled  to  recover  would  de- 
pend upon  which  policy  he  first  put  in  suit.  The  more  rational  rule  is 
to  take  the  average  value  of  the  four  policies,  by  adding  together  the 
several  agreed  values  in  each  and  dividing  it  by  four,  which  in  this  case 
would  give  £3,600  as  the  value  of  the  ship. 

Pollock,  C.  B.  "We  are  all  of  opinion  that  the  rule  ought  to  be 
discharged.  I  tliink  my  brother  Willes  was  quite  right  in  his  direc- 
tion, and  that  it  is  fortified  by  authority  and  reason.  The  action  is 
brought  on  a  policy  of  insurance  for  £2,400,  effected  on  a  ship  valued 
at  £3,200.  It  appears  that  the  ship  was  insured  by  other  policies  and 
that  the  assured  has  received  on  them  £3,126  \3s.  6d.,  and  the  question 
is  whether  he  is  entitled  to  recover  more  than  the  difference  between 
that  and  £3,200,  viz.,  £73  6s.  6d.  The  plaintiff  seeks  to  recover  more, 
on  the  ground  that  the  sums  which  he  has  received  on  the  other  policies 
ought  not  to  be  taken  into  consideration.  The  learned  judge  who  tried 
the  cause  did  not  adopt  that  view,  and  I  think  properly.  He  considered 
that,  as  between  the  plaintiff  and  defendant,  the  value  of  the  vessel 
must  be  taken  as  £3,200,  and  it  appears  to  me  that  is  the  correct  view. 
It  may  happen  that  when  a  vessel  is  in^ired  for  a  long  time  or  a  long 
voyage,  her  value  may  not  lie  the  same  at  the  beginning  as  at  the  end 
of  the  voyage.  More  freight  being  carried  might  increase  her  value, 
or  she  might  have  met  with  an  accident  and  have  been  so  thoroughly 
repaired  that  her  value  might  be  consideral)ly  increased.  But  in  gen- 
eral the  value  must  be  taken  to  be  that  which  is  stated  in  the  policy. 
If  that  is  binding  upon  the  underwriter,  so  tliat  he  cannotgive  evidence 
of  the  realvalue  of  the  vessel,  and_so  prevent  the  assured  froni  recovcr- 
ing  the  amount  stated  in  the  policy,  theassured  is  equ^hf  bouruLby: 
tlie  agreed  value,  an d  jf  h e  ha s^j;^ ceived JTIaf  amount  he  has  no  further 
claim  uponjiny^  other  uiidemriter.  If  he  has  received  less  he  can  only 
recover  on  other  policies  tlie  difference.  Upon  these  grounds  I  think 
that  the  rule  ought  to  be  discharircd. 


SECT.  I.]  BRUCE  V.    JONES.  827 

Martin,  B.  I  am  of  the  same  opinion.  I  admit  that  a  judgment 
given  in  a  matter  of  this  kind  is  not  altogether  satisfactory,  which 
arises  from  the  circumstance  tluit  courts  of  law  view  policies  of  insur- 
ance in  one  light,  whilst  the  assured  views  them  in  a  totally  different 
light.  Courts  of  law  are  obliged  to  discuss  these  questions  on  the 
principle  that  the  sum  to  be  recovered  is  an  indemnity  for  the  value  of 
the  sliip,  but  persons  who  insure  entertain  an  entirely  different  notion, 
so  that  we  have  to  decide  on  principles  at  variance  with  those  of  the 
parlies  when  the}'  enter  into  tliese  contracts.  It  is  therefore  scarcely 
possible  that  the  decision  of  a  court  of  law  can  be  satisfactory-  to  them. 
If  the  practice  between  the  ship-owner  and  the  underwriter  were  founded 
on  the  principle  alluded  to  by  Lord  Mansfield  in  his  judgment  in  Lewis 
V.  Rucker,  2  Burr.  1167,  1171,  viz.,  "that  the  value  is  fixed  in  such  a 
manner  tliat  the  insured  means  only  to  have  an  indemnity,"  the  matter 
would  be  plain.  But  that  is  not  tlie  mode  in  which  ship-owners  and 
underwriters  do  business.  I  remember  a  case  respecting  a  ship  the 
owner  of  which,  who  was  a  witness,  proved  that  he  had  effected  a  policy 
and  valued  the  ship  upon  a  principle  which  had  no  reference  whatever 
to  its  real  value.  He  had  opened  a  debtor  and  creditor  account  be- 
tween himself  and  the  ship,  and  insured  the  ship  for  the  balance  owing 
to  him.  A  lawyer  would  say  that  a  ship-owner  had  no  right  to  insure 
on  that  principle,  and  that  he  ought  to  value  the  ship  on  the  principle 
stated  by  Lord  Mansfield,  to  whicli  I  have  referred. 

It  seems  to  me  in  this  case  that  the  view  taken  by  my  brother  "Willes 
was  in  accordance  with  authority.  He  considered  that,  by  the  agree- 
ment between  the  assured  and  the  underwriters,  the  value  of  the  ship 
was  to  be  taken  at  £3,200,  and  that  the  plaintiff  w^as  entitled  to  recover 
that  sum  in  respect  of  the  loss  of  the  ship.  He  then  inquired  what 
sum  of  money  the  assured  had  received,  leaving  out  of  consideration 
how  he  got  it,  and  finding  that  he  had  received  £3,126  13i>\  6(7.,  he 
treated  it  as  if  there  had  been  a  salvage  of  the  ship,  and  the  assured 
had  received  that  amount  after  the  ship  was  sold.  He  then  placed  that 
amount  to  the  credit  of  the  underwriter  as  against  the  £3,200,  and  he 
entirely  dismissed  from  his  consideration  what  was  stated  as  the  value 
of  the  ship  in  other  policies  between  the  plaiutitT  and  individuals  to 
whom  the  defendant  was  a  stranger.  According  to  the  best  judgment 
I  can  form  on  the  n)atter,  that  is  the  more  correct  mode  of  estimating 
the  damage.  It  is  in  accordance  with  the  view  taken  by  courts  of  law, 
that  insurance  is  a  contract  of  indemnity  against  the  loss  actually  sus- 
tained. I  am  not  insensible  to  the  observation  that  the  amount  which 
the  assured  is  entitled  to  recover  may  depend  upon  which  policy  he  first 
puts  in  suit;  but,  in  point  of  fact,  each  policy  is  a  separate  contract, 
and  the  assured  must  deal  with  each  underwriter  according  to  his  par- 
ticular contract. 

Chanxell,  B.  I  am  of  the  same  opinion.  The  damages  were  as- 
sessed under  the  direction  of  the  learned  judge;  and  an  application 
is  made  for  a  new  trial  on  the  ground  that  he  misdirected  the  jury  in 


328  BRUCE   V.   JONES.  [CHAP.  VIII. 

stating  his  view  as  to  the  measure  of  damage.  The  broad  question  is 
wliether  the  plaintiff  is  entitled  as  against  the  defendant  to  damages  to 
a  greater  amount  than  he  has  recovered.  If  so,  there  would  be  ground 
for  granting  a  new  trial ;  but,  being  of  opinion  that  the  damages  were 
rightly  assessed,  it  is  unnecessary  to  consider  whether  any  other  mode 
of'assessment  should  be  resorted  to.  The  plaintiff  has  recovered  from 
the  defendant,  not  his  proportion  of  the  £3,200,  the  agreed  value  in  the 
policy,  but  his  proportion  of  the  difference  between  that  sum  and  the 
amount  which  the  plaintiff  received  on  the  three  other  policies.  I  think 
that  is  all  the  plaintiff  is  entitled  to  ;  and  that,  when  the  defendant  is 
sued  for  his  proportion  upon  a  policy  in  which  the  ship  is  valued  at 
£3,200,  that  must  be  taken  as  the  value  of  the  ship  for  the  purpose  of 
his  liability  ;  and  the  question  is  how  far  that  is  lessened  by  the  sums 
received  on  other  policies.  I  agree  that  some  inconvenience  may  result 
from  the  rule  now  laid  down,  and  it  is  not  satisfactory  to  find  that,  if 
the  order  of  suing  on  the  policies  had  been  inverted,  a  different  amount 
would  have  been  recovered.  But  I  think  that  is  in  a  great  degree 
attributable  to  the  character  of  these  insurances,  as  explained  by  ray 
brother  Martin  ;  and  that,  at  all  events,  as  the  plaintiff  has  effected  an 
insurance  in  which  his  ship  is  valued  at  £3,200,  we  must  abide  by  the 
rule  of  law  that,  for  the  purpose  of  estimating  the  liability  of  the  de- 
fendant, that  amount  must  be  taken  as  fixed  by  the  policy. 

Hule  discharged.^ 

^  Other  cases  of  inconsistent  valuations  are:  Kenny  v.  Clarkson,  1  Johns.  385  (1806) ; 
Murray  v.  Ins.  Co.  of  Pennsylvania,  2  Wash.  C.  C.  186  (1808) ;  Watson  v.  Ins.  Co.  of 
North  America,  3  Wash.  C.  C.  1  (1811).  — Ed. 


SECT.  lJ  HAMILTON   V.   MENDES.  829 


SECTION   I.   (continued). 
(C)  Total  Losses,  Actual  and  Constructive. 

HAMILTON  V.  MENDES. 
King's  Bench,  17G1.     2  Burr.  1198.^ 

This  was  a  special  case  reserved  at  Guildhall,  at  the  Sittings  there 
before  Lord  Mansfield,  after  Michaelmas  Term,  1760,  in  an  action 
brought  against  the  defendant,  as  one  of  the  insurers,  upon  a  policy  of 
insurance  from  Virginia  or  Maryland  to  London,  of  a  ship  called  the 
"  Selby,"  and  of  goods  and  merchandise  therein,  until  she  shall  have 
moored  at  anchor  twenty-four  hours  in  good  safety. 

The  case  stated  for  the  opinion  of  the  court  was  as  follows :  — 

Tiiat  the  shi[)  "  Selby,"'  mentioned  in  the  policy,  being  valued  at 
£l,2U0,  and  the  plaintiff  having  interest  therein,  caused  the  policy  in 
question  to  be  made  ;  and  the  same  was  accordingh'  made,  in  the  name 
of  John  Mackintosh,  on  behalf  and  for  the  use  and  benefit  of  the  plain- 
tiff, and  which  was  subscribed  by  the  defendant,  for  the  sum  of  £100. 

That  the  ship  being  of  the  burthen  of  two  hundred  tons,  was,  on  the 
28th  of  March,  17G0,  in  good  safety  at  Virginia,  wliere  she  took  on 
board  192  hogsheads  of  tobacco,  to  be  delivered  at  London. 

Tliat  on  the  said  28th  day  of  ^March,  she  departed  and  set  sail  from 
Virginia  for  London  ;  and  on  the  6th  day  of  May  following,  as  she  was 
sailing  and  proceeding  in  her  said  voyage,  was  taken  by  a  French 
privateer  called  the  "  Aurora,"  of  Bayonne,  Captain  Jean  Plena  Lesea 
commander,  who,  with  his  compau}',  were  subjects  of  the  French  king, 
then  being  at  war  with  our  lord  King  George  the  Second. 

That  at  the  time  of  the  capture  the  ''  Selb}'  "  had  nine  men  on  board, 
and  the  captain  of  the  said  privateer  took  out  six,  besides  the  captain, 
Dorsdill,  leaving  only  the  mate  and  one  man  on  board. 

That  the  French  put  a  prize-master  and  several  men  on  board  the 
said  ship  "  Selby,"  to  carry  her  to  France. 

That  as  the  French  were  carrying  the  said  ship  "Selby"  towards 
France,  on  the  2.3d  day  of  the  said  Ma\-,  she  was  retaken  off  Bayonne, 
b}'  the  "  Southampton,"  an  English  man-of-war,  commanded  bj'  Cap- 
tain Antrobus,  who  sent  her  into  Plymouth,  where  she  arrived  the  6th 
day  of  .June  following. 

That  the  plaintiff  living  at  Hull,  as  soon  as  he  was  informed  what 
had  befallen  his  said  ship  the  "  Selby,"  wrote  a  letter,  on  the  23d  day 
of  June,  to  his  agent,  Jolin  ^Mackintosh,  living  in  London,  to  acquaint 
the  defendant,  "  That  the  plaintiff  did  from  thenceforth  abandon  to 

1  6.  c,  sub  nom.  Hamilton  v.  Mendez,  1  W.  BL  276.  —  Ed. 


330  HAMILTON   V.   MENDES.  [CHAP.  VIII. 

him  his  interest  in  the  said  ship,  as  to  the  said  £100  by  the  defendant 
insured." 

That  the  said  John  Mackintosh,  on  the  26th  day  of  the  said  June, 
acquainted  the  defendant  with  an  offer  to  abandon  the  ship  ;  to  which 
the  defendant  said,  "He  did  not  think  himself  bound  to  take  to  the 
ship  ;  but  was  ready  to  pay  the  salvage  and  all  other  losses  and  charges 
that  the  plaintiff  sustained  by  the  capture." 

That  upon  the  19th  day  of  August  the  said  ship  "Selby"  was 
brought  into  the  port  of  London,  by  the  order  of  the  owners  of  tlie 
cargo  and  the  re-captors. 

That  the  said  ship  "  Selby  "  sustained  no  damage  from  the  capture. 

That  the  whole  cargo  of  the  said  ship  "Selby  "  was  delivered  to  tlie 
freighters  at  the  port  of  London,  who  paid  the  freight  to  Benjamin 
Vaughan,  withcnit  prejudice. 

The  question  tlierefore  submitted  to  the  opinion  of  the  court  in  this 
case  is,  "Whether  the  plaintiff,  on  the  said  26th  day  of  June,  had  a 
right  to  abandon,  and  hath  a  right  to  recover  as  for  a  total  los^"  If 
he  is  entitled  to  recover  for  a  total  loss,  then  tlie  jury  find  a"verdict  for 
the  plaintiff,  damages  £98,  costs  iOs.  But  if  the  court  shall  be  of 
opinion  that  he  had  no  right  to  abandon  on  the  said  26th  day  of  June, 
or  he  ought  only  to  recover  an  average  loss,  then  the  jury  find  a  ver- 
dict for  the  plaintiff,  damages  £10,  costs  40*\ 

Mr.  Morton  and  Mr.  Norton,  for  the  plaintiff. 

Mr.  Aston  and  Mr.  Gould,  for  the  defendant. 

Cur.  adv. 

Lord  jNIansfield  now  delivered  the  resolution  of  the  court,  having 
first  stated  the  case,  as  settled  at  nisi  prius. 

The  plaintiff  has  averred  in  his  declaration,  as  the  basis  of  his  de- 
mand for  a  total  loss,  "  that  by  the  capture  the  ship  became  wholly 
lost  to  him." 

The  general  question  is,  AVhether  the  plaintiff,  who  at  the  time  of  his 
action  l)rought,  at  the  time  of  his  offer  to  abandon,  and  at  the  time  he 
was  first  apprised  of  any  accident  having  happened,  had  only,  in  truth, 
sustained  an  average  loss,  ought  to  recover  for  a  total  one  ? 

In  support  of  the  affirmative,  the  counsel  for  the  plaintiff  insisted 
upon  the  four  following  points:  — 

1st.  That  by  this  capture  the  property  was  changed,  and  therefore 
the  loss  total  forever. 

2dly.  If  the  property  was  not  changed,  yet  the  capture  was  a  total 
loss. 

3dly.  That  when  the  ship  was  brought  into  Plymouth,  particularly 
on  the  26th  of  June,  the  recovery  was  not  such  as,  in  truth,  changed 
the  totality  of  the  loss  into  an  average. 

4thly.  Supposing  it  did,  yet,  the  loss  having  once  been  total,  a  right 
vested  in  the  insured  to  recover  the  whole  upon  abandoning ;  which 
right  could  never  afterwards  be  devested  or  taken  from  him  by  any 
subsequent  event. 


SECT.  I.]  HAMILTON    V.    MENDES.  831 

As  to  the  first  point,  If  the  change  of  propert}-  was  at  all  material  as 
between  the  insurer  and  insured,  it  would  not  be  applicable  to  the 
present  case,  because,  by  the  marine  law  received  and  practised  iu 
England,  there  is  no  change  of  property,  in  case  of  a  capture,  before 
condemnation  ;  and  now,  by  tlie  act  of  Parliament,  in  case  of  a  recap- 
ture, ihejiis  postli)ni/ni  continues  forever.^ 

I  know,  many  writers  argue,  between  the  insurer  and  insured,  from 
the  distinction,  "  whether  the  property  was  or  was  not  changed  bv  the 
capture,  so  as  to  transfer  a  complete  right  from  the  enemy  to  a  recap- 
tor  or  neutral  vendee,  against  the  former  owner."  But  arbitrary 
notions  concerning  the  change  of  property  by  a  capture,  as  between 
the  former  owner  and  a  re-captor  or  vendee,  ought  never  to  be  the  rule 
of  decision,  as  between  the  insurer  and  insured  upon  a  contract  of 
indemnity,  contrary  to  the  real  truth  of  the  fact.  And  therefore  1  agree 
with  the  counsel  for  the  plaintiff,  upon  their  second  point,  "that  by 
this  capture,  while  it  continued,  the  ship  was  totally  lost,"  though  it  be 
admitted,  ''that  the  property,  in  case  of  a  recapture,  never  was 
changed,   but  returned  to  the  former  owner." 

The  third  point  depends,  as  every  question  of  this  kind  must,  upon 
the  particular  circumstances.  It  does  not  necessarily  follow  that,  be- 
cause there  is  a  recapture,  therefore  the  loss  ceases  to  be  total.^  .  .  . 

Therefore  it  is  most  clear  that  upon  the  2Cth  of  June,  the  ship  had 
sustained  no  other  loss  by  reason  of  the  capture  than  a  short  temporary 
obstruction,  and  a  charge  which  the  defendant  had  offered  to  pay  and 
satisf}-. 

This  brings  the  whole  to  the  fourth  and  last  point. 

The  plaintiffs  demand  is  for  an  indemnity.  His  action,  then,  must 
be  founded  upon  the  nature  of  his  damnification,  as  it  really  is,  at  the 
time  the  action  is  brought.  It  is  repugnant,  upon  a  contract  of  indem- 
nity, to  recover  as  for  a  total  loss,  when  the  final  event  has  decided  that 
the  damnification,  in  truth,  is  an  average,  or  perhaps  no  loss  at  all. 

^Yhatever  undoes  the  damnification,  in  whole  or  in  part,  must  operate 
upon  the  indemnity  in  the  same  degree.  It  is  a  contradiction  in  terms 
to  bring  an  action  for  indemnity,  when,  upon  the  whole  event,  no  dam- 
age has  been  sustained.  This  reasoning  is  so  much  founded  in  sense 
and  the  nature  of  the  thing  that  the  common  law  of  England  adopts 
it  rthnugh  inclined  to  strictness).  The  tenant  is  obliged  to  indemnify 
liis  landlord  from  waste  ;  but  if  the  tenant  do,  or  suffier  waste  to  be 
done,  in  houses,  yet  if  he  repair  before  any  action  brought,  there  lies 
no  action  of  waste  against  him  ;  ^  but  he  cannot  plead  7ion  fecit  vas- 
tum^  but  the  special  matter.  The  special  matter  shows  that  the  injur}- 
being  repaired  before  the  action  brought,  the  plaintiff  had  no  cause  of 
action,  and  whatever  takes  away  the  cause  takes  away  the  action. 

Suppose  a  surety  sued  to  judgment,  and  afterwards,  before  an  action 

1  29  G.  II.  c.  34,  s.  24.  — Rep. 

2  The  discussion  of  this  point  has  been  omitted.  —  Ed. 
8  Co.  Lit.  53  a.  —  Rep. 


g32  HAMILTON   V.    MENDES.  [CHAP.  VIII. 

brought,  the  principal  pays  the  debt  and  costs,  and  procures  satisfaction 
to  be  acknowledged  upon  record  ;  the  surety  can  have  no  action  for 
indemnity,  because  he  is  indemnified  before  any  action  brought.  If 
the  demand,  or  cause  of  action,  does  not  subsist  at  the  time  the  action 
is  brou^^ht,  the  having  existed  at  any  former  time  can  be  of  no  avail. 

But  hi  the  present  case,  the  notion  of  a  "  vested  right  in  the  plaintiff 
to  sue  as  for  a  total  loss  before  the  re-capture,"  is  fictitious  only,  and 
not  founded  in  truth  ;  for  the  insured  is  not  obliged  to  abandon,  in  any 
case  :  he  has  an  election.  No  right  can  vest  as  for  a  total  loss  till  he 
has  made  that  election.  He  cannot  elect  before  advice  is  received  of 
the  loss  ;  and  if  that  advice  shows  the  peril  to  be  over,  and  the  thing 
in  safety,  he  cannot  elect  at  all ;  because  he  has  no  riglit  to  abandon 
when  the  thing  is  safe. 

Writers  upon  the  marine  law  are  apt  to  embarrass  general  principles 
with  the  positive  regulations  of  their  own  country  ;  but  they  seem  all  to 
agree  "  that  if  tlie  thing  is  recovered  before  the  money  paid,  the  in- 
sured can  only  be  entitled  according  to  the  final  event."  ^  .  .   . 

The  present  attempt  is  tlie  first  that  ever  was  made  to  charge  the 
insurer  as  for  a  total  loss  upon  an  interest  policy  after  the  thing  was 
recovered.  ... 

But  without  dwelling  longer  upon  principles  or  authorities,  the  con- 
sequences of  the  present  question  are  decisive.  It  is  impossible  that 
any  man  should  desire  to  abandon  in  a  case  circumstanced  like  the 
present  but  for  one  of  two  reasons,  viz.,  either  because  he  has  over- 
valued, or  because  the  market  has  fallen  below  the  original  price. 
The  only  reasons  which  can  make  it  the  interest  of  the  party  to  desire, 
are  conclusive  against  allowing  it. 

It  is  unjust  to  turn  the  fall  of  the  market  upon  the  insurer,  who  has 
no  concern  in  it,  and  who  could  never  gain  l)y  the  rise.  And  an  over- 
valuation is  contrary  to  the  general  policy  of  the  marine  law,  contrary 
to  the  spirit  of  the  Act  of  19  G.  II.,  a  temptation  to  fraud,  and  a  source 
of  o-reat  abuse  ;  therefore  no  man  should  be  allowed  to  avail  himself  of 
having  over-valued. 

If  the  valuation  be  true  the  plaintiff  is  indemnified  by  being  paid  the 
charge  he  has  been  put  to  by  the  capture.  If  he  has  over-valued,  he 
will  be  a  gainer  if  he  is  permitted  to  abandon  ;  and  he  can  only  desire 
it  because  he  lias  over-valued.  This  was  avowed  upon  the  first  argu- 
ment, and  that  very  reason  is  conclusive  against  its  being  allowed. 

The  insurer,  by  the  maritime  law,  ought  never  to  pay  less  npon  a 
contract  of  indemnity  than  the  value  of  the  loss,  and  the  insured 
ought  never  to  gain  more.  Therefore  if  there  was  occasion  to  resort 
to  that  argument  the  consequence  of  the  determination  would  alone  be 
sufficient  upon  the  present  occasion. 

But,  upon  principles,  this  action  could  not  be  maintained  as  for  a 
total  loss,  if  the  question  was  to  be  judged  by  the  strictest  rules  of 

1  Here,  and  in  subsequent  parts  of  the  opinion,  the  discussion  of  the  authorities  has 
been  omitted.  —  Ed. 


SECT.  I.]  HAMILTON   V.    MENDES.  833 

common  law ;  much  less  can  it  be  supported  for  a  total  loss,  as  the 
question  ought  to  be  decided,  b}-  the  large  principles  of  the  marine  law, 
according  to  the  substantial  intent  of  the  contract  and  the  real  truth  of 
the  fact. 

The  dailj-  negotiations  and  property  of  merchants  ought  not  to  de- 
pend upon  subtleties  and  niceties,  but  upon  rules,  easih'  learned  and 
easil}-  retained,  because  they  are  the  dictates  of  common  sense,  drawn 
from  the  truth  of  the  case. 

If  the  question  is  to  depend  upon  the  fact,  ever^'  man  can  judge  of 
the  nature  of  the  loss  before  the  mone}'  is  paid  ;  but  if  it  is  to  depend 
upon  speculative  refinements,  from  the  law  of  nations,  or  the  Roman 
Jiis  postliminii  concerning  the  change  or  revesting  of  propert}-,  no 
wonder  merchants  are  in  the  dark,  when  doctors  have  differed  upon  the 
subject  from  the  beginning,  and  arc  not  yet  agreed. 

To  obviate  too  large  an  inference  being  drawn  from  this  determina- 
tion I  desire  it  may  be  understood  that  the  point  here  determined  is, 
"  That  the  plaintiff,  upon  a  policy,  can  only  recover  an  indemnity  ac- 
cording to  the  nature  of  his  case  at  the  time  of  the  action  brought,  or 
(at  most)  at  the  time  of  his  offer  to  abandon." 

We  give  no  opinion  how  it  would  be  in  case  the  ship  or  goods  be  re- 
stored in  safety,  between  the  offer  to  abandon  and  the  action  brought; 
or  between  the  commencement  of  the  action  and  the  verdict.  And 
particularly  I  desire  that  no  inference  may  be  drawn,  "  that  in  case  the 
ship  or  goods  should  be  restored  after  the  monej-  paid  as  for  a  total 
loss,  the  insurer  could  compel  the  insured  to  refund  the  money  and 
take  tiie  ship  or  goods."  That  case  is  totally  different  from  the  present, 
and  depends,  throughout,  upon  different  reasons  and  principles. 

Here  the  event  had  fixed  the  loss  to  be  an  average  only,  before  the 
action  brought,  before  the  offer  to  abandon,  and  before  the  plaintiff 
had  notice  of  any  accident,  consequently  before  he  could  make  an 
election. 

Therefore,  under  these  circumstances,  we  are  of  opinion  "  that  he 
cannot  recover  for  a  total,  but  for  an  average  loss  only  ;  "  the  quantity 
of  which  is  estimated  and  ascertained  by  the  jury. 

The  judgment  must  be  entered  up  as  for  the  average  loss 
stated  in  the  case} 

1  See  Baiubridge  v.  Neilson,  10  East,  329  (1808) ;  Buys  v.  Royal  Exchange  Assur. 
Corp.,  [1897]  2  Q.  B.  135.— Ed. 


53 


834 


GARDINER   V.   SMITH.  [CHAP.  VIII. 


GARDINER  akd   Others  v.    SMITH. 
Supreme  Court  of  New  York,  1799,     1  Johns.  Cas.  141. 

This  was  an  action  on  a  policy  of  insurance  on  goods  "at  and  from 
New  York  to  any  port  or  ports  in  Jamaica,  and  twenty-four  liours  after 
the  goods,  as  named  in  the  margin,  are  landed  in  Jamaica."  Tlie 
policy  was  against  the  usual  risks,  and  also  against  tlie  risk  of  contra- 
band and  illicit  trade. 

The  plaintiff  declared  for  a  total  loss  by  seizure  for  illicit  trade.     On 
the  trial  before  Mr.  Justice  Radcliff,  at  the  last  March  circuit  in  the 
city  of  New  York,  it  appeared  that  the  goods  as  mentioned  in  the  mar- 
gin of  the  policy,  were  duly  shipped  on  the  voyage  insured  ;  that  they 
consisted  partly  of  dry  goods  which  were  illicit  by  the  laws  of  Jamaica, 
and  partly  of  lumber  and  provisions  which  were  not  illicit ;  that  the 
vessel  and  goods  arrived  at  Kingston  in  Jamaica,  on  the  12th  October; 
that  the  vessel  T,-as  duly  entered,  and  on  tlie  Uth  of  October  began 
to  discharo-e  her  cargo.     On  that  day  she  put  on  shore  her  deck  lad- 
ing, and  on  the  day  following  she  discharged  part  of  the  cargo  from 
the  hold ;  the  next  day  being  Sunday,  nothing  was  done,  but  early  in 
the  succeeding  day,  to  wit,  the  17th  of  October,  while  proceeding  in  the 
further  discharge  of  the  cargo,  the  vessel  and  the  remaining  goods  on 
board,  the  quantity  of  which  was  unknown,  were  seized  by  the  custom- 
house officers  of  the  port ;  the  greater  part  of  the  dry  goods  had  been 
landed,  and  some  of  them  which  had  been  so  landed  were  put  into  a 
store,  and  were  also  seized,  but  part  of  them  had  been  on  shore  for 
twenty-four  hours.     Of  the  above-mentioned  goods,  there  were  after- 
wards libelled  in  the  Court  of  Admiralty  at  Jamaica,  as  having  become 
forfeited,  5,000  pieces  of  nankeen,  55  pieces  of  linen,  and  74  pieces  of 
painted  cloth,  and  upon  computation  iUlDPeared_IliatJli£^^^lue  of  the 
nrhiflog  s?vvpd_was  less  than  half  the  amount  insured.     The  libel  was 
also  given  in  evidence,  but  no  sentence  of  condemnation  was  produced. 
The  plaintiff  on  receiving  n'otice  of  the  loss,  which  was  accompanied 
with  information  of  the  articles  saved,  consisting  of  lumber,  provisions, 
and  some  of  the  dry  goods,  abandoned  to  the  underwriters,  and  offered 
the  usual  proof  of  loss  and  interest.     The  consignee  of  the  goods  sold 
those  which  were  reported  to  be  saved,  and  rendered  to  the  plaintiff  an 
account  of  sales  which,  however,  did  not  comprise  as  many  goods  as 
would  be  equal  to  the  difference  between  those  shipped  and  the  articles 
specified  in  the  libel.     The  consignee  afterwards  sent  to  New  York  a 
quantity  of  rum  and  sugar  towards  the  payment  of  the  balance  of  his 
account,   which  was  partly  composed  of  the  proceeds  of  the  articles 
saved.     On  the  arrival  of  the  rum  and  sugar,  the  plaintiff  offered  to 
the  underwriters,  rum  at  the  first  cost  and  charges,  equal  to  the  amount 
of  the  proceeds  of  the  goods  saved,  which  they  refused  to  accept,  and 
the  rum  was  afterwards  sold  by  the  plaintiff  and  sustained  a  loss. 


SECT.  I.]  GARDINER    V.    SMITH.  835 

The  judge  directed  the  jury,  that  by  the  true  construction  of  the 
polic}',  the  risk  continued  upon  all  the  goods  insured  until  twenty-four 
hours  after  the}-  were  all  landed  ;  and  informed  them  that  in  his  opinion 
the  plaintiffs  were  entitled  to  recover  as  for  a  total  loss. 

The  jury  found  accordingly,  for  the  plaintiffs  for  a  total  loss,  credit-  • 
jng  the  underwriters  for  the  proceeds  of  the  articles  saved  according 
to  the  account  of  sales,  and  debiting  them  for  the  loss-  on  the  rum.  It 
was  agreed  by  the  parties,  that  if  the  court  should  be  of  opinion  that 
the  adjustment  for  a  total  loss  was  right,  and  the  debit  for  the  loss  of 
the  rum  was  wrong,  then  the  debit  should  be  deducted  proportionably 
from  the  amount  of  the  verdict. 

On  the  part  of  the  defendant  three  points  were  made  :  — 

1.  "Whether  the  policy  ought  to  be  construed  to  protect  all  the  goods 
until  all  of  them  were  landed. 

2.  Whether  the  plaintiffs  were  entitled  to  recover  for  a  total  or  a 
partial  loss. 

3.  Whether  the  loss  on  the  remittance  of  the  rum  and  sugar  was 
chargeable  to  the  defendants. 

Marison^  for  the  plaintiffs. 

B.  Livinf/stoiu  for  the  defendant. 

Lansing,  C.  J.  This  was  a  voyage  undertaken  expressh-  for  the 
purpose  of  illicit  trade  in  a  foreign  countr}-.  A  polic}'  on  such  a  voyage 
against  our  own  laws  would  be  void,  but  we  are  not  bound  to  declare 
it  void  when  merely  contravening  the  positive  regulations  of  another 
state.  On  account  of  the  nature  of  the  voyage,  tlie  insurance  in  point 
of  time,  was  extended  to  twenty-four  hours  aftei'  the  goods  should  be 
landed.  A  protection  against  the  risk  of  seizure  until  the}'  should  be 
so  landed,  was  a  direct  and  important  stipulation  in  the  contract,  and 
the  insurance  being  entire,  we  are  of  opinion  that  the  risk  continued 
on  the  entire  goods  until  twenty-four  hours  after  all  of  them  were 
landed.  This  is  the  correct  sense  of  the  terms  of  the  policy,  and  it 
would  be  inconvenient  to  admit  a  different  construction.  The  risk 
cannot  reasonably  be  divided  and  applied  to  separate  parcels.  It 
would  be  difficult  if  not  impossible,  under  the  usual  circumstances  of 
such  a  voyage,  to  descend  to  the  minute  details  which  would  be  requi- 
site, and  to  distinguish  the  precise  time  of  landing  each  article. 

As  to  the  second  question,  it  is  admitted  that,  by  ajgomputation,  the 
accurac}'  of  whijih  is  not  denieil,  the  v,alue_ja£tlie^goods  saved  didjiot 
amount  to  half  the  value  insured.  The  loss  was^therefore  totaU  accordj^ 
ing  to  the  rulejvhich  has  been  established  where  a  moiety  is  lost.  The 
pTaintiffs  having  abandoned,  are  therefore  entitled  to  recover  for  a 
total  loss. 

The  last  point  respects  the  conduct  of  the  consignee.  After  the 
abandonment  he  became  the  agent  of  the  assurer,  and  the  disposition 
of  the  goods  saved  as  made  b\'  him,  while  he  acted  bona  fide,  ought  to 
be  at  the  risk  and  for  the  benefit  of  the  assurer.  The  loss  on  the  sugar 
and  rum,  in  which  the  proceeds  of  the  property  saved  were  invested, 


836 


DUTILH   V.   GATLIFF.  [CIIAP.  VIII. 


oucrht  therefore,  to  be  charged  to  the  defendant.  The  plaintiffs,  on  the 
arrival  of  these  articles,  tendered  to  the  defendant  the  rum  only,  but  it 
appears  that  the  rum  and  sugar  were  part  of  a  mixed  cargo,  which  was 
the  product  of  different  funds,  and  difficult  to  be  distinguislied  ;  tliat 
the  suc^ar  was  not  withheld  from  an  improper  motive,  but  omitted  to  be 
tendered  tli rough  mistake,  and  that  the  assurer  wholly  declined  having 
anything  to  do°vith  the  shipment.  Under  such  circumstances  attend- 
incr  a  commercial  transaction,  and  considering  tliat  the  defendant 
refused  to  accept  any  part  of  the  shipment,  I  think  the  strictness  of 
a  comi)lete  tender  may  well  be  dispensed  with,  and  that  the  plaintiff  is 
entitled  to  judgment  on  the  verdict  generally. 

The  other  judges  concurred,  except  on  the  last  point,  as  to  which 
they  were  of  opinion  that  the  defendant  was  entitled  to  a  deduction 
for"  a  proportional  part  of  the  rum  and  sugar,  by  a  calculation  to  be 
made  on  the  product  of  the  whole  cargo. 

Judgment  for  the  plaintiffs  accordingly.^ 


DUTILH  V.  GATLIFF. 
Supreme  Court  of  Pennsylvania,  1806.     4  Dall.  446. 

The  following  case  was  stated  for  the  opinion  of  the  court :  — 

"Case.  On  the  24th  of  September,  1799,  the  defendant,  Samuel 
Gatliff,  underwrote  seven  hundred  and  fifty  dollars  upon  a  policy  of 
insurance  on  the  schooner  '  Little  Will,'  belonging  to  John  Dutilh  and 
Thomas  Lillibridge,  for  whom  the  plaintiff  was  agent,  on  a  voyage  at 
and  from  Philadelphia  to  Havanna. 

"On  the  26th  of  September,  1799,  the  'Little  Will'  sailed  on  her 
voyage  from  Philadelphia  for  Havanna,  and  on  the  8th  day  of  October 
following  she  was  captured  by  three  British  privateers,  and  carried  into 
the  port  of  Nassau,  New  Providence,  where  she  arrived  on  the  13th  of 
tlie  same  month. 

"  Upon  her  arrival  in  Nassau  the  said  schooner  was  libelled  in  the 
Admiralty  Court,  and  on  the  9th  day  of  November  following  was  regu- 
larly acquitted  ;  and  in  the  whole  she  remained  thirty-seven  days  at  Nas- 
sau, during  thirty-five  of  which  she  was  in  custody  of  the  captors ;  but 
the  fact  of  her  acquittal  was  not  known  to  the  plaintiff  until  subsequent 
to  the  abandonment  hereafter  mentioned,  although  it  was  known  to  John 
Dutilh,  one  of  the  owners,  and  supercargo,  who  was  with  her  at  Nassau. 

*  On  the  American  fifty  per  cent  rule,  see  also  Ludlow  v.  Columbian  Ins.  Co., 
1  Johns.  335  (ISOR);  Vandenheuvel  y.  United  Ins.  Co,l  Johns.  406  (1806);  Wood 
V.  Lincoln  and  Kennebeck  Ins.  Co.,  6  Mass.  479  (1810);  Ralston  v.  Union  Ins.  Co., 
4  Binn.  386  (1812);  Marcardier  v.  Chesapeake  Ins.  Co.,  8  Cranch,  39  (1814) ;  Peters 
r.  Phoenix  Ins.  Co.,  3  S.  &  R.  25  (1817);  Peele  v.  Merchants  Ins.  Co.,  3  Ma.son,  27, 
58-62,  69-70  (1822) ;  Debloia  v.  Ocean  Ins.  Co.,  16  Pick.  303,  309-310  (1835).  — Ed. 


SECT.  I.]  DUTILH    V.    GATLIFF.  837 

"  On  the  13th  day  of  November  the  plaintiff  wrote  the  letter  of  aban- 
donment, enclosing  the  papers  therein  referred  to,  which  was  received 
by  the  defendant  the  same  da}'. 

"On  the  20th  November  the  said  schooner  sailed  from  Nassau  for 
Havanna,  where  she  arrived  on  the  21st  of  the  same  month,  and  sold 
her  cargo,  except  three  boxes  plundered  at  New  Providence.  After- 
wards the  said  schooner  sailed  from  Havanna  for  Philadelphia,  where 
she  arrived  on  the  26th  or  27th  of  February,  in  the  year  1800,  with  a 
cargo  of  sugars,  on  which  freight  became  due  and  was  received  by 
Stephen  Diitilh,  for  the  benefit  of  those  who  were  entitled  to  it.  Each 
party  refusing  to  accept  the  schooner,  she  was  sold  for  wharfage,  and 
the  whole  proceeds  of  sale  applied  to  the  payment  thereof. 

"The  schooner  'Little  Will'   was  American  property,  as  warranted. 

"  The -question  for  the  court  is,  whether  the  plaintiff  is  entitled  to 
recover  as  for  a  tofal  loss  ? 

"  If  the  court  shall  be  of  opinion  that  the  loss  was  total,  then  it  shall 
be  referred,  in  the  usual  form,  to  three  persons,  to  be  appointed  by  the 
court,  to  ascertain  what  is  due,  after  the  legal  and  just  deductions. 

"  If  the  court  shall  be  of  opinion  it  was  not  a  total  loss,  it  shall,  in 
like  manner,  be  referred  to  three  referees,  or  any  two  of  them,  to  be  ap- 
pointed b}'  the  court,  to  ascertain  the  partial  loss  to  which  the  defendant 
is  liable. 

"J.  InfjersoU,  for  the  plaintiff. 
"  TF.  Lewis ^  for  the  defendant." 

After  argument,  the  chief  justice  delivered  the  unanimous  opinion  of 
the  court. 

TiLGHMAN,  chief  justice.  On  the  case  stated,  the  question  submitted 
to  the  court  is,  whether  the  plaintiff  is  entitled  to  recover  for  a  total 
loss  ? 

In  resolving  this  question  I  shall  divide  it  into  two  points. 

1st.  Did  there  ever  exist  a  total  loss  ? 

2d.  Supposing  that  there  once  existed  a  total  loss,  has  any  circum- 
stance occurred  which  excludes  the  plaintiff  from  recovering  for  more 
than  a  pm-tial  loss  ? 

1st.  The  case  before  us  includes  one  of  tlie  risks  expressly  mentioned 
in  the  policy,  a  taking  at  sea.  But  it  has  been  objected  that  this  taking 
was  not  by  an  enemy  ;  and  that  when  a  belligerent  takes  a  neutral,  it 
is  to  be  presumed  that  the  taking  is  only  for  the  purpose  of  searching 
for  the  property  of  his  enemy,  or  goods  contraband  of  war  ;  and  that 
in  the  end  justice  will  be  done  to  the  neutral.  To  a  certain  extent  there 
is  weight  in  this  distinction  ;  but  it  must  not  be  carried  too  far.  At 
the  time  when  the  capture  in  question  was  made  the  United  States 
acknowledged  the  right  of  the  British  to  detain  their  vessels  for  the 
purpose  of  a  reasonable  search.  The  bare  taking  of  the  vessel,  there- 
fore, could  by  no  means  constitute  a  loss ;  and  if  under  suspicious  cir- 
cumstances she  shortld  be  carried  into  port,  to  afford  an  opportunity  for 
a  complete  investigation,  perhaps,  even  that  ought  not  of  itself  to  be 


838  DUTILH   V.    GATLIFF.  [CHAP.  VIII. 

considered  as  a  total  loss.  On  this,  however,  I  give  no  opinion.  But 
when  the  captor,  having  carried  the  vesseHntQ_port.  and  completed  the 
examination  of  the  cargo  and  paj^ers,  instead  of  jdisch^rgingJier;J2]P- 
ceeds  to  libeTlier  as  pHze^J JhLiik_theToss IT^m plete.  The  property 
is  no  longer  subject  to  the  command  of  the  owner,  and  it  is  unreason- 
able that  he  should  wait  the  event  of  judicial  proceedings,  which  may 
continue  for  years.  The  case  of  an  embargo  is  less  strong ;  because, 
there  the  confiscation  of  the  property  is  not  intended,  and  a  temporary 
interruption  of  the  voyage  is  all  that  in  general  is  to  be  apprehended. 
Yet  the  assured  is  not  obliged  to  wait  the  result,  but  may  abandon  im- 
mediately on  receipt  of  intelligence  of  the  embargo.  Not  many  judicial 
decisions  have  been  produced  on  the  point  in  question.  Where  prin- 
ciples are  strong  it  is  sufficient  that  there  have  been  no  decisions  to  the 
contrary.  It  appears,  however,  that  in  the  State  of  New  York  the  pre- 
cise point  has  been  determined.  In  the  case  of  Mumford  v.  Church, 
decided  in  the  Supreme  Court  of  New  York,  July  term,  1799,  the 
assured  recovered  for  a  total  loss,  where  there  was  a  capture,  carrying 
into  port,  and  libelling  by  a  British  captor,  although  after  the  abandon- 
ment the  property  was  restored.  It  is  necessary  that  some  general  rule 
should  be  estabhshed,  some  line  drawn,  by  which  the  assured  may 
know  at  what  time  he  has  a  right  to  abandon.  In  most  cases  the  voyage 
is  extremely  injured  by  proceedings  in  the  Court  of  Admiralty,  and 
the  event  is  doubtful.  For  it  cannot  be  denied  that  of  late  years  sucli 
extraordinary  occurrences  have  taken  place  in  war  and  politics  as  have 
very  much  affected  the  principles  and  practice  of  foreign  Courts  of 
Admiralty.  Whatever  may  be  said  of  the  law  of  nature  and  nations, 
and  the  immutable  principles  of  justice,  we  see  ver}-  plainly  that  the 
courts  obey  the  will  of  the  sovereign  power  of  their  country  ;  and  this 
will  fluctuates  with  the  circumstances  of  the  times.  I  am,  therefore,  of 
opinion  that,  both  by  the  words  and  spirit  of  a  policy  of  insurance,  the 
assured  may  abandon  when  he  receives  intelligence  of  the  libelling  of 
his  vessel. 

2d.  This  brings  me  to  the  consideration  of  the  second  point.  Has 
any  circumstance  occurred  which  limits  the  plaintiff  to  a  recover}'  for 
onl}'  a  partial  loss  ? 

It  is  contended  that  such  an  event  has  occurred  ;  that  the  vessel  was 
acquitted  by  the  decree  of  the  Court  of  Admiralty  ;  that  after  acquittal 
she  proceeded  on  her  voyage,  and  that  one  of  the  owners  was  on  the 
spot,  and  knew  of  the  acquittal.  I  do  not  think  there  is  much  weight 
in  the  circumstance  of  one  of  the  owners  being  on  the  spot ;  because 
the  general  agent  of  all  the  owners  was  in  Philadelphia.  This  general 
agent  effected  the  insurance,  and  conducted  all  the  business  with  the 
iindr-rwriters,  and  the  owner,  who  was  in  New  Providence,  gave  him 
intelligence  of  what  occurred  from  time  to  time,  and  by  no  means  in- 
tended, from  anything  that  appears,  to  restrain  him  from  making  an 
abandonment.  It  is  true  that  the  vessel  proceeded  on  her  voyage  after 
Bhe  was  restored  ;  but  it  is  not  stated,  nor  can  the  court  presume,  that 


SECT.  I.]  DUTILH    V.    GATLIFF.  839 

any  of  the  owners  acted  in  a  manner  inconsistent  with  the  abandon- 
ment  made  b}'  their  agent.  It  was  proper,  at  all  events,  to  pursue  the 
voj-age  for  the  benefit  of  whoever  might  be  interested  in  it.  This  is 
the  usual  practice,  and  a  practice  authorized  by  tlie  polic}',  and  very 
much  for  the  advantage  of  the  underwriters. 

The  only  difficulty  in  the  case  before  the  court  arises  from  this  cir- 
cumstance, that  before  the  action  was  brought  the  vessel  was  restored, 
and  even  at  the  time  of  the  abandonment  there  was  a  decree  of  acquittal, 
although  restitution  does  not  appear  to  have  been  actually  made  till 
some  days  after.  The  counsel  for  the  defendant  have  i-elied  much  on 
the  opinion  of  Lord  Mansfield  in  the  case  of  Hamilton  v.  Mendez,  to 
establish  this  principle,  that  a  policy  of  insurance,  being  in  its  nature  a 
contract  of  indemnity,  the  plaintiff  can  recover  no  more  than  the 
amount  of  his  actual  loss  at  the  commencement  of  the  action.  There  is 
no  doubt  of  the  soundness  of  the  principle  —  I  mean  that  a  policy-  is  a 
contract  of  inderanit}-.  The  onl}-  question  is,  at  what  period  the  rights 
of  the  parties  are  to  be  tested  by  this  principle,  whetlier  at  the  time  of 
abandonment  or  at  the  commencement  of  the  action.  I  have  con- 
sidered attentively  the  case  of  Hamilton  v.  Mendez.  It  must  be  obvious 
to  ever}'  one  that  the  decision  in  that  case  was  perfectly  right.  It  was 
simply  this :  that  a  man  shall  not  be  permitted  to  abandon  and  recover 
for  a  total  loss,  when  he  knew  at  the  time  of  his  offer  to  abandon  that 
his  property,  which  had  been  lost,  was  restored,  and  the  vojage  very 
little  injured.  But  in  reading  the  opinion  of  Lord  Mansfield  we  find  a 
want  of  accurac}'  with  which  that  great  man  was  seldom  chargeable. 
Sometimes  it  appears  as  if  he  thought  the  period  for  fixing  the  rights 
of  the  insurers  and  insured  was  the  commencement  of  the  suit ;  some- 
times the  time  of  abandonment ;  and  sometimes  he  even  seems  to 
extend  his  ideas  so  far  as  the  time  of  the  verdict.  But  finall}'  he  ex- 
plicitly declares  that  he  decides  nothing  but  the  point  before  him.  He 
seems  to  have  felt  a  little  sore  at  the  improper  application  of  some 
general  expressions  used  by  him  in  the  case  of  Goss  v.  Withers.  Anx- 
ious to  cut  off  all  pretense  for  doing  the  same  in  Hamilton  v,  Mendez, 
be  has  taken  too  much  pains  to  avoid  the  possibility  of  misrepresenta- 
tion. Hence  his  argument,  considered  in  the  detail,  is  not  altogether 
clear  and  consistent.  Upon  the  whole  of  this  case  of  Hamilton  r. 
Mendez,  I  think  it  most  safe  to  confine  its  authority  to  the  point  actually 
decided,  which  was  very  diiTerent  from  that  we  are  now  considering. 
Some  period  must  be  fixed  for  determining  the  right  of  the  parties. 
To  limit  it  to  the  time  of  commencing  the  action  would  be  of  little 
service  to  the  insurers;  for  the  law  being  once  so  established,  an 
action  would  be  brought  in  every  instance  on  the  first  default  of  pay- 
ment. The  time  of  abandonment  seems  the  most  natural  and  con- 
venient period ;  because  the  assured  must  make  his  election  to  abandon 
or  not  in  a  reasonable  and  short  time  after  he  hears  of  the  loss,  and 
the  property,  being  transferred  by  the  abandonment,  can  never  after  be 
reclaimed   by   the   assured.     Want   of  mutuality  is  want   of  justice. 


840  ROUX   V.   SALVADOR.  [CHAP.  VIII. 

There  is  no  reason  why  the  assured  should  be  bound,  but  the  assurer 
left  free  to  take  advantage  of  events  subsequent  to  the  abandonment. 

It  has  been  contended  by  the  plaintiff's  counsel  that  the  right  to 
abandon  would  not  have  been  affected,  even  if  the  pro^Derty  had  been  re- 
stored at  the  time  of  abandonment,  because  the  restitution  was  unknown 
to  the  plaintiff.  As  to  this,  I  give  no  opinion.  It  is  unnecessary  ;  be- 
cause it  is  stated  that  the  vessel  remained  in  the  custody  of  the  captors 
at  the  time  of  abandonment.  The  defendant's  counsel  have  urged  that 
this  was  the  fault  of  the  captain,  or  of  one  of  the  owners,  who  was  at 
New  Providence;  because,  after  a  decree  of  acquittal,  a  writ  of  restitu- 
tion might  have  been  sued  out.  But  it  not  being  stated  that  there  was 
any  fault  or  negligence  in  the  captain  or  owner,  I  do  not  think  that  the 
court  can  infer  it.  It  being  stated  that  the  vessel  remained  in  the 
custody  of  the  captors,  we  must  presume  that  the  custody  was  legal. 
Whether  for  the  purpose  of  giving  the  captors  an  opportunity  of  enter- 
ing an  appeal,  or  for  what  other  purpose  it  was  that  the  restitution  was 
delayed,  we  are  at  a  loss  to  determine.  But  as  restitution  was  not 
actually  made,  and  as  the  plaintiff  was  ignorant  even  of  the  decree  of 
acquittal,  his  right  to  abandon  remaiued  unimpaired. 

Upon  the  whole,  we  are  of  opinion  that  the  plaintiff  is  entitled  to 
recover  for  a  total  loss. 

Judgment  for  the  plaintiff} 


ROUX   V.    SALVADOR. 
Exchequer  Chamber,   1836.     3  Bing.  N.  C.  266.* 

Assumpsit  on  a  policy  of  insurance,  subscribed  by  the  defendant  for 
£200. 

Maide,  for  the  plaintiff. 

Sir  J.  Campbell,  Attorney-General,  contra. 

Cur.  adv.  vult. 

Lord  Abinger,  C.  B.  This  was  a  writ  of  error  upon  a  judgment  of 
the  Court  of  Common  Pleas,  in  an  action  on  a  policy  of  insurance  upon 
goods  by  the  "Roxalane"  at  and  from  any  ports  or  places  in  South 

1  See  Rhinelander  v.  Insurance  Co.,  4  Cranch,  29  (1807);  Orient  Ins.  Co  v  Adams 
123  U.  S.  67  (1887). 

On  the  necessity  of  prompt  notice  of  election  to  abandon,  see  Mitchell  v.  Edie 
1  T.  R.  608  (1787) ;  Alhvood  v.  Henckell,  1  Park  Ins.  8th  ed.  399  (N.  P.  1795)  •  Ander- 
son 1-.  Royal  Exchange  Assur.  Co.,  7  East,  38  (1805);  Smith  v.  Nevvburyport  M.  Ins 
(-0.,  4  Mass.  668  (I80S);  Gernon  i-.  Royal  Exchange  Assurance,  6  Taunt.  383  (1S15) 
s.  c.  2  Marsh.  88;  Mellon  v.  Lonisiana  State  Ins.  Co.,  5  Martin,  n  s.  563  (18'--7)  •  Rev' 
nolds  V.  Ocean  Ins.  Co.,  22  Pick.  191  (1839);  Rowland  .;.  India  Mut.  Ins.  Co.,  131 
Mass.  239,  253,  256-257  (1881).  — Ed. 

2  The  reporter's  statement  has  been  omitted.  In  the  Common  Pleas  the  case  is 
reported  in  1  Bmg.  N.  C.  526  (1835).— Ed. 


SECT.  I.]  EOUX   V,   SALVADOR.  841 

America,  or  to  a  port  in  France  or  the  United  Kingdom,  with  various 
liberties,  not  material  to  be  mentioned.  By  a  written  memorandum  at 
the  foot  of  the  polic};.  the  insurance  was  declared  to  be  on  hides  shipped 
at  Valparaiso  free  of  average,  unless  the  ship  should  be  stranded  ;  and, 
in  case  of  average  loss,  the  underwriters  were  to  pay  the  expense  of 
washing  and  drying  in  full.  The  declaration  contains  the  usual  aver- 
ments, and  states  that  the  hides  were  shipped  at  Valpai-aiso  ;  that  the 
vessel  set  sail  with  them  on  board  for  Bordeaux,  a  port  in  France  ;  and 
that  in  the  course  of  the  voyage,  the  hides  became  lost  by  the  perils  of 
the  sea,  and  never  arrived  at  Bordeaux. 

The  plea  is  the  general  issue. 

It  appears  b^-  the  record  that  the  cause  was  tried,  and  a  special  ver- 
dict found,  which  after  stating  the  facts  necessary  to  support  those 
parts  of  the  declaration  upon  which  no  question  arises,  sets  forth  the 
loss,  in  substance  as  follows:  That  the  hides  of  the  value  of  £1,000 
having  been  shipped  in  the  vessel,  she  set  sail  on  her  voyage ;  in  the' 
progress  of  which  she  encountered  perils  of  the  sea,  and  sprung  a  leak, 
in  consequence  of  which  she  was  compelled  to  put  into  Eio  Janeiro, 
being  the  nearest  port ;  that  her  cargo  was  taken  out  and  landed,  when 
it  was  found,  as  the  fact  was,  that  the  hides  were  damaged  by  the  perils 
of  the  sea ;  that  by  reason  of  their  being  wetted  by  the  water  issuing 
through  the  leak,  and  of  the  consequent  dampness  of  the  hold,  the}' 
were  undergoing  a  process  of  fermentation,  which  could  not  be  checked  ; 
and  that  in  consequence  of  their  progressive  putrefaction  it  was  impos- 
sible to  carry  them,  or  any  part  of  them,  in  a  saleable  state,  to  the  ter- 
mination of  the  voyage  ;  and  that  if  it  had  been  attempted  to  take  them 
to  Bordeaux  they  would  in  consequence  of  the  putrefaction  have  lost 
the  character  of  the  hides  before  their  arrival.  The  special  verdict 
further  states,  that  the  hides  were  in  consequence  sold  at  Rio  Janeiro 
by  order  of  the  French  consul  there,  for  the  sum  of  £270  ;  that  they 
were  purchased  to  be  tanned,  and  were  afterwards  tanned ;  that  the 
ship  being  repaired,  set  sail  for  Bordeaux,  and  was  stranded  upon  en- 
tering the  Garonne ;  and  that  the  earliest  intelligence  of  the  damage 
and  sale  were  received  at  the  same  time  in  a  letter  from  Bordeaux. 

The  judgment  is  entered  for  the  defendant :  to  set  aside  which  judg- 
ment this  writ  of  error  is  brought.  The  stranding  of  the  vessel  upon 
entering  the  river  Garonne  in  her  passage  to  Bordeaux,  is  introduced 
into  the  special  verdict,  with  a  view  to  meet  the  supposed  case  of  a 
partial  loss  :  and  it  has  been  contended,  that  the  fact  of  stranding, 
being  a  condition  to  let  in  the  claim  for  a  partial  loss,  it  is  not  material 
whether  the  stranding  takes  place  whilst  the  goods  insured  are  on  board, 
or  after  the}'  have  been  landed.  We  are  not  prepared  to  adopt  that 
conclusion :  but  the  view  we  take  of  this  case  renders  it  unnecessary 
to  enter  into  any  discussion  of  the  argument,  or  to  pronounce  any 
opinion  upon  it.  It  appears  from  the  report  of  the  judgment  of  the 
Court  of  Common  Pleas  u^wn  this  case,  that  the  learned  judges  were 
of  opinion  that  there  was  a  constructive  total  loss,  in  case  it  had  been 


8^  TvOUX   V.    SALVADOR.  [CHAP,  Till. 

followed  l\y  an  abandonment  to  the  underwriters  ;  and  that  their  judg- 
ment for  the  defendant  was  grounded  upon  the  want  of  such  abandon- 
ment. 

It  has  been  urged  before  us  in  support  of  the  judgment,  first,  that 
there  was  no  total  loss  ;  secondly,  that  if  there  were  any  circumstances 
which  might  have  amounted  to  more  than  an  average  or  partial  loss, 
they  were  not  such  as  without  an  abandonment  could  have  been  con- 
verted into  a  total  loss.  Upon  the  first  point  it  has  been  contended, 
that  even  if  these  goods  had  not  been  excepted  from  average  loss  by 
the  memorandum,  unless  upon  the  condition  of  stranding,  there  would 
not  in  this  case  have  been  a  total  loss,  and  that,  a  fortiori,  being  goods 
so  expressly  excepted  from  average  loss  by  the  memorandum,  they 
could  not  become  totally  lost  so  long  as  any  part  of  them  remained  in 
specie  at  the  termination  of  the  risk ;  that  the  risk  terminated  when 
the  goods  were  taken  out  at  Rio  de  Janeiro,  when  they  were  so  far 
from  being  destroyed  by  the  perils  of  the  sea,  that  they  were  actually 
sold  as  hides,  and  were  capable  of  being  tanned. 

It  appears  to  us  that  there  is  no  ground  whatever  for  this  assumed 
distinction  between  goods  that  are  subject  to  a  partial  loss  uncondi- 
tionally, and  goods  excepted  by  the  memorandum  from  such  a  loss. 
The  interest  which  the  assured  may  have  in  certain  cases  to  convert  a 
partial  loss  into  a  total  loss,  may  be  a  fair  argument  to  a  jury  upon  a 
doubtful  question  of  fact  as  to  the  nature  of  the  loss  or  the  motive  for 
an  abandonment ;  and,  in  the  same  view  that  interest  has  been  adverted 
to  occasionally  by  judges,  where  the  conclusions  to  be  drawn  from 
facts  upon  a  special  case,  or  upon  a  motion  for  a  new  trial,  were  open 
to  discussion.  But  there  is  neither  authority  nor  principle  for  the  dis- 
tinction in  point  of  law  ;  whether  a  loss  bo  total  or  partial  in  its  nature, 
must  depend  upon  general  principles.  The  memorandum  does  not  vary 
the  i-ules  upon  which  a  loss  shall  be  partial  or  total ;  it  does  no  more 
than  preclude  the  indemnity  for  an  ascertained  partial  loss,  except  on 
certain  conditions.  It  has  no  application  whatever  to  a  total  loss,  or 
to  the  princi})le  on  which  a  total  loss  is  to  be  ascertained. 

Dismissing  this  distinction  then,  the  argument  rests  upon  the  position, 
that  if,  at  the  termination  of  the  risk,  the  goods  remain  in  specie,  how- 
ever damaged,  there  is  not  a  total  loss.  Now  this  position  ma}'  be 
just,  if  b}-  the  "  termination  of  the  risk,"  is  meant  the  arrival  of  the 
goods  at  their  place  of  destination  according  to  the  terms  of  the  policy. 
But  there  is  a  fallacy'  in  applying  those  words  to  the  termination  of  the 
adventure  before  that  period  by  a  peril  of  the  sea.  The  object  of__the 
polic}'  is  to  obtain  an  indemnity  for  any  loss  that  the  assured  may  sus- 
tain by  the  goods  being  prevented  by  the  perils  of  the  sea,fi:oni  arinvin g 
in  safety  at  the  port  of^  their  destinatjon.  If,  by  reason  of  the  perils 
insured  against,  the  goods  do  not  so  arrive,  the  risk  may  in  one  sense 
be  said  to  have  terminated  at  the  moment  when  the  goods  are  finally 
separated  from  the  vessel :  whether,  upon  such  an  event,  the  loss  is 
total  or  partial,  no  doubt,  depends  upon  circumstances.     But  the  ex- 


SECT.  I.]  EOtJX   V.   SALVADOR.  843 

istence  of  the  goods,  or  an}'  part  of  them,  in  specie,  is  neither  a  con- 
clusive, nor,  in  many  cases,  a  material  circumstance  to  that  question. 
If  the  goods  are  of  an  imperishable  nature,  if  the  assured  become 
possessed  or  can  have  the  control  of  them,  if  they  have  still  an  op- 
portunity of  sending  them  to  their  destination,  the  mere  retardation  of 
their  arrival  at  their  original  port  may  be  of  no  prejudice  to  them  be- 
3'ond  the  expense  of  re-shipment  in  another  vessel.  In  such  a  case, 
the  loss  can  be  but  a  partial  loss,  and  must  be  so  deemed,  even  though 
the  assured  should,  for  some  real  or  supposed  advantage  to  themselves, 
elect  to  sell  the  goods  where  they  have  been  landed,  instead  of  taking 
measures  to  transmit  them  to  their  original  destination.  But  if  the 
goods  once  damaged  by  the  perils  of  the  sea,  and  necessaril}'  landed 
before  the  termination  of  the  voyage,  are,  by  reason  of  that  damage, 
in  such  a  state,  though  the  species  be  not  utterly  destroyed,  that  they 
cannot  with  safety  be  reshipped  into  the  same  or  any  other  vessel ;  if 
it  be  certain  that,  before  the  termination  of  the  original  voyage,  the 
species  itself  would  disappear,  and  the  goods  assume  a  new  form,  losing 
all  their  original  character ;  if,  though  imperishable,  the}'  are  in  the 
hands  of  strangers  not  under  the  control  of  the  assured. ;  if  by  any 
circumstance  over  which  he  has  no  control  they  can  never,  or  within 
no  assignable  period,  be  brought  to  their  original  destination  ;  in  any 
of  these  cases,  the  circumstance  of  their  existing  in  specie  at  thciL 
forced  termination  of  the  risk,  is  of  no  importance.  The  loss  is,  in  its 
nature,  total  to  him  who  has  no  means  of  recovering  his  goods,  whether 
his  inability  arises  from  their  annihilation  or  from  any  other  insuper- 
able obstacle.^  ...  In  the  case  before  us  the  jury  have  found  that  the 
hides  were  so  far  damaged  by  a  peril  of  the  sea,  that  they  never  could 
have  arrived  in  the  form  of  hides.  By  the  process  of  fermentation  and 
putrefaction,  which  had  commenced,  a  total  destruction  of  them  before 
their  arrival  at  the  port  of  destination,  became  as  inevitable  as  if  they 
had  been  cast  into  the  sea  or  consumed  by  fire.  Their  destruction  not 
being  consummated  at  the  time  they  were  taken  out  of  the  vessel,  they 
became  in  that  state  a  salvage  for  the  benefit  of  the  party  who  was  to 
sustain  the  loss,  and  were  accordingly  sold ;  and  the  facts  of  the  loss 
and  the  sale  were  made  known  at  the  same  time  to  the  assured. 
Neither  he  nor  the  underwriters  could  at  that  time  exercise  any  con- 
trol ov^er  them,  or  by  any  interference  alter  the  consequences.  It 
appears  to  us,  therefore,  that  this  was  not  the  case  of  what  has  been 
called  a  constructive  loss,  but  of  an  absolute  total  loss  of  the  goods  : 
the}'  could  never  arrive ;  and,  at  the  same  moment  when  the  intelli- 
gence of  the  loss  arrived,  all  speculation  was  at  an  end.  It  has  indeed 
been  strenuously  contended  before  us,  that  the  sale  of  the  hides  whilst 
they  remained  in  specie,  rendered  abandonment  necessary  to  make  the 

1  Here  were  stated  Hunt  v.  Royal  Exchange  Assurance,  5  M.  &  S.  47  (1816)  ;  An- 
derson V.  Wallis,  2  M.  &  S.240  (1813)  ;  Glennie  v.  London  Assur.  Co.,  2  M.  &  S.  371 
(1814) ;  Thompson  v.  Royal  Exchange  Assur.  Co.,  16  East,  214  (1812) ;  and  Anderson 
V.  Royal  Exchange  Assur.  Co.,  7  East,  38  (1805).  — Ed. 


844  KOUX   V.   SALVADOR.  [CHAP.  VIII. 

loss  total ;  that  the  money  produced  at  the  sale  became  vested  in  the 
assured  ;  that  he  had  an  undoubted  right  to  keep  it  if  he  thought 
proper,  and  to  treat  the  loss  as  partial ;  and  that,  wherever  it  is  in  his 
power  to  treat  the  loss  as  partial,  an  abandonment  is  necessary  to  make 
it  a  total  loss.  The  assured  certainly  has  always  an  option  to  claim  or 
not;  but  his  abstaining  from  his  right  does  not  alter  the  nature  of  it: 
and  if  it  be  true  that  the  proceeds  of  the  sale  vested  in  him,  they  would 
equally  have  done  so,  if,  instead  of  being  sold  in  specie,  the  hides  had 
actually  changed  their  form,  and  been  sold  as  glue,  or  manure,  or  ashes. 
The  argument,  therefore,  in  effect,  resolves  itself  into  this  question, 
whether,  when  a  total  loss  has  taken  place  before  the  termination  of 
the  risk  insured,  with  a  salvage  of  some  portion  of  the  subject  insured, 
which  has  been  converted  into  money,  the  insured  is  bound  to  aban- 
don before  he  can  recover  for  a  total  loss.  If  any  doubt  should  exist 
upon  this  point,  it  is  important  that  it  should  be  well  considered  and 
determined. 

The  history  of  our  own  law  furnishes  few,  if  any,  illustrations  of 
the  subject  of  abandonment  before  the  time  of  Lord  Mansfield.  That 
great  judge  was  obliged  to  resort  to  the  aid  of  foreign  codes,  and  to 
the  opinions  of  foreign  jurists,  for  the  rules  and  principles  which  he 
laid  down  in  the  leading  cases  of  Goss  y.  Withers,  2  Burr.  683,  and 
Hamilton  v.  Mendez,  1  W.  Bl.  276.^  .  .   . 

But  whatever  lights  might  have  been  heretofore  derived  from  foreign 
codes  and  jurists,  the  practice  of  insurance  in  England  has  been  so 
extensive,  and  the  questions  arising  upon  every  branch  of  it  have 
been  so  thoroughly  considered  and  settled,  that  we  need  not  now  look 
beyond  the  authorities  of  the  English  law  to  illustrate  the  principle  on 
which  the  doctrine  of  abandonment  rests,  and  the  consequences  which 
result  from  it.  It  is,  indeed,  satisfactory'  to  know,  that  however  the 
laws  of  foreign  states  upon  the  subject  may  vary  from  each  other,  or 
from  our  own,  they  are  all  directed  to  the  common  object  of  making 
the  contract  of  insurance  a  contract  of  inderanit}',  and  nothing  more. 
Upon  that  principle  is  founded  the  whole  doctrine  of  abandonment  in 
our  law.  The  underwriter  engages,  that  the  object  of  the  assurance 
shall  arrive  in  safety*  at  its  destined  termination.  If,  in  the  progress 
of  the  voyage,  it  becomes  totally  destroyed  or  annihilated,  or  if  it  be 
l)laced,  by  reason  of  the  perils  against  which  he  insures,  in  such  a 
position,  that  it  is  wholly  out  of  the  power  of  the  assured  or  of  the  un- 
derwriter to  procure  its  arrival,  he  is  bound  by  the  very  letter  of  his 
contract  to  pay  the  sum  insured.  But  there  are  intermediate  cases  — 
there  may  be  a  capture,  which,  though  prima  facie  a  total  loss,  may  be 
followed  by  a  recapture,  which  would  revest  the  property-  in  the  as- 
sured. There  may  be  a  forcible  detention  which  may  speedily  termi- 
nate, or  may  last  so  long  as  to  end  in  the  impossibility  of  bringing  the 
ship  or  the  goods  to  their  destination.  There  may  be  some  other  peril 
which  renders  the   ship  unnavigable,  without  any   reasonable  hope  of 

1  A  discussion  of  foreign  law  has  been  omitted.  —  Ed. 


SECT.  I.]  EOUX   V.   SALVADOR.  '  845 

repair,  or  b}'  which  the  goods  are  parti}-  lost,  or  so  damaged,  that  they 
are  not  worth  the  expense  of  bringing  them,  or  what  remains  of  them, 
to  their  destination.  In  all  these  or  any  similar  cases,  if  a  prudent 
man  not  insured,  wonld  decline  anj'  further  expense  in  prosecuting  an 
adventure,  the  termination  of  which  will  probably  never  be  successfully 
accomplished,  a  party  insured  may,  for  his  own  benefit,  as  well  as  that 
of  tlie  underwriter,  treat  the  case  as  one  of  a  total  loss,  and  demand 
the  full  sum  insured.  But  if  he  elects  to  do  this,  as  the  thing  insured, 
or  a  portion  of  it  still  exists,  and  is  vested  in  him,  the  very  principle 
of  the  indemnity  requires  that  he  should  make  a  cession  of  all  his  ricrht 
to  the  recover}-  of  it,  and  that  too,  within  a  reasonable  time  after  he 
receives  the  intelligence  of  the  accident,  that  the  underwriter  may  be 
entitled  to  all  the  benefit  of  what  may  still  be  of  any  value  ;  and  that 
he  maj-,  if  he  pleases,  take  measures,  at  his  own  cost,  for  reali/cing  or 
increasing  that  value.  In  all  these  cases  not  only  the  thing  assured  or 
l^art  of  it  is  supposed  to  exist  in  specie,  but  there  is  a  possibility,  how- 
ever remote,  ©f  its  arriving  at  its  destination,  or  at  least  of  its  value 
being  in  some  way  affected  by  the  measures  that  may  be  adopted  for 
the  recovery  or  preservation  of  it.  If  the  assured  prefers  the  chance 
of  any  advantage  that  may  result  to  him  beyond  the  value  insured,  he 
is  at  liberty  to  do  so ;  but  then  he  must  also  abide  the  risk  of  the  arri- 
val of  the  thing  insured  in  such  a  state  as  to  entitle  him  to  no  more 
than  a  partial  loss.  If,  in  the  event,  the  loss  should  become  absolute, 
the  underwriter  is  not  the  less  liable  upon  his  contract,  because  the  in- 
sured has  used  his  own  exertions  to  preserve  the  thing  assured,  or  has 
postponed  his  claim  till  that  event  of  a  total  loss  has  become  certain 
which  was  uncertain  before.  In  the  language  of  Lord  Ellenborough, 
in  the  case  of  ]\Iellish  v.  Andrews,  15  East,  13  :  "  It  is  an  established 
and  familiar  rule  of  insurance,  that  when  the  thing  insured  subsists  in 
specie,  and  there  is  a  chance  of  its  recovery,  there  must  be  an  aban- 
donment. A  party  is  not  in  any  case  obliged  to  abandon,  neither  will 
the  want  of  an  abandonment  oust  him  of  his  claim  for  that  which  is  in 
fact  an  average  or  total  loss,  as  the  case  may  be."  Again,  in  Mullett 
V.  Shedden,  13  East,  304,  the  same  learned  judge  says,  "  If,  instead 
of  the  saltpetre  having  been  taken  out  of  the  ship  and  sold,  and  the 
property  divested,  and  the  subject-matter  lost  to  the  owner,  it  had  re- 
mained on  board  the  ship,  and  been  restored  at  last  to  the  owner,  I 
should  have  thought  there  was  much  in  the' argument,  that,  in  order  to 
make  it  a  total  loss,  there  should  have  been  notice  of  abandonment, 
and  that  such  notice  should  have  been  given  sooner :  but  here  the 
property  itself  was  totally  lost  to  the  owner,  and  the  necessity  of  an}* 
abandonment  was  altogether  done  away."  In  that  case,  the  sentence 
under  which  the  sale  was  made  had  been  reversed,  and  the  proceeds 
directed  to  be  paid  to  the  owner.  So  that  there  was  a  substitution  of 
money  for  a  portion  at  least  of  the  matter  insured.  Both  these  cases 
are  direct  authorities  that  no  abandonment  is  necessary'  where  there  is 
a  total  loss  of  the  subject-matter  insured.     To  which  may  be  added  the 


846 


ROCX   V.    SALVADOR.  [CIIAP.  VIII. 


cases  of  Green  v.  The  Eoyal  Exchange  Assurance  Company,  6  Taunt. 
G8  ;  Idle  v.  The  Royal  Exchange  Assurance  Company,  8  Taunt.  755  ; 
Robertson  v.  Clarke,  1  Bing.  445  ;  Cambridge  v.  Anderton,  2  B.  &  C. 
G97 :  this  last  is  in  all  points  similar  to  the  present,  and  is  an  express 
decision  that,  when  the  subject-matter  insured  has,  by  a  peril  of  the  sea, 
lost  its  form  and  species,  where  a  ship,  for  example,  has  become  a 
wreck  or  a  mere  congeries  of  planks,  and  has  been  bona  fide  sold  in 
that  state  for  a  sum  of  money,  the  assured  may  recover  a  total  loss 
without  any  abandonment.  In  fact,  when  such  a  sale  takes  place,  and 
in  the  opinion  of  the  jury  is  justified  by  necessity  and  a  due  regard  to 
the  interest  of  all  parties,  it  is  made  for  the  benefit  of  the  party  who  is 
to  sustain  the  loss  ;  and  if  there  be  an  insurance,  the  net  amount  of 
the  sale,  after  deducing  the  charges,  becomes  money  had  and  received 
to  the  use  of  the  underwriter,  upon  the  payment  by  him  of  the  total 
loss.  It  may  be  proper  to  mention,  however,  that  the  assured  may 
preclude  himself  from  recovering  a  total  loss,  if,  by  any  view  to  his  own 
interest,  he  voluntarily  does,  or  permits  to  be  done,  any  -act  whereby 
the  interests  of  the  underwriter  may  be  prejudiced  in  the  recovery  of 
that  money  .^  ...  Judgment  for  plaintiff.^ 

1  Here  was  discussed  Mitchell  v.  Edie,  1  T.  R.  608  (1787).  — Ed. 

2  Acc. :  De  Peyster  v.  Suu  Mut.  Ins.  Co.,  19  N.  Y.  275  (1859). 

See  Wallerstein  v.  Columbian  Ins.  Co.,  44  N.  Y.  204  (1870);  Insurance  Co.  i;. 
Fogarty,  19  Wall.  640  (1873). 

In  Asfar  v.  Blundell,  [1896]  1  Q.B.123,  127-128  (C.  A.  189.5),  Lord  Esher,  M.  R., 
said  :  "  The  first  point  taken  on  behalf  of  the  defendants,  the  underwriters,  is 
that  there  has  been  no  total  loss  of  the  dates,  and  therefore  no  total  loss  of  the 
freight  on  them.  The  ingenuity  of  the  argument  might  commend  itself  to  a  body 
of  chemists,  but  not  to  business  men.  We  are  dealing  with  dates  as  a  subject- 
matter  of  commerce;  and  it  is  contended  that,  although  these  dates  were  under 
water  for  two  days,  and  when  brought  up  were  simply  a  mass  of  pulpy  matter 
impregnated  with  sewage  and  in  a  state  of  fermentation,  there  had  been  no  change 
in  their  nature,  and  they  still  were  dates.  There  is  a  perfectly  well  known  test 
which  has  for  many  years  been  applied  to  such  cases  as  the  present  —  that  test  is 
whether,  as  a  matter  of  business,  the  nature  of  the  tiling  has  been  altered.  The  nature 
of  a  thing  is  not  necessarily  altered  because  the  thing  itself  has  been  damaged  ; 
wheat  or  rice  may  be  damaged,  but  may  still  remain  the  things  dealt  with  as  wheat  or 
rice  in  business.  But  if  the  nature  of  the  thing  is  altered,  and  it  becomes  for  business 
purposes  sometiiiug  else,  6o  that  it  is  not  dealt  with  by  business  people  as  the  thing 
which  it  originally  was,  tiie  question  for  determination  is  whether  the  thing  insured,  the 
original  article  of  commerce,  has  become  a  total  loss.  If  it  is  so  changed  in  its  nature 
by  the  perils  of  the  sea  as  to  become  an  unmerchantable  thing,  which  no  buyer  would 
buy  and  no  honest  seller  would  sell,  then  there  is  a  total  loss.  That  test  was  applied 
in  the  present  case  by  the  learned  judge  in  the  court  below,  who  decided  as  a  fact 
that  the  dates  had  been  so  deteriorated  that  they  had  become  something  whiqh  was 
not  msrchantable  as  dates.  If  that  was  so,  there  was  a  total  loss  of  the  dates.  What 
was  the  effect  of  this  upon  the  insurance  1  If  they  were  totally  lost  as  dates,  no  freight 
in  respect  of  them  became  due  from  the  consignee  to  the  person  to  whom  the  bill  of 
lading  freight  was  payable  —  that  is,  to  the  charterers  —  and  there  was  a  total  loss  of 
the  bill  of  lading  freight  on  these  dates."  —  Ed. 


SECT.  I.]  BRADLIE   V.    MAKYLAND   INS.   CO,  847 


BRADLIE   AND   Another,   Plaintiffs   in  Error,  v.  MARYLAND 
INS.  CO.,  Defendants  in  Error. 

Supreme  Court  of  the  United  States,  1838.     12  Pet.  378.^ 

Error  to  the  Circuit  Court  of  the  United  States  for  tiie  District  of 
Maryland. 

The  action  was  upon  a  policy  of  insurance,  dated  November  22,  1832, 
whereb\-  the  defendants  caused  the  plaintiffs,  by  their  agents,  William 
Howell  &  Son,  to  be  insured  $10,000  on  the  brig  "  Gracchus,"  valued 
at  that  sum,  at  and  from  Baltimore,  for  six  months.  Tlie  declaration 
alleged  a  total  loss  bj'  casting  ashore  in  the  river  Mississippi. 

The  brig  sailed  from  Baltimore  to  New  Orleans,  and  on  the  return 
voyage  went  on  shore  in  the  river  Mississippi  on  March  24,  1833.  A 
signal  was  made  for  a  steamboat,  which  came  to  the  assistance  of  the 
brig.  The  brig  was  got  off,  and  returned  to  New  Orleans  the  same 
day  in  a  leaky  condition.  On  March  25  the  master  learned  that  the 
steamboat  intended  to  libel  for  a  salvage  of  fifty  per  cent ;  and  he 
wrote  to  one  of  the  plaintiffs  to  that  effect.  On  March  27  the  brig 
was  taken  across  the  river  for  repairs,  and  was  libelled  for  the  sal- 
vage in  the  District  Court  of  Louisiana.  On  April  22,  William  Howell 
&  Co.  addressed  a  letter  to  the  defendants,  submitting  the  letter 
of  March  25,  and  saying,  "  In  consequence  of  the  damage,  to- 
gether with  the  detention  that  must  grow  out  of  a  lawsuit,  .  .  . 
the  voyage  being  broken  up,  we  do  hereby  abandon  to  you  the  brig 
'  Gracchus,'  .  .  .  and  claim  for  a  total  loss."  On  the  same  day,  the 
defendants  answered,  saying,  "  We  cannot  accept  the  abandon- 
ment .  .  .  ,  but  expect  you  to  do  what  is  necessary  in  the  case  for 
the  safety  and  relief  of  the  vessel."  On  May  9,  the  District  Court 
decreed  twent3--five  per  cent  of  the  value  of  the  vessel  and  cargo  (esti- 
mated at  $7,000)  as  salvage,  the  brig  being  valued  at  $2,500.  On 
May  14,  the  master  got  possession  again,  the  salvage  having  been  paid. 
On  June  3,  the  brig  was  repaired  and  ready  for  a  cargo.  The  repairs 
at  New  Orleans  amounted  to  $1,690.15  ;  and  the  share  of  the  brig,  at 
the  general  average  or  salvage,  amounted  to  $1,245.07;  and  the  two 
items  amounted  to  $2,935.22.  To  meet  this  sum  and  other  expenses, 
the  master  borrowed  $3,715.41  from  Harrison,  Brown  &  Co.,  giving  a 
bottomry  bond,  payable  on  the  safe  arrival  of  the  brig  at  Baltimore. 
The  brig  sailed  for  Baltimore  early  in  July,  and  arrived  in  the  latter 
part  of  that  month.  The  brig  was  libelled  on  the  bottomry  bond,  and 
by  the  District  Court  of  Maryland  was  ordered  sold.  The  sale  was 
accordingly  made  by  the  marshal  for  the  $4,750,  which  sum  was  paid 

*  The  statement  has  been  rewritten.  —  Ed. 


843  BRADLIE    V.    MARYLAND   INS.    CO.  [CIIAP.  VIII. 

b}'  the  purchaser  on  September  24.  On  the  same  da}-,  tlie  under- 
writers wrote  to  Howell  &  Son,  offering  to  pay  $2,409.11  as  for  general 
and  particular  average,  including  the  repairs  less  a  deduction  of  one- 
third  new  for  old,  and  also  saying :  "  If  you  find  any  other  charge  .  .  . 
in  order  to  raise  the  funds  on  bottomry,  we  will  pay  our  full  propor- 
tion .  .  .  upon  being  made  acquainted  with  the  amount."  On  the 
same  da}-,  Howell  &  Son  refused  the  offer,  saying  that  in  behalf  of  the 
owners  the}-  claimed  a  total  loss. 

After  the  evidence  was  closed,  the  counsel  for  the  defendants  moved 
for  instructions  that  are  summarized  in  the  opinion. 

The  court  refused  to  give  the  instructions  prayed  for,  and  gave  to 
the  jury  the  following  instruction  :  If  the  jury  find  from  the  evidence, 
that  the  "  Gracchus"  was  so  damaged  by  the  disaster  mentioned  in 
the  letter  of  Captain  Snow,  of  March  25,  1833,  that  she  could  not  be 
got  off  and  repaired  without  an  expenditure  of  money  to  an  amount 
exceeding  half  her  value,  at  the  port  of  New  Orleans,  after  such  re- 
pairs were  made,  then  the  plaintiffs  are  entitled  to  recover  for  a  total 
loss,  under  the  abandonment  made  on  the  22d  da}-  of  April,  1833  ;  and 
in  ascertaining  the  amount  of  such  expenditure,  the  jury  must  include 
the  sum  for  which  the  brig  was  liable  to  the  salvors,  according  to  the 
decree  of  the  District  Court  of  Louisiana,  stated  in  the  evidence  ;  birt 
if_the  jiu^L  find  that  the  vessel  could  have  been  got  off  and  repaired, 
without  an  expenditure  of  money  to  the  amount  of  piore  than  half  her 
yajuej_then^upon  the  evidence  offered,  the  plaintiffs  are  not  entitled  to 
recover  for  a  total  loss,  on  the  ground  that  the  voyage  was  retarded  of 
lost,  nor  on  account  of  the  arrest  and  detention  of  the  vessel  by  the 
admiralty  process,  issued  at  the  instance  of  the  salvors. 

The  defendants  excepted  to  the  refusal  of  the  court  to  give  the  in- 
structions prayed,  and  also  to  the  opinion  actually  given  by  the  court 
in  their  instructions  to  the  jury.  The  plaintiffs  also  excepted  to  the 
same  opinion  given  by  the  court. 

The  plaintiffs  also  prayed  "  the  court  to  direct  the  jury,  that  in  this 
cause  the  insured,  by  their  letter  of  the  22d  April,  authorized  and  re- 
quired the  proper  expenditures  to  be  made  upon  the  vessel,  for  which 
said  underwriters  are  liable  under  their  policy :  that  no  funds  being 
supplied  by  them  in  New  Orleans  to  meet  this  loss ;  and  the  salvage 
and  repairs  having  been  paid  for  by  money  raised  upon  respondentia 
upon  the  vessel ;  if  the  jury  shall  find  that  said  vessel,  under  the  lien 
of  this  bond,  came  to  Baltimore,  and  the  defendants  were  then  aj)- 
prized  of  the  existence  of  such  respondentia^  and  were  also  informed 
of  the  existence  of  the  proceedings  thereupon  against  said  vessel,  and 
they  neglected  to  pay  so  much  thereof  as  they  ought  to  have  paid  to 
relieve  said  vessel,  and  omitted  to  place  her  in  the  hands  of  the  owners, 
discharged  of  so  much  of  such  bottomry  as  the  underwriters  were  liable 
for,  and  in  consequence  thereof,  said  vessel  was  libelled  and  con- 
demned and  sold,  and  thereby  wholly  lost  to  tlie  plaintiffs  ;  then  the 
plaintiffs  arc  entitled  to  recover  for  the  whole  value  of  the  vessel." 


SECT.  I.]  BKADLIE    V.    MARYLAND    IXS.    CO.  849 

The  court  refused  to  give  this  instruction,  and  tlie  plaintiffs  excepted. 
The  jury  found  a  verdict  for  the  plaintiffs  for  a  partial  loss,  assessing 
the  damages  at  three  thousand  four  hundred  and  eighty-nine  dollars 
and  twenty-tv\o  cents,  upon  which  the  court  gave  a  judgment:  on  this 
judgment  the  plaintiffs  entered  a  credit  for  four  hundred  and  ei<Tlitv- 
five  dollars  and  twenty-two  cents,  the  amount  of  the  premium  note, 
and  interest.     The  plaintiffs  prosecuted  this  writ  of  error. 

The  case  was  argued  b}-  Mr.  Johnson  for  the  plaintiffs  in  error;  and 
by  Mr.  Jleredith  and  Mr.  Stewart  for  the  defendants. 

Mr.  Justice  Story  delivered  the  opinion  of  the  court.^  .  .  .  Althou"-h 
the  prayers  for  the  instructions  by  the  defendants  are  not  before  the 
court  for  the  purpose  of  direct  consideration,  as  the  defendants  have 
brought  no  writ  of  error;  yet  it  is  imi)0ssible  completely  to  understand 
the  nature  and  extent,  and  proper  construction  of  the  opinion  given  by 
the  court,  without  adverting  to  the  propositions  contained  in  them  ;  for 
to  them,  and  to  them  only  was  the  opinion  of  the  court  given  as  a 
response. 

The  second  instruction  asked  by  the  defendants,  in  substance,  in- 
sisted, that  to  entitle  the  plaintiffs  to  recover  for  a  total  loss,  the 
damage  to  the  "Gracchus"  from  the  accident  should  be  more  than 
one-half  the  sura  to  which  she  was  valued  in  the  policy ;  and  that  in 
estimating  that  damage,  the  costs  of  the  repairs  only  were  to  be  taken, 
deducting  one-third  new  for  old.  In  effect,  therefore,  it  excluded  all 
consideration  of  the  salvage  in  the  ascertainment  of  the  loss. 

The  third  instruction  was  in  substance  similar  to  the  second,  except 
that  it  did  not  insist  upon  the  exclusion  of  the  salvage.  In  effect, 
therefore,  it  insisted  upon  the  valuation  in  the  policy,  as  the  standard 
by  which  to  ascertain  whether  the  damage  was  half  the  value  of  the 
*'  Gracchus,"  or  not. 

The  fourth  instruction  insisted,  that  to  entitle  the  plaintiffs  to  recover 
for  a  total  loss,  the  damage  m«st  exceed  one-half  the  value  of  the 
"Gracchus "at  the  time  of  the  accident;  and  that  in  estimating  the 
damage,  the  general  and  particular  averages,  as  adjusted  at  New  Or- 
leans, were  to  be  taken,  deducting  one-third  new  for  old.  In  effect, 
therefore,  it  insisted  that  nothing  but  these  adjustments  were  to  be 
taken  into  consideration,  in  ascertaining  the  totality  of  the  loss  at  the 
time  of  the  abandonment  (admitting  the  abandonment  to  be  suf- 
ficient), however  imminent  might  be  the  dangers,  or  great  the  losses 
then  actually  impending  over  the  "  Gracchus."  And  all  three  of  tiiese 
prayers  further  insisted,  that  the  deduction  of  one-third  new  for  old, 
should  be  made  from  the  amount  of  the  repairs,  as  in  the  case  of  a 
partial  loss,  in  ascertaining  whether  there  was  a  right  to  abandon  for 
a  total  loss,  upon  the  ground  that  the  damage  exceeded  a  moiety  of 
the  value  of  the  vessel. 

The  instructions  of  the  court  actually  given  in  these  prayers,  involve 

^  After  stating  the  case. — Ed. 
54 


850  BRADLIE   V.   MARYLAND    INS.    CO.  [CITAP.  VIII. 

the  following  propositions :  1.  That  if  the  expenditures  in  repairing 
the  damage  exceeded  half  the  value  of  the  brig  at  the  port  of  New- 
Orleans,  after  such  repairs  were  made,  including  therein  the  salvage 
awarded  to  the  salvors  ;  the  plaintiffs  were  entitled  to  recover  for  a 
total  loss,  under  the  abandonment  made  on  the  22d  of  April,  1833. 
2.  If  the  expenditures  to  get  off  and  repair  the  brig,  were  less  than 
tlie  half  of  such  value,  then  the  plaintiffs  were  not  entitled  to  recover 
for  a  total  loss,  upon  the  ground  that  the  voyage  was  retarded  or  lost ; 
nor  on  account  of  the  arrest  and  detention  of  the  brig,  under  the  ad- 
miralty process,  for  the  salvage. 

The  question  is,  whether  these  instructions  were  correct.  In  con- 
sidering the  first,  it  is  material  to  remark,  that  by  the  well  settled 
principles  of  our  law,  the  state  of  the  facts,  and  not  the  state  of  the 
information  at  the  time  of  the  abandonment,  constitutes  tlie  true  cri- 
terion by  which  we  are  to  ascertain  whether  a  total  loss  has  occurred 
or  not,  for  which  an  abandonment  can  be  made.  If  the  abandonment, 
•when  made,  is  good,  the  rights  of  the  parties  are  definitely  fixed,  and 
do  not  become  changed  by  any  subsequent  events.  If,  on  the  other 
hand,  the  abandonment,  when  made,  is  not  good,  subsequent  circum- 
stances will  not  affect  it,  so  as,  retroactively,  to  impart  to  it  a  validity 
■which  it  had  not  at  its  origin.  In  some  respects,  our  law  on  this  point 
differs  from  that  of  England  ;  for,  by  the  latter,  the  right  to  a  total 
loss  vested  by  an  abandonment,  may  be  divested  by  subsequent  events, 
■which  change  that  total  loss  into  a  partial  loss.  It  is  unnecessary  to 
cite  cases  on  this  subject,  as  the  diversity  is  well  known  ;  and  the 
courts  in  neither  country  have  shown  any  disposition  of  late  years  to 
recede  from  their  own  doctrine.  The  cases  of  Rhinelander  v.  The 
Insurance  Company  of  Pennsylvania,  4  Cranch,  29  ;  and  Marshall  ?'. 
The  Delaware  Insurance  Compan}',  4  Cranch,  202,  are  direct  affirma- 
tions of  our  rule  :  and  those  of  Bainbridge  v.  Neilson,  10  least's  Rop. 
329  ;  Patterson  v.  Ritchie,  4  M.  &  Selw.  394 ;  and  M'lver  v.  Hender- 
son, 4  INI.  &.  Selw.  584,  of  the  English  rule. 

In  cases  where  the  abandonment  is  founded  upon  a  supposed  tech- 
nical total  loss,  by  a  damage  or  injur}-  exceeding  one-half  the  value  of 
the  vessel,  although  the  fact  of  such  damage  or  injury  must  exist  at 
the  time,  yet  it  is  necessaril}-  open  to  proofs,  to  be  derived  from  sub- 
sequent events.  Thus,  for  example,  if  the  repairs,  when  subsequenth' 
made,  clearly  exceed  the  half  value,  it  is  plain  that  this  affords  one  of 
the  best  proofs  of  the  actual  damage  or  injury.  On  the  other  hand,  if 
the  subsequent  repairs  are  far  below  the  half  value,  this,  so  far  as  it 
goes,  affords  an  inference  the  other  way.  But  it  is  not,  and  in  many 
cases  cannot  be  decisive  of  the  right  to  abandon.  In  many  cases  of 
stranding,  the  state  of  the  vessel  at  the  time  may  be  such,  from  the 
innninency  of  the  peril,  and  the  apparent  extent  of  expenditures  re- 
quired to  deliver  her  from  it,  as  to  justif\'  an  abandonment;  although, 
by  some  fortunate  occurrence,  slie  mav  be  delivered  from  her  peril, 
without  an  actual  expenditure  of  one-half  of  her  value  after  she  is  in 


SECT.  I.]  BRADLIE    V.    MARYLAND    IXS.    CO.  851 

safet}-.  Under  such  circumstances,  if,  in  all  human  probabilit}',  the 
expenditures  which  must  be  incurred  to  deliver  her  from  her  peril,  are, 
at  the  time,  so  far  as  any  reasonable  calculations  can  be  made,  in  the 
highest  degree  of  probability,  beyond  half  value ;  and  if  her  distress 
and  peril  be  such  as  would  induce  a  considerate  owner,  uninsured,  and 
upon  the  spot,  to  withhold  any  attempt  to  get  the  vessel  off,  because 
of  such  apparently  great  expenditures,  the  abandonment  would  doubt- 
less be  good.  It  was  to  such  a  case  that  Lord  EUenborough  alluded,  in 
Anderson  v.  Wallis,  2  M.  &  Selw.,  when  he  said  :  "  There  is  not  any 
case,  nor  principle,  which  authorizes  an  abandonment,  unless  where  the 
loss  has  been  actually  a  total  loss,  or  in  the  higliest  degree  probable  at 
the  time  of  the  abandonment."  Mr.  Chancellor  Kent,  in  his  learned 
Commentaries,  Vol.  III.  321,  has  laid  down  the  true  results  of  the  doc- 
trine of  law  on  this  sul)ject.  "  The  i-iglit  of  abandonment  [says  he] 
does  not  depend  upon  the  certainty,  but  upon  the  high  probabilit}'  of  a 
total  loss,  either  of  the  property  or  of  the  voyage,  or  both.  The  insured 
is  to  act,  not  upon  certainties,  but  upon  probabilities  ;  and  if  the  facts 
present  a  case  of  extreme  hazard,  and  of  probable  expense,  exceeding 
half  the  value  of  the  ship,  the  insured  may  abandon  ;  though  it  should 
happen  that  she  was  afterwards  recovered  at  a  less. expense. "  ^  We 
have  no  difficultv,  therefore,  in  acceding  to  the  argument  of  the  coun- 
sel for  the  plaintiffs  in  error  on  this  point.  But  its  application  to  the 
ruling  of  the  court  will  be  considered  hereafter. 

In  respect  to  the  mode  of  ascertaining  the  value  of  the  ship,  and,  of 
course^  whether  she  is  injured  to  the  amount  of  half  her  value,  it  has, 
upon  tlie  fullest  consideration,  been  held  b}-  this  court,  that  the  true 
basis  of  the  valuation  is  the  value  of  the  ship  at  the  time  of  the  disas- 
ter ;  and  that,  if  after  the  damage  is  or  might  be  repaired,  the  ship  is 
not,  or  would  not  be  worth,  at  the  place  of  the  repairs,  double  the  cost 
of  the  repaiis,  it  is  to  be  treated  as  a  technical  total  loss.  This  was 
the  doctrine  asserted  in  the  Patapsco  Insurance  Com[)an3-  v.  South- 
gate,  5  Pet.,  604,  in  which  the  court  below  had  instructed  the  jury, 
that,  if  the  vessel  could  not  have  been  repaired  without  an  expenditure 
exceeding  half  her  value  at  the  port  of  the  repairs,  after  the  repairs 
were  made,  it  constituted  a  total  loss.  This  court  held  that  instruc- 
tion to  be  entirely  correct.  It  follows,  from  this  doctrine,  that  the 
valuation  of  the  vessel  in  the  policy,*  or  the  value  at  the  home  port,  or 
in  the  general  market  of  other  ports,  constitutes  no  ingredient  in  ascer- 
taining whether  the  injur}'  by  the  disaster  is  more  than  one-half  the 
value  of  the  vessel  or  not.  For  the  like  reason,  the  ordinarj-  deduction 
in  cases  of  a  partial  loss  of  one-third  new  for  old,  from  the  repairs,  is 

1  See  Orient  Ins.  Co.  v.  Adams,  123  U.  S.  67  (1887) ;  Spalding  v.  Alliance  Marine 
and  General  Assur.  Co.,  10  Hawaii,  190  (1896).  — Ed. 

2  Ace:  Peele  v.  Merchants  Ins.  Co.,  .3  Mason,  27,  70-73  (1822) ;  Allen  v.  Sugrue, 
8  B.  &  C.  561  (1828),  s.  c.  3  M.  &  R.  9  ;  Irving  v.  Manning,  6  C.  B.  391  (H.  L.  1848), 
8.  c.  1  H.  L.  C.  287. 

Contra  :  Deblois  v.  Ocean  Ins.  Co.,  16  Pick.  303,  310-313  (1835).  — Ed, 


852 


BRADLIE   V.    MARYLAND   INS.    CO.  [CHAr.  VIII. 


equally  inapplicable  to  cases  of  a  technical  total  loss,^  by  an  injury  ex- 
ceeding one-half  of  the  value  of  the  vessel.  That  rule  supposes  the 
vessel °to  be  repaired  and  returned  to  the  owner;  who  receives  a  cor- 
respondent benefit  from  the  repairs  beyond  his  loss,  to  the  amount  of 
the  one-third.  But  in  the  case  of  a  total  loss,  the  owner  receives  no 
such  benefit;  the  vessel  never  returns  to  him,  but  is  transferred  to  the 
underwriters.  If  the  actual  cost  of  the  repairs  exceeds  one-half  of  her 
value  after  the  repairs  are  made,  then  the  case  falls  directly  within  the 
predicament  of  the  doctrine  asserted  in  the  case  of  5  Pet.  604.  The 
same  limitations  of  the  rule,  and  the  reasons  of  it,  are  very  accurately 
laid  down  by  Mr.  Chancellor  Kent,  in  his  Commentaries,  Vol.  III.  330  ; 
and  in  Da  Costa  v.  Newnham,  2  T.  R.  407. 

If,  with  these  principles  in  view,  we  examine  the  first  instruction 
given  in  this  case  in  the  Circuit  Court,  it  will  be  found  to  be  perfectly 
correct.  Indeed,  that  part  of  the  instruction  whicli  declares  that  if 
the  brig  "could  not  be  got  off  and  repaired  without  an  expenditure  of 
money  to  an  amount  exceeding  half  her  value  at  the  port  of  New 
Orleans,  after  such  repairs  were  made,  then  the  plaintiflf's  are  entitled 
to  recover  for  a  total  loss  under  the  abandonment,"  is  precisely  in  the 
terms  of  the  instruction  given  in  The  Patapsco  Insurance  Company  v. 
Southgate,  5  Pet.  604.  The  error,  which  has  been  insisted  on  at 
the  argument  by  the  plaintiffs,  is  in  the  additional  direction  ;  that  "  in 
ascertaining  the  amount  of  such  expenditure,  the  jury  must  include  tho 
sum  for  whicli  tlie  brig  was  liable  to  the  salvors,  according  to  the  de- 
cree of  the  District  Court  of  Louisiana,  stated  in  the  evidence  :  "  which, 
it  is  contended,  removed  from  the  consideration  of  the  jury  the  right  to 
take  into  the  account  the  high  probability,  at  the  time  of  the  abandon- 
ment, of  the  allowance  of  a  greater  salvage,  and  even  to  the  extent  of 
the  fifty  per  cent  then  claimed  by  the  salvors.  And  in  support  of  the 
argument,  it  is  insisted  that  the  state  of  the  facts,  and  the  high  proba- 
bilities at  the  time  of  the  abandonment,  constitute  the  governing  rule  ; 
and  not  the  ultimate  result  in  the  subsequent  events.  But  it  appears 
to  us  that  tlie  argument  is  founded  upon  a  total  misunderstanding  of 
the  true  import  of  this  part  of  the  instruction.  The  court  did  not  un- 
dertake to  say,  and  did  not  say,  that  the  jury  might  not  properly  take 
into  consideration  the  high  probability  of  a  larger  salvage  at  the  time 
of  the  abandonment;  but  simply,  that  the  jury  must  include  in  the  half 
value,  the  amount  of  the  actual  salvage  decreed,  because  that  was,  in 
truth,  a  part  of  the  loss.  The  instruction  was,  therefore,  not  a  limita- 
tion restrictive  of  the  rights  and  claims  of  the  plaintiffs,  but,  in  fact,  a 

1  Ace:  Peele  v.  Merchants  Ins.  Co.,  3  Mason,  27,  73-77  (1822);  Wallace  v. 
Thames  and  Mersey  Ins.  Co.,  22  Fed.  U.  66  (C.  C,  E.  D.  Mich.,  1884). 

CviUra:  Del)lois  v.  Ocean  Ins.  Co.,  16  Pick.  303,  31.3-314  (183.5). 

In  Heehner  u.  Eagle  Ins.  Co.,  10  Gray,  131,  143  (1859),  Bigelow,  J.,  for  the  court, 
said :  "  By  the  well  settled  rule  of  law  in  this  cotnmonwealtii,  applicable  to  ])oIicies  of 
insurance,  wliere  an  injury  is  sustained  by  a  vessel,  the  loss  is  not  total  unless  tlie 
expense  of  repairs  exceed  fifty  per  cent  of  the  valuation  in  the  policy,  after  the  deduc- 
tion of  one  third  new  for  old.     Deblois  v.  Ocean  Ins.  Co.,  16  Pick.  314."  —  Ed. 


SECT.  I.]  CINCINNATI    INS.    CO.    V.    DUFFIELD.  853 

direction  in  favor  of  their  rights  and  claims,  and  in  support  of  the 
abandonment.  This  is  demonstrated  b\-  the  then  actual  position  of 
the  cause.  The  defendants  had  asked  an  instruction  that  the  cost  of 
the  repairs  only,  exclusive  of  the  salvage,  should  be  taken  into  con- 
sideration in  estimating  the  half  value  ;  and  also  that  the  one-third  new 
for  old,  should  be  deducted  from  the  amount  of  the  cost,  in  esti- 
mating the  half  value.  Tlie  court,  in  effect,  negatived  both  instruc- 
tions ;  and  in  the  particulars  now  objected  to,  there  was  a  positive 
direction  to  the  jur}*  not  to  exclude,  but  to  include  the  salvage,  in  the 
estimate  of  the  loss.  In  this  view  of  the  matter,  the  instruction  was 
most  favorable  to  the  plaintiffs  ;  and,  so  far  from  excluding  evidence 
which  might  show  the  amount  of  the  actual  damage  at  the  time  of  the 
abandonment ;  it  resorted,  and  very  properly  resorted  to  the  subsequent 
ascertainment  of  salvage  as  positive  evidence,  that  to  that  extent  at 
least,  the  actual  damage  was  enhanced  beyond  the  cost  of  the  repairs. 
AYe  are  entirely  satisfied  with  this  part  of  the  instruction,  in  this  view, 
which  seems  to  us  to  be  the  true  interpretation  of  it.^  .  .   . 

Upon  the  whole,  our  opinion  is  tliat  there  is  no  error,  in  the  instruc- 
tions given  or  refused  by  the  Circuit  Court,  and  the  judgment  is  there- 
fore affirmed,  with  costs. 


CINCIXXATI   INS.    CO.    v.   DUFFIELD   and  Others. 
Supreme  Court  of  Ohio,   185G.     6  Ohio  St.  200, 

Petition  in  error  to  reverse  the  judgment  of  the  Superior  Court  of 
Cincinnati,  at  general  term. 

An  insurance  was  effected  on  the  steamboat  "  Sara  Cloon,"  in  four 
insurance  companies  ;  the  agreed  value  of  the  boat  being  S20,000,  and 
amount  insured  in  each  office  $3,750,  or  in  all  815,000.  The  policy  in 
each  case  was  in  the  same  form  and  with  the  same  conditions. 

The  steamboat  having  been  sunk  in  the  Mississippi  River,  was,  by  a 
writing  executed  for  the  purpose,  abandoned  to  the  insurance  compa- 
nies ;  who,  b}'  means  of  persons  acting  for  them,  raised  the  boat,  and 
realized  from  the  wreck,  after  deductiug  charges  and  expenses,  the  sum 
of  83,000.  An  action  was  brouglit  by  the  owners,  who  effected  the 
insurance,  to  recover  onp-fomth  of  that  sum,  claiming~that  they  still 
retained,  after  the  abandonment,  an  interest  of  one-fourth  in  the  wreck. 
This  claim  was  resistedliynTe  insurane^e^compantes"6n~fTTe^round  that 
by  the  terras  and  conditions  of  the  policies  the  owners  wore  required  to 
abandon  not  only  to  the  extent  of  the  interest  insured,  but  all  interest 
in  the  subject-matter  insured.  The  part  of  the  policies  supposed  to 
bear  on  this  question  was  as  follows :  "  And  in  case  of  loss  or  misfor- 
tune, as  aforesaid,  it  shall  be  the  duty  of  the  assured,  their  agents  or 

^  The  remainder  of  the  opinion  dealt  with  the  latter  part  of  the  instruction  given, 
and  also  with  the  instruction  requested  by  the  plaintiffs,  but  refused.  — Ed. 


854  CINCINNATI   INS.   CO.    V.   DUFFIELD.  [CHAP.  VIII. 

assigns,  to  use  every  reasonable  effort  for  the  safeguard  and  recovery 
of  the  said  steamboat,  and  every  part  thereof,  and  if  recovered,  to 
cause  the  same  to  be  forthwith  repaired,  if  practicable  ;  and  in  case  of 
neglect  or  refusal  on  the  part  of  the  assured,  their  agents  or  assigns, 
to  adopt  prompt  and  sufficient  measures  for  the  safeguard  and  recovery 
thereof,  then  said  insurers  are  hereby  authorized,  and  shall  have  the 
election  to  interpose  and  recover  said  steamboat,  and  cause  the  same 
to  be  repaired  for  account  of  the  assured,  to  the  charges  of  which  the 
said  insurance  company  will  contribute  in  proportion  as  the  sum  herein 
insured  bears  to  the  agreed  value  in  this  policy,  or  to  consider  such 
neglect  or  refusal  as  an  abandonment,  and  be  entitled  to  recover  said 
steamboat,  or  any  part  thereof,  at  their  own  expense,  and  for  their 
own  use  and  benefit  ;■  and  in  no  case  whatever  shall  the  assured  have 
the  right  to  abandon,  until  it  shall  be  ascertained  that  the  recovery  and 
repairs  of  said  steamboat  are  impracticable  ;  nor  sell  the  wreck,  or  any 
part  thereof,  without  the  consent  of  this  company  ;  and  in  aliases  of 
abandonment  the  assiired  shaUjissigjuJratisf&t^wxfl.  f^p-t  oner  to  said 
insurance  company  all  their  interest  in  and  to  the  said  steamboat,  and 
every  part  thereoffree  of  all  claims  and  charges  lohatever.^' 

The  actiotTwas  submitted  for  trial  to  the  Superior  Court  of  Cincin- 
nati, at  special  term,  and  judgment  was  rendered  in  favor  of  the  insured 
for  one-fourth  of  the  sum  realized  from  the  wreck. 

To  reverse  tliis  judgment,  a  petition  in  error  was  preferred  by  the 
insurance  company'  before  the  Superior  Court,  at  general  term,  and 
the  judgment  at  special  term  was  atiirmed. 

To  reverse  this  judgment  of  affirmance,  the  present  petition  in  error 
is  prosecuted  in  this  court. 

In  argument,  counsel  confined  themselves  mainly  to  this  question : 
Under  a  form  of  policj'  above  mentioned,  what  is  the  legal  effect  of  the 
term  abandonment  f  Is  it  to  transfer  to  the  undei'writer,  as  and  for 
his  own,  the  entire  interest  of  the  insured  in  the  proceeds  of  the  wreck, 
or  only  the  interest  which  is  covered  by  the  policy? 

Coffin  and  Mitchell,  for  plaintiff  in  error. 

John  S.  Nixon,  for  defendants  in  error. 

Scott,  J.  In  order  to  have  a  clear  apprehension  and  correct  solu- 
tion of  the  question  made  in  this  case,  it  is  necessar}*  to  understand 
•what  is  meant  by  an  abandonment;  what  are  its  legal  effects,  and 
what  would  be  the  legal  rights  of  the  parties,  independent  of  the  pro- 
visions of  the  polic}'  on  tlie  subject  of  abandonment. 

The  term  abandonment,  as  used  in  policies  of  marine  insurance,  and 
ill  the  law  regulating  that  subject,  is  a  technical  one. 

"  An  abandonment  is  an  act  on  the  part  of  the  assured,  by  which  he 
r'^linquishes  and  transfers  to  the  underwriters  his  insurable  interest,  as 
far  as  it  is  a  subject  of  the  policy,  or  the  proceeds  of  it,  or  the  claims 
arising  from  it."     Phil,  on  Ins.  382. 

*'  The  abandonment  cannot  transfer  the  interest  of  the  assured  any 
further  than  that  interest  is  covered  by  the  policy."     Aruould,  1159. 


SECT.  I.]  CINCINNATI    INS.    CO.    V.    DUFFIELD.  855 

"  The  abandonment,  wlien  properl}-  made,  operates  as  a  transfer  of 
the  property  to  the  underwriter,  and  gives  him  a  title  to  it,  or  what  re- 
mains of  it,  as  far  as  it  was  covered  by  the  polic}'."     5  Pet.  622. 

Such  we  understand  to  be  the  well-settled  legal  effect  of  an  abandon- 
ment. It  operates  as  a  transfer  to  the  underwriter  of  the  property  in- 
sured, only  to  the  extent  of  the  indemnit}'  contemplated  by  the  policy  ; 
and  this  limitation  of  its  operation  is  not  only  sanctioned  b}-  the  au- 
thority of  the  elementary  writers  and  the  general  current  of  decisions, 
but  has  its  foundation  in  equity  and  sound  principle. 

Upon  what  principle  of  equity  should  the  underwriter,  in  case  of 
abandonment,  take  the  wreck,  not  only  of  that  which  he  has  insured, 
and  of  which  his  contract  binds  him  to  pa}'  the  full  agreed  value,  but 
also  of  that  which  he  has  not  insured,  and  for  which  he  is  in  no  event 
liable  to  pay? 

It  would  seem  equitable,  —  and  in  ordinary  cases  of  insurance  such  is 
doubtless  the  law,  — that  where  an  abandonment  may  be  and  is  legally 
made,  the  wreck,  or  its  proceeds,  inure  to  the  benefit  of  those  who  bear 
the  burden  of  the  loss,  — to  the  underwriters  in  proportion  to  the  parts 
b^them  severattyTTisured,  and  lo  the  owner^  m  ^I'oxjortiqn  to  the  part 
remaining  uninsured,  antl  as  to  which  he  is  virtuall}'  his  own  insurer. 
The  ground  upon  which  the  insurer  takes  the  wreck  is,  that  he  paj's 
the  part}'  assured  for  a  total  loss ;  and  to  the  extent  to  which  his  con- 
tract binds  him  thus  to  pay,  to  the  same  extent,  and  no  further,  is  he 
entitled  to  the  proceeds  of  the  wreck.  His  rights  originate  from  his 
obligations,  and  cannot  be  more  than  co-extensive. 

But  did  the  parties  intend,  b}'  the  clause  in  the  policy  out  of  which 
this  controversy  arises,  riiaterially  to  change  the  legal  rights  of  the  in- 
surer and  the  assured,  growing  out  of  and  incident  to  an  abandonment? 

That  clause  is  in  these  terms:  "In  all  cases  of  abandonment  the 
assured  shall  assign,  transfer,  and  set  over  to  said  insurance  compan}^ 
all  their  interest  in  and  to  the  said  steamboat,  and  every  part  thereof, 
free  of  all  claims  and  charges  whatever." 

The  right  of  the  party  assured  to  "  abandon  "  in  a  proper  case, 
seems  here  to  be  contemplated  and  stricth'  recognized  ;  and  yet  if  we 
adopt  the  construction  claimed  by  the  plaintiff  in  error,  the  policy 
does  not  permit  the  making  of  a  legal  technical  abandonment  under 
any  circumstances,  but  substitutes  therefor  a  transfer,  having  an  effect 
which  the  law  does  not  attach  to  an  abandonment. 

That  the  "  claims  and  charges  "  mentioned  in  this  clause  were  under- 
stood by  the  parties  to  refer,  not  to  the  interest  of  the  party  insured  in 
the  boat,  but  to  mortgages  or  other  liens  held  b}'  other  parties  against 
the  boat,  is  satisfactorily  shown  by  the  terms  of  the  guaranty-  taken 
by  the  plaintiff  in  error  from  the  defendants  on  the  payment  of  the 
sum  insured. 

The  construction  claimed  would,  in  cases  of  partial  insurance,  often 
prevent  an  abandonment,  where  the  settled  rule  of  law  would  authorize 
it,  or  would  defeat  that  indemnity,  which  is  the  very  ground  and  object 
of  all  legitimate  insurance. 


So6  CINCINNATI   INS.    CO.    V.   DUFFIELD.  [CHAP.  VIII. 

A  construction  leading  to  such  results,  so  vitally  changing  the  legal 
rights  of  the  parties,  and  working  apparent  injustice,  ought  not  to  be 
adopted,  unless  required  by  clear  and  explicit  language. 

We  tliink  a  different  construction  may  be  fairly  given  to  the  clause 
in  question  —  that  it  was  not  intended  to  clmnge  the  legal  effect  of  an 
abandonment,  which  the  framer  of  the  policy  may  be  presumed  to  have 
understood,  but  to  prescribe  the  form  in  which  the  transfer  should  be 
made  to  the  underwriters  of  the  interest  which  tliey  derive  by  law  from 
the  abandonment,  and  to  point  out  the  mode  in  vvliich  the  intention  to 
abandon  should  be  unequivocally  expressed. 

The  elementary  writers  tell  us  that  "  no  particular  form  of  aban- 
donment is  prescribed,  nor  is  the  form  material;"  "it  has  not  been 
considered  necessar}-,  as  a  general  rule,  that  it  should  be  made  in 
writing."     Phillips  on  Ins.  447. 

In  Chesapeake  Insurance  Co.  v.  Stark,  6  Cranch,  272,  C.  J.  Mar- 
shall, giving  the  opinion  of  the  court,  said:  "The  informalit}'  of  the 
deed  of  cession  is  thought  unimportant,  because,  if  the  abandonment 
was  unexceptionable,  the  propert}'  vested  immediately  in  the  under- 
writers, and  the  deed  was  not  essential  to  the  rights  of  either  party." 

As  no  deed  of  cession,  transfer,  writing,  or  particular  form  is  essen- 
tial to  an  abandonment,  doubts  iiave  sometimes  arisen  as  to  what  will 
constitute  a  valid  abandonment.  To  prevent  all  difficulty  or  mis- 
understanding on  this  point,  we  may  reasonably  suppose  was  the  object 
in  requiring  that  the  abandonment  should  be  accompanied  and  evi- 
denced by  a  formal  assignment  and  transfer  of  the  property  insured. 
And  the  clause  may  have  also  been  intended  to  provide  that  the  aban- 
donment should  be  general,  embracing  the  whole  subject-matter  of  the 
insurance. 

Besides,  we  understand  an  abandonment  to  operate  as  a  transfer  to 
the  underwriter  of  the  legal  title  to,  and  right  of  disposal  of  what  re- 
mains of  the  thing  insured  ;  and  the  formal  assignment  piovided  for  in 
the  clause  under  consideration,  ma^-  reasonably  have  been  intended 
simply  to  facilitate  the  sale  of  the  wreck  by  the  insurance  companies, 
without  discharging  them  from  their  legal  liability  to  account  to  the 
party  assured  for  his  proportion  of  the  proceeds.  Such  discharge  can 
only  be  effected  by  language  so  clear  and  explicit  as  to  leave  no  reason- 
able ground  for  misappreliension  on  the  part  of  the  insured. 

Judgment  affirmed} 

Bartley,  C.  J.,  and  Swan,  Brinkerhoff,  and  Bowen,  JJ.,  con- 
curred. 

1  See  Natchez  and  New  Orleans  P.  &  N.  Co.  v.  Louisville  Underwriters,  44  La.  Ann. 
714  (1892)  ;  Harvey  v.  Detroit  F.  &  M.  Ins.  Co.,  120  Mich.  601,  610-611  (1899). 
On  total  loss  in  general,  see  also  :  — 

Pole  V.  Fitzgerald.   Willes,  641,  644-648   (Ex.  Ch.  1752);  s.  c.  s«6  now.  Fitz- 

Gerald  r.  Pole,  4  Bro.  P.  C.  (Tonil.  ed.)  439,  449  (H.  L.  1754) ; 
Parsons  v.  Scott,  2  Taunt.  362  (1810) ; 
Biays  v.  Chesapeake  Ins.  Co.,  7  Cranch,  415  (1813) ; 
Falkner  v,  Uitchie,  2  M.  &  S.  290  (1814) ; 


SECT.  I.]  CINCIXXATI    INS.    CO.    V.    DUFFIELD. 


ibi 


Smith  V.  Robertson,  2  Dow,  474  (1814)  ; 

Hunt  V.  Royal  Exchauge  Assurance,  5  M.  &  S.  47  (1816)  ; 

Houstman  v.  Tliorntou,  Holt  N.  P.  242  (1816)  ; 

Cambridge  v.  Anderton,  4  D.  &  K.  203  (1824)  ■  s.  c.  2  B.  &  C.  691  • 

Gordon  v.  Massachusetts  F.  &  M.  Ins.  Co.,  2  p'icli.  249  (1824)  • 

Humphreys  v.  Union  Ins.  Co.,  3  iMason,  429  (1824) ; 

Patapsco  Ins.  Co.  v.  Southgate,  5  Pet.  604  (1831)  ;' 

Sewall  V.  United  States  Ins.  Co.,  11  Picli.  90  (1831)  ; 

Cincinnati  Ins.  Co.  v.  Bakewell,  4  B.  Mon.  541  (1844) ; 

Moss  i\  Smith,  9  C.  B.  94  (1850)  ; 

Rosetto  V.  Gurney,  11  C.  B.  176  (1851); 

Ralli  V.  Janson,  6*  E.  &  B.  422  (Ex.  Ch.'l856) ; 

Duff  I'.  Mackenzie,  3  C.  B.  n.  s.  16  (1857) ; 

McConochie  v.  Sun  Mut.  Ins.  Co.,  26  N.  Y.  477  (1863)  • 

Farnworth  v.  Hyde,  L.  R.  2  C.  P.  204  (Ex.  Ch.  1866) ;  ' 

Rankin  v.  Potter,  L.  R.  6  H.  L.  83  (1873) ; 

Provincial  Ins.  Co.  i-.  Leduc,  L.  R.  6  P.  C.'224,  237,  241  (1874)  ; 

Hnhbell  v.  Great  Western  Ins.  Co.,  74  N.  Y.  246,  260-261  (1878); 

Kaltenboch  v.  Mackenzie,  3  C.  P.  D.  467  (C.  A.  1878) ; 

Boardman  v.  Boston  M.  Ins.  Co.,  146  Mass.  442  (1888) ; 

Carr  v.  Security  Ins.  Co.,  109  N.  Y.  504  (1888) ; 

Mayo  V.  India  Mut.  Ins.  Co.,  152  Mass.  172  (IS^O) ; 

Sailing  Ship  Blairmore  Co.  r.  MacreiHe,  [1S98]  A.  C.  593  ; 

AVashburn  &  Moen  Mfg.  Co.  r.  Reb-ance  M.  Ins.  Co.,  179  U.  S.  I  (1900). 
_     And  on  the  amount  of  recovery  under  a  policy  procured  bv  the  owner  of  a  limited 
interest,  see :  — 

Stuart  V.  Columbian  Ins.  Co.,  2  Crancli  C.  C.  442  (1823), —vendor ; 

Irving  r.  Richardson,  2  B.  &  Ad.  193  (1831),  — mortgagee; 

Lazarus  v.  Commonwealth  Ins.  Co.,  19  Pick.  81  (1837)7— mortgagor; 

Hancox  v.  Fishing  Ins.  Co.,  3  Sumner,  132  (1837),  —  lienholder;  '' 

Finney  v.  Warren  Ins.  Co.,  1  Met.  16  (1840),  — part  owner; 

Joyce  V.  Kennard,  L.  R.  7  Q.  B.  78  (1871),  —carrier; 

Ebsworth  V.  Alliance  M.  Ins.  Co.,  L.  R.  8  C.  P.  596  (1873) ;  s.  c.  reversed,  by 

arrangement  between  the  parties,  43  L.  J.  n.  s.  C.  P.  394  (Ex.  Ch.  1874),— 

consignee ; 
Knight  i:  Eureka  F.  &  M.  Ins.  Co  ,  26  Ohio  St.  664  (1875),  —  part  owner; 
Murdock  V.  Franklin  Ins.  Co.,  33  W.  Va.  407  (1889),  —  charterer.  — Ed. 


g58  HAKKIS    V.    EAGLE    FIKE    COMPANY.  [CIIAP.  VIII. 


SECTION  II. 

Fire   Insurance. 

{A)  General  Principles  as  to  Both  Open  and  Valued  Policies. 

HARRIS  V.  EAGLE  FIRE  COMPANY. 
Supreme  Court  of  New  York,  1810.     5  Johns.  368. 

This  was  an  action  of  covenant,  on  a  policy  of  insurance  against 
fire.  At  the  trial  of  the  cause,  a  verdict  was  taken  for  the  plaintiff,  by 
consent,  for  1,235  dollars  and  10  cents,  subject  to  the  opinion  of  the 
court  on  a  case,  containing  the  following  facts  :  — 

The  plaintiff  resided  in  Riciimond,  in  Virginia,  where  he  manufactured 
tobacco,  in  a  particular  manner;  and  procured  a  policy  of  insurance 
to  be  made  by  the  defendants  against  fire,  upon  manufactured  and 
unmanufactured  tobacco,  utensils,  and  other  property,  to  the  amount 
of  20,000  dollars,  and  which  was  tlius  described  in  tlie  policy. 

"  Ten  thousand  dollars  upon  his  (the  plaintiff's)  merchandise  and 
utensils  specified  on  the  back  hereof,  and  contained  in  his  two-story 
frame  building,  occupied  by  the  assured,  for  a  tobacco  manufactory, 
the  said  building  being  marked  No.  1,  on  a  plan  filed  with  the  sur- 
veyor's reports,  No.  800. 

"  Ten  thousand  dollars  upon  his  merchandise  and  other  propert}-,  as 
specified  on  the  back  hereof,  contained  in  his  one-story  wooden  build- 
ing adjoining  the  aforesaid  building,  and  marked  on  said  plan,  No.  2." 

The  memorandum  on  the  back  of  the  policy,  and  referred  to  in  the 
policj',  specifies  among  other  articles  insured,  in  building  No.  1,  "  380 
kegs  of  manufactured  tobacco,  worth  9,600  dollars." 

The  policy  was  dated  31st  October,  1807,  and  the  insurance  was  to 
continue  for  one  year  from  the  date. 

A  fire  happened  on  the  6th  March,  1808,  which  consumed  a  consid- 
erable portion  of  the  property  insured,  and  among  it  157  kegs  of 
manufactured  tobacco.  The  plaintiff,  it  was  admitted,  was  entitled  to 
recover  for  the  loss  of  the  property  insured,  and  had  been  paid  b}'  the 
defendants  for  all  of  it,  except  the  157  kegs  of  manufactured  tobacco. 
And  the  point  in  controversy  between  the  parties  was,  as  to  the  mode 
of  estimating  the  loss  on  those  kegs. 

The  manufactured  tobacco  was  of  the  same  kind  as  that  which  the 
plaintiff  had  sold,  for  several  3-ears  previous  to  the  fire,  and  of  the 
same  quality  as  the  380  kegs  specified  on  the  back  of  the  policy,  as 
worth  9,600  dollars  ;  and  which  were  estimated  under  their  average 
value,  in  reference  to  the  price,  at  which  they  would  have  sold  to  a 
bona  fide  jjurchaser,  out  of  the  manufactory  ;  but  it  was  the  practice 
of  the  plaintiff  and  his  agents  (without  any  warranty  for  that  purpose), 


SECT.  II.]  HARRIS    V.    EAGLE   FIRE    COMrANY.  859 

to  take  back  any  of  the  article  sold  to  a  purchaser,  which  proved  to  be 
injured  in  manufacturing,  and  to  return  the  price,  or  give  other  tobacco; 
and  kegs  of  sucli  tobacco  had  been  sometimes  returned  in  consequence. 

The  plaintiff  claimed  to  be  compensated  for  the  157  kegs  of  manu- 
factured tobacco,  at  the  same  rate  as  is  specified  in  the  memorandum 
on  the  back  of  the  polic}-,  to  be  the  worth  of  the  whole  380  keo-s,  the 
157  kegs  being  of  the  same  kind  and  qualit}-. 

The  defendants  insisted  that  the  plaintiff  would  be  indemnified,  if  he 
received  the  first  cost  of  the  tobacco,  together  with  the  cost  of  manu- 
facturing it,  and  a  reasonable  allowance  for  his  attention,  and  the  use 
and  risk  of  the  capital  employed.  It  was  admitted,  that  if  such  a  mode 
of  calculation  was  adopted,  12i  percent  on  the  amount  would  be  such 
reasonable  allowance ;  and  that  according  to  that  mode  of  calculation 
the  plaintiff  had  been  fully  paid.  It  was  agreed,  that  if  the  court 
should  be  of  opinion  that  the  loss  was  to  be  estimated  in  the  mode 
insisted  on  by  the  plaintiff,  the  verdict  was  to  stand,  otherwise  the 
verdict  was  to  be  set  aside,  and  judgment  entered  for  the  defendants  ; 
and  that  any  mistake  in  the  sum  for  which  the  verdict  was  taken, 
should  be  rectified. 

Boyd,  for  the  defendants. 

T.  A.  Emmet,  contra. 

Hoffman,  in  repl}'. 

Thompson,  J.,  delivered  the  opinion  of  the  court.  The  rule  by 
which  the  loss  is  to  be  calculated,  is  the  only  question  arising  in  this 
case.  The  loss  was  a  total  destruction  of  157  kegs  of  manufactured 
tobacco  ;  and  the  assured  claims  the  price  for  which  they  would  have 
sold  at  his  manufactory  to  a  hona  fide  purchaser ;  being,  as  he  con- 
tends, the  valuation  in  the  policy.  The  underwriters  contend,  that 
they  ouglit  only  to  pay  the  first  cost  of  the  tobacco,  together  with  the 
cost  of  manufacturing  the  same,  and  a  reasonable  allowance  for  the 
use  and  risk  of  the  capital  of  the  manufacturer,  and  for  his  attention. 
Which  of  these  rules  ought  to  govern,  must,  it  appears  to  me,  depend 
upon  the  question,  wliether  this  is  to  be  deemed  an  open  or  valued  policy. 
"We  find  in  the  books  but  few  cases  in  which  the  subject  of  insurance 
against  loss  by  fire  has  come  under  consideration,  and  none  which 
throw  any  light  on  the  present  question.  The  rules  applicable  to 
marine  insurance,  so  far  as  the  analogy  between  the  two  cases  will 
hold,  ought  to  govern  us.  And  according  to  those  rules,  this  must,  I 
tliink,  be  considered  a  valued  policy,  so  far  as  relates  to  the  kegs  of 
tobacco.  The  case  states,  that  among  the  articles  insured,  there 
were  380  kegs  manufactured  tobacco,  worth  9,600  dollars;  this  was 
the  rate  at  which  the  tobacco  was  estimated,  in  making  up  the  20,000 
dollars,  the  amount  of  the  insurance.  The  premium  was  paid  accord- 
ing to  this  valuation;  and  the  157  kegs  which  were  lost,  are  expressly 
stated  to  be  of  the  same  kind  and  quality  as  the  whole  380  kegs. 
We  have,  therefore,  an  infallible  rule  by  which  to  estimate  the  several 
and  distinct  value  of  each  keg  of  tobacco.     But  it  was  said  ou  the 


860 


HARRIS    V.    EAGLE    FIRE    COMPANY.  [CHAP.  VIII. 


art^ument,  that  admitting  tliis  to  be  a  valued  policy,  it  would  make  no 
difference,  for  it  was  only  in  case  of  a  total  loss,  that  there  was  any 
distinction  between  an  open  and  a  valued  policy ;  that  in  case  of  a  partial 
loss,  the  like  inquiry  into  the  true  amount  of  such  loss  is  to  be  made, 
whether  the  policy  be  of  the  one  sort  or  the  other.  This  is  undoubtedly 
true,  when  ascertaining  the  extent  of  damage  which  the  particular  sub- 
ject has  sustained,  and  when  there  was  not  an  absolute  destruction  of 
the  subject.  But  where  there  is  an  actual  total  loss  of  any  article,  dis- 
tinctly valued  in  the  policy,  that  valuation,  I  apprehend,  must  govern 
in  all  eases.  The  valuation  in  a  policy,  is  in  the  nature  of  liquidated 
damages,  to  save  the  necessity  of  proving  them.  In  case  of  a  total 
loss  of  the  subject,  by  allowing  the  value  to  be  inserted  in  the  policy,  the 
underwriter  agrees  that  it  shall  be  taken  as  there  stated.  This  valua- 
tion is  always  considered  as  the  fair  amount  of  the  prime  cost,  or  at 
least  that  which  the  parties  have  agreed  to  adopt  as  such.  (1  Marsh. 
199.)  If  in  the  valuation  of  an  article  manufactured  by  the  assured, 
he  has  chosen  to  estimate  his  labor  and  supposed  profits,  and  to  pay  a 
premium  therefor,  I  see  no  objection  against  it.  It  furnishes  no  evi- 
dence of  a  fraudulent  intention  to  overvalue. 

In  France,  where  almost  all  policies  are  valued,  if  the  goods  be  of 
the  growth  or  manufacture  of  the  assured,  the  current  price  is  always 
adopted  as  the  value.  (2  Marsh.  533.)  The  effect  of  a  valuation  is 
only  fixing  conclusively  the  prime  cost ;  if  it  be  an  open  policy,  the 
prime  cost  must  be  proved  ;  if  a  valued  policy,  it  is  agreed.  (2  Burr. 
1171.) 

In  the  case  of  Lewis  v.  Rucker,  2  Burr.  1167,  Lord  Mansfield,  through- 
out, speaks  of  the  prime  cost  and  valuation,  as  meaning  the  same  thing. 
In  speaking  of  the  general  nature  of  the  contract  of  insurance,  he  says, 
""•  The  insurer  engages,  so  far  as  the  prime  cost  or  value  in  tlie  policy, 
that  the  thing  shall  come  safe.  If  the  goods  be  totally  lost,  he  must 
pay  the  prime  cost,  that  is,  the  value  of  the  thing  he  insured  at  the 
outset.  If  part  of  the  cargo,  capable  of  a  several  and  distinct  valua- 
tion, at  the  outset,  be  totally  lost,  as  if  there  be  one  hundred  hogsheads 
of  sugar,  and  ten  happen  to  be  lost,  the  insurer  must  pay  the  prime 
cost  (or  valuation)  of  those  ten  hogsheads.  But  where  an  entire  indi- 
vidual, as  one  hogshead,  happens  to  be  spoiled,  no  measure  can  be 
taken  from  the  prime  cost,  to  ascertain  the  quantity  of  such  damage." 

To  apply  those  rules  to  the  case  before  us.  The  parties  have  agreed, 
in  order  to  save  the  necessity  of  particular  proof  in  case  of  loss,  that 
the  valuation  in  the  policy  shall  be  considered  the  prime  cost  of  the  to- 
bacco. That  is,  that  the  prime  cost  of  380  kegs  of  tobacco,  shall  be 
estimated  at  9,600  dollars ;  each  keg  is,  therefore,  capable  of  a  several 
and  distinct  valuation.  There  has  been  a  total  loss  of  157  kegs  of  this 
tobacco,  and  according  to  Lord  Mansfield's  doctrine,  the  underwriters 
must  pay  the  prime  cost,  or  valuation,  of  the  157  kegs.  Had^the^SO^ 
kegsbeen  totally  destroyed,  would  there  have  b^eii_aiiy  doubt,  but  that 
nic^fendants  mifst  have  paid  the  9T600  dollars?    I  see  no  reasoiTwliy 


SECT.  II.]  NICOLET   V.   INSURANCE   COMPANY.  861 

a  difTerent  rule  should  prevail  where  there  has  been  a  total  loss  of  any 
number  of  thekegs/each  one  being  of  equal  weight  and  quality.  There 
is  much  greater  certainty  and  simplicity  in  this  mode  of  calculation, 
than  to  go  into  an  inquir}'  as  to  the  value  of  the  I'aw  material,  and  the 
expense  of  manufacturing  it.  There  is  no  pretence  that  there  has  been 
an}'  fraud,  or  over-valuation. 

We  are,  therefore,  of  opinion,  that  the  plaintiff  is  entitled  to  judg- 
ment for  the  amount  of  the  verdict. 

Judgment  for  the  plaintiff .^ 


NICOLET  ET  AL.    V.  INSURANCE   COMPANY. 
Supreme  Court  of  Louisiana,  1832.     3  La.  366. 

Appeal  from  the  court  of  the  first  district. 

This  was  a  claim  for  loss  under  an  insurance  from  fire.  The  policy 
stated,  "thatT.  Nicolet  &  Co.  had  paid  the  defendants  the  sum  of  one 
hundred  dollars  for  insurance  from  loss  or  damage  by  fire,  according 
to  the  tenor  of  the  conditions  hereunto  annexed,  not  exceeding  in  each 
case  the  sum  or  sums  hereinafter  recited,  upon  the  property  herein  de- 
scribed, in  the  place  or  places  herein  set  forth  and  not  elsewhere  (unless 
allowed  by  indorsement  previously  made,  as  set  forth  in  the  margin),  viz  : 
on  cotton  to  the  amount  of  twenty  thousand  dollars,  oi-  as  may  appear 
to  that  extentJocated_iP_the_ir  names,  in  seven  named  presses,  say, 
t\:^eiit^  thousand  dollars."  On  the  same  sheet  were  printed  several 
articles  entitled,  "  Conditions  of  Insurance."  The  first  of  which  stated 
that  "  each  building  must  be  separately  valued  and  a  specific  sum  in- 
sured thereon,  and  in  Hke  manner,  a  separate  sum  insured  on  the  prop- 
erty contained  therein."  The  eleventh  article  stated,  "  that  for  the 
further  convenience  of  merchants  and  others,  who  have  property  in 
two  distinct  buildings,  the  same  may  be  insured  with  the  customary 
average  clause." 

No  average  clause  was  written  out,  but  proof  was  given  of  what  was 
the  usual  average  clause,  and  two  witnesses  proved  that  it  was  usual 
to  insert  it  in  the  policies  of  another  office ;  viz.,  The  Louisiana  State 
Insurance  Office,  tliough  they  stated  no  instance  had  occurred  of  a  loss 
being  paid  under  such  circumstances.  On  the  back  of  the  policy  was 
indorsed  T.  Nicolet  &  Co.,  cotton,  six  months,  twenty  thousand  dollars 
at  one-half  per  cent,  one  hundred  dollars ;  and  it  was  proved  that  from 
one-third  to  one-half  per  cent  was  the  current  premium  for  the  risk  on 
a  single  press. 

Hart's  press,  one  of  the  seven,  was  burned,  and  the  plaintiffs  had 
therein,  at  the  time,  five  hundred  and  fifty-seven  bales  of  cotton,  of 
which  four  hundred  and  sixty-three,  worth  seventeen  thousand  eight 

1  See  Cushman  v.  Northwestern  Ins.  Co.,  34  Me.  487  (1852).  —Ed. 


362  NICOLET   V.   INSURANCE   COMPANY.  [CHAP.  VIII. 

bundred  and  fortj-'sis  dollars,  were  lost,  and  ninety-four,  the  value  of 
which  was  not  shown,  were  saved. 

There  was  also,  at  the  same  time,  in  the  other  six  presses,  four  hun- 
dred and  fifty-seven  bales,  the  value  of  which  was  not  shown. 

To  the  plaintiflTs  application  for  payment,  the  defendants  objected, 
unless  an  account  was  furnished  of  the  amount  of  cotton  at  risk  in  the 
remaining  six  presses,  which  plaintiffs  refused  to  give.  Suit  was  then 
brought,  the  defendants  paid  eight  thousand  five  hundred  dollars  with- 
out prejudice,  and  it  was  prosecuted  for  the  balance.  There  was  a 
verdict  ami  judgment  for  the  plaintiflTs,  and  the  defendants  appealed. 

Strawhridfje,  for  appellants. 

Xiockett,  for  appellees. 

Matuews,  J.,  delivered  the  opinipii  of  the  court. ^  .  .  .     ..^ 

The  sole  question  presented  by  the  "case  to  be  determined  is,  whether 
the  insurers  are  bound,  according  to  a  just  and  legal  interpretation  of 
their  contract,  to  indemnify  the  insured  to  the  full  extend  of  their  loss, 
or  only^J>/-o  rata  on  an  average  estimate  of  the  amount  lost,  compared 
with  the  value  of  all  the  cotton  stored  in  the  various  presses  mentioned 
in  the  polic}'. 

The  counsel  for  the  appellants  relies  on  two  principal  grounds  for  a  re- 
versal of  the  judgment  rendered  by  the  court  below.  He  insists  :  1 .  That 
the  loss  must  be  averaged  according  to  an  express  condition  of  the 
policy.  2.  If  such  condition  be  not  expressed  in  such  a  manner  as  to 
bind  the  insured  to  submit  to  average,  a  legal  construction  of  the  con- 
tract imposes  on  them  this  obligation.  The  clause  of  the  policy  as- 
sumed as  giving  a  right  to  the  insurers  to  claim  the  benefit  of  average, 
is  found  in  the  eleventh  article  of  a  printed  paper  attached  to  the  con- 
tract of  insurance,  and  headed  conditions  of  insurance.  These  may 
be  presumed  to  be  the  conditions  on  which  insurances  can  be  obtained 
by  applicants  to  the  compan}-.  They  are  twelve  in  number,  and  all 
favorable  to  the  interests  of  the  insurers ;  but  certainly  may  be  waived 
by  the  party  in  whose  favor  they  are  stipulated ;  and  if  a  contract,  by 
which  risk  is  assumed,  contain  express  agreements  legally  irreconcilable 
with  these  printed  conditions,  the  former  must  prevail.  The  article 
relied  on  is  in  these  words  :  "  For  the  further  convenience  of  merchants 
who  may  have  property  in  two  or  more  distinct  buildings,  the  same  may 
be  insured  in  one  sum  with  the  customary  average  clause."  Suppose, 
however,  an  insurance  be  made  without  this  clause,  would  it  be  the 
duty  of  a  court,  called  on  to  interpret  the  contract  of  the  parties,  to 
consider  everything  as  stipulated  In  it  which  it  might  by  a  grant  have 
contained,  in  the  absence  of  any  clause  to  that  effect  ?  We  think  not. 
This  article  contains  an  enunciation  to  the  public  that  the  New  Orleans 
Insurance  Company  will  insure  property  in  two  or  more  distinct  build- 
ings, in  one  sum,  with  the  customary  average  clause,  but  does  not  de- 
clare that  thoy  will  not  make  such  insurances  without  that  clause.  In 
the  article  immediately  preceding,  it  is  declared  that  ''no  polic}'  for  a 

1  A  passage  stating  the  case  has  been  omitted.  —  Ed. 


SECT.  II.]  NICOLET   V.    INSUKA^XE    COMPANY.  863 

shorter  period  than  a  year  shall  be  issued  to  cover  other  than  specific 
goods  identified  by  marks  and  numbers."  But  in  the  very  policy  be- 
fore us  we  find  this  company  insuring  property  for  six  months  onl}-, 
without  specification,  either  by  marks  or  numbers,  yet  it  is  not  pre- 
tended that  the  contract  is  void  on  this  account,  although  directly  op- 
posed to  the  condition  stated  in  the  printed  articles.  The  absurdity  of 
such  a  pretention  is  perhaps  the  reason  why  it  has  not  been  urged 
against  the  plaintiffs.  The  difference  of  absurdity  is  not  easily  per- 
ceived between  insisting  on  an  article  which  would  entirely  annul  the 
contract  and  one  which  might  radically  change  the  nature  and  extent 
of  the  obligations  created  by  it.  We  are  of  opinion  that  the  clause 
relating  to  average,  not  being  inserted  in  the  body  of  the  policy,  may 
be  considered  as  waived.^  .   .  . 

"Whether  the  defendants  in  the  present  case  be  bound  according  to  a 
just  and  legal  interpretation  of  their  contract  to  indemnify  the  insured 
to  the  full  extent  of  their  loss  or  only  by  average  (leaving  out  of  view 
the  clause  of  the  eleventh  article,  which  might  have  been  inserted)  is  a 
question  not  of  easy  solution. 

The  rules  which  would  govern  in  a  case  of  marine  insurance  similar 
to  the  present,  appear  to  be  well  settled,  and  the  principle  which  pre- 
vails in  the  construction  of  a  contract  of  the  former  kind,  seems  to  be 
firmly  established  and  fixed  by  law  and  usage  in  most  commercial 
countries ;  and  has  been  adopted  as  a  rule  of  decision  in  the  United 
States.  Accoi'ding  to  this  principle,  in  the  event  of  a  partial  loss  on 
vessels  or  merchandise  insured  against  risks  by  sea,  an  average  takes 
place,  regulated  by  a  percentage  on  the  whole  value  of  the  property 
insured,  whether  that  value  be  entirely  covered  by  the  policy  or  not. 
If  the  insurance  be  for  less  than  the  whole,  the  underwriters  are  re- 
sponsible only  in  the  proportion  which  the  part  of  which  they  have 
assumed  the  risk,  bears  to  the  whole.   Phillips  on  Ins.  p.  372  ;  Park,  137. 

The  doctrine  established  in  England  and  the  United  States,  relative 
to  adjustment  in  cases  of  partial  loss  on  property  covered  by  marine 
insurances,  seems  to  prevail  in  France  to  the  same  extent  in  contracts 
of  insurance  against  loss  and  damage  by  fire,  as  appears  in  a  new 
treatise  on  insurance  against  fire,  written  by  Boudousquie,  and  edited 
in  1829.     See  this  work,  pp.  187,  357-8. 

How  a  difference  in  rules  of  interpretation  of  a  contract  of  assurance 
against  loss  by  fire,  and  one  against  loss  by  sea,  can  reasonably  exist, 
it  is  difficult  to  perceive.  The  first  principles  on  which  any  course  of 
reasoning  can  be  fairly  pursued  are  certainly  the  same  in  both  cases. 
The  intention  of  the  parties  to  either  contract  must  be  sought  for  in 
the  expressions  of  the  instrument  from  which  these  obligations  result. 
Let  us  examine  the  policy  now  under  consideration,  independent  of 
that  general  usage  which  has  assumed  the  force  of  law,  in  relation  to 
marine  insurances.  The  plaintiffs  procured  insurance  on  cotton  to  the 
amount  of  twenty  thousand  dollars,  located  in  their  names  in  seven 

1  A  passage  foreign  to  the  amount  of  recovery  has  been  omitted.  —  Ed. 


864  NICOLET   V.   INSURANCE   COMPANY.  [CHAP.  VIII. 

different  storehouses,  for  which  they  paid  a  premium  of  one  hundred 
dollars.  In  consideration  of  this  premium,  the  company  promised  to 
pay  to  the  assured  for  all  such  damage  and  loss  as  should  happen  by 
fire  to  the  property  insured,  not  to  exceed  the  sum  of  twenty  thousand 
dollars.  It  appears  by  the  evidence  of  the  case  that  the  plaintiffs  had 
cotton  to  the  value  of  thirty-nine  thousand  and  eighty-four  dollars 
(located  in  the  various  places  as  designated  in  the  policy)  at  the  time 
when  part  of  it,  valued  at  seventeen  thousand  eight  hundred  and  forty- 
six  dollars,  was  destroyed  by  fire  by  the  burning  of  one  of  the  ware- 
houses in  which  it  was'stored.  An  obligation  to  pay  more  than  twenty 
thousand  dollars  could,  in  no  event,  have  been  imposed  on  the  insurers. 
If  the  property  at  risk  had  been  of  a  value  less  than  this  amount,  the 
assured  would  have  been  entitled  to  no  more  than  an  indemnity  equiva- 
lent to  their  loss  and  the  sum  stipulated  in  the  contract  reducible  to 
the  actual  damage.  If  the  property  insured  exceeded  the  amount  cov- 
ered by  the  policy,  the  indemnity,  in  the  event  of  a  total  loss,  could  not 
be  enlarged  so  as  to  afford  full  protection.  In  the  first  hypothesis  the 
contract  is  favorable  to  the  insurers,  because  less  was  put  at  risk  than 
an  equivalent  to  the  premium  ;  or,  if  they  are  obliged  to  return  a  part, 
the  premium  and  risk  might  be  deemed  correlatives.  In  the  second, 
they  are  clearly  so,  according  to  the  contract.  This  correspondence 
between  premium  and  risk  is,  perhaps,  a  fundamental  principle  of  all 
agreements  to  indemnify  for  losses.  But  in  a  contract  where  the  obli- 
gation to  pay  on  account  of  loss  can  in  no  event  surpass  the  relative 
premium  paid,  it  would  seem  that  justice  ought  to  require  tlie  obligors 
to  make  good  the  full  amount  of  damages  sustained  by  the  destruction 
of  any  part  of  the  property  insured  to  that  amount.  The  amount  in- 
sured by  the  present  policy  was  not  sufficient  to  cover  the  whole  of  the 
property  put  at  risk,  and  consequently  could  not  protect  all  the  parts. 
All  were,  however,  in  danger,  and  it  may  as  well  be  considered  as 
attaching  to  the  part  destroyed  as  that  which  was  saved  from  the  fire. 
The  company  bind  themselves  by  the  contract  to  pay,  make  good  and 
satisfy  all  such  damage  or  loss  as  shall  happen  by  fire  to  the  property 
insured  ;  and  it  is  shown  by  the  evidence  that  loss  has  been  sustained 
amounting  to  seventeen  thousand  eight  hundred  and  forty-six  dollars. 
Looking  alone  to  this  contract,  could  it  be  said  in  truth  that  its  obliga- 
tion may  be  discharged  by  the  pa^-raent  of  a  sum  less  than  all  the 
damage  and  loss  suffered  by  the  insured?  Their  intention  was  evi- 
dently to  cover  the  risks  on  all  and  every,  or  an}-  part  or  parcels  of  the 
cotton  insured,  to  the  extent  of  twent}-  thousand  dollars,  or  under  that 
sum,  as  loss  might  happen  ;  and  there  is  nothing  on  the  face  of  the  policy 
which  shows  that  the  insurers  did  not  acquiesce  in  this  intention.  A 
different  interpretation  would  not  afford  complete  indemnity,  although 
such  would  be  required  in  conformit}'  with  rules  as  laid  down  in  Bou- 
dousqiiie's  Treatise  on  Insurance  against  Fire  ;  but  they  are  not  the 
rules  of  construction  which  seem  to  prevail  in  the  United  States ;  and 
the  latter,  we  think,  may  be  justly  adopted  in  the  decision  of  the 


SECT.  II.]  WALLACE    V.   INSURANCE    COMPANY.  865 

present  case,  without  entering  into  any  discussion  of  the  weight  of 
aiguments  which  might  be  urged  in  opposition.^  See  Phillips  on  Ins. 
p.  375,  note,  and  G  Pickering,  p.  186,  Reports  of  Cases  in  the  Supreme 
Court  of  Massachusetts. 

The  verdict  and  judgment  of  th3  District  Court  is  correct,  except  in 
allowing  interest.  The  claim  was  uncertain  and  unliquidated  until  that 
judgment  was  rendered,  and  interest  should  not  have  been  allowed  in 
this  respect ;  it  is  precisely  like  the  case  of  Workman  v.  Louisiana 
Insurance  Company,  in  which  interest  was  refused. 

It  is,  therefore,  ordered,  adjudged,  and  decreed,  that  the  judgment  of 
said  court  be  reversed  and  annulled.  And  proceeding  here  to  give 
such  judgment  as  ought  there  to  have  been  given,  it  is  further  ordered, 
adjudged,  and  decreed,  that  the  pUiintiffs  and  appellees  do  recover  from 
the  defendants  and  appellants  the  sum  of  nine  thousand  three  hundred 
and  forty-six  dollars  and  eight3'-two  cents,  with  costs  in  the  court  below  ; 
those  of  the  appeal  to  be  borne  by  the  appellees. 


WALLACE  ET  AL.  V.  INSURANCE   COMPANY. 
Supreme  Court  of  Louisiana,  1832.     4  La.  289. 

Appeal  from  the  court  of  the  First  District. 

The  facts  are  fully  stated  in  the  opinion  of  the  court,  delivered  by 
Porter,  J. 

This  is  an  action  on  a  policy  of  insurance  against  fire.  The  case 
presents  three  questions : 

1.  Whether  the  policy  was  a  valued  one? 

2.  Whether,  if  it  was  open,  the  verdict  and  judgment  be  supported 
by  evidence? 

3.  Whether  the  defendants  had  not  a  right  to  discharge  themselves 
from  the  payment  of  money  by  rebuilding  the  houses  which  were 
burned  ? 

In  arguing;  the  question  whether  the  contract  on  which  this  litigation 
has  arisen,  was  what  is  denominated  a  valued  policy,  counsel  have  gone 
into  the  consideration  of  the  legality  of  such  an  agreement  in  a  fire 
insurance.^  ... 

Be  the  law,  however,  on   this  question  as  it  may,  we  do  not  think 
there  was  in  this  case  a  valued  policy.     The  coj^tract_jtates_llie_cQm- 
pany  have  insured  ei^h^jbousanij^ve  hundrcd„dollars  on_o.U£^bricJL. 
Eouse'and  two  wooden ^nes.  The  words  '' valued ^'^m-ejipi_ins£il£c1, 
buTthe  formerisl^ut  down  at  six  thousand_scveii  hundred_dolkia»-lIie 

1  Ace:  Underhill  v.  Agawam  Mut.  F.  Ins.  Co.,  6  Cush.  440,  447  (1850);  mssis- 
sippi  Mut.  Ins.  Co.  v.  Inffram,  .34  Miss.  215  (1857).— Ed. 

2  The  discussion  of  this  point  has  been  omitted.  — Ed. 

5§ 


866  WALLACE    V.    INSURANCE    COMPANY.  [CHAP.  VIIL 

latter  at  one  thousand  eight  hun(ir£d_dollM§-  Tlieii  follows  this  clause, 
'•^mTEliesaid  company  do  hereby  promise,  &c.  to  make  good  to  the 
said  insured,  &c.  all  such  loss  or  damage  not  exceeding  the  sum  hereby 
insured.  The  said  loss  or  damage  to  be  estimated  according  to  the 
true  and  actual  value  of  the  said  property  at  the  time  the  same  shall  • 
happen. 

The  rules  which  govern  the  interpretation  of  other  contracts  regulate 
those  of  insurance,  and  it  is  a  cardinal  rule  of  construction  to  give  if 
possible  every  part  of  the  agreement  effect.  It  is  indeed  true,  as  ob- 
served from  the  bar,  that  the  written  parts  of  a  policy  control  those 
which  are  printed,  but  this  principle  can  only  receive  a  proper  applica- 
tion in  cases  where  it  is  not  possible  to  satisfactorily  reconcile  them. 
No  such  difficulty  presents  itself  here.  The  sums  placed  opposite 
tlie  houses  respectivel}"  may  be  easil}-  accounted  for  as  indicating  an 
amount  beyond  which  the  company  would  not  be  responsil)le.  The 
absence  o^^the^  terms  "  value(Lat,,^l_B:hiclL_are  invariably  used  in  mai-i^ 
time  policies,  where  the  intention  of  the  parties  isJtajiiak£j;he_estima- 
tion~ConuhT5TYe7'slrengthetis^this  construction.  We  are  clear  there  is 
no  sucirirepWgiTance'  between  the  written  and  printed  clauses  as 
authorizes  us  to  reject  one  of  them.     See  2  Washington,  C.  C.  R.  175. 

II.  We  think  the  evidence  supports  the  judgment  below,  and  that  a 
correct  conclusion  was  drawn  by  the  jury  in  relation  to  the  value  of 
the  property  destroyed  by  fire.  Connected  with  this  part  of  the  case 
is  the  bill  of  exceptions  to  the  judge's  refusal  to  permit  the  jury  to 
take  into  consideration  the  amount  stated  in  the  polic}'  as  insured  on 
each  house.  Wliether  this  estimation  might  not  properly  have  formed 
an  element  in  the  calculation  the  jur^-  was  required  to  make,  need  not 
be  decided.  For  if  we  were  of  opinion  it  should  have  been  admitted, 
we  would  remand  the  cause,  and  we  understand  the  appellee  prefers  an 
affirmance  of  the  judgment. 

III.  On  the  last  point,  which  io  as  to  the  right  of  the  defendants  to 
rebuild,  there  is  no  doubt.  No  usage  is  found  to  sanction  such  a  pre- 
tension. There  is  no  law  which  authorizes  it.  The  contract  makes  no 
mention  of  it.  On  the  contrary  it  stipulates  the  loss  shall  be  compen- 
sated in  money.  It  is  true  rebuilding  might  in  some  cases  be  an  in- 
demnity for  the  loss.  It  would  perhaps  have  been  so  in  this  instance, 
but  then  it  was  not  the  indemnity  the  assured  paid  for,  and  we  are  at 
a  loss  to  conceive  how  on  policies  where  such  a  right  is  not  expressl}' 
conferred  it  could  be  supposed  one  of  the  parties  had  a  light  to  change 
the  agreement  and  substitute  one  mode  of  performance  for  another. 

It  is  therefore  ordered,  adjudged,  and  decreed  that  the  judgment  of 
the  District  Court  be  affirmed,  with  costs.  ^ 
Pierce^  for  appellant. 
Slidell,  for  appellees. 

1  On  the  purpose  and  construction  of  the  statutes  commonly  called  valued  policy 
laws,  see  Keilly  v.  Franklin  Ins.  Co.,  43  Wis.  449  (1877);  Seyk  t'.  Millers'  Nat.  Ins. 
Co.,  74  Wis.  67  (1889) ;  Insurance  Co.  v.  Leslie,  47  Ohio  St.  409  (1890) ;  German  Ins. 


SECT.  II.]  IN   EE    WEIGHT    AND    POLE.  867 

In  the  Matter  of  Arbitration  between  WRIGHT  and  POLE. 

King's  Bench,  1834.     1  Ad.  &  E.  621. ^ 

Charles  Wright,  proprietor  of  the  Ship  Inn  at  Dover,  effected 
an  insurance,  as  after-mentioned,  with  the  Sun  Fire  Office  Company. 
In  November,  1832,  a  fire  broke  out  on  the  insured  pi-emises,  and 
Wright  claimed  compensation  from  tiie  company  for  the  loss  thereby 
occasioned.  His  claim  being  objected  to,  the  parties,  by  deed  (which 
was  afterwards  made  a  rule  of  court)  referred  the  dispute  to  arbitration. 
It  appeared  before  the  arbitrator  lliat,  Iw  the  policy  of  insurance, 
Wright  and  another  (his  partner  when  the  policy  was  signed)  had  in- 
sured, among  other  things,  "on  their  interest  onl}-  in  the  said  Sliip  Inn 
and  offices,  £1 ,000."  By  virtue  of  this  clause,  W^right  made  the  follow- 
ing demand  before  tiie  arI)itrator  :  •'  Also  such  damages  as  he  can  satisfy 
the  arbitrator  he  has  sustained  under  tiie  claim  delivered  to  the  Sun 
Fire  Office  for  his  loss  in  his  interest  in  the  said  Ship  Inn  and  offices  ; 
such  damages  consisting  in  rent  paid  by  him  fo  his  landlord,  J.  ^F. 
Fector,  Esq..  the  hire  of  other  houses  or  apartments  whilst  the  apart- 
ments damaged  in  such  inn  by  the  fire  were  undergoing  the  necessary 
repairs,  and  the  loss  or  damage  sustained  by  him  Iw  reason  of  various 
persons  refusing  or  declining  to  go  to  the  said  Ship  Inn  whilst  the 
apartments  so  damaged  were  undergoing  such  repair."  It  was  olyected 
that  this  claim  was  not  maintainable,  for  that  the  interest  insured  could 
be  understood  only  to  mean  the  interest  Wright  had  in  the  fabric  of 
the  inn  and  offices,  by  reason  of  tiie  iin[)rovementsand  additions  proved 
to  have  been  made  thereto  bv  him,  and  by  his  father,  througli  whom  he 
derived  title  to  the  premises,  and  that  in  respect  of  that  interest  lie  had 
no  claim,  the  inn  and  offices  having  been  reinstated  in  pursuance  of  the 
policy,  as  Wright  admitted.  The  arbitrator  awarded  that  £450  was 
due  from  Charles  Pole,  as  one  of  the  managers  or  directors  of  tlie  Sun 
Fire  Office  Company,  to  the  said  Charles  Wright,  "  for  the  loss  he  has 
sustained  in  his  business  as  an  innkeeper,  by  not  being  able  to  occupy 
the  said  Ship  Inn  and  offices  during  the  time  that  elapsed  between  the 

Co.  r.  Eddv,  36  Xeb.  461  (1893) ;  Havens  v.  Germania  F.  Ins.  Co.,  123  Mo.  403  (1894); 
Eoyal  Ins.  Co.  v.  M'Intyre,  90  Tex.  170  (1896). 

On  policies  expressly  permitting  the  underwriter  to  elect  to  rebuild,  see  :  Parker  v. 
Eagle  F.  Ins.  Co..  9  Gray,  152  (18.")7) ;  Brown  r.  Royal  Ins.  Co.,  1  E.  &  E.  853  (18.59) ; 
Morrell  >\  Irving  F.  Ins.  Co.,  33  N.  Y.  429  (186.5) ;  Beals  v.  Home  Ins.  Co.,  36  N.  Y. 
522  (1867)  ;  Heilmann  v.  Westchester  F.  Ins.  Co.,  75  N.  Y.  7  (1878)  ;  Wynkoop  r. 
Niagara  F.  Ins.  Co.,  91  X.  Y.  478  (1883)  ;  Fire  Association  v.  Rosenthal,  108  Pa.  474 
(1885)  ;  Good  v.  Buckeye  Mut.  F.  lus.  Co.,  43  Ohio  St.  394  (1885);  Piatt  v.  Aetna 
Ins.  Co.,  153  111.  113  (1894);  Phoenix  Ins.  Co.  v.  Levy,  12  Tex.  Civ.  App.  45  (1835)  ; 
McAllaster  i'.  Xiagara  F.  Ins.  Co.,  156  X.  Y.  80  (1898)  ;  Elliott  v.  Merchants  and 
Bankers  F.  Ins.  Co.,  109  Iowa,  39  (1899).  — Ed. 

^  s.  c.  suh  nom.  In  the  Matter  of  Arbitration  between  the  Sun  Fire  Office  Co.  and 
Wright,  3  N.  &  M.  819.  —  Ed. 


868  IN   KE   WRIGHT    AND    POLE.  [CHAP.  VIII. 

fire  and  the  rebuilding  of  the  said  premises."  He  also  awarded  a  sum 
for  loss  on  goods.  A  rule  nisi  having  been  obtained  for  setting  aside 
the  award, 

M.  Y.  Richards  now  showed  cause.^  The  insurance  was  effected 
on  Wright's  •'  interest  in  the  Sliip  Inn,"'  and  it  was  for  the  arbitrator  to 
sa}-  what  that  interest  was,  and  whether  there  was  a  loss  in  respect  of  it. 
[Lord  Denman,  C.  J.  Do  you  contend,  that  if  he  had  carried  on  busi- 
ness at  another  inn  while  his  own  premises  were  rebuilding,  and  had 
gone  on  there  so  successfully  as  to  be  no  loser  during  that  period,  he 
would  have  had  no  claim  now  in  respect  of  interest,  but  that,  if  less 
successful,  he  might  have  claimed  in  proportion?]  The  question  would 
always  have  been  for  the  arbitrator,  whether  there  was  a  loss  within 
the  meaning  of  the  policy.  The  profits  of  the  business  were  clearly  in- 
surable. [Lord  Dekmax,  C.  J.  The  question  is,  whether  they  are 
covered  by  the  insurance  actually  effected.]  In  Crowley  v.  Cohen,  3 
B.  &  Ad.  478,  Lord  Tenterden  said  that,  in  a  polic}'  of  insurance, 
"  although  the  subject-matter  of  the  insurance  must  be  properly  de- 
scribed, the  nature  of  the  interest  may  in  general  be  left  at  large." 
Littledale,  J.,  makes  a  similar  observation  ;  Parke,  J.,  says,  "  The 
particular  nature  of  the  interest  is  a  matter  which  only  bears  on  the 
amount  of  damages  ;  it  is  never  specially  set  out  in  a  policy  ;  "  and 
Patteson,  J.,  adds  :  "  It  is  only  necessary  to  state  accurately  the  sub- 
ject-matter insured,  not  the  particular  interest  which  the  assured  has  in 
it."  In  Flint  v.  Flemyng,  1  B.  &  Ad.  45,  it  was  held  that  a  ship- 
owner, on  an  insurance  of  freight,  might  recover  for  the  profits  which 
he  would  have  made  by  carrying  his  own  goods.  [Taunton,  J.  The 
profits  were  of  the  same  nature,  whether  he  carried  his  own  goods  or 
those  of  another.] 

Kelly^  contra^  on  stating  that  he  should  not  dispute  the  award  on 
an}'  point  but  this,  was  stopped  by  the  court. 

Lord  Denman,  C.  J.  We  all  think  the  case  quite  clear  on  this  point. 
The  interest  in  question  might  have  been  the  subject  of  insurance,  but 
an  arbitrator  cannot  take  into  consideration  the  possible  profits  of  an 
inn,  under  the  shape  of  an  interest  in  buildings. 

Littledale,  J  ,  concurred. 

Taunton,  J.  If  a  party  would  recover  such  profits  as  these,  he  must 
insure  them  qua  profits.  I  never  heard  before  of  a  recovery  of  profits 
of  a  business  as  an  incidental  part  of  the  loss  under  an  insurance  upon 
a  house  or  ship. 

Williams,  .J.,  concurred. 
Rule  absolute  for  setting  aside  the  disputed  part  of  the  award. ^ 

1  The  award  was  (h'sputed  on  more  than  one  ground  ;  hut  Kelly  stating,  on  behalf 
of  the  company,  that  they  were  willing  the  award  should  stand  except  as  to  £450,  no 
decision  was  given  on  any  other  point.  —  Rep. 

2  See  Leonarda  v.  Phrenix  Assnr.  Co.,  2  Rob.  (La.)  1.31  (1842) ;  Niblo  v.  North 
American  F.  Ins.  Co.,  1  Sandf.  551  (1848).  — Ed. 


SECT.  II.]      HOFFMAN   V.   WESTERN   MARINE   AND   FIRE   INS.   CO,       869 


HOFFMAN  V.  WESTERN   MARINE   AND  FIRE 
INSURANCE  CO. 

Sdpreme  Court  of  Louisiana,  1846.     1  La.  Ann.  216. 

Appeal  from  the  Commercial  Court  of  New  Orleans,  Watts,  J. 

The  judgment  of  the  court  was  pronounced  by 

Slidell,  J.  This  is  a  suit  on  a  fire  polic}'  upon  merchandize,  bed- 
room furniture,  &c.  ,.in  a  store  occupied  by  plaintiff.  The  amount 
claimed  is  based  upon  an  account  annexed  to  the  petition.  This  ac- 
count is  composed  mainly  of  items  exhil)iting  the  sound  value  of  the 
goods,  as  appraised  in  the  store  after  the  fire.  A  few  of  the  items  are 
for  goods  lost  or  destroyed  at  the  fire,  put  down  at  an  appraised  value. 
From  the  total  of  these  items  thus  appraised,  is  deducted  the  net 
amount  which  the  goods  and  furniture  produced  at  an  auction,  ordered 
by  the  plaintiff  after  tlie  company  had  refused  to  pa}-  him,  and  for  the 
balance  —  the  difference  between  the  appraised  value  and  the  auction 
sales  being  81,231.19,  the  plaintiff  sues,  and  has  obtained  a  verdict. 
The  evidence  at  the  trial  was  of  the  same  character.  The  appraise- 
ments of  the  goods  and  furniture  were  offered,  and  the  accounts  of  the 
auction  sales  were  also  offered.  The  jur}-  gave  their  verdict  for  the 
precise  balance  stated  in  the  account  annexed  to  the  petition. 

The  insurers'  liability  is  distinctly  defined  b}'  the  policy,  and  by  well 
ascertained  principles  of  the  law  of  insurance.  If  goods  are  wholly 
destroyed  b}-  fire,  the  insurer  is  bound  to  make  indemnity,  b}-  paying 
their  value  at  the  time  of  the  loss.  If  the  goods  be  not  destroyed  but 
damaged,  the  insurer  is  bound,  by  the  like  rule  of  indemnity,  to  pay  the 
assured  the  difference  of  value  between  the  goods  in  their  sound  and 
in  their  damaged  condition.  Tlie  idea  of  a  right  of  abandonment  of 
the  goods,  which  seems  to  have  existed  in  the  plaintiff's  mind,  and  in 
that  of  his  principal  witness,  who  assisted  him  in  making  out  the  ap- 
praisement, is  entirely  unsanctioned  by  the  law  of  fire  insurance.  In- 
surance companies  sometimes  assent  to  the  sale  of  damaged  goods  at 
auction  to  ascertain  the  value,  but  they  are  under  no  obligation  so  to 
do,  without  a  clause  to  that  effect.  When  they  assent  to  that  course  to 
ascertain  the  damaged  value,  the  indemnity  is  the  difference  between 
the  auction  return  and  their  sound  value  at  the  date  of  the  fire.  Where 
a  sale  is  thus  made  with  their  assent,  or,  without  their  assent,  yet  upon 
notice  to  them,  it  is  obvious  that  they  could  have  an  opportunity  of 
being  represented  at  the  sale,  and  of  taking  measures  to  prevent  an 
undue  sacrifice. 

The  court  below  was  requested  bj-  the  defendants'  counsel,  "  to 
charge  the  jury  that,  the  difference  between  the  price  for  which  the 
goods  injured  b}-  the  fire  were  sold  at  public  auction  and  the  valuation 
of  said  goods  before  they  were  injured,  was  not  a  proper  criterion  to  fix 
and  determine  the  amount  of  indemnity  for  which  the  defendants  were 


870         HOFFMAN  V.  WESTERN  MARINE  AND  FIKE  INS.  CO.       [CHAP.  VIII. 

liable  under  their  contract  of  insurance,  and  that  the  anaount  of  dam- 
age or  injury  sustained  by  the  property  insured  ought  to  have  been 
proved  by  other  testimony,  or  legal  evidence  ;  but  the  court  refused  to 
charge  the  jury  as  requested,  but  cliarged  them,  on  the  contrary,  that 
the  auction  sale  and  valuation  of  the  property  as  aforesaid,  afforded  a 
proper  basis  to  establish  the  amount  of  indemnity  to  which  the  plain- 
tiff was  entitled."  The  minds  of  the  jury  might  have  been  misled 
by  this  refusal,  and  charge  of  the  court,  and  it  is  natural  to  suppose 
that  tliey  were  so,  as  they  have  given  their  verdict  for  the  precise  dif- 
ference between  the  appraisements  and  the  auction  sales. 

In  our  opinion  the  charge  of  the  court  should  have  been  that,  one 
assured  in  a  fire  policy  is  entitled  to  recover  the  fair  market  value,  at 
the  date  of  the  fire,  of  goods  totally  destroyed,  and,  as  to  goods  dam- 
aged, the  difference  between  the  value,  at  the  date  of  the  fire,  of  goods 
in  their  damaged  state  and  like  goods  undamaged  ;  and  that  in  ascer- 
tainino-  the  damaged  value,  a  fair  sale  at  auction  made  by  the  assured, 
in  cases  where  the  goods  are  so  much  damaged  as  not  to  be  saleable  in 
the  ordinary  mode,  and  upon  reasonable  notice  given  to  the  insurer  or 
with  the  insurer's  knowledge,  may  be  considered  by  the  jury  in  estimat- 
ing the  extent  of  damages,  and  ascertaining  the  amount  of  indemnity. 
But  that  when  an  auction  sale  is  made  by  the  assured,  without  notice 
to,  or  knowledge  by,  the  insurer,  the  mere  returns  of  sale  are  not  of 
themselves  sufHcient  evidence  of  the  damaged  value. 

In  the  present  case  the  insurers  were  parties  to  the  appraisement, 
their  own  agent  having  acted  and  signed  as  one  of  the  appraisers  ;  and 
as  no  fraud  or  mistake  in  the  framing  of  the  appraisement  is  proved, 
the  company  is  bound  by  it,  as  jyrirna  facie  evidence  of  the  sound  value 
of  the  goods,  both  of  those  lost  or  destroyed  at  the  fire,  and  of  those 
which  existed  at  the  store,  after  the  fire,  in  a  damaged  condition.  But 
there  is  no  satisfactory  evidence  in  addition  to  the  auction  sales,  to 
show  the  extent  of  the  damage. 

It  is  obvious  that,  by  taking  the  mere  auction  sale,  made  without 
proof  of  notice  or  privity  of  the  insurer,  a  fair  measure  of  indemnity  is 
not  given,  for  goods  sold  under  the  hammer  as  damaged  goods,  might 
well  be  sacrificed.  In  the  present  case  we  are  not  able  to  say  whether 
there  was  a  sacrifice  as  to  the  merchandize,  as  the  appraisement  was 
single,  to  wit,  of  sound  value  only.  But  with  regard  to  the  furni- 
ture, it  appears  that  the  appraisers  made  a  double  appraisement,  esti- 
mating the  value  before  the  fire  at  $231,  and  the  damage  by  the  fire, 
which  was  the  loss  to  the  plaintiffs,  at  845  ;  thus  leaving  its  value  in  its 
damaged  condition  at  $153.54  ;  whereas  it  was  sold  at  auction  for  the 
gross  sum  of  only  848. 12,  and  a  net  sum  of  $42.46,  which  latter  amount 
only  is  credited  to  the  insurers  by  tlie  plaintiff's  petition  and  by  the 
finding  of  the  jury.  We  should  not  suppose  the  sacrifice  as  great  in 
the  case  of  the  merchandize,  but  we  are  still  left  in  doubt  by  the  evi- 
dence as  to  the  extent  of  the  damage,  having  no  guide  but  the  auction- 
eer's return. 


SECT.  II.]  BEINLEY    V.    NATIONAL    INS.    CO.  871 

Under  these  circumstances,  and  without  entering  into  a  consideration 
of  the  charges  of  fraud,  we  deem  it  our  duty  to  remand  this  cause.  In 
doing  so,  liowever,  it  is  proper  to  notice  some  other  questions  of  law 
presented  in  this  case.^  .   .  . 

It  is  therefore  ordered  that  the  judgment  of  the  court  below  be 
reversed,  and  that  this  cause  be  remanded  to  the  Fourth  District  Court 
of  New  Orleans,  for  a  new  trial ;  the  plaintitf  paying  the  cost  of  this 
appeal,^ 

W.  II.  and  li.  Hunt,  for  the  plaintiff. 

Mayhin  and  Itoselhcs,  for  the  appellants. 


BRINLEY  V.  NATIONAL  INSURANCE  CO. 
Supreme  Judicial  Court  of  Massachusetts,   1847.     11  Met.  195. 

Assumpsit  on  a  policy  of  insurance,  dated  August  28th,  1844, 
whereby  the  defendants  caused  George  Brinley  to  be  insured  against 
loss  by  fire,  for  one  year,  four  thousand  dollars  on  a  brick  building, 
used  as  a  store,  in  Dock  Square,  Boston.  This  provision  was  in  the 
polic}' :  "That  in  case  of  any  loss  or  damage  the  said  company  shall 
have  the  right  to  replace  the  articles  lost  or  damaged  with  others  of_the 
salne  liincT  and  equal  good uess^^aT  any  time  within  sixty  days^jifter_ 
notice  of  tlie  loss." 

The  trial  was  before  Shaw,  C.  J.,  whose  report  thereof  was  as  fol- 
lows :  There  was  proof  that  the  store  was  totall}'  destroyed  by  fire 
wilhiu  the  year,  and  that  the  policy  was  assigned  by  the  assured,  after 
the  loss  to  the  plaintiff,  with  the  consent  of  the  defendants ;  and  no 
objection  was  made  to  the  plaintiff's  bringing  the  action  in  his  own 
name. 

The  store  having  been  rebuilt  upon  a  plan  different  from  that  of  the 
one  destroyed,  the  cost  of  the  new  building  could  not  be  the  measure 
of  the  plaintiff's  loss  by  the  destruction  of  the  old  one.  There  was 
much  conflicting  evidence,  and  many  varying  estimates  of  the  cost  of 
erecting  a  new  building  of  the  same  dimensions  and  materials,  and 
upon  the  same  plan  with  that  of  the  one  burnt ;  all  of  which  was  left 
to  the  jury. 

The  defendants  contended  that,  as  a  store  of  similar  dimensions 
and  plan  with  the  old  one,  built  of  new  materials,  would  be  worth  more 
than  the  old  one,  a  deduction  ought  to  be  made  from  the  estimated 
cost  of  a  WQVf  store,  for  the  difference  in  value  between  the  old  store 
and  such  new  store  ;  analogous  to  the  deduction  of  new  for  old  in  the 
adjustment  of  losses  on  marine  policies.     This  position  was  not  sus- 

1  The  omitted  passages  discussed  points  foreign  to  the  amount  of  recovery,  and  held 
that  as  to  one  of  these  points  the  court  below  had  committed  error.  —  Ed. 

-  See  Clement  v.  British  American  Assur.  Co.,  141  Mass.  298,  301,  304-305  (1686). 
—  Ed. 


872 


BRINLEY   V.    NATIONAL    INS.    CO.  [CHAP    VIII. 


tained  b}'  the  judge ;  but  the  jury  were  instructed,  that  the  contract 
was  a  contract  of  indemnity;  that,  to  afford  indemnity,  thedefend- 
ants  were  bound  either  Jo^replace  the  building  inJlirgood_cqnditio 
as  it  was  uTlbefore  the  fire,  ^rn^M^ay  the  plaintiff  a  sum  of  money 
siifflcaentl^qjrace  the'as'sured,  as  owner  of  the  building,  in  as  good  a 
sTtuatTon  as  if  the  ^'e  had  not  happened  ;  that,  in  doing  this,  if  any 
matei-ials  were  left,  they  might  be  used,  as  far  as  they  would  go,  and 
as  far  as  they  were  fit,  in  rebuilding  ;  but  if  the  building  could  not 
be  placed  in  as  good  a  condition  as  it  was  in  before,  without  using 
new  materials,  and  new  materials  were  used,  no  deduction_shouldJje 
made  on  that  account7  although^  jtjni^htbe  niore  durable  tlmn  J;he  oM 
bufldrng  VoulThayeM3een7and  fors^me^  £U£poses  more  valuable. 
""The'juiy  returned  a'TerdFct  lor  $3,689,  which  is  to  be  set  aside,  and 
a  new  trial  granted,  if  the  above  instruction  was  wrong;  otherwise 
judgment  to  be  entered  on  the  verdict. 

Gardiner  &  English^  for  the  defendants. 

31.  S.    Clarke,  for  the  plaintiff. 

Wilde,  J.  At  the  trial,  the  defendants  contended  that  as  a  new 
store  of  similar  dimension  and  plan  with  the  old  one,  built  of  new 
materials,  would  be  worth  more  than  the  old  one,  a  deduction  ou-ht 
to  be  made  from  the  estimated  cost  of  a  new  store,  for  the  difference 
in  value  between  the  old  store  and  the  new  one ;  analogous  to  the  de- 
duction of  new  for  old  in  the  adjustment  of  losses  on  marine  policies. 
This  claim  of  deduction  was  not  sustained  by  the  judge  at  the  trial,  and 
we  are  not  aware  of  any  authority  or  principle  by  which  it  can  be  sup- 
ported. The  rule,  in  adjusting  marine  losses,  is  arbitrary,  and  operates 
in  some  cases  unjustly,  giving  to  the  insured  more  or  less  than  a  full 
indemnity,  to  which  he  is  entitled  by  the  policy,  and  to  no  more.  The 
rule  originated  from  the  usages  among  merchants  and  underwriters, 
probably  from  the  great  difficulty  of  ascertaining  the  actual  loss,  with- 
out first  repairing  the  damage  done,  or  estimating  the  cost  of  repairs. 
The  rule  is  applicable  only  to  cases  of  a  partial  or  a  constructive  total 
loss.  It  depends  on  usage,  sanctioned  by  judicial  decisions  ;  and  in 
some  cases  this  rule  of  estimating  the  loss  is  expressly  provided  for  by 
the  terms  of  the  policy.  Such  has  been  the  stipulation  in  the  marine 
policies  in  Boston  for  many  years.  But  the  rule  has  never  been  adapted 
to  policies  of  insurance  on  buildings  and  other  propert3'  against  fire. 

Tlie  question  then  is,  what  is  the  rule  of  damages,  if  any  tliere  be,  in 
cases  lilie  the  present  ?  The  plaintiff's  counsel  contends  that  the  actual 
loss  is  to  be  ascertained  by  the  expense  of  restoring  the  property  without 
any  deduction  for  the  difference  of  value  between  the  new  and  old  ma- 
terials ;  and  so  the  rule  is  laid  down  by  Professor  Greenleaf.  2  Greenl, 
on  Ev.  §  407.  But  the  only  adjudicated  case  he  cites  which  has  any 
direct  bearing  on  the  question  is  that  of  Vance  ?'.  Forster,  1  Irish 
Circuit  Cases,  51,  in  which  Mr.  Baron  Pennefather  laid  down  a  very 
different  rule.  He  says,  as  is  reported  in  3  Stephens  N.  P.  2,084,  that 
''  the  jury  are  to  say  what  state  of  repair  the  machinery  was  in,  what  it 


SECT.  II.]  BRIXLEY   V.    NATIONAL    INS.    CO.  873 

would  cost  to  replace  it  by  new  machinery,  and  how  ranch  better  (if  at  all) 
the  mill  "  in  which  the  machinery  was  placed  '•  would  be  with  the  new 
niachiner}-  than  it  was  at  the  time  of  the  fire  ;  and  the  difference  is  to 
be  deducted  from  the  entire  expense  of  placing  there  such  new  machi- 
nery." This  rule,  in  all  cases  where  the  cost  of  repairs  is  one  of  the  ele- 
ments by  which  the  jury  are  to  estimate  the  actual  loss,  seems  to  be 
founded  on  the  principles  of  justice,  as  it  will  give  to  the  assured  a  full  in- 
demnity, and  no  more,  to  which  he  is  entitled  by  the  contract.  But  by 
the  rule  contended  for  by  the  plaintiff's  counsel,  the  assured  in  most 
cases  would  recover  more  than  an  indemnit}' ;  and  much  more  when  the 
building  insured  is  dilapidated  and  much  out  of  repair.  Such  rule  is  not 
sup[)ortcd  by  an}'  principle  of  justice,  nor  by  the  authority  of  anj-  ad- 
judged case.  It  is  founded  on  an  erroneous  construction  of  the  contract. 
It  supposes  that  the  insurers  are  bound  to  repair  the  building,  or  to  pay 
the  expenses  of  the  repairs.  But  no  such  obligation  is  imposed  on 
them  by  the  policy.  They  have  the  privilege  to  make  the  requisite 
repairs,  if  they  see  fit,  to  protect  themselves  against  the  recovery  of 
excessive  damages,  or  for  any  other  reason.  But  if  the}'  elect  not  to 
make  the  repairs,  the}'  are  liable  only  to  pay  a  fair  indemnity  for  the  loss. 
But  whatever  may  be  the  rule  when  the  building  insured  is  partially 
injured  by  the  peril  insured  against,  it  has  no  ap[)lication  to  cases  like 
the  present,  where  the  building  is  totally  destroyed,  and  is  to  be  replaced 
by  a  new  one.  The  rule  of  damages  in  cases  on  marine  policies  would 
not  apply  to  a  case  where  the  ship  had  been  totally  destroyed.  In  the 
present  case  the  building  was  destroyed  by  fire,  and  a  new  building  was 
erected  upon  a  different  plan;  so  that  the  cost  of  a  new  building  could 
not  be  certainly  ascertained.  If  the  rule  laid  down  in  Vance  r.  Forster 
were  applied,  the  jury  must  ascertain,  by  the  estimates  and  opinions  of 
witnesses,  the  amount  of  the  expenses  of  a  new  building,  and  they  must 
estimate  the  value  of  the  old  l)uilding,  in  order  to  ascertain  the  difference, 
if  any  there  be,  between  the  new  and  the  old.  We  can  perceive  no  use 
in  requiring  this  double  estimate  ;  for  where  the  plaintiff  is  only  entitled 
to  recover  the  amount  of  the  value  of  the  building  destroyed,  the  esti- 
mate of  the  cost  of  a  new  building  is  useless.  We  are  therefore  of 
opinion  that  there  is  no  rule  of  damages  applicable  to  the  present  case, 
and  that  in  all  cases  where  no  rule  of  damages  is  established  by  law,  the 
jury  are  to  decide  upon  the  question,  and  that  to  their  decision  there 
can  be  no  legal  exception. 

The  instructions  were  conformable  to  these  principles,  except  in  one 
particular.  The  jury  were  instructed  thatjio  deduction  was  to  be  made 
from  the  expenses^of  repairing  or  rebuilding  the  stoi'eHrnsured,  althoiTgh 
the  new  building  might  be  more  durJi.bTp  tlinn'thpT  old  Jjiiijding  woiild 
have  been,  and  for  some  purposes  more  valuable.  In  tliis  respect  we 
think  the  jury  were  misdirected,  and  consequently  that  the  defendants 
^re^entilled'tb  a  new  trfal.^ 

1  Ace. :  GuiDD  v.  Phcenix  Ins.  Co.,  80  Iowa,  346  (1890) ;  Hilton  v.  Phoenix  Assur. 
Co.,  92  Me.  272  (1898).  — Ed. 


874        COMMON- WEALTH  INS.  CO.  V.  SENNETT,  BARK  &  CO.       [CHAP.  VIII. 

COMMONWEALTH   INS.   CO.    v.  SENNETT,    BARR   &   CO. 
Supreme  Court  of  Pennsylvania,   1860.     37  Pa.  205. 

Error  to  the  Common  Pleas  of  Erie  Count}-. 

This  was  an  action  of  debt,  brought  in  the  court  below  b}'  Pardon 
Sennett,  M.  R.  Barr,  Conrad  Brown,  and  J.  J.  Finlej-,  partners  doing 
business  as  Sennett,  Barr  &  Co.,  against  The  Commonwealth  Insurance 
Compan}-. 

To  a  narr.  in  debt,  the  defendants  filed  a  special  plea,  averring  con- 
cealments and  misrepresentation  on  the  part  of  the  plaintiffs,  adding 
the  formal  pleas  of  non  est  factum  and  7iil  debet.  To  this  a  replica- 
tion and  demurrer  was  filed,  which  demurrer  was  afterwards  withdrawn. 
The  plaintiffs  then  replied  to  and  traversed  the  defendants'  plea,  and, 
on  the  issue  thus  made  up,  the  parties  went  to  trial. 

The  plaintiffs  below  were  owners  of  a  number  of  machines  called 
mowers  and  reapers,  which  they  had  manufactured  for  sale,  and  stored 
in  a  warehouse  at  Erie.  They  were  insured  against  loss  or  damage 
by  fire  by  the  defendants  below,  in  a  policy  in  the  usual  form,  in  the 
sum  of  83,000.  The  policy  was  dated  May  25,  1857,  and  was  for  the 
term  of  six  months.  On  the  25th  of  November,  1857,  the  policy  was 
renewed  by  J.  J.  Lints,  agent  of  defendants,  for  a  further  period  of 
six  months.  On  the  night  of  the  10th  of  February,  1858,  the  property 
insured  was  totally  destroyed  by  fire. 

On  the  trial,  the  defendants  offered  to  show,  by  Matthew  Dickson 
and  others,  that  the  kind  of  machine  known  as  Danforth's  reaper  and 
mower,  and  manufactured  by  the  plaintiffs,  and  being  the  same  kind  of 
machine  insured  and  destroyed,  were  of  little  or  no  value  —  were 
worthless  as  an  agricultural  instrument,  or  for  any  other  use  or  pur- 
pose—  and  that  they  had  no  value,  save  as  mere  wood  and  old  iron 
—  and  that  the  machines  were  worthless  both  on  account  of  defects 
in  construction,  and  in  the  principle  of  the  machines  themselves.  To 
this  the  plaintiffs  objected,  but  the  court  said:  "We  will  admit  evi- 
dence to  show  that  the  machines  could  be  manufactured  at  a  less  price 
than  the  plaintiffs'  witnesses  sa}'  they  were  made  and  sold  for,  or  that 
the  plaintiffs'  knew,  when  making  them,  that  they  were  worthless  in 
principle,  and  that  they  were  defective  in  workmanship,  but  not  that 
they  were  defective  in  principle,  as  it  was  a  patented  one."  To  this 
ruling  the  defendants  excepted. 

The  policy  provided,  among  other  things,  as  follows :  "  And  the 
said  company  do  hereby  promise  and  agree  to  make  good  unto  the  said 
assured,  their  executors,  administrators,  or  assigns,  all  such  immediate 
loss  or  damage  not  exceeding  the  sum  hereby  insured,  as  shall  happen 
by  fire  to  the  property  above  specified,  —  the  said  loss  or  damage  to  be 
estimated  according  to  the  true  and  actual  cash  value  oT  the  said  prop- 
erty  aTThe~timeTEe^  same  shall  happen." 


SECT.  II.]       COMMONWEALTH  INS.  CO.  V.  SENNETT,  BARE  &  CO.  875 

The  defendants  requested  the  court  to  instruct  the  jury  as  to  the 
measure  of  damages,  that  the  jury  were  not  to  be  confined  to  the  evi- 
dence of  the  cost  of  manufacturing  the  machines  as  given  by  plaintiffs, 
but  might  l)e  governed  by  the  actual  cash  value,  as  proved  by  defend- 
ants, without  reference  to  the  cost  of  construction.  Tlie  court  refused 
so  to  cliarge  the  jury,  but  instructed  tliem  that  "  the  value  as  estimated 
in  the  manufacture  of  each  machine,  and  before  it  was  tried  in  the 
field,  wouUl  be  the  standard  of  valuation."  And  further  on  this  point, 
the  court  said  to  the  jury  :  "  Admitting  that  many  of  the  machines  did 
not  work  when  they  were  put  to  the  trial,  and  this  because  of  a  de- 
fect in  the  principle  upon  which  they  were  got  up,  and  not  in  the 
mechanism  of  them,  that  would  not  interfere  with  tlie  plaintiffs'  right 
to  recover  according  to  their  estimated  or  actual  value  when  the  in- 
surance was  made,  unless,  as  before  stated,  the  plaintiffs  were  aware 
of  V.ie  defect.  The  asking  or  selling  price  would  not  be  the  standard 
of  value,  for  the  company  would  have  the  option  to  replace  by  similar 
articles  or  pay  the  cash,  but  the  cost  of  construction." 

The  jury  found  in  favor  of  the  plaintiffs  the  sum  of  $3,262.50,  and 
judgment  having  been  entered  thereon,  the  case  was  removed  into  this 
court  by  the  defendants,  who  assigned  for  error  the  instruction  of  the 
coui-t  below,  as  to  the  measure  of  damages. 

W.  A.  Gdlbrait/i,  for  plaintiff  in  error. 

Church  &  Marshall,  for  defendants  in  error. 

The  opinion  of  the  court  was  delivered,  October  2o,  1860,  by 

Thompson,  J.  There  is  nothing  in  the  policy  of  the  law  which 
abridges  the  right  and  power  of  parties  to  a  contract  of  insurance 
from  stipulating  in  regard  to  the  mode  and  manner  of  estimating  or 
valuing  a  loss  when  it  shall  occur,  or  as  to  the  time  which  shall  be  the 
period  of  the  valuation  of  the  property  destroyed,  or  such  other  mat- 
ters within  the  scope  of  a  fair  transaction  as  they  may  see  proper. 
Insurance  is  a  contract  of  indemnity,  and  if  the  parties  stipulate  for 
the  manner  in  which  that  indemnity  shall  be  made,  on  the  contingency 
of  liability,  it  is  their  right  to  do  so,  and  the  law  will  carry  out  their 
contracts  as  made,  if  there  be  no  fraud  in  them,  as  in  other  cases. 
Trask  v.  The  State  Fire  and  Marine  Ins.  Co.,  5  Casey,  198;  North- 
AVestern  Ins.  Co.  v.  Phoenix  Oil  and  Candle  Co.,  7  Casey,  448. 

Mr,  riiillips,  in  his  Treatise  on  Insurance,  cap.  1,  §  3,  says :  ''  The 
indemnity  intended  in  insurance  is  not  the  putting  the  party  insured 
into  as  good  a  condition  as  he  would  in  fact  have  been  if  no  loss  had 
happened  ;  it  means  tlic  repayment  of  the  expense  incurred,  and  the 
payment  for  as  much  of  the  insured  subject  as  is  lost,  at  its  market 
value,  or  its  value  as  agreed  upon  in  the  policy." 

The  policy  in  this  case  was  an  open  one,  as  contradistinguished 
from  a  valued  policy,  and  in  it  the  parties  have  chosen  to  fix  for  them- 
selves the  standard  of  valuation,  and  have  stipulated  that  it  should  be 
the  "true  actual  cash  value  of  the  propert}',"  and  the  lime  for  ascer- 
taining such  value  to  be  the  date  of  its  injury  or  destruction  by  fire. 


876        COMMONWEALTH  INS.  CO.  V.  SENNETT,  BARR  &  CO.       [CIIAP.  VIII. 

Now,  unless  it  can  be  shown  that  they  had  not  the  right  so  to  con- 
tract, or  have  used  terras  possessing  some  other  than  tlieir  ordinary 
meaning  and  import,  this  basis  for  estimating  the  loss  thus  established, 
must  control  and  govern.  It  is  the  law  of  the  contract  established 
by  the  parties  themselves.  Nothing  has  or  can  be  shown,  we  think, 
to  countervail  their  right  so  to  contract  in  regard  to  the  subject-matter 
mentioned,  or  which  controls  the  ordinary  meaning  of  the  terms  used 
bv  them.  This  has  not  and  cannot  be  done.  The  contract  is  so  plain, 
that  interpretation  is  not  needed  to  arrive  at  what  was  meant.  The 
parties  meant  only  what  they  have  plainly  said  ;  and  it  was  a  plain 
mistake  to  disregard  the  language  used,  and  construe  the  contract  as 
if  no  stipulation  existed. 

It  is  usual,  in  the  absence  of  a  stipulation  in  marine  insurance,  to 
value  the  goods  lost  and  covered  by  an  open  policy,  as  of  the  time  of 
the  commencement  of  the  risk,  and  this  was  the  nature  of  the  insur- 
ance treated  of  by  Mr.  Phillips,  as  cited  by  the  counsel  for  the  defendant 
in  error. 

I  will  not  attempt  to  point  out  the  distinctive  differences  in  this  re- 
spect between  marine  and  fire  insurances,  and  wherein  they  consist. 
If  we  were  dealing  with  a  policy  in  which  no  stipulation  existed  for 
determining  when  or  how  the  valuation  should  be  made,  and  the  ques- 
tion were  to  be  determined  by  principles  of  law  exclusively,  we  might 
be  required  to  look  more  closely  to  them.  But  such  is  not  the  case 
here.  The  parties  have  made  the  law  of  this  contract  in  this  particular 
for  themselves,  and  we  must  administer  it.  They  have  covered  the 
whole  ground. 

The  case  of  Nil)lo  v.  The  North  American  Ins.  Co.,  1  Sandf.  558,  has 
no  possible  bearing  on  the  point  in  question.  There  the  policy  contained 
no  stipulation  such  as  we  find  here,  and  the  court  allowed  the  full 
value  of  the  tenement  insured  without  regard  to  the  extrinsic  circum- 
stance that  it  was  to  be  removed  within  fifteen  days.  They  held  that 
peradventure  the  lease  of  the  ground  might  be  renewed,  or  the  in- 
sured might  sell  it  to  the  owner  of  the  ground,  or  its  value  miglit  not 
be  impaired  by  removing  it  to  an  adjacent  vacant  lot.  Intrinsically  it 
was  not  impaired  by  the  circumstance  that  the  ground  lease  was  soon 
to  end.  Such  had  been  the  doctrine  laid  down  in  Laurent  v.  The  Chat- 
ham Fire  Ins.  Co.,  1  Hall,  41.  Such  cases  as  these  are  good  enough 
law  where  they  belong,  but  fiunish  no  rule  where  the  parties  have  fixed 
a  law  for  themselves.  These  views  apply  as  well  to  the  restricted  oper- 
ation of  the  testimony  received,  as  to  the  ruling  in  answer  to  the  de- 
fendant's eleventh  point.     There  was  error  in  both. 

The  option  to  replace  the  machinery,  if  destroyed,  was  a  reservation 
for  the  benefit  of  tlie  company  ;  they  were  not  bound  to  adopt  it. 
"What  it  would  cost  to  replace  it,  was,  therefore,  not  to  furnish  the  rule 
for  the  damages  which  the  company  must  pay  to  make  good  the  loss. 
If  this  were  to  be  held,  it  would  be  equivalent  to  enforcing  the  option 
as  an  obligation.     It  is  stated  in  Angell  on  Insurance,    §  269,  that  in- 


SECT.  II.]  EQUITABLE    FIRE    1X3.    CO.   V.   QUIXX.  877 

surers  have  the  privilege  of  making  repairs  or  replacing  propert}',  if 
they  see  fit  to  do  so  ;  but  if  the}-  elect  not  to  do  so,  "  they  are  liable 
only  to  pa}'  a  fair  indemnity  for  the  loss.'"'  This  shows  that  the  esti- 
mated cost  of  a  compliance  with  tlie  option  is  not  to  be  considered  in 
assessing  the  amount  to  be  paid  on  the  loss.  If  it  had  any  weight 
here,  it  was  wrong. 

Nor  was  the  fact  that  the  machines  insured  were  constructed  under 
a  patent,  of  any  importance.  Patented  or  unpatented,  what  they  were 
wortli  at  the  happening  of  the  fire,  was,  by  the  agreement  of  the  parties, 
to  be  the  measure  of  their  value  ;  and  this  must  be  ascertained  by  testi- 
mony, as  is  done  in  ever}-  other  case,  where  the  value  is  not  fixed. 

For  these  reasons,  the  judgment  is  reversed,  and  a  venire  de  novo 
awarded. 


EQUITABLE   FIRE    INS.    CO.,  Appellants,  v.  QUINN, 
Respondent. 

Queen's  Bench,  in  Appeal,    District  of  Quebec,  1861.     11  Lower 

Canada,   170. 

Before  Sir  L.  H.  La  Fontaine,  C.  J.,  Aylwin,  Do^al,  Meredith, 
and  Mondelet,  JJ. 

In  this  case,  the  respondent,  plaintiff  in  the  court  below,  obtained 
judgment  against  the  appellants  for  the  sum  of  £200,  being  the 
amount  insured  by  them  on  his  stock  and  utensils  in  trade  as  a 
general  turner. 

The  principal  matters  of  fact  in  the  plaintiff's  declaration  were 
admitted,  including  the  making  of  the  policy,  the  amount  insured 
thereby,  the  renewal  thereof,  and  a  loss  by  fire  while  the  policy  was  in 
force  ;  but  not  admitting  the  quantity  and  value  of  the  articles  insured 
by  the  policy.  Tlie  quantity  and  value  were,  however,  established  by 
the  respondent's  witnesses.  By  the  policy,  the  appellants  agreed  to 
pay  or  make  good  to  the  insured  all  such  loss  or  damage  as  the  said 
insured  should  suffer  by  fire.  The  loss  and  damage  w-hich  he  had 
suffered,  the  respondent  contpndpd,  was,  Jlie  value  of  the  blocks  fn  the 
market.  The_apj>ellants,  on  the  contrary,  contended  tliat  they  were 
only  liable  to  the  respondent  for  the  cost  of  the  effects,  inasmuch  as^ 
the  respondmi-t  '^^^^  ""^^  pfFnntprl  ingnrnpr^P  upi)n  the  profits  he  expected^ 
to  make  upon  his  goods.  A  number  of  witnesses  were  produced  by 
the  appellants  who  established  the  cost  of  the  articles  insured  at  a 
considerably  lower  amount  than  the  value  proved  by  the  respondent. 
The  appellants,  in  consequence,  tendered  the  sum  of  one  hundred  pounds 
with  interest  and  costs  to  the  party  insured,  who  refused  to  accept  the 
offer,  and  tlie  present  appeal  was  in  consequence  instituted. 


Q78  EQUITABLE    FIRE    INS.    CO.    V.    QUINN.  [CHAP.  VIII. 

Meredith,  J.  The  action  in  the  court  below  was  founded  upon  a 
policy  of  insurance  by  which  the  plaintiff,  a  block-maker  by  trade,  insured 
his  stock  in  trade,  consisting  of  blocks,  for  £200.  The  property  insured 
having  been  destroyed  by  fire,  the  present  action  was  brought  for  the 
recovery  of  the  insurance;  and  the  only  question  between  the  parties  is 
as  to  the  value  of  the  blocks  destroyed.  The  defendants  contend  that 
the  plaintiff  is  not  entitled  to  more  tiiun  the  amount  which  it  cost  the 
plaintiff  to  manufacture  the  blocks  in  question  ;  but  this  pretension 
cannot,  I  tliink,  be  maintained.  The  plaintiff  is  entitled  to  wliat  the 
blocks  were  worth  in  the  market,  at  tlie  time  they  were  Inn-ned;  and 
nnTnkT'according  to  the  e\'idence,  they  were  worth  thV  amount  the 
plaintiff  had  insured  upon  them,  namely  £200,  that  being  the  amount 
of  the  judgment  in  favor  of  the  plaintiff;  and  therefore  that  that 
judgment  ought  to  be  confirmed. 

Duval,  J.  The  judgment  of  the  court  below  should,  in  my  opinion, 
be  confirmed,  inasmuch  as  both  the  English  and  French  law,  on  this 
point,  declare  that  tlie  amount  covered  by  the  insurance  is  tlic  actual 
loss,  without  any  reference  to  the  cost  price  ;  and  this  is  wliat  the  court 

now  grants. 

The  judgment  of  the  court  below  was  therefore  confirmed} 
Lelievre^  for  a[)pellants. 
Stuart  and  Murphy,  for  respondent. 

1  In  Mitchell  v.  St.  Paul  German  F.  Ins.  Co.,  92  Mich.  594  (1892),  insurance  was 
procured  upon  lumber.  The  policy  said  :  "  This  company  shall  not  be  liable  beyond 
the  actual  cash  value  of  the  property  at  the  time  any  loss  or  damage  occurs,  and  tlie 
loss  or  damage  shall  be  ascertained  or  estimated  according  to  such  actual  cash  value, 
with  proper  deduction  for  depreciation,  however  caused,  and  shall  in  no  event  exceed 
what  it  would  then  cost  the  insured  to  repair  or  replace  the  same  with  material  of  like 
kind  and  quality."  The  lumber  was  destroyed  by  fire.  The  persons  procuring  the 
insurance  had  manufactured  the  lumber  in  their  own  mill,  which  was  at  the  yards 
where  the  lumber  was  piled.  They  were  the  owners  of  timber  lands  from  which  the 
destroyed  lumber  could  be  replaced,  and  after  the  fire  they  continued  to  cut  from 
their  lands  and  to  operate  their  mill.  It  was  held  that  the  proper  basis  for  recovery 
was  not  cost  of  reproduction,  but  market  value.     Long,  J.,  for  the  court,  said :  — 

"  We  think  the  word  '  then '  is  significant,  and  must  be  given  weight  in  determin- 
ing the  true  intent  and  meaning  of  the  contract.  If  the  defendant's  theory  of  construc- 
tion be  adopted,  the  word  '  then  '  must  be  dropped  out,  and  the  contract  construed  as 
intending  to  give  to  the  insurance  company  the  benefit  of  the  time  it  would  take  the 
insured  to  replace  it  or  reproduce  it ;  that  is,  if  the  insured  had  the  means  of  replacing 
or  reproducing  the  burned  lumber,  having  timber  from  which  to  manufacture  lumber 
and  the  mill  to  manufacture  it  with,  then  an^  estimate  should  be  made  of  that  cost  as 
the  measure  of  damages,  though  it  might  take  six  months  or  a  year  to  replace  or 
reproduce  it.  In  this  sense  the  words  '  replace '  and  '  reproduce  '  would  be  synony- 
mous ;  but  the  contract  cannot  be  construed  in  that  way  without  doing  violence  to  the 
language  employed.  Clearly,  it  means  just  what  it  says,  '  what  it  would  then  cost 
the  insured  to  replace  it,'  and  not  what  it  would  cost  the  insured  to  cut  from  his  own 
stumpage,  manufacture  lumber  at  his  own  mill,  and  replace,  after  the  delay  of  cutting, 
hauling,  sawing,  piling  in  the  yards,  etc. 

"  We  arc  unable  to  agree  with  the  learned  counsel  for  the  defendant  that  the  con- 
tract is  to  be  construed  any  differently  in  this  case  than  though  the  plaintiffs  had 
no  stumpage  of  their  own,  and  no  mill  by  which  they  could  manufacture  lumber.  It 
means  that  the  plaintiffs  had  the  right,  on  the  date  of  the  fire,  to  recover  from  the 


SECT.  II.]  OGDEX   V.    EAST   PJYER   INS.   CO.  879 


OGDEX   ET   AL.,    Respondents,    v.    EAST    RIVER   INS.    CO., 

Appellant. 

Court  of  Appeals  of  New  York,  1872.     50  N.  Y.  388. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  first  judicial  department,  affirming  a  judgment  in  favor  of  plain- 
tiffs, entered  upon  a  verdict. 

The  action  was  brought  upon  a  polic}'  of  insurance  issued  bj-  defend- 
ant to  plaintiffs  for  $3,000  on  plaintiffs'  stock  in  trade,  "contained  in 
the  three-stor}-  brick  building  known  as  No.  392  Washington  Street,  in 
the  cit}-  of  New  York."  Other  insurance  was  permitted  without  notice 
until  required. 

The  pollc}-  contained  a  provision  that  "in  case  of  loss  the  insured 
shall  not  recover  on  this  polic}'  any  greater  proportion  of  the  loss  or 
damage  sustainecrio  the  subject  insured  than  tlie  ainojint  hereby  in- 
sured shall  bear  to  the  whole  amount  insured  on  the  said  property." 

The  plaintiffs,  at  the  time  of  the  fire,  held  fourteen  other  policies, 
issued  by  various  companies,  to  the  amount  of  847,500,  covering  said 
property  in  No.  392  Washington  Street  and  a  large  amount  of  other 
property  owned  by  plaintiffs.  On  the  30th  November,  1864,  all  the 
property  insured  and  covered  by  said  fifteen  policies  was  destroyed  by 

defendant  such  an  amount  of  money  as  it  would  cost  them  to  replace  the  lumber,  or, 
in  other  words,  the  market  value  of  the  lumber  at  the  date  of  the  fire.  It  cannot  be 
said  that,  because  the  lumber  was  so  great  iu  amount,  it  would  have  no  market  value, 
or  that  such  a  large  amount  could  not  have  been  purchased  in  open  market.  It  is  like 
any  other  commodity  of  which  constant  sales  are  being  made.  If  it  had  been  flour,  it 
is  not  contended  that,  because  the  insured  may  have  had  a  farm  and  could  raise  the 
wheat,  and  a  mill  where  he  could  manufacture  it  into  flour,  he  could  recover  only 
what  it  would  actually  cost  to  raise  the  wheat  and  convert  it  into  flour;  but  there 
would  be  as  mucli  reason  to  hold  the  contract  controlled  by  such  considerations  in  the 
one  case  as  in  the  other.  Lumber  is  a  marketable  commodity,  and  it  is  well  known 
can  be  purchased  in  the  open  market  as  well  a.s  flour.  Certain  grades  have  certain 
prices,  and  grades  of  lumber  are  as  well  known  to  the  trade  as  grades  of  wheat.  We 
know  of  no  reason  for  saymg  that  fifteen  or  sixteen  million  feet  of  lumber  cannot  be 
purcliased  iu  open  market,  or  that  it  has  not  as  certain  and  fixed  market  value  as  a 
thousand  or  five  thousand  bushels  of  wheat. 

"  It  cannot  be  said  that  it  was  in  the  contemplation  of  the  parties,  at  the  time  the 
contract  was  entered  into,  that  it  was  to  have  the  construction  now  contended  for  by 
counsel  for  the  defendant.  Suppose  plaintiffs  had  sold  their  timber  and  removed  their 
mill  before  the  fire,  which  they  would  have  had  the  right  to  do.  The  contingency 
would  then  have  arisen  where  they  could  not  have  reproduced  the  lumber.  It  would 
then  be  conceded  that  the  measure  of  loss-damage  would  be  the  cost  of  replacing  it  by 
purchase  in  the  open  market.  If  the  contract  bore  the  construction  contended  for  at 
its  execution,  under  the  circumstances  above  supposed,  it  would  be  changed  by  the 
change  in  the  situation  and  surroundings  of  the  insured.  It  would  be  construed  in 
one  way  at  its  inception,  and  by  a  change  of  circumstances  be  susceptible  of  another 
construction  at  the  time  of  the  fire." 

See  Hartford  F.  Ins.  Co  v.  Cannon,  19  Tex.  Civ.  App.  305  (1898). 

Compare  Chippewa  Lumber  Co.  v.  Phenix  Ins.  Co.,  80  Mich.  116,  123-124 
( 1890;.  —  Ed. 


880 


OGDEN   V.   EAST    RIVER    INS.    CO.  [cHAP.  VIII. 


fire.     The  value  of  the  entire  property  so  destroyed  was  $88,788.83. 
The  vaUie  of  the  property  covered  by  defendant's  policy  was  $16,305.89. 

The  court  upon  trial  directed  a  verdict  in  favor  of  plaintiffs  for  the 
full  amount  of  the  policy  and  interest,  which  was  rendered  accordingly. 

Charles  Tracy,  for  the  appellant. 

William  F.  Shepard,  for  the  respondents. 

Rapallo,  J.  The  clause,  now  usual  in  policies  of  insurance,  which 
provides  for  an  apportionment  of  the  loss  in  case  of  other  insurance  on 
the  property,  is  a  part  of  the  contract,  and  must  receive  a  reasonable 
construction.  ^Ye  have  no  right  to  engraft  upon  it  the  rules  governing 
suits  for  contribution  among  insurers,  nor  to  restrict  its  operation  to 
cases  where  such  suits  could  be  maintained,  but  must  look  at  the  lan- 
CTuao-e  of  the  clause  itself  and  construe  it  as  we  would  any  other  stipu- 
laiion  between  the  insurer  and  the  insured. 

We  cannot  adopt  the  view  taken  of  this  clause  in  the  case  of  Howard 
Ins.  Co.  V.  Scribner,  5  Hill,  298,  where  it  was  held  (in  analogy  to  the 
rule  in  actions  for  contribution)  that  where  a  specific  parcel  of  property 
is  insured  by  one  policy,  and  the  same  property  is  covered  by  another 
policy,  which  also  includes  other  property,  the  latter  policy  is  to  be 
thrown  wholly  out  of  view,  and  does  not  constitute  other  insurance 
within  the  meaning  of  the  clause.  Neither  can  we  agree  to  the  doctrine 
contended  for  by  the  counsel  for  the  appellant,  that  the  whole  sum  in- 
sured by  the  more  comprehensive  policy  is  to  be  considered  as  so  much 
additional  insurance  upon  the  parcel  separately  insured. 

Where  several  parcels  of  property  are  insured  together  for  an  entire 
sum,  it  is  impossible  to  say  as  to  either  of  the  parcels  that  there  is  no 
insurance  upon  it.  Neither  is  it  reasonable  to  assume  that  any  of  the 
parcels  is  insured  for  more  than  its  value  where  the  whole  sum  insured 
is  less  than  the  aggregate  value  of  all  the  parcels  covered  by  the  policy. 
The  difficulty  lies  in  determining  what  part  of  the  whole  sum  insured  is 
to  be  deemed  applicable  to  either  parcel  where  the  policy  itself  makes 
no  separation. 

If  the  entire  property  is  destroyed,  as  in  this  case,  the  rule  laid  down 
in  2  Phillips  on  Insurance  (p.  56,  No.  1263,  a)  and  in  Blake  v.  Exch. 
Mut.  Ins.  Co.,  12  Gray,  265,  carries  out  the  intent  of  the  clause  and 
works  entire  equit}*  between  the  insurers  and  the  insured,  as  well  as 
between  the  several  insurers.  That  rule  is,  in  substance,  that  for  the 
purpose  of  ai)portioning  the  loss  in  case  of  over  insurance,  where  several 
parcels  are  insured  together  by  one  policy  for  an  entire  sum,  and  one 
of  the  parcels  is  hisiired  separatelx  bx_g"ot.hcr  policy,  the  sum  insured" 
by  The  first  mentioned  policy  is  to  be  distributed  among  the  several 
parcels  in  the  proportion  which  the  sum  insured  by  that  policy  bears  to 
the  total  value  of  all  the  pai^lsk  Thus  in  round  numbers  the  sum  in- 
sured in  this  case^  by  the  policies,  other  than  the  defendant's,  on  the 
property,  aa  an  entirety,  was  847,000.  The  total  value  of  the  property 
covered  b}'  these  policies  was  188,000.  In  case  of  a  total  loss,  each 
parcel  should  be  deemed  insured  thereby  for  |^  of  its  value.     The 


SECT.  II.]  STATE    INS.    CO.    V.    TAYLOR.  881 

parcel  separately  insured  by  the  defendant  was  worth  §16,000,  and  was 
insured  by  the  defendant  for  $3,000,  which  was  equal  to  ^^  of  its  value. 
It  is  manifest  that  there  was  no  over  insurance,  and  that  consequently 
there  is  no  occasion  for  any  apportionment. 

Whether  this  would  be  the  proper  rule  in  case  the  $16,000  parcel 
alone  had  been  destroyed  or  damaged,  it  is  not  now  necessary  to  deter- 
mine. In  that  event,  if  the  defendant's  policy  had  not  existed,  the 
whole  loss  would  have  been  recoverable  under  the  $47,000  insurance. 
It  ma}'  be  that  the  rule  for  ascertaining  the  amount  of  insurance  upon 
any  particular  parcel  where  insurances  are  commingled,  us  in  this  case, 
is  dependent  upon  the  extent  of  the  loss,  and  that  whatever  could  be 
recovered  upon  the  more  comprehensive  policy  without  regard  to  the 
other  is  the  amount  to  be  deemed  insured  thereby  on  the  part  injured 
in  case  of  a  partial  loss,  and  that  on  that  basis  an  over  insurance  to 
the  extent  of  the  separate  policy  might  be  established.  By  insuring 
several  parcels  of  property  for  an  entire  sum  the  insured  obtains  the 
advantage,  and  the  insurer  subjects  himself  to  the  liability  of  having  so 
much  of  the  total  sum  insured  as  may  be  necessary  to  compensate  for 
damage  to  any  part  of  the  property  applied  to  that  part,  though  the 
sum  named  in  the  policy  would  have  been  insufficient  to  cover  the  loss 
if  the  whole  had  been  destroyed.  Thus  it  is  left  to  the  result,  in  case 
of  a  partial  loss,  to  determine  what  sum  is  insured  upon  any  particular 
parcel,  the  only  limit  being  its  value.  On  the  other  hand,  it  would  be 
desirable  to  adopt  a  general  rule  applicable  to  all  contingencies.  We 
refrain  from  expressing  an  opinion  now  upon  the  several  phases  which 
might  be  developed  under  an  insurance  of  this  cliaracter  in  case  of 
partial  loss,  confining  our  adjudication  to  the  case  before  us,  which  was 
that  of  a  total  loss  of  the  whole  subject  insured  by  all  the  policies. 

The  judgment  should  be  affirmed,  with  costs. 

All  concur.  *"  Judgment  affirmed} 


STATE  INS.  CO.  v.  TAYLOR. 
Supreme  Court  of  Colorado,  1890.     14  Colo.  499. 

Appeal  from  District  Court  of  Chaffee  County. 

On  the  30th  day  of  January*,  1885,  appellant  issued  to  appellee  a 
policv  of  insurance  on  his  frame  house,  used  as  a  residence,  in  the 
village  or  town  of  Hancock,  Chaffee  County,  and  its  contents,  including 
wearing  apparel,  famil}'  stores  and  provisions,  for  the  sum  of  $1,200. 
—  $800  being  on  the  building  and  $400  on  the  contents;  insuring 
against  fire  and  lightning  for  one  year  for  a  premium  of  $48.^  .  .  . 

1  See  Lucas  v.  Jefferson  Ins.  Co.,  6  Cow.  6.35  (1827). 
Compare  Clarke  v.  Western  Assur.  Co.,  146  Pa.  561  (1892).  — Ed. 

2  In  reprinting  the  statement  and  the  opinion,  passages  not  dealing  with  the 
amount  of  recovery  have  been  omitted.  —  Ed. 

56 


882  STATE    INS.    CO.    V.    TAYLOE.  [CHAP,  VIII. 

On  the  3d  da}-  of  November  of  the  same  year,  the  house  took  fire  in 
the  upper  part  (ceiling  or  roof)  from  a  stove-pipe,  and  was  destroyed, 
with  most  of  the  contents.  .  .   . 

In  the  answer  the    defendant  admitted  the  making  and  delivering 
of  the  polic}',  denied  that  the  loss  was  $1,200,  as  shown  by  proofs  of. 
tlie  loss  submitted,  and  said  it  ought  to  be  not  to  exceed  $524.62.  .  .  . 

The  case  was,  by  agreement  of  parties,  tried  b}-  the  judge  of  the 
district  court  without  a  jury.  He  found  for  the  plaintiff  in  the  sum  of 
$1,045,  and  judgment  was  entered  for  that  amount. 

Stuart  Bros.,  for  appellant. 

W.  S.  Decker  and  C.  A.  Allen.,  for  appellee. 

Rked,  Commissioner.  .  .  .  The  onl}-  remaining  question  is  as  to 
the  rule  of  damages  in  arriving  at  the  value  of  the  building  destroyed. 
It  is  contended  that  the  amount  allowed  was  excessive  ;  that  the  true 
value  was  what  the  property  would  have  sold  for  in  the  market.  Counsel 
do  not  say  whether,  in  fixing  the  value,  the  house  is  to  be  considered 
a  chattel,  and  its  value  what  it  would  bring  severed  from  the  realt}-,  or 
whether  its  value  was  to  be  estimated  in  connection  with  the  land  on 
which  it  stood.  The  rule  contended  for  cannot  be  the  correct  one.  If 
*so,  —  if  there  was  no  market  demand  for  the  property  so  it  could  be 
sold,  —  it  would  have  no  value,  and  there  would  be,  consequently,  no 
loss.  Another  trouble  is  as  above  suggested  :  It  would  make  the  value 
of  the  house  insured  to  depend  upon  the  marketability  of  the  uninsured 
land.  A  farmer  might  have  an  insured  building  of  the  value  of  $5,000 
on  a  large  farm,  and  yet  be  held  to  have  sustained  no  loss  by  its  de- 
struction because  there  was  no  demand  for  land  in  that  location,  and 
the  farm  could  not  have  been  sold.  While  the  price  for  which  the  prop- 
erty could  be  sold  might  be  admissible  in  evidence  to  assist  in  arriving 
at  its  value,  it  was  not  the  only,  nor  a  safe,  criterion.  If  not  salable  at 
all.  it  might  have  a  value  to  the  owner  as  a  home  for  himself  and 
family,  or  for  business  purposes.  Where,  as  in  this  case,  the  policy 
was  "  valued  "  ("amount  of  insurance  fixed),  the  rule  is  indemnification 
to  the  owner  not  exceeding  the  sum  insured;  the  question,  not  >vhat 
some  one  would  have  paid  for  the  building,  but  what  amount  would 
indemnify,  tli£_owner  for  the  loss  sustaijied. 

The  rule  of  damages  is  the  value  of  the  property  lost,  and  not  the 
cost  of  replacement.  Steward  v.  Insurance  Co.,  5  Hun,  261.  It  is  for 
the  jin-y  to  determine  how  much  money  will  make  good  to  the  insured 
his  loss.  Brinley  ?'.  Insurance  Co.,  11  Mete.  195.  "It  is  for  the  jury 
to  say  what  the  actual  value  of  the  building  was,  in  view  of  all  the 
facts,  and  their  finding  is  conclusive."     Wood,  Ins.  §  446. 

Counsel  seem  to  have  confounded  the  measure  or  rule  of  damage  for 
merchandise  or  goods  destroyed  wit.li  tlmt.  for  bnildinga  In  the  fornaer 
UiiIxalueirLQiark£tdsj^rreijt_  In  the  latter  it  must  be  "  the  actual  value 
of  the  property  in  the  condition  it  was  in  at  the  time  of  loss,  taking  into 
ronsideratif)n  its  age  and  condition,  and  not  necessarily  what  it  would 
cost  to  erect  a  new  building.     The  assured  should  be  allowed  the  value 


SECT.  II.]  STATE    INS.    CO.    V.    TAYLOR.  '883 

of  his  building  at  the  time  of  loss  ;  and  if,  b}-  reason  of  age  or  use,  it  is 
less  valuable  than  a  new  building,  erected  upon  the  same  plan,  of 
similar  materials,  and  of  the  same  dimensions,  the  insurer  should  be 
allowed  for  such  difference  arising  from  deterioration."  Wood,  Ins. 
§  446  ;  Insurance  Co.  v.  Senuett,  37  Pa.  St.  205. 

It  follows  that  the  original  cost  of  the  building,  the  cost  of  con- 
structing a  like  building  at  the  time  of  trial,  on  the  same  laud,  and 
the  difference  in  value  between  the  building  destroyed,  by  reason  of  its 
age  and  use,  and  a  new  one,  were  all  proper  inquiries  to  assist  the 
court  in  arriving  at  a  just  conclusion  in  regard  to  the  loss  sustained ; 
and  the  admission  of  evidence  upon  these  points  was  not  erroneous,  as 
supposed  by  appellant.  In  our  view  of  the  case,  no  serious  errors  oc- 
curred upon  the  trial,  and  the  judgment  should  be  affirmed. 

Richmond  and  Pattison,  C.  C,  concur. 

Per  Curiam.  For  the  reasons  stated  in  the  foregoing  opinion  the 
judgment  is  affirmed.  AffinnecU 

i  In  Bardwell  v.  Conway  Mut.  F.  Ins.  Co.,  122  Mass.  90,  95  (1877),  Devens,  J., 
for  the  court,  said:  "The  defendant  sought  to  show  what  the  land  sold  for  after 
the  buildings  were  destroyed,  as  affording  evidence  of  the  value  of  the  buildings  when 
connected  with  proof  of  what  both  together  had  been  offered  for  at  sale.  We  cannot 
say  that  this  was  improperly  excluded.  The  relation  which  the  buildings  occupy  to 
the  land  is  not  necessarily  such  that  their  value  can  approximately  be  ascertained  by 
such  a  comparison  as  was  proposed.  In  some  instances  they  add  to  the  value  of  the 
estate  more  than  their  own  independent  value,  while,  in  others,  buildings  which  it 
would  cost  much  money  to  renew,  do  not  add  sensibly  to  the  amount  for  which  the 
estate,  on  which  they  are  situated,  could  be  sold." 
On  amount  of  recovery  in  general,  see  also  :  — 

Pentz  V.  Aetna  F.  Ins.  Co.,  9  Paige,  568  (1842)  : 

Liscom  V.  Boston  Mut.  F.  Ins.  Co.,  9  Met.  205  (1845) ; 

Crombie  v.  Portsmouth  Mut.  F.  Ins.  Co.,  26  N.  H.  389  (1853) ; 

Cumberland  Valley  Mut.  Protection  Co.  v.  Schell,'29  Pa.  31  (1857); 

Tuckerman  v.  Home  Ins.  Co.,  9  R.  I.  414  (1870)  ; 

Woodruff  V.  Imperial  F.  Ins.  Co.,  83  N.  Y.  133  (1880).  —  Ed, 


884 


LAURENT    V.   CHATHAM    FIRE    INS.    CO.  [CHAP.  VIII. 


SECTION   II.    {contiimed). 
(B)   Limited  Interests. 

LAURENT  V.  CHATHAM   FIRE   INS.   CO. 
Superior  Court  of  the  City  of  New  York,  1828.     1  Hall,  41.^ 
This  was  an  action  of  assumpsit  on  a  policy  of  fire  insurance  for 


upon  a  building.     Tiie  plea  was  the  general  issue. 

At  the  trial  before  Hoffman,  J.,  it  appeared  that  the  building  was 
destroyed  by  fire  on  August  15,  1827;  that  it  stood  upon  ground 
leased  to  the  plaintiflf  for  a  term  expiring  September  1,  1827  ;  that  the 
lease  contained  a  covenant  for  renewal,  but  that  the  plaintiff  had  given 
no  notice  of  a  desire  to  renew  ;  that  the  building  Was  erected  by  the 
plaintiff,  was  his  property,  and  was  capable  of  removal ;  that  the  build- 
ing cost  more  than  $1,100,  and  was  intrinsically  worth  about  $1_^0  ; 
but  that,  if  it  were  necessary  to  remove  the  building,  it  would  not  bring 
mojiLihan  $200^ 

The  counsel  for  the  defendants  submitted  that,  as  the  plaintiff  had 
no" Interest  in  the  lot,  except  for_aLJg^"^.  "^  which  only  fifteen  days 
reiiiained  atllie  JlmejaLJ^  fire,  and  as  tlie  value  ofUieJJuilcringli 
removed  was  only  $200,  the  plaintiff  coura~^uot  "5c~entitled~to  recover 


But  the  judge  ruled  that,  as  the  building  had  cost  upwards  of  $1,100 
and  was  worth  at  least  $1,000,  and  as  there  were  vacant  lots  in  the 
immediate  vicinity  upon  wliich  it  might  have  been  placed  even  if  the 
plaintiff  did  not  renew  his  lease,  and  as  the  defendant  company  must 
be  presumed  to  have  written  the  policy  with  knowledge  of  the  circum- 
stances, the  plaintiff  was  entitled  to  recover  the  full  amount  with  in- 
terest.    To  this  opinion  the  defendant  company  excepted. 

The  jury  returned  a  verdict  for  $900.  The  defendant  company  now 
moved  for  a  new  trial. 

Mr.  Jay,  in  support  of  the  motion. 

Mr.  Charles  Graham^  for  the  plaintiff,  contra. 

Jones,  C.  J.,  delivered  the  opinion  of  the  court.'^  .  .  . 

It  is  certainl}'  true,  as  a  general  rule,  that  the  polic}'^  of  insurance  is 
a  contract  of  indemnit}',  and  that  the  actual  loss  upon  an  open  polic}' 
is  tlie  measure  of  the  indemnity  to  which  the  assured  is  entitled.  But 
will  that  rule,  if  applied  to  this  case,  sustain  this  defence  ?  The  plain- 
tiff insists  that  this  is  not  an  open  policy  ;  and  if  he  is  correct  in  that 
opinion,  and  the  contract  is  to  be  deemed  a  valued  policy,  there  could 
be  no  longer  any  qut^stion  of  his  right  to  recover  to  the  full  amount  of 
his  insurance.     But  I  cannot  accede  to  that  opinion.^  .  .   . 

1  The  statement  has  been  rewritten.  — Ed. 

2  Passas^es  stating  the  case  have  been  omitted.  —  Ed. 
'  The  discussiun  of  this  point  has  been  omitted.  —  Ed. 


SECT,  ir.]       LAURENT  V.    CHATHAM  FIRZ  INS.  CO.  8S5 

Tliis  polic}'  contains  i.o  such  agreeincnt  or  vakuition,  and  has  r.o 
feature  of  a  vahied  polic}-.  The  assured  cannot  recover  any  greater 
satisfaction  for  liis  loss  than  the  actual  value  of  the  building  which  was 
destroyed  by  the  fire  at  the  time  of  its  destruction.  But  his  contract 
would  entitle  him  to  recover  the  full  value  of  that  building  at  the  time 
of  the  loss,  if  the  full  amount  was  covered  by  the  policy.  And  if  the 
actual  value  exceeds  the  sum  insured,  he  will  of  course  be  entitled  to 
the  whole  amount  of  the  insurance  towards  his  indemnity.  This  gen- 
eral proposition,  as  applicable  to  open  policies,  is  admitted  b\'  both 
parties.  They  differ  upon  the  rule,  or  principle  of  valuation  ;  the  in- 
sured insisting  upon  the  full  intrinsic  value  of  the  building  as  the 
standard,  but  the  company'  contending  for  the  relative  value  of  it  to 
the  owner,  subject  to  removal  from  its  location  at  the  time  of  the  fire, 
as  the  just  measure  of  the  indemnity  to  which  he  is  entitled. 

The  judge  ruled  that  the  intrinsic  value  of  the  building  at  the  time 
was  the  true  measure  of  the^oss  within  theliieaning  of  the  contract  of 
imTemnity,  and  we  concur  with  him  in  that  opuiioiK^  The  actual  value 
of  the  premises  insured  is  the  standard  which  the  policy  obviously 
contemplated  for  settling  the  loss,  and  adjusting  the  indemnity.  The 
agreement  is  to  make  good  the  loss  or  damage  to  the  property  by  tlie 
fire,  and  the  estimate  of  that  loss  or  damage  is  to  be  according  to 
the  value  of  the  property  at  the  time  the  loss  occurs  ;  and  the  conditions 
annexed,  to  wliich  the  policy  refers  for  the  explanation  of  its  meaning, 
are  too  clear  to  admit  of  any  other  interpretation.  A  particular  account 
of  the  loss  or  damage  is  to  be  given  in  ;  and  the  value  of  the  property, 
if  in  question,  is  to  be  ascertained  by  the  books  of  account  and  vouchers 
of  the  claimant,  which  are  to  come  in  aid  of  the  estimate  of  the  value 
of  the  property  at  the  time  of  the  loss. 

But  it  is  said  that  the  policy  is  a  contract  of  indemnity,  and  that  the 
principle  of  indemnit}'  which  pervades  the  insurance  must  control  the 
construction  of  the  policy  ;  and  upon  that  principle  it  is  insisted,  that 
the  value  of  the  property  to  the  assured  at  the  time  of  the  loss,  circum- 
stanced as  it  may  then  be,  in  reference  to  his  use  and  enjoyment  of  it, 
is  the  loss  he  sustains  by  the  destruction  of  it,  and  must  be  the  measure 
of  his  indemnity  for  the  loss.  It  will  at  once  be  seen,  that  if  this  prin- 
ciple of  indemnity  is  to  be  admitted,  the  extent  and  value  of  the  recovery 
will  in  every  case  vary  with  the  special  and  peculiar  circumstances  of 
the  insured,  and  the  local  advantages  or  disadvantages  of  the  building, 
and  the  uses  to  which  it  is  applied  ;  and  the  intrinsic  value  of  the  build- 
ing will  form  no  criterion  of  the  loss  of  the  proprietor  in  case  of  its 
destruction.  A  building,  for  example,  which  the  necessities  of  the 
owner  compel  him  to  offer  at  public  sale,  for  ready  money,  will  be 
worth  to  him  no  more  tlian  what  it  will  produce  at  such  a  sale  ;  and  a 
building  for  which  there  happens  to  be  great  competition  will  command 
a  much  larger  price  than  its  true  value.  Are  these  incidental  and 
collateral  circumstances  to  enter  into  the  estimate  of  value  under  the 
contract  of  insurance,  and  give  the  rule  of  indemnity  to  the  proprietor 


886 


LAURENT    V.    CHATHAM    FIEE    INS.   CO.  [CHAP.  VIII. 


for  the  loss  of  the  huikling  ?  Two  houses  of  equal  value  may,  from 
their  local  situatiou,  be  very  uuequal  in  the  revenues  they  produce  to 
the  proprietors;  would  the  loss  of  them,  if  destroyed  by  fire,  entitle 
the  proprietors  to  different  indemnities  in  proportion  to  the  rents,  or 
revenues  of  the  tenants  ?  Would  the  insurers  be  compelled  to  pay 
double  the  amount  of  the  cost  of  the  profitable  stand,  because  the  loca- 
tion of  the  tenement  made  it  of  that  value  to  the  owner,  and  yet  be 
compellable  to  pay  for  the  loss  of  the  other  tenement,  the  one-half  only 
of  its  actual  cost, "because  from  its  unfavorable  location,  or  from  some 
popular  prejudice  it  would  sell  for  no  more  than  one-half  of  its  value  ? 
It  is  the  tenement  upon  which  the  insurance  is  made  ;  and  the  actual 
value  of  it  as  a  building  is  the  loss  of  the  insured  in  case  of  its  destruc- 
tion by  fire.  To  that  measure  of  indemnity  the  proprietor  is  entitled, 
however  unproductive  the  property  may  be,  and  he  is  entitled  to  no 
more,  whatever  revenue  he  may  have  derived  from  the  tenement. 

The  obligation  of  the  contract,  then,  is  to  pay  the  insured  the  actual 
value  of  the  tenement  as  a  building,  or  a  proportion  of  its  value,  equal 
to  the  sum  insured  upon  it  in  case  of  the  destruction  of  it  by  fire  within 
the  term  for  which  the  policy  protects  it,  for  his  indemnity  for  his  loss. 
The  policy  in  terms  refers  to  the  true  and  actual  value  of  the  property 
at  the  time  of  the  loss,  and  makes  that  value  the  standard  by  which  to 
estimate  the  loss  or  damage  which  the  insurer  is  bound  to  satisfy,  and 
the  insured  is  entitled  to  claim.  This  agreement  cannot  be  other- 
wise understood  than  as  binding  the  parties  to  the  intrinsic  value  of 
the  property  at  the  time  of  its  destruction,  as  the  rule  by  which  the  in- 
demnity is  to  be  measured,  without  reference  or  regard  to  any  special 
and  adventitious  circumstances  which  may  enhance  or  diminish  the 
relative  value  or  importance  of  it  to  the  insured.  It  is  the  true  and 
actual  value  of  the  tenement  itself  at  the  time,  independently  of  its 
location,  or  the  insecurity  of  the  title,  or  terms  by  which  it  is  held  that 
the  insurers  agree  to  make  good  to  the  present  proprietor  in  case  the 
loss  or  damage  by  fire  happens  during  the  continuance  of  his  ownership, 
and  within  the  terra  of  the  insurance.  It  is  of  no  importance  whether 
the  tenement  stands  upon  freehold  or  upon  leasehold  ground,  or  whether 
the  lease  is  about  expiring,  or  has  the  full  time  to  run  when  the  fire 
occurs,  or  whether  it  is  renewable  or  not.  The  condition  of  the  policy 
is  satisfied  if  the  title  and  ownership  are  in  the  insured  at  the  time  of 
the  insurance,  and  at  the  time  of  the  loss,  and  the  measure  of  his  in- 
demnity is  the  amount  of  his  interest  in  the  tenement  when  destroyed 
by  the  fire,  notwithstanding  that  the  whole  interest  would  have  expired 
tlie  very  next  day,  or  soon  after  the  loss  occurred.  But  whether  there 
may  not  be  incidents  and  special  circumstances  so  intimately  connected 
^vith  the  premises,  or  so  permanently  attached  to  them  as  to  affect  their 
intrinsic  value,  or  the  insurable  interest  of  the  part}',  who  eflTects  the 
insurance  upon  them,  I  am  not  prepared  to  say  ;  and  it  is  not  material 
to  the  decision  of  the  question  before  us  to  inquire,  for  this  clearly  is 
not  such  a  case.    In  this  case  the  tenement  belonged  exclusively  to  the 


SECT.  II.]  LAURENT    V.    CHATHAM   FIRE    INS.    CO.  887 

insured,  and  the  lease  of  the  lot  upon  which  it  stood  had  fifteen  da^-s  to 
run,  and  was  moreover  renewable.  The  true  and  actual  value  of  it 
exceeded  the  sum  insured  upon  it,  and  the  loss  of  it  by  the  fire  was 
absolute  and  total,  and  took  place  within  the  term  for  which  it  was 
insured.  The  sole  ground  of  objection  to  the  right  to  recover  the  full 
amount  of  the  insurance  is  that  the  lease  was  about  expirino^,  and  had 
not  been  renewed,  and  it  did  not  appear  that  the  notice  required  bv  the 
lease  to  entifle  the  holder  to  a  renewal  had  been  given  ;  and  on  these 
grounds  the  recover}^  is  sought  to  be  limited  to  the  value  of  the  build- 
ing as  a  tenement  to  be  removed  from  the  premises.  But  if  that  con- 
tingenc}-  could  in  an}'  supposable  case  be  brought  into  the  calculation, 
and  suffered  to  reduce  the  insurable  interest,  or  the  claim  to  indemnity 
for  tlie  actual  loss  of  the  building  by  the  fire  (which,  if  I  am  riglit  in 
my  conclusions  on  the  point,  would  be  wholly  inadmissible),  still  it 
would  not  follow  that  in  this  case  such  deduction  could  be  made,  for  it 
is  not  reduced  to  a  certainty  that  the  lease  would  not  have  been  re- 
newed. Application  may  have  been  made  to  the  agents  for  renewal ; 
or  if  the  time  limited  for  the  renewal  as  a  matter  of  right  had  been  suf- 
fered to  elapse,  the  lessee  might  within  the  remaining  fifteen  days  of 
the  subsisting  term  have  made  an  arrangement  with  the  landlord  for 
the  continuance  of  the  lease,  or  he  might  have  sold  the  tenement  to  his 
successor  or  to  the  landlord  ;  or,  the  tenement,  which  from  its  construc- 
tion, not  having  any  foundation  or  fixture  attacliing  it  to  the  soil  was 
capable  of  removal,  miglit  have  been  removed  to  one  of  the  vacant  lots 
in  its  immediate  vicinity  of  which  it  appears  in  proof  there  were  several. 
In  any  one  of  these  contingencies  the  tenement  which  is  found  to  have 
been  worth  upwards  of  81,000,  might  well  have  produced  to  the  owner 
of  it  the  sum  of  $800  insured  upon  it  by  the  defendants.  The  plaintiff, 
by  the  total  destruction  of  it  by  the  fire,  lost  the  means  of  availing 
himself  of  the  sale,  or  the  removal  of  it,  and  may  have  been  compelled 
by  the  loss  of  the  building  to  relinquish  the  right  reserved  to  him  to 
renew  and  continue  the  lease.  Besides,  if  it  had  been  reduced  to  a  cer- 
tainty that  the  lease  was  not  to  be  renewed,  and  that  the  building  was 
to  be  sold  or  removed,  what  proof  is  there  that  the  avails  of  it  if  sold, 
or  the  value  of  it  if  removed  to  a  contiguous  lot,  would  not  have  been 
equal  to  the  sum  insured  upon  it  ?  Only  one  witness  has  been  examined 
to  the  point,  and  he  simply  testifies  that  he  would  not  have  given  more 
than  8200  for  the  building,  if  it  had  been  necessary  to  remove  it ;  but 
to  give  his  testimony  decisive  weight,  he  should  have  stated  what  the 
probable  expense  would  have  been  to  remove  it  to  the  adjoining  lot, 
and  what  its  value  in  such  new  location  would  have  been  ;  because,  if 
oflfered  for  sale,  the  owner  of  the  contiguous  vacant  lot  might  have  com- 
peted for  the  purchase  of  it  for  that  purpose.  But  witnesses  testifying 
to  the  point  under  the  most  favorable  circumstances  could  only  speak 
from  opinion,  and  the  value  they  would  put  upon  a  tenement  so  circum- 
stanced could  be  no  more  than  estimates,  which  would  varv  with  the 
opinions  and  views  of  the  witnesses.     The  value  of  the  building  to 


S88  LAURENT    V.    CHATHAM    FIRE   INS.    CO.  [CHAP.  VIII. 

Dodge,  the  witness  who  was  examined,  for  example,  would  be  much 
less  than  it  would  be  to  the  new  tenant,  who  should  succeed  the  plain- 
tiff, or  the  landlord  who  owned  the  lot  on  which  it  stood,  or  to  the 
owners  of  the  vacant  lots  in  its  immediate  vicinit}-.  Are  such  estimates 
then  a  just  criterion  for  the  measure  of  the  indemnity  of  the  insured  for 
his  loss  ?  He  was  clearl}'  entitled,  even  upon  the  principle  the  defend- 
ants would  appl}'  to  his  case,  to  the  price  his  building  w^Q^ild  have  sold 
for.  What  sum  it  would  have  produced  on  a  sale  of  it  cannot  now  be 
known  ;  but  as  the  fair  value  of  it  to  himself,  if  he  had  continued  in  the 
tenure  of  the  premises,  or  to  the  tenant  who  might  succeed  him,  or  to 
the  landlord,  exceeded  the  amount  of  the  insurance,  he  has  a  just  claim 
upon  that  principle  to  a  full  recovery. 

In  another  view  of  it,  the  rule  contended  for  b}-  the  insurers  would 
be  unequal  and  unjust  in  its  operation.  The  insured  pays  the  premiuin 
upon  the  whole  sutp, jind Joe  i nsures^ I°LJ:!^5_^^^ re  risk^of  the  proijerty 
t^thatjunount^jlunn^^  He  has  a  right, 

therefore,  to  claim  the  amount  he  thus  insures,  if  he  looses  property  of 
that  value  by  the  peril,  during  the  continuance  of  the  risk  ;  but  if  other 
considerations  are  to  enter  into  the  calculations  of  value,  and  he  is  to 
be  paid  at  a  reduced  rate,  because  in  certain  contingencies  the  propert}' 
might  fail  to  produce  to  him  the  full  value  of  it  as  it  stood  at  the  time 
of  the  loss,  he  will  not  have  the  full  benefit  of  his  insurance,  for  which 
he  has  paid  the  full  premium. 

These  views  of  the  practical  results  of  a  speculative  calculation  of 
damages  on  the  principles  for  which  the  defendants  contend,  present  to 
us  powerful  considerations  for  preferring  the  true  and  actual  value  of 
the  building  as  the  standard  of  indemnit}'. 

The  intrinsic  value  of  the  tenement,  as  a  building  at  the  time  of  the 
loss,  is  not  a  matter  of  mere  estimate,  but  is  susceptible  of  proof.  The 
ninth  condition  attached  to  the  policy  prescribes  the  form  and  substance 
of  the  proofs  required  of  the  claimant  to  entitle  him  to  payment,  and 
the  true  and  actual  value  of  the  property  at  the  time  of  the  fire,  is  the 
rule  by  which  the  amount  of  the  loss  or  damage  is  to  be  estimated  and 
settled.  The  rule  is  uniform  and  rational ;  it  is  in  accordance  with  the 
letter  and  spirit  of  the  contract,  and  administers  equal  justice  to  the 
parties.  It  was  in  my  judgment  rightly  applied  to  this  case,  and  accord- 
ingly the  motion  for  a  new  trial  must  be  denied.^ 

»  Ace. :  Washington  Mills  Emery  Mfg.  Co.  v.  Commercial  F.  Ins.  Co.,  13  Fed.  R. 
646  (C.  C,  D.  Mass.,  1882) ;  Washington  Mills  Emery  Mfg.  Co.  i;.  Weymouth  and 
Braintree  Mut.  F.  Ins.  Co.,  135  Mass.  503  (1883). 

See  Collingridge  v.  Royal  Exchange  Assur.  Corp.,  3  Q.  B.  D.  173  (1877).  —  Ed. 


SECT.  II.]  STRONG   V.    MANUFACTUREHS'    INS.    CO.  889 

STRONG  V.    MANUFACTURERS'    INS.   CO. 
Supreme   Judicial  Coukt  of  Massachusetts,    1830.       10  Pick.  40. 

Assumpsit  on  a  polic}-  of  insurance,  dated  December  29,  1828, 
whereby  the  defendants  insured  for  the  plaintiff  $1,400  on  his  dwellino-- 
house  in  Northampton,  against  loss  by  fire. 

Upon  a  case  stated  it  appeared  that  the  house  was  destroyed  by 
tire  on  April  23,  1829,  and  the  amount  of  the  loss  was  Si, 300. 

The  policy  contained  a  provision,  that  if  the 'property  should  be  sold 
or  conveyed,  in  whole  or  in  part,  the  policy  should  become  void.  The 
plaintiff,  upon  his  application  for  insurance,  stated  in  writing,  in  reply 
to  interrogatories  on  the  part  of  the  defendants,  that  the  property  was 
his  own ;  but  no  inquiry  was  made  and  no  information  communicated 
as  to  the  state  of  the  title. 

In  1825,  the  plaintiff  mortgaged  the  estate  to  one  Damon  to  secure 
the  payment  of  a  note  for  $300;  this  note  has  never  been  paid.  In 
1827,  the  plaintiff  again  mortgaged  it  to  Damon,  to  secure  him  against 
a  note  for  $1,100,  which  he  had  signed  jointly  with  the  plaintiff  and 
others.  The  plaintiff  paid  one  half  of  this  note  in  1827,  and  a  new 
note  for  the  balance  signed  by  the  same  persons  was  given  by  way  of 
renewal.  On  July  3 1 ,  1828,  Damon  had  assigned  both  mortgages  to  one 
Stebbins.  On  December  4,  1828,  the  equity  of  redemption  was  seized 
by  virtue  of  three  executions  issued  in  pursuance  of  judgments  recov- 
ered against  the  plaintiff ;  and  on  January  7,  1829,  it  was  sold  by 
auction  for  $210.  This  sum  was  applied  in  payment  of  the  executions, 
but  was  insufficient  to  dischai-ge  the  whole  amount  of  them.  On  January 
6,  1829,  it  was  agreed  between  the  plaintiff  and  Stebbins,  that  Steb- 
bins should  take  possession  of  the  mortgaged  premises  for  condition 
broken,  and  that  the  plaintiff  should  continue  to  occupy  them  until 
May,  1829.  Stebbins  accordingly  took  possession  and  leased  the  prem- 
ises to  the  plaintiff  until  May  1,  1829,  the  plaintiff  agreeing  to  pay  him 
$25  rent,  and  to  give  up  the  premises  without  further  let  or  hindrance 
at  the  expiration  of  the  term.  On  November  5,  1829,  the  equity  of 
redemption  was  reconveyed  to  the  plaintiff  by  the  purchaser. 

According  as  the  opinion  of  the  court  should  be  upon  the  foregoing 
statement  of  facts,  a  default  or  nonsuit  was  to  be  entered. 

/Strong  and  Forbes^  for  the  plaintiff. 

Deicey^  for  the  defendants. 

The  case  was  continued  nisi^  and  the  opinion  of  the  court  was  after- 
ward drawn  up  b}* 

Wilde,  J.  Upon  the  facts  stated  we  think  there  can  be  no  question 
that  the  plaintiff  had  an  insurable  interest  in  the  house  assured,  at  the 
time  the  policy  was  effected  ;  for  although  a  policy  of  insurance  is  a 
contract  of  indemnity,  and  wager  policies  are  not  to  be  countenanced, 
yet  a  legal  title  to  the  property  insured  is  not  necessary  to  give  validity 


890 


.^TNA   FIRE    INS.    CO.    V.    TYLER.  [CHAP.  VIII. 


to#rch  a  contract.  A  mere  equitable  title,  or  any  qualified  property 
in  the  thing  insured,  may  be  legally  protected  by  insurance  ;  Colum- 
bian Ins.  Co.  V.  Lawrence,  2  Pet.  25  ;  Marshall  on  Ins.  (1st  ed.)  91 ; 
and  it  is  very  clear  that  the  plaintiff  not  only  had  an  insurable  in- 
terest, but  that  his  interest  was  substantially  the  same  as  it  would 
have  been  had  the  property  insured  been  free  from  any  incumbrance  ; 
for  he  was  liable  to  tlie  mortgagee  and  the  attaching  creditor  for  the 
whole  amount  of  the  debts  for  which  they  had  obtained  liens,  and  it 
is  well  settled  that  a  mortgager  may  protect  his  equitable  interest  at 
any  time  until  actual  foreclosure  of  the  mortgage. 

Nor  did  any  of  the  events  subsequent  to  the  insurance  wholly  devest 
the  plaintiff  of  his  interest,  for  after  the  sale  of  the  equity  still  he  had 
a  ricrht  to  redeem,  and  this  right  might  constitute  a  valuable  interest. 
No  evidence  was  offered  to  show  that  it  was  not.  The  presumption 
is  that  it  was  of  some  value,  for  the  plaintiff  did  afterwards  actually 
redeem  or  purchase  the  equity  ;  and  independently  of  any  circumstance 
tending  to  show  that  a  right  of  redemption  is  a  valuable  interest,  the 
law  would  presume  that  it  was,  the  contrary  not  appearing.  The  plain- 
tiff too  might,  from  local  attachment  and  other  circumstances,  estimate 
the  property  higher  than  others  would,  and  as  the  value  of  property  is 
not  to  be  ascertained  by  the  market  price,  or  by  the  opinion  of  wit- 
nesses, in  a  case  like  this,  we  think  the  underwriters  have  not  shown 
any  defence  on  the  ground  that  the  plaintiff  had  no  interest  at  the  time 
of  the  loss.  The  value  of  the  plaintiff's  interest  in  the  property  in- 
sured is  not-  material.  If  he  had  an  insurable  into;est  at  the__timc  the 
policy  was  effected,  and_an  intei-est  also  at  the  time  of  the  loss,  he  is 
entitled  to  recoveFThe  whole  amount  of  damage  to  property,  not  ex- 
ceeding the  sum  insured. 

^ut  the  principal  objection  on  which  the  defendants'  counsel  rely 
is,  that  the  plaintiff  did  not  make  a  full  and  fair  representation  of 
his  interest,  and  that  there  was  such  a  concealment  as  vitiated  the 
policy.^  .  .  .  Judgment  for  plaintiff  on  default? 


^TNA  FIRE  INS.  CO.  v.  TYLER. 

Court  of  Errors  of  New  York,  1836.     16  Wend.  385.^ 

Error  from  the  Supreme  Court.     Tyler  sued  the  ^tna  Fire  Insur- 
ance Company,  on  a  policy  against  fire  on  a  dwelling-house.     In  his 

1  The  discussion  of  this  question  has  been  omitted.  —  Ed. 

2  See  Borden  v.  Hingham  Mut.  F.  Ins.  Co.,  18  Pick.  523  (1836) ;  Buck  v.  Phoenix 
Ins.  Co.,  76  Me.  586  (1886).  — Ed. 

*  In  reprinting  the  statement,  passages  foreign  to  the  amount  of  recovery  have  been 
omitted.  —  Ed. 


SECT.  II.]  ^TNA   FIRE    INS.    CO.    I'.    TYLER.  891 

application  in  writing  he  stated  that  he  wished  to  "  effect  an  insi^nce 
on  my  house  in  which  I  reside,"  and  the  policy  itself  stated  that  the 
plaintiff  was  insured  upon  his  two  story  frame  dwelling-house.  The 
insurance  was  to  the  airiount  of  §1,500,  for  the  period  of  one  year  from 
24th  August,  1827,  and  within  the  year  the  house  was  consumed  by 
fire.   .   .  . 

The  policy  in  the  body  thereof  contained  the  following  conditions  : 
.  .  .  "  And  in  case  of  any  other  insurance  upon  the  property  hereby 
insured,  whether  prior  or  subsequent  to  the  date  of  this  policy,  the  in- 
sured shall  not,  in  case  of  loss  or  damage,  be  entitled  to  demand  or 
recover  on  this  policy,  an^'  greater  portion  of  the  loss  or  damage 
sustained  than  the  amount  hereby  insured  shall  bear  to  the  whole 
amount  insured  on  the  said  policy."  The  policy  contained  the  usual 
clause  referring  to  the  conditions  attached  thereto.  .  .  .  The  fifth  condi- 
tion is  in  these  words:  "  Notice  of  all  previous  insurances  upon  prop- 
erty insured  by  this  company  shall  be  given  to  them  and  indorsed  on 
this  polic}'  .  .  .  at  or  before  the  time  of  their  making  insurance  thereon, 
otherwise  the  policy  made  by  this  company  shall  be  of  no  eflfect.  .  .   . 

After  the  plaintiff  had  rested,  the  counsel  for  the  defendants  offered 
to  prove  that  tlie  plaintiff,  at  the  time  he  effected  the  insurance,  held 
the  property  insured  CMily  by  an  executory  contract,  upon  which  he  had 
paid  but  a  small  sum,  for  the  purpose  of  showing  that  the  title  to  the 
property  was  not  in  him  ;  and  for  the  further  purpose  of  showing  a 
fraudulent  concealment  of  the  nature  and  extent  of  his  interest.  The 
evidence  was  objected  to,  but  the  objection  was  overruled.  The  de- 
fendants then  produced  in  evidence  a  contract  between  one  F.  Shafer 
and  the  plaintiff,  bearing  date  2d  July,  1827,  whereby  Shafer  bargains 
and  sells  the  lot  on  which  the  house  insured  is  situate,  to  the  plain- 
tiff, and  covenants  to  convey  the  premises  in  fee,  on  the  plaintiff  per- 
forming the  covenants  on  his  part,  or  on  neglect  to  convey,  to  pay  all 
damages.  The  plaintiff,  on  his  part,  covenants  to  pay  S700  in  cash 
by  instalments,  and  81,300  in  an  article  for  land,  which  he  agrees  to 
assign  the  next  day,  and  to  pay  the  money  due  and  to  grow  due  upon 
the  article;  and  when  entitled  to  a  deed,  to  convey  the  land  to  Shafer. 
On  the  back  of  the  contract  were  indorsements,  hy  which  Shafer  ac- 
knowledged that  the  assignment  of  the  article  was  duly  executed  on  the 
3d  July,  1827;  that  on  the  2d  October,  1827,  he  had  received  of  the 
plaintiff  $50,  and  on  the  10th  Januar}-,  1828,  the  further  sum  of  SHI  ; 
and  it  was  proved  that  $500  remained  due  under  the  article  to  the 
owner  of  the  land.  .  .  .  The  defendants  also  offered  to  prove  that 
Shafer  (the  bargainor  of  the  plaintiff)  had  procured  an  insurance  upon 
the  same  propert}-,  by  a  policy  underwritten  by  the  Merchants'  Insur- 
ance Company  of  Alban}-,  on  the  30th  June,  1825,  and  that  the  same 
had  been  continued  by  renewals  from  year  to  year,  the  last  renewal 
having  taken  place  on  the  28th  May,  1827,  continuing  the  policy  until 
the  28th  May,  1828.  The  plaintiff  objected  to  tliis  evidence,  but  the 
judge  ruled  it  to  be  admissible,  and  it  was  accordingly  adduced,  and  the 


892  iETNA    FIKE    INS.    CO.    V.   TYLER.  [CHAP.  VIII. 

defendants  proved  that  the  plaintiff  knew  of  the  existence  of  such 
polic}'  at  the  time  that  he  procured  insurance  from  tliem. 

The  counsel  for  the  defendants  insisted,  ...  4.  That  if  the  plaintiff 
was  entitled  to  recover,  he  could  recover  only  the  amount  of  his  loss, 
deducting  therefrom  a  proportionable  part  of  the  amount  in  arrear  and 
unpaid  to  Shafer,  The  judge  charged  the  jury  that  the  plaintiff  was 
entitled  to  recover,  if  anything,  the  actual  value  of  the  premises  in- 
sured to  the  extent  of  the  insurance.  5.  They  insisted  that  the  plain- 
tiff was  entitled  to  recover  only  such  proportion  of  the  loss  as  the 
amount  insured  by  the  defendants  bore  to  the  whole  amount  insured  by 
them  and  the  other  company.  The  judge  charged  that  the  plaintiff,  if 
entitled  to  recover  anv  thing,  must  recover  the  full  value  of  the  prem- 
ises insured.  .  .  .  The  defendants'  counsel  having  excepted  to  the 
several  decisions  made  b}'  the  judge,  .  .  .  applied  to  tiie  Supreme 
Court  for  a  new  trial,  which  was  denied  and  judgment  rendered  upon 
the  verdict.  .  .   . 

Judgment  having  been  rendered  for  the  plaintiff  upon  the  verdict 
rendered  in  his  favor,  the  defendants  sued  out  a  writ  of  error. 

I.  L.  Wendell  ^\-\C<  S.  Steve^is,  for  the  plaintiffs  in  error. 

3[.  T.  Iiey)iolds  and  S.  Beardsley  (attorney -general),  for  the  de- 
fendant. 

The  following  opinion  was  delivered  :  — 

By  the  Chancellok.  ^  There  is  no  misdescription  in  this  case  of  the 
subject  of  insurance  in  the  policy.  Neither  was  there  any  misrepre- 
sentation or  concealment  of  any  fact  on  the  part  of  the  assured,  which 
was  at  all  material  to  the  risk,  in  the  application  for  the  insurance  ;  and 
the  jury  have  negatived  all  pretence  of  fraud  on  the  part  of  Tyler,  in 
not  disclosing  the  true  state  of  his  title.  It  is  a  fact  of  public  notoriet}- 
that  a  great  portion  of  the  propert}'  in  the  eighth  senate  district,  and 
much  in  every  other  part  of  the  State,  is  held  b}-  those  who  are  con- 
sidered the  real  owners  thereof  for  most  purposes,  under  contracts, 
without  having  paid  the  whole  purchase  mone}',  and  obtained  legal  con- 
veyances ;  and  this  court  certainly  cannot  presume  that  the  officers  of 
this  or  any  other  insurance  company  in  the  State  are  ignorant  of  this 
fact,  or  that  they  considered  the  fact  as  in  an}'  way  material  to  the 
risk.  If  they  considered  it  material  that  the  state  of  the  legal  title 
should  be  disclosed,  they  would,  in  their  notices  to  the  pul)lic  specifying 
the  information  required  from  country  applicants,  have  inserted  this  as 
a  necessar}'  part  of  tliat  information.  Yet  this  is  not  required  in  any 
conditions  which  I  have  seen  except  in  the  case  of  mutual  insurance 
companies,  where  the  true  state  of  the  title  is  material  to  enable  the 
officers  of  the  company  to  judge  of  the  security  which  the  insured 
premises  will  afford  for  the  payment  of  the  premium  note,  if  an  assess- 
ment should  become  necessary.  It  is  also  a  fact  of  public  notoriety, 
that  in  common  parlance  the  person  who  is  in  possession  of  real  property 
as  owner,  under  a  valid  and  subsisting  contract  for  the  purchase  thereof, 
^  Hon.  Reuben  H.  Walworth.  —  Ed. 


SECT.  II.]  iETNA    FIRE    INS.    CO.    V.    TYLER.  893 

whether  he  has  paid  the  whole  of  the  purchase  money,  and  gotten  the 
legal  title  or  not,  is  called  the  owner  thereof,  and  the  property  is  usually 
called  his  by  others.  In  equity  it  is,  in  fact,  his  ;  and  the  vendor  has 
only  a  lien  thereon  for  the  security  of  his  unpaid  purchase  money;  and 
I  am  yet  to  learn  that  the  person  who  is  in  the  actual  possession  of 
propert}'  as  the  real  owner  thereof  in  equit}',  and  who  must  sustain  the 
whole  loss  thereof  primarily  in  case  of  its  destruction  by  the  perils 
insured  against,  cannot  insure  it  as  owner,  unless  there  is  something  in 
the  terms  of  the  {wlicy,  or  in  the  conditions  referred  to  therein,  requir- 
ing the  true  state  of  the  legal  title  to  be  disclosed.  See  10  Pickering's 
Reports,  40,  542. 

The  assured  in  this  case  had  also  an  insurable  interest  to  the  full 
value  of  the  dwelling-house  described  in  tlie  policy;  and  the  liai)ility  of 
tlie  underwriters  to  him  was  neither  diminished  nor  impaired  by  the 
previous  policy  which  the  person  from  whom  he  purchased  had  obtained 
from  another  companj'.  To  constitute  a  double  insurance,  both  policies 
must  be  upon  the  same  insurable  interests,  either  in  the  name  of  the 
owner  of  that  interest,  or  in  tlie  name  of  some  other  person  for  his 
benefit.  In  this  case  Tyler  could  not  claim  an}'  benefit  under  the 
policy  of  Shafer,  as  it  had  not  been  assigned  to  him  with  the  assent  of 
the  underwriters  therein  at  the  time  of  the  loss.  It  could  not,  therefore, 
in  any  event,  protect  him  against  any  portion  of  the  loss  he  might 
sustain  b}'  the  destruction  of  the  house  insured,  or  prevent  his 
liability  for  the  payment  of  the  whole  of  the  purchase  money  due  on 
his  contract.  Policies  against  fiie  are  personal  contracts  with  the 
assured  ;  and  they  do  not  pass  to  an  assignee  or  purchaser  of  the  prop- 
erty insured  without  the  consent  of  the  underwriters..  Lynch  v.  T>a.y- 
rell,  3  Bro.  P.  C.  497.  The  Sadlers'  Company  v.  Badcock,  2  Atk. 
554.  If  the  assured,  therefore,  sells  the  property  and  parts  with  all 
his  interest  therein  before  the  loss  happens,  there  is  an  end  of  the 
policy  unless  it  is  assigned  to  the  purchaser  with  the  assent  of  the  com- 
pany ;  or  if  he  retains  but  a  partial  interest  in  the  propert}',  it  will  only 
protect  such  insurable  interest  as  he  had  in  the  property  at  the  time  of 
the  loss.  In  the  present  case  all  the  insurable  interests  which  Shafer 
had  in  the  property  after  his  sale  to  Tyler,  was  the  amount  of  his  un- 
paid purchase  money,  so  far  as  the  land  upon  which  the  house  stood 
was  insufficient  to  protect  him  from  loss  ;  and  provided  the  purchaser 
was  unable  to  paj'  the  same.  Even  a  recovery  by  Shafer  from  the 
other  company  would  not  protect  Tyler  from  any  part  of  the  loss  sus- 
tained by  the  destruction  of  the  building,  as  he  would  still  be  liable  for 
the  whole  amount  of  the  purchase  money.  Shafer,  indeed,  could  not 
recover  that  money  and  retain  it  for  his  own  benefit  after  he  had  been 
paid  by  his  underwriters  ;  but  it  could  be  collected  in  his  name  for  tlie 
benefit  of  such  underwriters,  as  they  are  in  equity  entitled  to  all  his 
rights  and  remedies  if  they  pay  the  amount  of  his  loss.  This  principle 
of  equitable  subrogation  or  substitution  of  the  underwriters  in  the  pk.oe 
of  the  assured,  is  recognized  by  every  writer  on  the  subject  of  insur- 


894  iETNA    FIRE    INS.    CO.    V.    TYLER.  [CHAP.  VIII. 

ance,  and  is  coustantl}'  acted  upon  in  courts  of  law  as  well  as  in  equity  ; 
so  that  where  the  assured  has  any  claim  to  indemnity  for  his  loss 
ao-ainst  a  third  person  who  is  primarily  liable  for  the  same,  if  the 
assured  discharges  such  third  person  from  his  liability  before  the  pay- 
ment of  the  loss  by  the  underwriters,  he  discharges  his  claim  against 
them  for  such  loss,  jyro  tanto.  Or  if  he  obtains  payment  from  such 
third  person  afterwards,  it  is  in  the  nature  of  salvage,  which  he  holds  as 
trustee  for  the  underwriters  who  had  paid  his  loss.  ^  .  .  .  It  is  evi- 
dent, therefore,  in  the  case  under  consideration,  that  the  two  insur- 
ances, after  the  sale  and  when  the  last  insurance  was  made, ..were  upon 
two  distinct  and  separate  interests.  The  subject  matters  thereof  were 
different :  the  one  being  upon  Tyler's  debt  to  Shafer,  which  might  be 
lost  by  the  destruction  of  the  house  if  the  vendee  was  unable  to  pay, 
and  the  other  upon  the  actual  loss  of  the  house.  The  loss  of  the 
house  must  fall  upon  the  holder  of  the  last  policy,  in  any  event,  as  the 
underwriters  in  the  first  policy  will  be  entitled  to  an  assignment  of 
Tyler's  contract  to  pay  the  purchase  money,  and  may  collect  the  full 
amount  thereof  from  him  if  they  shall  pay  to  Shafer  the  full  amount  of 
his  debt.  I  am  satisfied_jVom  this  view  of  the  rights  of  the^diffcrcnt 
parties  thjit  there  was  no  prior  insurance,  within  the  meaning  of  the 
policy,  of  which  the  assured  was  bound  to  give  notice,  or  which  could 
be  resorted  to  by  him  to  obtain  satisfaction  for  part  of  his  loss. 

The  clauses  in  the  policy  and  in  the  conditions  annexed  to  the  same  on 
the  same  subject,  unquestionably  were  intended  to  mean  the  same  thing ; 
and  if  they  differ  in  any  respect,  the  policy  itself  must  be  resorted  to  to 
explain  the  meaning  ;  as  it  would  tlien  be  a  case  which  would  be  specially 
provided  for  in  the  policy,  otherwise  than  in  the  conditions  annexed. 
The  language  of  the  policy  is  sufficiently  broad  to  cover  any  previous  in- 
surance on  the  property  in  which  T^ler  had  an  interest,  or  which  could 
protect  him  as  the  purchaser  of  the  property,  provided  the  previous  policy 
had  been  assigned  to  him  at  the  time  of  his  purchase,  with  the  assent  of 
the  other  company.  The  termsof  the  condition  are  :  "  If  the  assured  shall 
have  already  any  other  insurance  against  loss  by  fire  on  the  property 
hereby  insured,"  &c.,  evidently  intending  to  cover  not  only  insurances 
made  by  the  assured  and  in  his  own  name,  but  any  others  wliich  he  had 
either  in  the  name  of  another  or  by  assignment  for  his  benefit.  But  no 
one  can  suppose  for  a  moment  that  these  underwriters  intended  to  be 
so  unreasonable  as  to  require  a  person  insuring  with  them,  under  a 
penalty  of  a  forfeiture  of  his  policy,  to  give  notice  of  every  insurance 
wliich  any  former  owner  of  the  property  might  have  made  thereon, 
although  he  had  no  interest  in  that  insurance,  and  the  rights  of  the  com- 
pany could  not  in  any  way  be  affected  thereby  ;  that  if  there  was  any 
such  insurance,  even  in  those  cases  where  the  fact  was  notified  to  the 
underwriters,  the  person  insured  with  them  should  only  recover  a  part 
ofj.,his  loss  from  them,  although  he  had  no  interest  in  and  could  not 
be  benefited  by  the  other  insurance.       To  suppose  the  underwriters  iu- 

1  The  presentation  of  the  authorities  has  been  omitted.  —  Ed. 


SECT.  II.]  .ETNA   FIRE    INS.    CO.    V.    TYLER.  895 

tended  that  such  a  construction  should  be  given  to  this  part  of  the  policy 
would  be  to  suppose  that  they  intended  to  entrap  those  who  insured  with 
them.  The  [)lain  and  obvious  meaning  of  tlie  whole  clause  is,  that  if 
tlie  assured  has  an}-  other  policy  or  insurance  upon  the  property,  by 
assigiuneut  or  otherwise,  by  which  the  interest  intended  to  be  insured  is 
already  either  wholly  or  partially  protected,  he  shall  disclose  that  fact 
and  have  it  indorsed  on  the  polic}',  or  the  insurance  shall  be  void  ; 
and  the  same  where  he  shall  make  any  subsequent  insurance  ;  also,  that 
in  case  of  any  such  prior  or  subsequent  insiu-ance,  although  it  is  notified 
to  the  company  and  indorsed  on  the  policy,  the  underwriters  in  the  two 
policies  shall  contribute  ratabh-  to  his  loss,  so  that  in  no  event  he  can 
recover  more  than  the  amount  of  his  actual  loss.  I  am  satisfied,  there- 
fore,  that_thc_[)o]icy  was  A'alid  ;  that  the  assured  had  an  insurable  in- 
terest tothe  value  of  the  house  whTclTn'as  burnecTTancl  as  the  jury  have" 
found  that  value^  to  be  the  whole  amount  underwritten  in  the  policy,  he 
was  entitled  to  recover  that  amount,  with  the  interest  thereon,  after  the 
sixty  daySj  if  the  condition  as  to  the  proof  of  loss,  &c.,  has  been  com- 
plied with  by  him  according  to  the  terms  of  the  polic}',  or  has  been 
waived  by  the    underwriters. 

The  certificate  of  the  magistrate  was  a  pairt  of  the  preliminary  proofs 
as  to  the  nature,  circumstances,  and  extent  of  the  loss  which,  by  the 
expiess  terms  of  the  policy,  the  underwriters  had  the  right  to  insist 
upon  before  any  action  could  be  sustained  for  such  loss  ;  ^  .  .  .  I  am 
compelled,  upon  this  point  alone,  to  vote  for  a  reversal  of  the  judg- 
ment of  the  court  below.  If  other  members  of  the  court,  however, 
are  capable  of  giving  to  the  certificate  the  meaning  which  the  counsel 
for  the  defendant  in  error  insist  it  ought  to  bear,  there  is  very  little 
danger  that  injustice  will  be  done  to  the  underwriters,  as  the  jurv  have 
decided  that  the  loss  actually  sustained  by  Tyler  upon  the  property  in- 
sured was  equal  to  the  whole  amount  of  the  risk  assured  by  these 
underwriters. 

On  the  question  being  put,  Shall  this  judgment  be  reversed  ?  the 
members  of  the  court  voted  as  follows :  — 

Til  the  alffirmatice  —  The  Chancellor  and  Senators  Edwards,  Hub- 
bard, and  Tracy  —  4. 

In  the  negative  —  The  President  of  the  Senate,  and  Senators  Arm- 
strong, J.  Beardsley,  L.  Beardsley,  Beckwith,  Griffin,  Downing, 
Fox,  Gansevoort,  Hl'ntingtox,  H.  F.  Jones,  J.  P.  Jones,  Lacey, 
Lawyer,  Loojiis,  Lounsberry,  Mack,  Maison,  Powers,  Wager, 
Willis  — 21. 

Whereupon  the  judgment  of  the  Supreme  Court  was  affirmed.'^ 

1  In  the  statement  and  in  the  opinion,  matter  as  to  the  sufficiency  of  the  magis- 
trate's certificate  has  been  omitted.  —  Ed. 

'^  Compare  Davis  i-.  Phoenix  Ins.  Co.,  Ill  Cal.  409  (1896).  — Ed. 


896 


HONE-  V.   MUTUAL   SAFETY    INS.    CO.  [CHAP.  VIII. 


HONE  AND  Another,  Receivers,  v.  MUTUAL  SAFETY  INS.  CO. 
Superior  Court  of  the  City  of  New  York,  1847.     1  Sandf.  137. 

This  was  an  action  of  assumpsit  on  a  policy  of  re-insurance,  made 
bv  the  defendants,  in  favor  of  The  American  Mutual  Insurance  Com- 
pany. The  defendants  pleaded  the  general  issue,  and  gave  notice 
that  they  would  prove  on  the  trial,  that  by  an  universal  usage  among 
insurers  in  the  city  of  New  York,  they  were  liable  only  ^o^'  a  sjjm, 
which  should  bear  the  same  proportion__tp  the  amount  oj^the  pro^ert^ 
destroyed,  as  thejjolicy_ot_rfi-insiii-ance  bore  to  the  original^jc}-. 

At  the  trial,  in  February,  1817,  it  appeared  that  the  American  Mu- 
tual Insurance  Company,  on  the  third  day  of  ^Nlay,  1845,  executed  a 
policy  of  insurance  to  Herckenrath  and  Van  Damme,  for  one  year  from 
May  4,  for  the  sum  of  $22,000,  against  loss  or  damage  by  fire,  on 
merchandise,  hazardous  and  not  hazardous,  their  own,  or  held  by  them 
in  trust,  or  on  commission,  contained  in  the  store  No.  42  Broad  Street. 
Of  the  sum  insured,  $500  was  to  apply  to  office  furniture.  The  policy 
was  in  the  usual  printed  form  of  the  New  York  fire  policies,  and  the 
premium  paid  was  forty  cents  on  one  hundred  dollars. 

On  the  seventh  day  of  May,  1845,  the  defendants  executed  a  policy 
to  the  American  Mutual  Insurance  Company,  by  which,  in  considera' 
tion  of  thirty-five  dollars,  they  re-insured  the  latter,  against  loss  or 
damage  by  fire  to  the  amount  of  $10,000,  on  merchandise,  hazardous 
and  not  hazardous,  the  property  of  Herckenrath  and  Van  Damme,  or 
held  by  them  in  trust  or  on  commission,  contained  in  the  building  No. 
42  Broad  Street,  for  one  year  from  the  fourth  day  of  May. 

By  this  policy,  the  defendants  promised  and  agreed  to  make  good  to 
the  American  Mutual  Insurance  Company,  all  such  loss  or  damage,  not 
exceediuo"  in  amount  the  sum  so  insured,  as  should  happen  b3'  fire  to 
the  property  therein  specified,  during  the  year  stipulated.  The  policy 
of  re-insurance  was  in  tlie  usual  printed  form  of  a  fire  policy,  with  no 
change,  except  the  insertion  in  writing  of  the  prefix  re-,  before  the 
word  insure,  in  the  commencement  of  the  instrument.  In  the  great 
fire  in  the  city  of  New  York,  on  the  19th  day  of  July,  1845,  the  store 
42  Broad  Street,  was  consumed,  and  the  property  of  Herckenrath  and 
Van  Damme,  contained  in  the  store  and  covered  by  their  policy  before 
described,  was  destroyed  by  the  fire,  to  the  extent  of  $14.373. a£.  Due 
and  suflScient  proofs  of  their  loss  were  furnished  by  the  primitive  in- 
sured, to  the  American  Mutual  Insurance  Company,  who  became  liable 
to  the  former  for  the  payment  of  such  loss.  On  the  first  day  of  August, 
1845,  the  preliminary  proofs  of  the  loss  were  presented  to  the  defend- 
ants, by  the  American  Mutual  Insurance  Company,  in  a  manner  which 
was  conceded  to  be  sufficient. 

Their  losses  by  the  fire  of  July,  1845,  made  the  latter  company  in- 
solvent, so  that  their  assets  were  not  sufficient  to  pay  more  than  fifty 


SECT.  II.]  HONE    V.    MUTUAL    SAFETY   INS.    CO.  897 

cents  on  the  dollar  of  their  debts.  The  corporation  was  dissolved  by 
an  order  of  the  Court  of  Chancer}-,  and  the  plaintiffs  were  appointed 
receivers  of  its  property'  and  effects. 

The  receivers  had  made  one  dividend  amongst  ics  creditors,  amount- 
ing to  twenty-five  cents  on  the  dollar.  This  was  on  the  22d  day  of 
April,  1846,  on  which  occasion,  Herckenrath  and  Van  Damme  received 
the  sum  of  $3,593.34,  an  account  of  their  loss.^  .  .  . 

A  verdict  for  $10,962.11  was  taken  for  the  plaintiffs,  subject  to  the 
opinion  of  the  court. 

jB.  D.  Silliman,  for  the  plaintiffs. 

T.  Sedgicick,  for  the  defendants. 

O.  Hoffman^  in  repl}'. 

By  the  court,  Sandford,  J.^  .  .  .  The  remaining  question  in  the 
cause  arises  upon  the  defendant's  objection,  that  the  plaintiffs  were 
bound  to  pay  the  loss,  before  the}-  could  maintain  a  suit,  and  that  in 
no  event  can  they  recover  more  than  the  assets  of  the  American  Mu- 
tual Insurance  Compan}'  will  pay  to  the  primitive  insured. 

The  latter  proposition  is  surely  unsound.  The  fact  that  the  insurers 
were  a  corporation,  does  not  affect  the  point.  Their  claim  upon  the 
re-assurers  rests  upon  the  liability  to  pa}'  the  loss  to  the  insured,  not 
on  their  greater  or  less  ability  to  pay  it  in  full.  If  the  liabilit}'  of  the 
re-assurer  depend  upon  the  solvenc}'  or  bankruptcj-  of  the  first  insurer, 
in  man}'  cases  he  will  not  become  chargeable  at  all,  or  but  to  a  nominal 
amount,  according  to  the  extent  of  the  first  insurer's  insolvenc}'. 

As  to  the  other  branch  of  the  objection.  It  is  true,  the  contract  is 
one  of  inderanit}'.  That  is,  the  insurer  is  to  be  protected  b}'  the  re- 
assurer,  to  the  extent  of  his  loss.  But  when  the  loss  is  incurred,  the 
re-assurer,  by  t|iej)ositive  terms  of  the  contract,  is  to  pay  the  amoun t 
to  the  insurer  within  sixty  days_after  the  same  is  ascertained  and 
proved.  The  re-assurer  has  noth^jig  to  do  with  the  payment  by  the 
insurer.  In  the  French  policies,  both  to  relieve  the  insurer  from  the 
troulile"  of  going  through  all  the  proofs  on  a  trial,  and  to  save  costs 
to  the  re-assurer,  it  has  become  customary  to  insert  a  provision,  that 
the  re-assurer  shall  pay,  on  proof  of  pa3-ment  by  the  insurer.  And  it  is 
to  this  provision,  that  M.  de  Alauzet  refers  in  his  treatise  cited  by  the 
defendants.  But  in  France,  when  there  is  no  such  clause  ;  and  uni- 
formly here,  where  it  is  as  yet  unknown ;  the  Insurer  may  at  once 
resort  to  his  action  against  the  re-assurer  ;  taking  upon  himself  the 
burthen  of  making  out  his  claim  with  the  same  precision  that  the  first 
insured  would  be  required  to  do,  in  an  action  against  him  ;  or  he  may 
await  a  suit  by  the  first  insured,  give  notice  of  it  to  his  re-assurer,  and 
on  being  subjected  to  the  loss,  recover  it,  with  the  costs  of  the  litiga- 
tion against  the  latter.  There  is  no  authority  for  saying  that  he  must 
pay  the  loss  in  the  one  instance,  or  the  judgment  against  him  in  the 

1  Passages  on  the  usage  among  insurers  have  been  omitted.  —  Ed. 

2  After  stating  the  case,  discussing  the  general  nature  of  re-insurance,  and  decid- 
ing that  evidence  of  the  usage  was  inadmissible.  —  Ed. 

67 


398  HONE   V.   MUTUAL    SAFETY   INS.    CO.  [CHAP.  VIII. 

Other,  before  enforcing  his  demand  against  the  re-insurer.  In  Hastie 
V.  De  Peyster,  3  Caines,  190,  cited  to  this  point,  by  the  defendants, 
the  insurer  had  stood  out  a  suit  against  him  by  tlie  first  insured, 
and  it  is  inferable  from  the  points  raised,  that  he  had  paid  the  recov- 
ery ;  but  no  such  fact  is  stated,  it  is  not  discussed  by  the  counsel,  and 
the  language  of  Chief  Justice  Kent,  as  well  as  Judge  Livingston's,  is 
unequivocal,  that  he  may  recover,  not  what  he  has  paid,  but  all  that  he 
ought  to  pa}',  or  has  become  liable  to  pay. 

The  decisions  in  France,  cited  by  Emerigon  and  Boulay  Paty,  fully 
sustain  the  principles  laid  down  by  those  distinguished  authors,  which 
we  have  already  noticed  incidentally,  in  speaking  of  the  extent  of  the 
re-assurer's  liabilit}-.  In  one  case,  adjudged  in  1748,  the  re-assured 
became  bankrupt,  and  was  discharged,  having  paid  the  first  insured 
sixty  per  cent  of  the  loss.  Nevertheless,  the  re-assurer,  who  thought 
he  ought  to  pay  only  the  same  sixty  per  cent,  was  condemned  to  pay 
the  bankrupt  the  entire  sum  re-assured. 

The  other  case  was  in  1780,  in  which  the  first  insured  claimed  they 
ought  to  receive  the  amount  of  the  loss  from  the  re-assurer ;  instead 
of  permitting  it  to  go  into  the  hands  of  the  assignees  of  the  insurer, 
who  had  become  bankrupt.  The  claim  of  the  first  insured  was  over- 
ruled, and  the  re-assurers  required  to  pay  the  whole  sum  to  the 
assignees. 

Alauzet  concurs  with  Emerigon,  and  cites  a  similar  judgment  in  the 
court  of  Renncs. 

So  in  Marshall,  it  is  laid  down,  that  if  the  original  insurer  fail,  so 
that  his  insured  receive  on!}'  a  dividend,  however  small,  the  re-insurer 
can  gain  nothing  by  this,  but  must  pa}'  the  full  amount  of  the  loss  to 
the  first  insurer.  And  thus,  he  adds,  stands  the  law  in  most  of  the 
maritime  states  of  Europe.     (1  Marsh,  on  Ins.  143.) 

To  the  same  effect  is  Park  on  Insurance,  and  3  Kent's  Comment- 
aries, 278. 

The  interest  and  importance  of  the  questions  involved,  have  induced 
us  to  give  our  views  more  at  large  than  is  our  custom ;  and  nothing 
remains  but  to  sa}'  that  we  entertain  no  doubt  on  the  subject,  and  that 
the  plaintiffs  are  entitled  to  judgment  for  the  whole  amount  of  the  re- 
insurance, with  interest.^ 

1  Affirmed,  suh  nom.  Mutual  Safety  Ins.  Co.  v.  Hone,  2  N.  Y.  23.')  (1849). 

See  Eagle  Ins.  Co.  v.  Lafayette  Ins.  Co.,  9  Ind.  443  (1857) ;  Casliau  v.  Northwestern 

National  Ins.  Co ,  5  Diss.  476  (U.  S.  C.  C,  E.  D.  Wis.,  1873)  ;  Blackstone  v.  Alleman- 

nia  Ins.  Co.,  56  N.  Y.  104  (1874)  ;  Consolidated  Keal  Estate  and  Fire  Ins.  Co.,  41  Md. 

59,  74  (1874) ;  In  re  EUdystoue  M.  lus.  Co.,  [1892J  2  Ch.  423  (a  marine  policy).  — Ed. 


SECT.  II. J  INSURANCE    COMPANY   V.    UPDEGRAFF.  899 

INSURANCE   COMPANY   v.   UPDEGRAFF. 
Supreme  Court  of  Pennsylvania,  1853.     21  Pa.  513. 

Error  to  the  Common  Pleas  of  Lycoming  County. 

This  was  an  action  of  assun)psit  to  December  Term,  1851,  by  Abra- 
ham Updegraff  for  the  use  of  A.  A.  Winegardner  r.  The  State  Mutual 
Fire  Insurance  Company.  The  plea  was  non-assumpsit,  and  payment 
with  leave,  &c. 

The  action  was  brought  upon  a  policy  of  insurance  No.  549,  by  which 
the  said  company,  "  For  and  in  consideration  of  the  sum  of  ten  dollars, 
and  of  the  premium  note  of  twenty  dollars,  by  the  said  company  re- 
ceived, do  insure  Abraham  Updegraff  of  Williamsport,  in  the  county  of 
Lycoming,  and  State  of  Pennsylvania,  against  loss  or  damage  by  fire, 
to  the  amount  of  one  thousand  dollars,  on  the  following  property,  as 
described  in  application  and  survey  No.  549,  viz. :  on  his  wooden 
block,  $1,000." 

"And  the  said  company  do  hereby  promise  and  agree,  to  and  with 
the  said  insured,  to  make  good  unto  him,  his  executors,  administrators, 
and  assigns,  all  such  loss  or  damage,  not  exceeding  in  amount  the  sum 
insured,  as  shall  happen  by  fire  to  the  property  as  above  specified, 
during  the  term  of  two  years  from  the  seventh  day  of  August,  one 
thousand  eight  hundred  and  fifty,  at  12  o'clock  at  noon,  unto  the 
seventh  day  of  August,  one  thousand  eight  hundred  and  fifty-two,  at 
12  o'clock  at  noon  ;  the  said  loss  or  damage  to  be  estimated  accordino- 
to  the -true  and  actual  value  of  the  said  propertj-,  at  the  time  the  same 
shall  happen,  &c." 

In  the  application  by  Updegraff,  the  plaintiff,  which  was  given  in 
evidence  on  the  part  of  the  plaintiff,  on  the  trial,  in  answer  to  the 
questions  :  "  Is  it  (the  property)  encumbered?  If  so,  to  what  amount? " 
Updegraff  answered,  "  Sold  to  Winegardner  under  contract  to  convey 
title  when  the  purchase-money  is  paid,  to  be  paid  in  annual  instalments 
of  8500  —  8500  paid  on  it." 

The  premium  note,  dated  August  7,  1850,  for  $20,  was  given  by 
Updegraff. 

From  a  copy  of  articles  of  agreement  between  Abraham  Updegraff 
and  Abraham  A.  Winegardner,  dated  15th  October,  1849,  given  in 
evidence,  it  appeared,  that  on  that  day  Updegraff  entered  into  an 
agreement  with  Winegardner  for  the  sale  of  the  property  insured,  for 
the  sum  of  $2,800  ;  $500  to  be  paid  on  the  1st  April,  1850,  when  posses- 
sion is  to  be  given,  and  8500  on  the  1st  of  each  succeeding  April,  until 
82,500  are  paid,  and  8300  on  the  next  April,  which  will  be  the  last 
payment." 

By  the  same  agreement,  Winegardner  agreed  to  rent  a  part  of  the 
premises  to  Updegraff,  then  occupied  by  said  Updegraff  as  a  store,  for 


900  INSURANCE    COMPANY    V.    UPDEGRAFF.  [CHAP.  VIII. 


two  years  from  the  time  he,  Winegardner,  got  possession,  for 
per  annum. 

The  premises  insured  were  entirely-  consumed  by  fire,  on  the  16th 
Jul}-,  1851.     It  was  testified  that  the  loss  of  tlie  house  was  total. 

After  the  insurance,  and  before  the  fire,  as  appeared  by  indorse- 
ments on  the  articles  of  agreement  above  mentioned,  Updegraff  had 
received  from  Winegardner,  on  the  purchase-money,  $1,108,  making 
the  whole  payment  on  account  of  it  $1,618. 

One  of  the  conditions  of  the  policy  of  insurance  was  in  the  following 
■words:  "The  interest  of  the  insured  in  this  policy  is  not  assignable, 
unless  the  assignee,  before  any  loss  happens,  shall  give  notice  in  writ- 
ing of  the  assignment,  in  pursuance  of  the  by-laws  of  this  company, 
and  have  the  same  indorsed  on,  or  annexed  to  this  policy." 

Article  19,  of  extracts  from  the  by-laws  annexed  to  and  printed  on 
the  same  sheet  with  the  policy,  is  as  follows  :  — 

"Article  19.  In  all  cases  when  the  policy  is  to  be  assigned,  the 
assignee  must  sign  the  premium  note  —  give  a  new  note,  or  give 
securit}'  for  the  payment  of  the  same.  The  assignment  should  be 
made  out  on  the  back  of  the  policy,  and  sent  to  the  secretary,  or  a 
true  copy,  with  fifty  cents  recording  fees,  to  be  approved  by  a  director, 
and  recorded  on  the  policy  assigned." 

It  did  not  appear  from  the  evidence  in  the  case,  that  the  policy  on 
which  suit  was  brought,  had  ever  been  assigned  b}-  Updegraff  to 
Winegardner. 

On  the  part  of  the  defendant  it  was  proposed  to  ask  a  witness 
whether  he  knew  how  Updegraff"  held  the  propert}',  whether  as  owner 
or  tenant? 

The  proposed  evidence  was  overruled.     First  bill. 

Offer  was  also  made  to  prove  the  value  of  the  lot,  after  the  building 
was  burned.  This  was  offered  in  order  to  show  that  Updegraff"  had  not 
sustained  an}'  loss.  Objected  to  because  the  lot  was  not  insured,  and 
as  irrelevant.     Objection  sustained.     Excepted  to.     Second  bill. 

On  the  part  of  the  plaintiflT,  it  was  testified  under  exception,  by 
C.  Lloyd,  that  he  acted  as  agent  of  the  compan}'  in  efl["ecting  the  in- 
surance. He  further  testified  :  "I  went  to  Updegraff",  and  told  him  I 
thought  the  application  should  be  made  in  his  name ;  that  he  was  legal 
owner  of  the  propert}'.  He  said  he  had  no  objection  to  put  his  name 
to  the  note  ;  I  should  do  as  I  thought  best.  I  told  UpdegraflT  I  would 
send  an  application  in  his  name,  stating  in  the  application  precisely 
how  the  propert}-  was  situated  ;  if  it  was  not  right  the  company  would 
return  it  to  me  for  correction ;  if  they  approved  of  the  application  they" 
would  issue  a  policy,  and  it  would  be  all  right.  I  accordingly  made 
out  the  application,  which  has  been  given  in  evidence  here.  I  for- 
warded the  application  to  the  company ;  the  policy  issued  on  it  to 
Updegraff";  can't  recollect  if  it  was  sent  to  me  or  UpdegraflT.  Updegraff 
disclosed  to  me  all  the  facts." 

This  was  the  third  bill. 


SECT.  II.]  INSURANCE    COMPANY    V.    UPDEGRAFF.  901 

The  defendant's  counsel  submitted  points  as  follows : 

1.  That  if  tlie  jury  believe  the  value  of  the  lot,  after  the  destruction 
of  the  buildings,  was  sufficient  to  pay  and  satisfy  Updegraff  the  balance 
of  tlie  purchase-money  due  him  at  the  time  of  the  fire,  then  the  said 
Updegraff  had  no  insurable  interest  at  the  time  of  the  fire,  and  sus- 
tained no  loss,  and  cannot  recover  in  this  action. 

2.  That  to  entitle  the  plaintiff  to  recover,  he  must  satisfy  tlie  jury 
he  had  an  interest  at  the  time  of  the  insurance,  and  at  the  time  the 
fire  happened  ;  and  that,  as  the  policy  is  strictly  a  contract  of  indemnit}', 
be  can  only  recover  the  value  of  his  beneficial  interest  at  the  time  of 
the  fire,  if  any,  in  the  property  destroyed. 

3.  That  if  the  plaintiff,  Updegraff,  is  entitled  to  recover  the  loss 
which  he  has  sustained,  if  any,  then  the  company  have  a  right  to  be 
subrogated  to  all  his  securities  as  against  his  vendee,  Winegardner. 

4.  That  Winegardner  having  paid  to  Updegraff,  subsequent  to  the 
insurance,  the  sum  of  Si, 108,  on  the  article  of  agreement  for  the  sale 
of  the  premises,  such  payment  reduces  the  liability  of  the  company 
2yro  tanto. 

5.  That  under  all  the  circumstances  in  this  case  the  plaintiff  is  not 
entitled  to  recover. 

Jordan,  J.,  answered  the  foregoing  points  in  the  negative,  and  in- 
structed the  jury  that  the  plaintiff  was  entitled  to  recover. 

May  12,  1853,  verdict  for  plaintiff,  for  $1,089.50. 

Error  was  assigned  to  the  action  of  the  court  relative  to  the  evidence 
offered,  as  stated  in  the  three  bills  of  exceptioii ;  and  to  the  answers 
to  the  points,  and  the  charge. 

Scales,  with  whom  was  Pollock,  for  plaintiff  in  error. 

Maynard  and  Armstrong,  for  defendant  in  error. 

The  opinion  was  delivered,  September  15,  by 

Lewis,  J.  This  was  an  action  on  a  policy  of  insurance  effected  by 
the  vendor  after  articles  for  tlie  sale  of  the  property  and  before  con- 
veyance. The  sum  due  to  the  vendor,  at  the  time  of  the  insurance, 
was  $2,300,  which  was  reduced  by  payments  afterwards,  so  that  the 
sum  due  to  him  at  the  time  of  the  loss  was  only  $1,192.  The  verdict 
was  in  his  favor  for  the  sum  of  $1,080.50  ;  a  sum  not  sufficient  to  cover 
the  whole  extent  of  his  interest.  The  house  was  destroyed  by  fire. 
The  defence  was  that  the  lot  is  sufficient  security  for  the  unpaid 
purchase-money,  and  that  the  insured  has  no  insurable  interest  beyond. 

It  is  sometimes  stated,  in  general  terms,  that  by  the  contract  of  sale 
the  purchaser  of  real  estate  becomes  in  equity  the  owner ;  but  this  rule 
applies  only  as  between  the  parties  to  the  contract,  and  cannot  be 
extended  so  as  to  affect  the  interests  of  others.  The  purchaser 
before  the  contract  is  carried  into  effect,  cannot,  against  strangers  to 
the  contract,  enforce  eqnitics  attaching  to  the  property.  Dart's  Vend. 
&  Purch.  115;  3  Mylne  «&  Craig,  70.  A  stranger  cannot  set  up 
the  equitable  title  of  the  vendee  to  defeat  an  ejectment  brought  by 
the  vendor  against  the  clear  equitable  title  of  the  vendee.     At  law  the 


902  INSUKANCE    COMPANY    V.    UPDEGRAFF.  [CHAP.  VIII. 

vendor,  before  payment  of  the  purchuse-money  and  delivery  of  the 
conveyance,  is,  to  all  intents  and  purposes,  the  owner  of  the  estace. 
It  is  true  that  he  is  a  trustee  for  the  vendee,  who,  as  between  the 
parties  to  the  contract,  is  bound  to  take  the  estate  subject  to  every 
loss  which  may  happen  to  it  without  the  fault  of  the  vendor,  and  is 
consequently  entitled  to  every  benefit  accruing  to  it  after  the  agree- 
ment. Paine  v.  Meller,  6  Ves.  Jun.  349  ;  Sugden,  19^  The  right  to 
the  benefits  of  the  purchase  fix  him  with  the  losses  which  may  happen 
to  it ;  but  the  latter  branch  of  the  proposition  has  not  been  established 
without  reluctance,  because  there  is  a  hardship  in  compelling  payment 
after  the  consideration  fails.  The  vendee's  liability  to  pay  for  a  house 
which  was  burnt  down  after  the  contract,  and  before  the  time  appointed 
for  payment  of  the  purchase-money,  was  at  one  time  doubted  :  Stent 
V.  Baily,  2  P.  Wms.  220 ;  at  another  time  his  liability  was  placed  upon 
the  special  ground  that  he  had  been  "  inteft  before  the  burning." 
Hunter  v.  Wilsons,  and  Atchison  v.  Dickson,  Sugden  on  Vend.  200, 
n.  1.  At  another  time  it  was  held  that,  in  the  case  of  a  sale  before 
the  master,  he  was  not  liable  for  a  loss  which  happened  after  the  report 
had  been  confirmed  nisi:  11  Ves.  Jun.  559  ;  and  a  lessee  was  relieved 
because  the  fire  happened  before  the  time  appointed  for  the  commence- 
ment of  the  term,  although  after  the  date  of  the  contract.  Wood  v. 
Hubbel,  6  Month.  Law  Rep.  237.  These  cases  show  that,  notwith- 
standing the  rule,  the  hardship  of  the  case  secures  for  the  vendee  the 
favorable  consideration  of  the  court,  and  that  slight  circumstances 
will  be  laid  hold  of  for  his  relief.  Following  the  spirit  of  these  deci- 
sions, the  courts  will  make  no  presumptions,  in  the  case  of  an  insur- 
ance by  the  vendor,  that  it  was  his  intention,  in  the  event  of  a  loss, 
that  the  vendee  should  bear  not  only  the  measure  of  it  which  fell  upon 
him  by  the  accident,  but  that  he  should  also  indemnify  the  insurance 
company.  On  the  contrary,  as  the  vendor  is  a  trustee  for  the  vendee, 
every  act  of  his  in  relation  to  the  estate  will  be  presumed  to  be  for  the 
benefit  of  the  vendee,  subject  of  course  to  the  prior  claims  of  the  vendor 
himself.  This  is  reasonable,  because,  as  the  vendee  must  suffer  the 
losses  which  may  happen  to  the  property,  it  is  just  that  he  should  have 
the  advantage  of  any  benefits  which  accrue  to  it ;  and,  next  to  the 
security  of  his  own  interest,  a  trustee  will  be  presumed  to  have  in  view 
the  interest  of  the  cestui  que  trust.  Although  the  vendor  is  not  bound 
to  insure,  or  even  to  continue  an  insurance  already  made,  he  may,  like 
any  other  trustee  having  the  legal  title,  insure  if  he  thinks  proper,  to 
the  full  value  of  the  property.  1  Arn.  259,  2  B.  &  P.  N.  R.  324. 
It  is  true  that  in  the  case  of  a  mortgagee  of  a  ship  he  can  only  recover 
to  the  extent  of  his  mortgage  debt,  unless  it  appears  that  in  effecting 
the  insurance  he  intended  to  cover,  not  his  own  interest  onl}',  but  that 
of  the  mortgagor  also.  2  B.  «fe  Ad.  193,  1  Moody  &  Rob.  153.  If  he 
intended  to  cover  the  whole  interest,  both  legal  and  equitable,  he  may 
recover  the  whole  amount  of  the  insurance,  under  a  trust,  as  to  the 
surplus,  to  hold  it  for  the  mortgagor.     Carothers  v.  Shedden,  G  Taunt. 


SECT.  II.J  INSURANCE    COMPANY    V.   UPDEGKAFF.  903 

17,  1  Ai-n.  252.  The  same  rule  applies  to  the  case  of  an  insurance 
by  a  vendor.  There  is  this  difiference,  however,  that  as  the  whole 
estate  is  at  law  in  the  vendor,  and  the  vendee  has  onlj-  a  title  to  go 
into  equity-,  the  insurance  company  cannot  assert  tha  rights  of  the 
latter,  or  go  into  equity  in  respect  to  thein,  except  upon  principles'of 
equity  itnd  good  conscience.  An  insurance  upon  a  house,  effected  by 
the  vendor,  is  prima  facie  an  insurance  upon  the  whole  legal  and 
equitable  estate,  and  not  upon  the  balance  of  the  purchase-raone}'. 
Where  the  form  of  the  policy  shows  it  to  be  upon  the  house,  and  not 
upon  the  debt  secured  In'  it,  the  burthen  of  showing  that  the  insurance 
was  upon  the  latter  and  not  upon  the  former,  rests  upon  the  under- 
writers. There  is  no  hardship  in  this.  The  premium  paid,  as  com- 
pared with  that  usuallj-  charged  where  the  insurance  is  upon  houses, 
and  not  upon  debts  secured  b}'  them,  is  generally  decisive  of  the  ques- 
tion, and  the  rates  of  insurance  are  peculiarly  within  the  knowledge  of 
the  insurance  compan}'.  If  the  insurance  was  upon  the  whole  estate, 
the  premium  would  be  according  to  the  usual  rates  for  houses  of  that 
description  and  location  ;  if  it  was  only  upon  the  debt  due  to  the  ven- 
dor, there  would  be  a  large  reduction,  on  account  of  the  responsibility 
of  the  vendee,  and  the  value  of  the  lot  of  ground  included  in  the  sale, 
because  both  of  these  would,  in  that  case,  stand  as  indemnities  to  the 
underwriters.  They  would  be  entitled  to  a  cession  of  the  vendor's 
claims,  from  wliich'  an  ample  indemnity  might  be  recovered.  If  the 
lot  was  worth  the  balance  of  tlie  purchase-money,  there  would  be  no 
risk  whatever,  and  the  premium  would  be  quite  insignificant.  If  the 
intention  was  to  insure  only  the  debt  due  to  the  vendor,  and  a  full 
premium  was  charged,  without  deduction  for  the  securities  which  the 
underwriters  knew  he  held,  a  portion  of  the  premium  should  have  been 
returned,  upon  the  principles  which  require  a  return  of  premium  for 
short  interest,  for  over  insurance,  and  for  double  insurance.  11  Pick. 
85,  1  Met.  IG,  2  Arn.  1226. 

But  there  was  no  evidence  tending  to  prove  that  the  premium  was 
less  than  the  usual  rates  for  houses  of  the  description  set  forth  in  the 
policy,  where  the  whole  estate  is  insured.  Nor  was  there  any  offer  to 
return  any  portion  of  the  premium.  On  the  contrarj-,  all  the  evidence 
tended  to  show  that  the  insurance  companv  was  fairly  informed  of  all 
material  facts  —  that  its  agent  advised  the  insurance  to  be  taken  in  the 
name  of  the  vendor,  because  the  latter  were  "  the  legal  owners,"  and 
that  the  vendor  replied  that  he  had  "  no  objection  to  sign  the  premium 
note."  Unless  the  intention  was  to  cover  both  interests,  there  was  no 
ground  for  question,  or  for  taking  or  giving  advice  in  regard  to  which 
name  should  be  used,  or  for  the  vendor's  consideration  whether  he  had 
or  had  not  any  objection  to  signing  the  premium  note. 

The  instrument  before  us  is  an  open  polic}'  of  limited  extent.  The 
underwriters  agree  to  make  good  to  tiie  insured,  not  all  his  loss,  but  all 
such  loss  or  damage,  not  exceeding  the  sum  stated,  as  shall  happen  b}^ 
fire  to  the  property  —  the  loss  or  damage  to  be  estimated,  not  according 


904  INSURANCE   COMPANY  V.   UPDEGRAFF.  [CHAP.  VIII. 

to  the  balance  of  purchase-money  which  ma}'  remain  unpaid  at  the  time 
of  the  damage,  nor  according  to  the  probabilities  of  recovering  such 
balance  from  the  vendee,  or  from  the  lot,  but  "according  to  the  true 
and  actual  value  of  the  said  property."  The  policy  is  in  form  an  in- 
surance upon  the  house,  and  not  upon  tlie  debt ;  and  no  evidence 
whatever  was  given  to  change  its  character,  or  to  show  that  anything 
more  or  less  was  intended  by  the  parties.  It  follows  that  the  plaintiff 
below  was  entitled  to  recover,  under  a  trust,  as  to  the  surplus,  for  the 
benefit  of  the  vendee.  Tlie  underwriters  have  shown  no  equitable  right 
to  intermeddle  between  the  vendor  and  the  vendee.  Under  such  cir- 
cumstances tliey  must  be  content  to  respond  to  the  party  with  whom 
thej'  made  the  contract  of  insurance. 

In  Smith  v.  Columbia  Ins.  Co.,  5  Harris,  353,  the  insurance  expressly 
included  the  lot,  and  was  stated  to  be  to  cover  a  mortgage.  As  the 
insurance  company,  on  such  a  policy,  would  have  been  entitled  to  a 
cession  of  the  mortgage,  upon  payment  of  the  amount,  it  was  properly 
held  that  the  concealment  of  prior  encumbrances  which  made  it  worth- 
less, and  would,  if  known,  have  enhanced  the  premium,  was  a  good 
defence.  But  here  the  insurance  is  upon  the  building  alone  —  it  is  not 
expressed  to  be  to  cover  a  debt  —  and  the  lot  is  not  included.  The 
underwriters  are  therefore  not  entitled  to  a  cession  of  the  vendor's  title 
to  the  lot,  or  of  his  claim  upon  the  vendee.  The  cession  of  a  part  of 
the  house,  according  to  the  proportion  of  its  value  insured,  would  be 
all  that  could  be  demanded  under  such  an  insurance.  But  even  this 
has  become  impossible  b}-  reason  of  its  entire  destruction.  The  testi- 
mony is,  that  it  was  a  total  loss  —  not  a  mere  technical  total  loss,  but 
an  actual  total  loss  —  that  it  was  entirely  burnt  down  ;  that  "  not  one 
stick  was  left  upon  another."  Where  there  is  no  vestige  of  the  prop- 
erty left,  or  (which  is  the  same  thing)  where  it  has  been  finally  con- 
demned as  lawful  prize  by  the  court  of  the  last  resort,  the  cession  has 
nothing  to  operate  upon.  There  is  neither  property  nor  spes  recuper- 
andi,  and  the  cession  in  such  case  would  be  an  idle  ceremony.  4  Bin. 
462,  8  Johns.  245,  1  Pet.  215. 

The  court  was  therefore  correct  in  the  instruction  that  the  plaintifif 
was  entitled  to  recover. 

We  see  no  error  whatever  in  the  proceedings,  and  the  judgment  is 
therefore  affirmed.  Judgment  affirmed} 

1  See  Fire  and  Marine  Ins.  Co.  of  Wheeling  v.  Morrison,  11  Leigh  (Va.),  354 
(1840);  Trumbull  v.  Portage  County  Mut.  Ins.  Co.,  12  Ohio,  305  (1843);  Boston  & 
Salem  Ice  Co.  v.  Royal  Ins.  Co.,  12  Allen,  381  (1866) ;  Waring  v.  Indemnity  F.  Ins. 
Co.,  45  N.  Y.  606  (1871)  ;  Wood  v.  North  Western  Ins.  Co.,  46  N.  Y.  421  (1871) ;  Col- 
lingridge  v.  Royal  Exchange  Assur.  Corp.,  3  Q.  B.  D.  173  (1877);  Burson  v.  Fire 
Assn.,  136  Pa.  2"67  (1890). 

In  Keefer  i;.  Phoenix  Ins.  Co.,  26  Ontario  App.  277  (1899),  the  plaintiff,  the  owner 
of  buildings,  procured  frf)m  the  defendant  company  a  policy  for  $2,000,  whereby  the 
company  agreed  "  to  indemnify  and  make  good  unto  the  said  assured,  his  heirs  or 
assigns,  all  such  direct  loss  or  damage  (not  exceeding  in  amount  the  sum  or  sums  in- 
sured as  specified,  nor  the  interests  of  the  assured  in  the  property  herein  described). 


SECT.  II.]      WATERS   V.   MOXARCH   FIRE   AND   LIFE   IXS.   CO.  905 

WATERS  AND  Another  v.  MONARCH  FIRE  AND  LIFE  INS.  CO. 

Queen's  Bench,   1856.     5  E.  &  B,  870.^ 

Thi.s  was  an  action  upon  policies  of  fire  insurance  issued  to  the 
plaintiffs  by  the  defendant  company.  The  defence  was  that  the  plain- 
titls  were  not,  before  or  at  the  time  of  the  loss.  intere.sted_in__the 
])roperty  in  the  policies  described  beyond  sums  that  were  paid  into 
court.^  Tlie  plaintiffs  took  the  suras  paid  into  court  out  of  court,  and 
on  the  trial,  before  Lord  Campbell,  C.  J.,  at  the  Guildhall  sittings,  a 
verdict  was  found  for  the  plaintiffs,  subject  to  the  opinion  of  the  court 
on  a  case  stating  that  the  plaintiffs  were  flour  merchants,  warehouse- 
men, and  wharfingers  ;  that  they  did  not  receive  goods  on  consignment 
or  commission  ;  that  one  policy  described  the  plaintiffs  as  corn  and 
flour  factors  and  insured  them  against  loss  or  damage  by  fire  not  ex- 
ceeding "£3.000  on  stock  in  trade  and  utensils  in  their  warehouse, 
.  .  .  £400  on  goods  in  trust  or  on  commission  therein,"  and  other  sums 
on  other  items  ;  that  the  other  policy  was  in  similar  form  and  insured 
"  £2,000  on  corn  and  flour,  the  property  of  the  assured  or  held  by 
them  in  trust  or  on  commission,  on  or  in  all  of  the  public  wharfs,  quays, 
warehouses,  .  .  .  situate  within  five  miles  of  the  Royal  P^xchange  ;  " 
that  while  the  policies  were  in  force  the  plaintiffs'  warehouse  was  de- 

the  amount  of  loss  or  damage  to  be  estimated  according  to  the  actual  cash  value  of  the 
property."  The  loss  was  made  payable  to  the  Quebec  Bank.  The  plaintiff  had  already 
entered  into  a  written  contract  to  sell  the  premises  to  one  Cloy  for  $2,000,  had  made 
simultaneously  an  oral  agreement  to  keep  the  premises  insured  to  the  e.xtent  of  £2,000 
until  the  purchase-money  was  fully  paid,  and  had  received  $800  on_  account.  The 
plaintiff  did  not  disclose  to  the  company  any  part  of  his  contract  with  Cloy,  nor  did 
the  company  have  any  knowledge  of  such  contract  until  the  day  before  the  fire.  Within 
the  terra  of  the  policy  the  premises  were  damaged  by  fire  to  the  extent  of  $1,740. 
Before  the  fire,  $I,.300  had  been  paitl  under  the  contract  of  sale.  The  defendant  com- 
pany tendered  $700  to  the  plaintiff  before  action,  and  paid  that  sum  into  court.  lu 
the  High  Court  of  Justice  for  Ontario,  upon  written  admissions  of  fact  signed  by 
counsel,  judgment  was  given  for  the  plaintiffs  for  $1,740,  with  interest  and  costs.  29 
Ontario,  394  (1898).  In  the  Court  of  Appeal  of  Ontario,  four  of  the  five  justices  con- 
curred in  reversing  this  judgment  and  confining  it  to  $700.  Burtox,  C.  J.,  one  of 
the  majority,  said  :  — 

"  It  is  clear  that  a  person  having  a  limited  interest  in  property  may  insure,  never- 
theless, on  the  total  value  of  the  subject-matter  of  the  insurance,  and  that  he  may 
recover  the  wliole  value,  subject  to  this,  that  the  form  of  the  policy  must  be  such  as  to 
enable  him  to  recover  the  total  value,  and  that  it  must  have  been  the  intention  at  the 
time,  both  of  himself  and  the  insurers,  to  insure  the  whole  value.  .  .  . 

"  The  judgment  below  should  be  reversed  and  confined  to  the  sum  of  $700,  which, 
having  been  tendered  before  action,  entitles  the  defendants  to  judgment  in  their  favor 
with  costs. 

"The  case  of  Insurance  Company  v.  Updegrafif  (1853),  21  Pa.  .513,  has  caused  me 
to  hesitate  a  good  deal  before  finally  coming  to  this  conclusion,  but  on  the  whole  I 
think  that  the  inference  cannot  properly  be  drawn  tliat  the  insurance  company  intended 
to  insure  anything  beyond  the  owner's  interest  in  the  property.  See  Castellain  i;. 
Preston  (18^3),  II  Q.  B.  D.  380."  — Ed. 

1  The  statement  has  been  rewritten.  —  Ed. 


906  WATERS    V.    MONARCH    FIRE    AND    LIFE    INS.    CO.       [CHAP.  VIIL 

sti-oved  b3-  an  accidental  fire,  with  all  the  goods  therein  ;  tliat  tlie 
warehouse,  l)esides  large  quantities  of  goods  belonging  to  the  plain- 
tiffs, contained  flour  lielonging  to  the  plaintiffs'  customers,  which  had 
been  deposited  witii  the  plaintiffs  as  wharfingers  and  warehousemen  for 
safe  custody  ;  that  the  plaintiffs  made  no  charge  for  insurance  ;  tliat 
the  plaintiffs  had  no  authority  from  their  customers  to  insure,  except 
as  might  be  inferred  from  the  fact  that  long  before  the  fire  they  liad 
told  one  of  their  customers,  who  had  flour  in  their  wareliouse  at  the 
time  of  the. fire,  that  they  carried  insurance  on  the  goods  of  their  cus- 
tomers; and  that  the  sums.i)aid  into  court  were  sufficient  to  cover  the 
plaintiffs'  own  goods  and  the  plaintiffs'  charges  witli  reference  to  the 
goods  deposited  by  their  customers,  to  wit,  charges  for  landing,  wharf- 
age, and  cartage. 
:    Hellish,  for  the  plaintiffs. 

Ziiish,  contra} 

Lord  Campbell,  C.  J.  After  hearing  the  argument,  I  have  come  to 
the  conclusion  that  the  plaintiffs  are  entitled  to  judgment.  The  first 
question  is  whether,  upon  the  construction  of  the  contract,  these  gpods 
were  intended  to  be  covered  by  the  policy.  I  tliink  in  either  policy  the 
description  is  sucli  as  to  include  them.  Wliat  is  meant  in  those  policies 
by  the  words  ''goods  in  trust"?  I  think  tliat  means  goods  with 
which  the  assured  were  intrusted  ;  not  goods  held  in  trust  in  the  strict 
technical  sense,  so  held  that  there  was  only  an  equitable  obligation  on 
the  assured  enforceable  by  a  subpoena  in  Chancery,  but  goods  with 
which  they  were  intrusted  in  tlie  ordinary  sense  of  the  word.  They 
were  so  intrusted  with  the  goods  deposited  on  their  vvliarfs  ;  I  cannot 
douUt  the  polic3'  was  inteiWed  to  protect  sucli  goods;  and  it  would  be 
very  inconvenient  if  wharfingers  could  not  protect  such  goods  by  a 
floating  policy.  Then,  this  being  the  meaning  of  the  policy,  is  tliere 
anything  illegal  in  it?  It  cannot  now  be  disputed  tliat  it  would  be 
legal  at  common  law  ;  and  INIr.  Lush  properly-  admits  that  it  is  not  pro- 
hibited by  the  terms  of  any  statute.  And  I  think  that  a  person  in- 
trusted with  goods  can  insure  them  with  orders  from  the  owner,  and 
even  without  informing  him  that  there  was  such  a  policy.  It  would 
be  most  inconvenient  in  business  if  a  wharfinger  could  not,  at  his  own 

1  In  the  course  of  this  argument,  Lord  Cajipbell,  C.  J.,  said:  "la  mercantile 
usage  merchants  ai'e  likely  to  have  in  their  custody  goods  on  commission.  Those  are 
insured  by  name,  and  also  goods  in  trust.  What  goods  are  those  which  in  mercantile 
usage  merchants  are  likely  to  have,  not  being  on  commission,  which  can  he  called  in 
trust,  if  the  present  are  not  ?  "  Cromptox,  .1.,  said:  "In  the  Factors'  Acts  (Stat.  4 
G.  IV.  c.  8.3,  Stat.  6  G.  IV,  c.  94,  and  Stat.  .5  &  6  Vict.  c.  39)  the  phrase,  '  agents  intrusted 
with  goods,'  is  used,  and  certainly  not  confined  to  cases  where  the  remedy  is  hy  a  sub- 
ptpna  in  Chancery."  Wigiit.man,  .1.,  said  :  "  Rut,  if  the  money  is  paid  to  the  plain- 
tiffs, it  will  inure  to  the  benefit  of  the  owners  of  the  goods."  And  again  Lord 
Ca.mpbei.l,  C.  J.,  said  :  "  It  was  not  intended  to  limit  the  policy  to  the  personal  inter- 
est of  the  plaintiffs;  for  in  this  and  .all  other  floating  policies  the  promise  is  to  make 
gofid  the  dam.ige  to  the  goods.  Such  a  contract  w.as  valid  at  common  law.  Dalby  v. 
India  .and  London  L.  Assur.  Co.,  15  C.  B.  3G5.  What  statute  do  you  rely  upon  as 
making  it  illegal  ?  "  —  Ed. 


tlie  J 
are  j 


SECT.  II.]      WATERS    V.   MONARCH   FIRE   AND    LIFE   INS.    CO.  907 

cost,  keep  np  a  floating  policy,  for  the  benefit  of  all  who  might  become 
his  customers.  Tiie  last  point  that  arises  is,  to  what  extent  does  the 
policy  protect  those  goods?  The  defendants  saj-  that  it  was  only  the 
plaintiffs'  personal  interest.  But  the  policies  are  in  terms  contracts 
to  make  good  "  all  such  damage  and  loss  as  may  happen  by  fire  to  the 
propert}' hereinbefore  mentioned."  That  is  a  valid  contract;  and,  as 
the  property  is  wholly  destroyed,  the  value  of  the  whole  must  be  made 
good,  not  merely  the  particular  interest  of  the  plaintiffs.  The}'  will  be 
entitled  to  apply  so  much  to  cover  their  own  interest,  and  will  be  trus- 
tees for  the  owners  as  to  the  rest.  The  authorities  are  clear  tliat  an 
assurance  made  without  orders  may  be  ratified  by  the  owners  of  the 
propertj',  and  then  the  assurers  become  trustees  for  them. 

(Coleridge,  J.,  was  absent.) 

WiGHTiMAN,  J.  There  are  two  questions.  The  first,  Whether  tlie 
goods  destroyed  were  covered  at  all  by  the  policies.  The  policies 
on  various  descriptions  of  goods;  and,  amongst  others,  on  goods  "in 
trust."  It  seems  clear  to  me  that  the  goods  iu  question  were  in  trust. 
The  plaintiffs  are  warehousemen  and  wharfingers  ;  and  the  goods  were 
in  their  warehouse:  they  had  a  lien  on  them,  subject  to  which  they 
were  accountable  to  the  owners  who  had  intrusted  them  with  the  goods. 
So  the  goods  lost  were  goods  in  trust.  Then  comes  the  question,  Can 
the  plaintiffs  recover  their  value?  It  seems  to  me  that  they  ma}',  un- 
less tliere  be  something  making  it  illegal  to  insure  more  than  the 
plaintiflTs'  own  interest.  Mr.  Lush  does  not  contend  that  any  statute 
applies.  It  has  been  decided  that,  if  no  statute  applies,  a  person  in- 
sured may  recover  the  amount  contracted  for:  and,  that  being  so,  I 
think  the  plaintiffs  entitled  to  recover  the  whole  value. 

Crompton,  J.  I  cannot  entertain  the  least  doubt  that  in  these 
policies  the  words  "  in  trust  "  are  used  without  any  reference  to  a 
subpoena  in  Ciiancery.  The  parties  meant  to  insure  those  goods  with 
which  the  plaintiffs  were  intrusted,  and  in  every  part  of  which  they  had 
an  interest,  both  in  respect  to  their  lien  and  in  respect  of  their  bailors. 
What  the  surplus  after  satisfying  their  own  claim  might  be,  could  only 
be  ascertained  after  the  loss,  when  the  amount  of  their  lien  at  that 
time  was  determined  ;  but  they  were  persons  interested  in  every  par- 
ticle of  the  goods.  Judgment  for  the  x>l(-Mxt%ffs} 

1  See  De  Forest  v.  Fulton  F.  Ins.  Co.,  1  Hall,  84  (1828) ;  Rafel  v.  Nashville  M.  & 
F.  Ins.  Co.,  7  La.  Ann.  244  (1852)  ;  iEtna  Ins.  Co.  r.  Jackson,  16  B.  Mon.  242  (18551; 
London  &  Northwestern  Kv.  Co.  v.  Glyn,  1  E.  &  E.  652  (1859)  ;  Stilluell  v.  Staples, 
19  N.  Y.  401  (1859);  Waring  v.  Indemnity  F.  Ins.  Co.,  45  N.  Y.  606  (1871);  North 
British  and  Mercantile  Ins.  Co.  v.  Moffatt,  L.  R.  7  C.  P.  25  (1871) ;  Hough  v.  People's 
F.  Ins.  Co.,  36  Md.  398  (1872)  ;  Ehsworth  v.  Alliance  M.  Ins.  Co.,  L.  R.  8  C.  P.  596 
(1873)  ;  s.  c.  reversed,  by  arrangement  between  the  parties,  43  L.  J.  n.  s.  C.  P.  394 
(Ex.  Ch.,  1874),  (a  marine  policy) ;  Home  Ins.  Co.  v.  Baltimore  Wareliouse  Co.,  93 
U.  S.  527  (1876) ;  North  British  and  Mercantile  Ins.  Co.  v.  L.,  L.  &  G.  Ins.  Co.,  5  Ch. 
D.  569  (C.  A.,  1877);  Martineau  i'.  Kitching,  L.  R.  7  Q.  B.  4-36  (1878);  California 
Ins.  Co.  V.  Union  Compress  Co.,  133  U.  S.  387  (1890). 

In  Stillwell  V.  Staples,  suipra,  manufacturers  procured  insurance  upon  goods,  "  the 
property  of  the  insured,  or  held  by  them  iu  trust  or  on  commission,  or  sold  but  not 


908 


ILLINOIS   MUX.   F.   INS.    CO.   V.   ANDES   INS.   CO.      [CIii.P.  VIIL 


ILLINOIS   MUX.   F.   INS.   CO.   v.    ANDES   INS.   CO. 
Supreme  Court  of  Illinois,  1873.     67  111.  362. 

Writ  of  error  to  the  City  Court  of  Alton  ;  the  Hon.  Henry  S.  Baker, 
judge,  presiding. 

Mr.  Charles  P.  Wise,  for  the  plaintiff  in  error. 

Messrs.  Staart,  Edwards  <b  Brown,  and  Mr.  J.  H.  Yager,  for  the 
defendant  in  error. 

Mr.  Justice  Sheldon  delivered  the  opinion  of  the  court. 

The  only  question  here  presented  for  decision  is,  as  to  the  amount  of 
the  recovery. 

The  original  insurer  became  liable  to  pay  to  tlie  first  assured  the  sum 
of  $6,000  in  consequence  of  the  loss  of  the  subject-matter  of  the  first 
insurance;  but  it  actually  paid  only  $600  in  full  discharge  of  the 
liability.  The  amount  of  the  reinsurance  was  $2,000.  Shall  the  rein- 
sured recover  the  full  $2,000,  or  only  $600,  or  a  pro  rata  part  of  the 
latter  sura? 

So  far  as  we  are  aware,  the  contract  of  insurance,  or  of  reinsurance, 
against  loss  by  fire,  has  uniformly  been  held  to  be  a  contract  of  indem- 
nity not  exceeding  the  sum  insured. 

in  the  case  of  an  ordinary  policy  of  insurance,  and  a  loss,  the  sum 
insured  is  the  extent  of  the  insurer's  liability,  not  the  measure  of  the 
assured's  claim.  The  contract  being  one  of  indemnity,  he  is  entitled 
only  to  that,  and  the  actual  loss  sustained  by  the  assured  is  the  meas- 
ure of  indemnity  to  which  he  is  entitled  where  it  is  less  than  the  sum 
insured.  So,  if  the  assured  has  parted  with  all  his  interest  in  the  sub- 
delivered."  When  a  fire  occurred,  the  manufacturers  collected  the  whole  insurance, 
•which  was  not  enough  to  cover  their  own  loss.  There  had  heen  no  agreement  with 
customers  to  insure,  but  one  of  the  manufacturers'  customers,  discovering  the  form  of 
the  insurance  after  tlie  settlement  had  been  made  thereunder,  attempted  —  by  way  of 
counterclaim  in  an  action  brought  by  the  manufacturers  to  recover  a  balance  for  mauu- 
facturing  —  to  set  up  a  right  to  a  proportionate  part  of  the  insurance.  The  attempt 
ultimately  failed.     Seldkn,  J.,  for  the  court,  said  :  — 

•'  In  order  to  support  the  judgment  in  this  case,  it  must  appear,  either  that  the  de- 
fendant iiad  elected  to  adopt  the  policy,  before  its  force  as  an  insurance  upou  his 
goods  iiad  been  in  any  degree  impaired,  by  any  act  of  the  plaintiffs;  or  that  the  latter 
had  actually  received  money  from  the  insurance  company  on  account  of  the  defend- 
ant's goods    ... 

"  At  the  time  when  the  plaintiffs  presented  their  claim  to  and  settled  with  the  in- 
surance companies,  the  defendant  had  acquired  no  interest  whatever  in  the  policies. 
He  had  not  then,  so  far  as  appears,  ratified  or  adopted  them.  The  plaintiffs,  therefore, 
were  at  liberty  to  cancel  or  modify  them  at  pleasure.  It  seems  they  presented  no 
claim  against  the  insurance  companies  for  any  loss  upon  the  defendant's  goods.  The 
lo.ss  upon  their  own  goods  greatly  exceeded  the  amount  of  all  the  policies,  and  they 
very  naturally  elected  to  claim  for  their  own  loss  alone.  This  was  equivalent  to  an  elec- 
tion to  cancel  .so  much  of  the  policy  as  purported  to  insure  goods  held  by  them  in  trust, 
which,  as  tliey  were  under  no  objection  to  insert  that  clause,  and  as  their  act  in  doing 
80  had  not  been  adopted,  they  were,  as  we  have  seen,  at  entire  liberty  to  do."  —  Ed. 


SECT.  II.]  ILLINOIS   MUT.   F.    IXS.   CO.   V.   ANDES   INS.   CO.  909 

ject  insured  before  the  loss  happens,  he  cannot  recover,  for  tlie  reason 
that  the  contract  is  regarded  as  one  for  an  indemnit}',  and  he  has 
sustained  no  loss  or  damage. 

Although  the  original  insurer  here  did  become  liable  to  pa}-  the  sum 
of  66,000,  that  did  not  turn  out  to  be  the  amount  of  its  actual  loss. 
The  actual  loss  and  damage  which  it  sustained  was  $600,  the  sum 
which  it  paid  in  full  discharge  of  its  liabilit}-.  That  sum,  given  to  the 
reinsured,  would  make  good  the  loss  sustained  by  reason  of  the  original 
insurance  ;  whereas,  to  allow  a  recovery  of  $2,000,  would  enable  it  to 
realize  a  gain  of  $1,400  over  and  above  the  actual  damage  it  has  sus- 
tained. It  is  difficult  to  see  how  this  can  be  done  consistently  with 
principle,  under  a  contract  which,  we  apprehend,  this  must  be  admitted 
to  be,  to  indemnify  the  reassured  against  the  loss  it  might  sustain  from 
the  risk  it  had  incurred  in  consequence  of  its  prior  insurance.^  .  .  . 

The  precise  point  here  involved  is  quite  barren  of  the  authority  of 
adjudged  cases.  As  the  contract  of  reinsurance  was  virtualh'  pro- 
hibited in  England  more  than  a  century  ago  —  it  having  been  there 
forbidden  except  where  the  insurer  shall  be  insolvent,  become  bank- 
rupt or  die,  by  the  statute  (19  Geo.  TI.  ch.  37,  sect.  4) — that  may 
account  for  the  absence  of  the  authority'  in  the  English  reports  upon 
the  point. 

What  little  authority  is  to  be  found,  it  must  be  confessed,  is  in  sup- 
port of  the  view  that,  where  the  first  insurer  becomes  insolvent,  and, 
on  a  compromise  with  his  creditors,  pays  only  a  certain  percentage  of 
the  loss  sustained  by  the  insured,  the  reinsurer  is,  nevertheless,  bound 
to  pa}'  the  reinsured  the  full  amount  of  the  reinsurance.  Such  was  the 
decision  of  a  French  court  of  admiralty  at  Marseilles,  made  in  1748. 

In  Howe  v.  Mutual  Safety  Insurance  Co.,  1  Sandf.  137,  this  subject 
is  quite  elaboratelv  considered,  and  the  authorities  bearing  upon  it 
adduced,  and  the  doctrine  laid  down  by  the  above  French  decision  is 
recognized  and  adopted  as  the  true  rule  of  law  which  governs  the  ex- 
tent of  the  liability  of  a  reinsurer. 

There  are  treatises  on  insurance  where  the  same  doctrine  ma}'  be 
found  to  be  laid  down,  but  so  far  as  they  have,  for  its  support,  the 
authority  of  adjudications,  they  seem  to  depend  upon  the  two  cases 
above  cited. 

In  Eagle  Insurance  Co.  v.  The  Lafayette  Insurance  Co.,  9  Ind.  443, 
the  case  in  1  Sandf.  is,  with  seeming  reluctance,  barely  recognized  as 
authority. 

This  comprises  the  sum  of  the  authority  of  adjudged  cases  to  which 
we  have  been  referred,  or  which  have  been  brought  to  our  notice  in 
support  of  this  doctrine  of  the  reinsurer's  liability  for  the  full  amount 
reinsured,  as  contended  for  by  the  appellee. 

1  Here  followed  quotations  from  Bainbridge  v.  Neilson,  10  East,  329,  347  (1808),  to 
the  effect  that  a  policy  of  insurance  is  a  contract  of  indemnity,  and  from  Bainbridge  v. 
Neilson,  10  East,  329,  347  (1808),  per  Bayley,  J.,  and  from  Hamilton  v.  Mendes,  ante, 
pp.  829,  831  (1761), /^er  Lord  Mansfield,  C.  J.  — Ed. 


910  ILLINOIS   MUT.    F.    INS.    CO.    V.   ANDES   INS.    CO.       [CHAP.  VIIL 

We  can  understand  how  the  reinsured  party,  where  the  amount  of 
his  liability  has  been  ascertained,  may  be  admitted  to  recover  to  the 
full  extent  of  the  liability  so  long  as  the  liability  to  pay  continues, 
although  he  may  not  have  made  payment,  or  may  be  insolvent  and 
unable°to  pay.  But  where  the  liability  has  become  actually  discharged 
bv  the  pavment  of  a  sum  less  in  amount,  it  is  difficult  to  perceive,  on 
principle,  why  the  sura  paid  in  discharge  of  the  liability  should  not  be 
taken  as  tlie  amount  of  damage  sustained  and  as  the  measure  of  in- 
demnity to  be  recovered  under  a  contract  which  is  confessedly  one  of 
indemnity. 

Notwithstanding,  then,  the  adverse  authority  that  isto  be  found,  we 
are  disposed  to  hold,  on  i^rinciple.  as  we  regard  it,  that  $600,  the  sum 
paid  by  the  reinsured  conipany  in_discharge  of  its  liability  for  S6,000, 
was  the  actuaUoss  it  sustamecTand^the^extent  of  the  recovery  which 
should  be li^ad.  ,Aii^  '"  view_of_tlie  following  special  clause  injjiis 
policy  of  reinsurance,  we  are  of  opinion  that  the  recovcryinjliis^  case 
should  be  reduced  even  below  that  sum:  Ttie~cTause  islhisTf^^' 
it'  any,  payable  ^>ro  7'ata,  at  the  same  time'and  in  ille"same"manner  as 
thereinsured  company." 

The  only  construction  we  can  well  put  on  this  clause  and  give  it 
practical  effect  is  this :  that  the  Andes  Insurance  Company,  the  rein- 
surer, was  only  to  pay  at  the  same  rate  as  the  Illinois  INIutual  Fire 
Insurance  Company,  the  reinsured,  should  pay ;  and  as  the  latter  com- 
pany paid  only  ten  cents  on  the  dollar  of  its  insurance,  the  former 
company  is  only  liable  to  pay  at  the  same  rate,  that  is,  ten  cents  oq 
the  dollar  of  the  amount  of  its  reinsurance,  which  would  be  $200. 

Appellee's  counsel  suggest  that  the  clause  has  reference  only  to  cases 
of  double  insurance.  There  is  no  warrant  in  the  language  of  the  clause 
for  giving  it  such  a  reference. 

The  policy  of  reinsurance  is  not  before  us.  The  case  comes  before 
us  as  a  certified  question  of  law,  and  this  clause  is  the  only  portion  of 
the  policy  which  is  put  into  the  case,  so  that  we  have  nothing,  aside 
from  the  language  itself,  of  the  clause,  to  aid  in  its  construction. 

We  are  of  opinion  the  judgment  should  have  been  for  $200  instead 
of  S2,000. 

The  judgment  is  reversed  and  the  cause  remanded. 

Judgment  reversed. 


SECT.  II.]    EXCELSIOR  FIRE  INS.  CO.  V.   ROYAL  INS.  CO.        911 


EXCELSIOR   FIRE   INSURANCE    CO.  et  al.,  Respondents,  v. 
ROYAL  INS.  CO.,  Appellants. 

Court  of  Appeals  of  New  York,   1873.      55  N.  Y.  343.^ 

Appeal  from  a  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  fourth  judicial  district,  affirming  a  judgment  entered  upon  a  verdict 
in  favor  of  the  plaintiffs. 

On  May  7,  1862,  and  August  1,  1865,  James  Connelk,  then  being 
the  owner  of  the  property,  mortgaged  it  to  David  Dows  and  others  by 
two  mortgages  for  §10,000  each.  On  July  23, 1870,  Mary  L.  Connelly, 
the  wife  of  the  mortgagor,  entered  into  a  contract  with  the  mortgagees, 
whereby,  in  consideration  of  $15,000  paid  and  agreed  to  be  paid,  the 
mortgagees  agreed  to  assign  to  her  the  mortgages.  Under  this  contract 
Mrs.  Connelly  paid  $7,500. 

On  December  7,  1870,  Mrs.  Connelly,  through  her  husband,  procured 
a  policy  in  the  Excelsior  Fire  Insurance  Company  upon  her  mortgage 
interest  to  the  amount  of  $3,750,  of  which  $1,250  was  on  the  building, 
and  $2,500  on  the  machinery  and  fixtures  therein,  and  also  a  like  policy 
in  the  Commonwealth  Insurance  Compan}-.  These  companies  wished 
these  policies  to  be  cancelled,  but  what  actually  happened  was  that* 
there  was  procured,  on  December  20,  1870,  in  Mrs,  Connelly's  behalf, 
a  third  policy,  dated  December  7,  1870,  for  $7,500,  namely  "$2,500 
on  her  mortgage  interest  in  the  three-story  stone  flour  mill,  .  .  .  and 
$5,000  on  the  machinery  and  fixtures  therein." 

The  property  was  destroyed  by  fire  on  December  22, 1870. 

On  April  13,  1871,  Mrs.  Connelly  assigned  to  the  plaintiffs  —  the 
Excelsior  and  the  Commonwealth  —  her  claim  against  the  defendant  — 
the  Royal. 

In  addition  to  the  question  as  to  the  proper  amount  of  recovery, 
there  were  questions  not  indicated  by  this  statement. 

A?)iasa  J.  Pa/rker,  for  the  appellant. 

W.  F.  Cogsicell,  for  the  respondent. 

Folger,  J.  This  case  comes  up  on  exceptions  to  a  refusal  of  mo- 
tion for  a  nonsuit  of  the  plaintiffs,  made  first  at  the  rest  of  the  plain- 
tiffs' case,  and  again  at  the  close  of  all  the  proofs. 

The  defendant,  by  making  this  motion,  concedes  that  the  court  may 
pass  upon  the  facts  ;  indeed,  that  there  is  no  dispute  as  to  the  facts, 
and  nothing  therefore  to  be  submitted  to  the  jury.  Winchell  v.  Hicks, 
18  N.  Y.  558.  That  they  have  presented  in  this  court  questions  not 
made  at  circuit,  cannot  alter  this  rule.  .  .  . 

Again,  we  are  of  the  opinion  that  Mrs.  Connelly  had  an  interest  as 
mortgagee  in  the  property  insured  by  the  defendant  to  the  full  amount, 

1  The  statement  has  been  rewritten.  In  making  the  statement  and  in  reprinting 
the  opinion,  matters  foreign  to  the  amount  of  a  mortgagee's  recovery  have  been 
omitted.  —  Ed. 


912  EXCELSIOR   FIRE   INS.    CO.   V.   ROYAL   INS.   CO.      [CHAP.  \IIL 

at  least,  of  their  policy.  Though  the  language  of  the  description  in 
the  policy  is  involved,  it  must  be  taken  to  describe  her  mortgage 
interest  not  only  in  the  mill  but  also  in  the  machinery  and  fixtures, 
wiiich,  in  legal  contemplation,  were  included  in  the  mortgage.  Biglin 
V.  N.  Y.  Cent.  Ins.  Co.,  20  Barb.  635;  House  v.  House,  10  Paige, 
158;  Snedekery.  Warring,  2  Kernan,  170.  And  though  the  risk  was 
divided  upon  the  building  and  upon  the  machinery,  etc.,  tlie  loss  upon 
each  was  greater  than  the  amount  named  in  this  policy.  She  had,  it  is 
true,  paid  but  a  portion  of  the  amount  slie  had  agreed  to  give  in 
purchase  of  the  mortgages,  but  she  was  entitled  to  seek  indenmity,  not 
only  to  the  extent  to  which  she  had  paid,  but  the  extent  of  the  interest 
for'which  she  had  bargained  and  agreed  to  pay.  This  was  the  full 
amount  secured  and  unpaid  upon  the  mortgages. 

The  defendants  further  claim  that  Mrs.  Connelly  having  been  insured 
upon  her  mortgage  interest,  the  loss  sustained  by  her  thereon,  for  which 
a  recovery  can  be  had,  can  be  no  more  than  that  which  the  mortgaged 
property  shall  fail  to  secure  of  her  debt ;  and  that,  as  it  was  proven  that 
the  morto-aged  property  after  the  fire  was  sold  for  $11,000,  which  was 
more  than  the  amount  she  had  paid  on  her  contract  to  buy  the  mort- 
gages, she  suffered  no  loss,  and  therefore  has  no  claim  against  the 
defendants. 

We  have  already  stated  our  opinion  that  her  insurable  mortgage 
interest,  and  hence  the  amount  which  she  might  lose,  was  not  limited  to 
the  amount  actually  paid  by  her  on  that  contract,  but  that  it  equalled  the 
whole  amount  secured  and  unpaid  upon  the  mortgages  for  which  she  was 
bound  to  pay.  As  there  was  due  and  unpaid  upon  the  mortgages  a  sum 
of  over  $19,000,  even  if  the  premises  had  been  available  to  her,  at  the 
price  at  which  they  sold  after  the  fire,  there  was  still  a  deficiency  of  more 
than  the  amount  of  the  defendants'  policy. 

To  this  the  defendant  says  that  if  the  plaintiffs'  policies  are  available 
to  Mrs.  Connelly  for  one  purpose,  as  she  claims,  they  are  available  to 
the  defendant  for  another.  They  then  insist  that  those  policies  should 
share  in  the  payment  of  the  loss,  if  any  there  is  ;  and  then,  that  if  the 
insured  must  first  exhaust  her  remedy  against  the  mortgaged  premises, 
the  amount  for  the  defendant  to  pay  will  be  much  less  than  the  amount 
adjudged  against  them.  If  the  premises  of  the  defendants'  argument 
are  sound,  they  are  right  that  such  consequence  would  follow.  Without 
deciding  whether  the  policies  of  the  plaintiff's  are  in  existence,  so  as  to 
be  available  to  Mrs.  Connelly  and  also  to  the  defendants  for  the  pur- 
pose of  this  argument,  we  will  dispose  of  the  point  upon  the  other 
branch  of  it. 

And  this  raises  the  question  whether  a  mortgagee,  who  has  in- 
sured his  mortgage  interest  in  buildings  and  fixtures  and  machinery 
at  his  own  expense  and  for  his  own  indemnity,  with  no  agreement 
or  understanding  with  the  mortgagor,  must  first  exhaust  his  remedy 
on  his  mortgage  before  he  can  call  upon  the  Insurer  to  make  good 
any  part  of  the  damage  by  fire  to  the  property.    The  learned  counsel 


SECT.  II.]         EXCELSIOR    FIRE    INS.    CO.    V.    ROYAL   INS.    CO.  913 

for  the  defendant  cites,  for  the  affirmation  of  this  position,  Flanders  on 
Insurance  (p.  360)  and  Angell  on  Insurance  (§  59).  Flanders  says  of 
an  insurance  by  a  mortgagee :  "  It  is  not  the  specific  property  wliich  is 
insured,  but  its  capacity  to  pa}-  the  mortgaged  debt."  Angell  says : 
'*  It  is  but  an  insurance  of  his  debt ;  and  if  his  debt  is  afterward  paid 
or  extinguished,  the  polic}'  from  that  time  ceases  to  have  an}'  operation. 
And  even  if  the  premises  are  after  that  destroyed  by  fire  he  has  no 
right  to  recover  for  the  loss,  for  he  has  sustained  no  damage  thereby." 
Tliese  texts  do  not,  in  terms,  sustain  the  propositions  of  the  defend- 
ants ;  and  it  is  onl}'  as  a  corollary,  if  at  all,  that  it  can  be  deduced 
from  them.  If  it  is  the  debt  only  which  is  insured,  it  may  be  said  that 
until  the  debt,  or  some  part  of  it,  is  lost,  there  is  no  loss  upon  the  policy, 
and  that  the  debt  nor  any  part  of  it  is  lost  until  the  mortgagee  fails  to 
obtain  it  from  an  enforcement  of  his  mortgage.  Neither  of  these 
writers  cites  any  decision  which  sustains  the  proposition  of  the  de- 
fendants, except  perhaps  one.  There  are  dicta  in  several  cases  which 
will  be  referred  to.  The  one  case  is  Smith  v.  Col.  Ins.  Co.,  17  Penn. 
St.,  253.  ^  .  .  .  It  is  apparent  that  if  it  is  the  debt  onl}'  of  the  mort- 
gagee which  is  insured,  and  that  he  has  no  claim  against  the  insurer 
until  the  mortgaged  property'  is  exhausted,  that  the  same  rule  will  apply 
as  to  the  obligation  of  the  mortgage  debtor,  and  that  the  remed}-  against 
him  must  also  be  first  exhausted.  Yet  this  proposition  does  not  seem 
to  receive  sanction.  ^  ...  In  the  absence  of  direct  authorit}',  how  is 
the  reason  of  this  matter?  Can  it  be  said,  in  any  strict  or  legal  sense, 
that  the  defendants  have  contracted  to  indemnify  Mrs.  Connelly  for  a 
loss  of  her  mortgaged  debt?  "Whence  is  their  power  to  guarantee  the 
payment  or  collection  of  a  debt  ?  Fire  underwriters  in  these  days,  in 
this  State,  are  the  creatures  of  statute,  and  have  no  rights,  save  such 
as  the  State  gives  to  them.  Thev  ma}-  agree  that  the}-  will  pay  such 
loss  or  damage  as  happens  by  fire  to  property.  They  are  limited  to 
this.  It  was  not  readily  that  it  was  first  held  that  they  could  agree, 
with  a  mortgagee  or  lienor  of  property,  to  reimburse  to  him  the  loss 
caused  to  him  by  fire.  He  is  not  the  owner  of  it;  how,  then,  can  he 
insure  it,  was  the  query.  And  the  effort  was  not  to  enlarge  the  power 
of  the  insurer  so  that  it  might  insure  a  debt,  but  to  bring  the  lienor 
within  the  scope  of  that  power,  so  that  the  property  might  be  insured 
for  his  benefit.  And  it  was  done  by  holding  that,  as  his  security  did 
depend  upon  the  safety  of  the  property,  he  had  an  interest  in  its  pres- 
ervation, and  so  had  such  interest  as  that  he  might  take  out  a  policy 
upon  it  against  loss  by  fire  without  meeting  the  objection  that  it  was  a 
wagering  policy.  The  policy  did  not,  therefore,  become  one  upon  the 
debt,  and  for  indemnification  against  its  loss,  but  still  remained  one 

1  Here  Smith  v.  Columbia  Ins.  Co.,  17  Pa.  253  (1851),  was  quoted  and  discussed; 
and  various  dicta  were  cited.  —  Ed. 

2  Here  were  cited  Hancox  v.  Fishing  Ins.  Co.,  3  Sumner,  132  (1837);  Russell  v. 
Union  Ins.  Co.,  1  Wash.  C.  C.  409  (1806),  8.  c.  4  Dallas,  421  ;  and  Godin  v.  Loudon 
Asbur.  Co.,  1  Burr.  489  (1758).  — Ed. 

58 


914  EXCELSIOR   FIRE    INS.    CO.    V.    ROYAL   INS.    CO.       [CHAP.  VIIL 

•upon  the  property  and  against  loss  or  damage  to  it.  It  is,  doubtless, 
true,  as  is  said  In'  Gibson,  J.,  in  17  Penn.  (supi-a),  that  in  effect  it  is 
the  debt  which  is  insured.  It  is  only  as  an  effect,  however ;  an  effect 
resulting  from  the  primarj-  act  of  insurance  of  the  property  which  is 
the  security  for  the  debt.  It  is  the  interest  in  tiie  property  which  gives 
the  right  to  obtain  insurance,  and  the  ownership  of  the  debt,  a  lien 
upon  the  property  creates  that  interest.  The  agreement  is  usually,  as 
it  is  in  fact,  in  this  case,  for  insuring  from  loss  or  damage  by  fire  the 
property.  The  interest  of  the  mortgagor  is  in  the  wliole  property,  just 
as  it  exists,  undamaged  by  fire  at  the  date  of  the  policy.  If  that 
property  is  consumed  in  part,  though  what  there  be  left  of  it  is 
equal  in  value  to  the  amount  of  the  mortgage  debt,  the  mortgage  in- 
terest is  affected.  It  is  not  so  great,  or  so  safe,  or  so  valuable  as  it 
was  before.  It  was  for  indemnity  against  this  very  detriment,  this 
very  decrease  in  value,  that  the  mortgagee  sought  insurance  and  paid 
bis  premium. 

To  say  that  it  is  the  debt  which  is  insured  against  loss,  is  to  give  to 
most,  if  not  all,  fire  insurance  companies  a  power  to  do  a  kind  of  busi- 
ness which  the  law  and  their  charter  do  not  confer.  They  are  privileged 
to  insure  property  against  loss  or  damage  by  fire.  They  are  not  privi- 
leged to  guarantee  the  collection  of  debts.  If  they  are,  they  may 
insure  against  the  insolvency  of  the  debtor.  No  one  will  contend  this  : 
and,  it  will  be  said,  it  is  not  by  a  guaranty  of  the  debt,  but  an  indemnity 
is  wiven  against  the  loss  of  the  debt  by  an  insurance  against  the  perils 
to  the  property  by  fire.  This  is  but  coming  to  our  position,  that  it  is 
the  property  which  is  insured  against  the  loss  by  fire,  and  the  protec- 
tion to  the  debt  is  the  sequence  thereof.  As  the  property  it  is  which 
is  insured  against  loss,  it  is  the  loss  which  occurs  to  it  which  the 
insurer  contracts  to  pay,  and  for  such  loss  he  is  to  pay  within  the 
limits  of  his  liability,  irrespective  of  the  value  of  the  jjroperty  unde- 
stroyed.  So  as  to  the  remark,  that  it  is  the  capacity  of  the  property  to 
pay  the  debt  which  is  insured.  This  is  true  in  a  certain  sense ;  but  it 
is  as  a  result  and  not  as  a  primary  undertaking.  The  undertaking  is 
that  the  property  shall  not  suffer  loss  by  fire  ;  that  is,  in  effect,  that  its 
capacity  to  pay  the  mortgaged  debt  shall  not  be  diminished.  When  an 
appreciable  loss  has  occurred  to  the  property  from  fire,  its  capacity  to 
pay  the  mortgaged  debt  has  been  affected  ;  it  is  not  so  well  able  to  pay 
the  debt  which  is  upon  it.  The  mortgage  interest,  the  insurable  in- 
terest, is  lessened  in  value,  and  the  mortgagee,  the  insuree,  is  affected, 
and  may  call  upon  the  insurer  to  make  him  as  good  again  as  he  was 
when  he  effected  his  insurance. 

Another  consideration  :  It  is  settled  that  when  a  mortgagee,  or  one  in 
like  position  toward  propert}',  is  insured  thereon  at  his  own  expense, 
upon  his  own  motion  and  for  his  sole  benefit,  and  a  loss  happens  to  it, 
the  insurer,  on  making  compensation,  is  entitled  to  an  assignment  of 
the  rights  of  the  insured.  This  is  put  upon  the  analogy  of  the  situation 
of  the  insurer  to  that  of  a  surety.      If  this  analogy  be  made  complete, 


SECT.  II. J         EXCELSIOR   FIRE   INS.    CO.    V.   ROYAL   INS.    CO.  915 

then  has  tlie  insurer  no  more  right  to  refuse  payment  of  the  loss  so  long 
as  the  insured  has  otlier  remed}'  for  his  debt,  than  has  the  suret}'.  One 
as  well  as  the  otlier,  as  soon  as  the  creditor's  right  to  make  demand  is 
fixed,  must  respond  to  it  and  seek  his  reimbursement  through  his  right 
of  subrogation  ;  and,  indeed,  the  application  of  this  equitable  right  of 
subrogation  makes  our  view  of  this  subject  harmonious  and  consistent 
with  all  the  rights  and  interests  of  all  tlie  parties.  .  .  . 

The  judgment  should,  therefore,  be  affirmed. 

All  concur  except  Church,  C.  J.,  not  voting. 

Judgment  affirmed} 

1  In  Carpenter  i;.  Providence  Washington  Ins.  Co.,  16  Pet.  495,  501  (1842),  Stokt, 
J.,  for  the  court,  said  :  — 

"  No  doubt  can  exist  tliat  the  mortgagor  and  the  mortgagee  may  each  separately 
insure  his  own  distinct  interest  in  the  property.  But  there  is  this  important  distinc- 
tion between  the  cases,  that  where  the  mortgagee  insures  solely  on  his  own  account,  it 
is  but  an  insurance  of  his  debt;  and  if  his  debt  is  afterwards  paid  or  extinguished, the 
policy  ceases  from  that  time  to  have  any  operation  ;  and  even  if  the  premises  insured 
are  subsequently  destroyed  by  fire,  he  has  no  right  to  recover  for  the  loss,  for  he  sus- 
tains no  damage  thereby ;  neither  can  the  mortgagor  take  advantage  of  the  policy, 
for  he  has  no  interest  whatsoever  therein.  On  the  other  hand,  if  the  premises  are 
de.stroyed  hy  fire  before  any  payment  or  extinguishment  of  the  mortgage,  the  under- 
writers are  bound  to  pay  the  amount  of  the  debt  to  the  mortgagee,  if  it  does  not  ex- 
ceed the  insurance.  But  then,  upon  such  payment  the  underwriters  are  entitled  to  an 
assignment  of  the  debt  from  the  mortgagee,  and  may  recover  the  same  amount  from 
the  mortgagor,  either  at  law  or  in  equity,  according  to  circumstances  ;  for  the  payment 
of  the  insurance  by  the  nndei-writers  does  not,  in  such  a  case,  discharge  the  mortgagor 
from  the  debt  but  only  changes  tlie  creditor. 

"  Far  different  is  the  case  where  an  insurance  is  made  by  the  mortgagor  on  the 
premises  on  his  own  account;  for,  notwithstanding  any  mortgage  or  other  encum- 
brance upon  the  premises,  he  will  be  entitled  to  recover  the  full  amount  of  his  loss 
not  exceeding  the  insurance  ;  since  the  wiiole  loss  is  his  own,  and  he  remains  personallv 
liable  to  the  mortgagee  or  other  encumbrancer  for  the  full  amount  of  the  debt  or  en 
cumbrance." 

In  Kernochan  v.  New  York  Bowery  F.  Ins.  Co.,  5  Duer,  1,  4-5  (1855),  Duer,  J. 
for  the  court,  said  :  — 

"  It  is  needless  to  cite  authorities  to  prove  that,  by  our  law,  a  mortgagee  has  an  in- 
surable interest,  corresponding  in  its  amount  with  that  of  the  debt  which  the  mortgage 
was  intended  to  secure ;  and  we  apprehend  it  to  be  equally  certain  that,  in  the  even  ; 
of  a  total  loss,  he  is  entitled  to  recover  the  whole  amount  insured,  provided  it  does  not 
exceed  that  which  at  the  time  of  the  loss  was  due  upon  the  mortgage.  We  do  not 
believe,  and  certainly  have  not  been  able  to  discover,  that  there  is  any  adjudged 
case  in  which  evidence  has  been  admitted  to  show  that  the  mortgaged  premises,  not- 
withstanding the  loss,  were  still  an  ample  security  for  the  debt ;  and  we  think 
ourselves  warranted  to  affirm  that  in  no  text-writer,  foreign  or  domestic,  is  any 
intimation  to  be  found  that  such  evidence  can  be  received  to  defeat  or  diminish  the 
recovery  of  the  assured.  Hence,  were  there  no  other  defence  in  this  case  than  that 
the  plaintiff  has  not  been  damnified,  we  should  have  no  difficulty  in  holding  that  he 
is  entitled  to  retain  the  judgment  that  has  been  rendered. 

"  It  is  indeed  true,  as  was  insisted  by  the  counsel  for  the  defendants,  that  in  this 
State,  since  wager  policies  have  been  abolished,  the  assured,  whether  in  a  marine  or 
fire  policy,  can  never  be  permitted  to  recover  more  than  a  full  indemnity  for  the  loss 
which  it  is  proved  that  he  sustained ;  but  it  is  a  mistake  to  suppose  that  this  salu- 
tary rule  is  violated  by  permitting  the  assured,  when  a  mortgagee,  to  recover  the  sum 
insured,  when  it  is  proved  that  such  was  the  amount  of  his  debt  and  of  the  loss  upon 
the  property  insured.    Although  his  recovery  under  these  conditions  is  allowed,  there 


916  MEKRETT   V.   FARMERS'   INS.    CO.      ^  [CHAP.  VIIL 

MERRETT   v.   FARMERS'   INS.   CO. 
SuPRKME  Court  of  Iowa,  1875.     42  Iowa,  11. 

Appeal  from  Johnson  District  Court. 

Action  upon  a  policy  of  insurance.  The  cause  was  tried  to  the 
court  without  a  jury,  and  a  judgment  rendered  for  plaintifl".  Defend- 
ant appeals. 

Fairall  <&  Bo7iorden,  for  appellant. 

Clark  &  Haddock^  for  appellee.  , 

Beck,  J.  The  policy  of  insurance  upon  which  suit  is  brought  is 
against  loss  by  fire  and  covers  a  dwelling  and  barn,  and  certain  enu- 

is  no  case  in  which  he  will  recover  more  than  an  indemnity  for  his  actual  loss,  since, 
according  to  the  nature  of  the  contract  and  the  intention  of  the  parties  the  sum  which 
he  receives  under  the  policy  must  either  be  applied  to  the  satisfaction  of  the  mort- 
gage or  its  payment  by  the  insurers  will  operate  as  a  transfer  to  them  of  his  own 
interest  in  the  debt  and  its  securities.  There  is  notasein  which,  after  the  payment  of 
a  loss,  he  will  be  allowed  to  enforce  for  his  own  benefit  the  payment  of  the  debt.  He 
can  never  recover  from  tlie  mortgagor  for  his  own  benefit  the  sum  which  has  been  paid 
to  him  by  his  insurers." 

On  the  affirmance  of  Keruochau  v.  New  York  Bowery  F.  Ins.  Co.,  supra,  in  the 
Court  of  Appeals,  17  N.  Y.  428,  435-436  (1858),  Strong,  J.,  for  a  majority  of  the 
court,  said  :  — 

"  The  contract  in  terms  expresses  that  the  defendants  insure  the  plaintiff,  '  as 
mortgagee,  against  loss  or  damage  by  fire,'  to  the  amount  and  on  the  buildings  speci- 
fied ;  and  agree  to  make  good  to  the  plaintiff  '  all  such  loss  or  damage,  not  exceeding 
in  amount  the  sum  insured,  as  shall  happen  by  fire  to  the  property  as  above  specified,' 
during  one  year  ;  'the  loss  to  be  estimated  according  to  the  true  and  actual  value  of 
the  property.'  The  loss  against  which  the  plaintiff  is  insured  is,  by  the  very  language 
of  the  contract,  '  to  the  property  insured  ; '  the  destruction  in  whole  or  in  part  of  the 
value  of  the  property  by  the  total  or  partial  burning  of  the  property.  In  case  of  such 
loss  it  is  stated  that  it  is  '  to  be  paid  within  sixty  days  after  due  notice  and  proof 
thereof  by  the  insured,'  in  conformity  to  the  policy.  Whether  the  loss,  by  diminishing 
the  mortgage  security,  endangers  the  collection  of  the  debt,  or  the  security  remains 
ample,  is  not  by  the  contract  made  of  any  importance ;  in  either  case  it  is  insured 
against,  and  the  amount  of  it  is  to  be  paid.  Nothing  is  said  in  the  policy  in  regard  to 
the  mortgage  debt,  nor  is  any  allusion  made  to  it  further  than  by  the  statement  that 
the  plaintiff  is  insured  as  mortgagee.  I  think  it  apparent,  therefore,  on  the  face  of 
the  policy,  that  the  contract  is  in  its  nature  an  insurance  of  the  propertv  mortgaged, 
and  not  of  the  debt  of  the  plaintiff.  The  debt  is  important  to  an  interest  of  the 
plaintiff  in  the  property;  without  an  interest  in  the  property  the  policy  would  be 
invalid,  and  the  insurance  is  limited  to  that  interest.  The  insurance  thus  has  re- 
spect to  the  debt ;  the  mortgage  lien  is  the  b.asis  and  extent  of  tiie  right  of  the  plain- 
tiff to  insure ;  but  the  insurance  is  upon  the  property,  the  subject  of  the  lien. 

"  If  the  insurance  was  of  the  debt,  there  should,  to  warrant  a  recovery,  be  a  loss 
as  to  the  debt,  which  has  not  occurred  and  cannot  take  place,  as  the  mortgaged  prop- 
erty still  far  exceeds  in  value  the  sum  unpaid,  and  the  debtors  are  solvent.  Regarding 
tlie  insurauceasof  the  debt.no  risk  has  been  insured  by  the  defendants;  the  policy  was 
not  only  of  no  possible  benefit,  but  worse,  it  has  been  a  constant  source  of  expense." 

On  the  amount  of  recovery  by  a  mortgagee,  see  also  Sussex  County  Mut.  Ins. 
Co.  V.  Woodruff,  26  N.  J.  L.  (2  Dutch.)  541,  548-551  (1857) ;  Harris  v.  Gaspee  F.  & 
M.  Ins.  Co.,  9  U.  I.  207  (1869) ;  De  Wolf  v.  Capital  City  Ins.  Co.,  16  Hun,  116  (1878). 
—  Ed. 


SECT.  II.]  MERRETT   V.   FARMERS'    INS.    CO.  917 

merated  articles  of  personal  property.  The  dwelling  and  a  part  of  the 
personal  property  were  destroyed  by  fire,  and,  to  recover  the  loss,  this 
action  is  brought.  The  first  question  presented  in  the  case  is  this : 
Was  plaintiff's  interest  in  the  house  burned,  insurable  ? 

The  house  was  occupied  by  plaintiff  and  his  wife  as  a  homestead. 
It  was  built  by  the  wife  upon  land  in  which  slie  held  a  life  estate  and 
was  occupied  by  her  as  a  dwelling.  Subsequently  she  married  plain- 
tiff, and  thereafter  the  house  was  occupied  by  them  and  their  farailj'. 
The  title,  then,  of  tlie  real  propert}-  is  in  the  wife,  her  interest  therein 
was  a  life  estate,  and  it  was  occupied  by  plaintiff  and  wife  as  a  home- 
stead. It  may  be  stated,  besides  these  facts,  that  plaintiff  made  certain 
additions  and  improvements  to  the  house.  The  polic}'  was  issued  upon 
the  application  of  plaintiff  and  in  his  name. 

I.  What  is  an  insurable  interest  ?  An  interest,  to  be  insurable, 
docs  not  depend  upon  title  or  ownership  of  the  property  ;  it  may  be  a 
special  or  limited  interest,  disconnected  from  title,  lien,  or  possession. 
If  the  holder  of  an  interest  in  property  will  suffer  loss  b}'  its  destruc- 
tion he  may  indemnify  himself  therefrom  b}'  a  contract  of  insurance. 

The  interest  must  be  of  such  a  character  that  the  destruction  of  the 
property  will  have  a  direct  effect  upon  it,  not  a  remote  or  consequential 
effect.  If,  by  the  loss,  the  holder  of  the  interest  is  deprived  of  the 
possession,  enjoyment,  or  profits  of  the  property,  or  of  a  securit}'  or 
lien  resting  thereon,  or  other  certain  benefits  growing  out  of,  or  de- 
pending upon  it,  he  holds  an  insurable  interest.  1  Phillips  on  Insur- 
ance, §§  175,  342,  346  ;  Flanders  on  Insurance,  p.  342;  Warren  et  al. 
V,  The  Davenport  Fire  Ins.  Co.,  31  Iowa,  464. 

II.  The  plaintiff  held  a  homestead  interest  in  the  propert}',  and  was 
entitled  to  occui)y  it  independent  of  the  will  of  his  wife.  This  right 
could  only  be  terminated  by  her  death.  Whatever  benefits  flowed 
from  such  occupation,  he  enjoyed  on  account  of  his  interest  in  the 
property,  and  he  could  not  be  deprived  of  them  except  by  his  own  act. 
Code  §§  1088,  2215.  The  destruction  of  the  house  deprived  him  of 
these  benefits  growing  out  of  his  interest  in  the  property.  His  interest 
then  is  clearly  witliin  the  definition  of  an  insurable  interest  above 
stated. 

III.  It  is  insisted  that  the  amount  of  the  judgment  is  excessive  ;  it 
is  the  siun  insured  upon  the  property,  not  exceeding  two-thirds  of  its 
value.  The  judgment,  it  is  claimed,  should  have  been  for  the  value  of 
plaintiff's  interest.  It  has  been  held  in  like  cases  that  the  right  of 
recovery  extends  "to  the  amount  of  damages  to  the  property  not 
exceeding  the  sum  insured,  without  regard  to  the  value  of  the  assured's 
interest  in  the  property."  Franklin  Ins.  Co.  v.  Drake,  2  B.  Mon.  47; 
Strong  V.  Manufacturers'  Ins.  Co.,  10  Pick.  40;  Insurance  Co.  v. 
Chase,  5  Wal.  509. 

IV.  This  question,  it  seems  to  us,  is  determined  by  the  language  of 
the  policy  which  binds  the  defendant  to  pa}-  "the  amount  of  the  loss 
or  damage,  to  be  estimated  according  to  the  actual  cash  value  of  the 


918  MERRETT    V.   FARMERS'    INS.    CO.  [CHAP.  VIII. 

property  at  the  time  of  the  loss,"  and  to  make  good  the  loss  or  damage 
of  assured,  not  exceeding  in  amount  the  sum  insured.  The  loss  or 
damage  is  determined  by  the  contract,  which  provides  that  it  shall  be 
estimated  upon  the  value  of  the  property,  not  upon  the  value  of  in- 
sured's interest,  to  the  extent  of  the  sum  insured. 

The  value  of  the  property  insured  and  the  sura  insured  thereon,  mark 
out  the  limits  of  recovery  in  all  actions  upon  policies.  If  the  policy 
holder  has  an  insurable  interest,  no  inquiry  is  made  as  to  the  value  of 
that  interest.  All  insurable  interests,  of  those  who  may  be  called 
owners  of  property,  are  regarded  alike  by  the  law  which  will  not  per- 
mit an  inquiry  into  values  to  limit  the  obligation  of  the  underwriter. 
The  rule  may  be  different  in  the  case  of  mortgagees  or  lien  holders. 

V.  It  is  difficult  to  see  how  a  sum  less  than  the  value  of  the  prop- 
erty would  compensate  plaintiff  for  the  loss  sustained.  The  house  was 
occupied  as  a  homestead.  Its  destruction  deprived  him  of  the  benefits 
which  were  derived  from  the  possession  of  a  homestead  of  that  value. 
He  ouglit  to  recover  as  compensation  the  sum  that  will  enable  him  to 
regain  the  benefits  he  lost,  to  the  extent  they  were  covered  by  the 
insurance.  Nothing  less  than  an  estimate  based  upon  the  value  of  the 
house  will  do  this. 

VI.  The  court,  against  defendant's  objection,  permitted  plaintiff  to 
prove  that  the  policy  was  issued  at  the  request  of  his  wife.  It  is  now 
insisted  that  this  was  error.  It  is  not  necessary  that  we  should  pass 
upon  the  question.  If  the  evidence  had  been  excluded,  the  finding  of 
the  court  could  not  have  been  different,  and  a  judgment  for  defendant 
upon  the  other  evidence  would  have  been  set  aside  as  in  conflict  with 
tlie  proof.  No  prejudice  was,  therefore,  wrought  defendant  by  the  ad- 
mission of  the  evidence,  should  it  be  held  incompet^t.  The  foregoing 
discussion  disposes  of  all  questions  in  the  case.  Affirmed^ 

1  See  Franklin  M.  &.  F.  Ins.  Co.  v.  Drake,  2  B.  Mon.  47,  50  (1841). 

In  Trade  Ins.  Co.  v.  Barracliff,  4.5  N.  J.  L.  (16  Vroom)  543,  545-546,  552-553 
(1883),  Dixon,  J.,  for  the  Court  of  Errors  and  Appeals,  said  :  — 

"The  fourth  exception  is  to  the  cliarge  of  the  judf^e,  that  the  plaintiff  had  an  in- 
surable interest  in  the  property  and  could  recover  for  the  whole  damage  occasioned  by 
the  fire,  not  exceeding  the  amount  of  tlie  insurance. 

"  The  property  insured  consisted  of  the  buildings  and  stock  upon  a  farm  wliereon 
the  plaintiff  with  his  family  resided.  Tlie  title  of  tlie  property,  both  real  and  personal, 
was  vested  in  his  wife,  but  he  had  the  possession  and  enjoyment  of  it  as  the  head  of 
his  household.  The  plaintiff  and  his  wife  had  had  living  off.spring  of  their  marriage. 
The  insurance  was  effected  by  the  plaintiff  with  the  authority  of  his  wife,  and  the 
agent  of  the  company  who  made  the  contract  knew  that  the  wife  was  the  owner,  at 
least  of  the  realty.  .  .  . 

"  Having  thus,  then,  concluded  that  the  plaintiff  had  an  insurable  interest  at  the 
making  of  the  contract  and  at  the  time  of  the  loss,  the  next  question  is  as  to  the 
amount  of  recovery.  And,  on  this  point,  it  will  not  be  necessary  to  go  so  far  as  some 
of  the  cases  already  cited,  and  to  say  tliat  no  inquiry  into  the  interest  of  tlie  assured 
will  be  permitted ;  but  I  think  this  principle  may  lie  justly  lai<l  down  that  the  amount 
to  Ite  recovered  will  depend,  not  on  the  loss  happening  to  the  individual  interest  of  the 
a.«sured,  but  on  the  damage  accruing  to  whatever  interests  are  covered  by  the  policy, 
SO  far  as  the  assured  represents  those  interests,  whether  as  his  own  or  by  the  precedent 


SECT.  II.]  MEERETT   V.    FARMERS*   INS.    CO.  919 

authority  or  subsequent  ratification  of  others.  On  this  notion  rest  all  the  cases  en- 
forcing insurance  effected  by  consignees,  factors,  and  other  bailees  and  agents,  to  the 
full  amount  of  the  loss.  It  supports,  too,  the  judgments  in  most  of  the  cases  already 
cited.  .  .  . 

"  In  the  case  before  us  there  is  no  doubt  that  the  plaintiff  represented  his  wife's  in- 
terest as  well  as  liis  own,  and  tliat  he  intended  to  effect  this  insurance  on  behalf  of 
both,  and  that  such  intention  was  known  to  the  underwritei-s.  This  fact  of  represen- 
tation is  riot,  indeed,  expressly  stated  in  the  policy,  but  it  is  no  part  of  the  law  either 
of  contracts  or  of  evidence  that  the  principal  shall  be  disclosed  on  the  face  of  the 
writing.  .  .  . 

"  The  policy  now  under  consideration  clearly  indicates  a  design  to  have  the  insur- 
ance cover  the  entire  ownership.  This  would  be  inferred,  at  least  for  the  purpose  of 
supporting  the  contract,  from  the  fact  that  no  particular  interest  is  mentioned  as  the 
subject-matter  of  the  insurance,  but  it  more  expressly  appears  in  the  clause  which  pro- 
vides for  estimating  the  amount  of  loss  or  damage,  according  to  the  actual  value  of  the 
insured  property  at  the  time  of  the  fire,  in  that  whicli  requires  the  proof  of  loss  to  set 
forth  the  value  of  the  property  insured  and  the  interest  of  the  assured  tlierein,  and  in 
that  which  gives  to  the  company  an  option  of  replacing  the  property  burned  with 
other  of  the  same  kind  and  goodness.  These  expressions  show  that  the  property 
insured  was  not  necessarily  the  interest  of  the  assured  alone.  Waters  v.  Monarch 
F.  &  L.  A.ssur.  Co.,  5  E.  &.  B.  870;  Merrett  v.  Farmers'  Ins.  Co.,  42  Iowa,  II." 

In  Welsh  v.  London  Assur.  Corp.,  1.51  Pa.  607,  616-618  (1892),  Mitchell,  J.,  for 
the  court,  said  :  — 

"  Tlie  substantial  defence  was  upon  the  admitted  fact  tliat  the  insurance  was  on  the 
full  value  of  the  fee  in  the  land,  wiiile  the  plaintiff's  interest  was  only  a  life  estate. 
Unexplained  this  was  a  solid  defence  on  the  merits,  and  the  burden  of  explanation 
was  on  the  plaintiff.  It  was  testified  by  Xeeley  that  he  wrote  the  application  for  in- 
surance for  the  plaintiff  at  her  request,  and  that  her  interest  in  the  house  was  correctly 
stated  therein  as  '  a  life  lease.'  This  application  was  sent  or  given  by  Neeley  to  Bar- 
bour, who  by  his  own  testimony  had  authority  to  write  up  the  policj'  by  inserting  the 
description  of  the  insured  interest  in  the  land,  and  did  so  in  this  case.  .  .  .  Upon  the 
evidence,  therefore,  it  was  plain  that  tiie  defendant  had  issued  the  policy  with  knowl- 
edge of  the  actual  condition  of  the  title,  and  the  mistake  in  the  description  was  that  of 
its  own  agent  which  it  could  not  setup  as  a  defence.  Burson  r.  Fire  Assn.,  136  Pa. 
267  ;  Columbia  Co.  v.  Cooper,  50  Pa.  331 ;  Ins.  Co.  v.  Webster,  59  Pa.  227  ;  Meadow- 
craft  V.  Ins,  Co.,  61  Pa.  91  ;  Eilenberger  v.  Ins.  Co.,  89  Pa.  464.  .  .  . 

"  The  question  of  the  measure  of  damages  is  not  free  from  difficulty,  owing  to  the 
meagreness  of  its  presentation  by  both  parties.  Undoubtedly  the  general  rule  that 
the  insured  cannot  recover  more  than  his  actual  loss,  or  the  value  of  his  interest, 
would,  without  more,  limit  the  recovery  of  a  life  tenant  as  of  a  lessee,  to  the  value  of 
his  unexpired  term.  See  Wood  on  Fire  Ins.  481.  But  it  is  equally  true  that  a  carrier, 
or  custodian,  or  agent  may  insure  in  his  own  name,  and  recover  the  entire  loss,  stand- 
ing as  a  trustee  for  all  the  amount  recovered  in  excess  of  his  interest.  Wood  on  Fire 
Ins.  617,  632,  1121,  and  cases  cited.  ...  In  the  present  case  Neeley  testified  that  there 
was  some  talk  with  plaintiff  as  to  the  name  in  which  the  insurance  should  be  taken, 
she  saying  that  some  one  thought  it  had  better  be  in  the  name  of  the  executor  or  ad- 
ministrator, but  she  thought  as  she  had  control  of  it  it  had  better  be  in  her  name. 
This,  in  connection  with  the  fact  that  the  full  premium  was  paid  and  the  policy  issued 
for  the  full  value  of  the  fee,  ma}'  fairly  be  taken  to  indicate  the  real  intent  of  tlie  par- 
ties to  insure  the  whole  for  the  benefit  not  only  of  the  plaintiff  as  life  tenant,  but  also 
of  the  remaindermen.  The  company  is  in  no  position  to  contest  this  intent.  .  .  .  On 
the  other  hand,  the  plaintiff,  by  suing  for  and  recovering  on  this  evidence  the  full 
value  of  the  fee,  has  put  herself  in  the  position  of  trustee  for  the  remaindermen  as  to 
the  excess  of  the  judgment  over  the  value  of  her  life  interest." 

In  Harrison  v.  Pepper,  166  Mass.  288  (1896),  a  bill  in  equity  was  filed  to  compel 
the  defendant  to  place  the  proceeds  of  insurance,  on  premises  of  which  she  was  life 
tenant,  iu  trust  for  the  plaintiff,  as  remainderman,  until  the  decease  of  the  defendant 


920  INSURANCE   COMPANY   V.    STINSON.  [CHAP.  VIIL 


INSURANCE    COMPANY  v.    STINSON. 
Supreme  Coukt  of  the  United  States,   1880.     103  U.  S.  25. 

Error  to  the  Circuit  Court  of  tlie  United  States  for  the  District  of 
Massachusetts. 

The  facts  are  stated  in  the  opinion  of  the  court. 

Mr.  Charles  T.  Russell  and  Mr.  Charles  T.  Russell,  Jr.,  for  the 
plaintiff  In  error. 

Mr.  Robert  D.  Smith,  contra. 

Mr.  Justice  Bradley  delivered  the  opinion  of  the  court. 

This  was  an  action  on  a  policy  of  insurance  against  loss  or  damage 
by  fire.     Stinson,  the  plaintiff  below,  had  a  contract  to  build  a  hotel  to 

with  income  payable  to  the  defendant  for  life.     In  holding  the  bill  demurrable  for 
want  of  equity,  Morton,  J.,  for  the  court,  .said  :  — 

"  If  the  amount  received  by  the  defendant  did  not  exceed  the  value  of  her  interest, 
then  it  is  clear  that  the  plaintiff  has  no  right  in  equity  to  any  portion  of  it.  Reiten- 
bach  V.  .Johnson,  129  Mass.  316  ;  Martineau  v.  Kitching,  L.  R.  7  Q.  B.  436  ;  Stillwell 
r.  Staples,  19  N.  Y.  401. 

"  But  if  we  assume  that  the  sum  paid  is  equal  to  the  total  value  of  the  dwelling- 
house,  and  exceeds  the  value  of  the  defendant's  interest,  and  tliat  the  bill  fairly  alleges 
this,  still  we  do  not  think  that  the  plaintiff  is  entitled  to  recover.  .  .  . 

"  In  the  absence  of  anything  that  requires  it  in  the  instrument  creating  the  estate,  or 
of  any  agreement  to  that  effect  on  the  part  of  the  life  tenant,  we  think  that  the  life 
tenant  is  not  bound  to  keep  the  premises  insured  for  the  benefit  of  the  remainderman. 
Each  can  insure  his  own  interest,  but,  in  the  absence  of  any  stipulation  or  agreement, 
neither  has  any  claim  upon  the  proceeds  of  the  other's  policy,  any  more  than  in  the 
case  of  mortgagor  and  mortgagee,  or  lessor  and  lessee,  or  vendor  and  vendee.  Suffolk 
Ins.  Co.  y.  Boyden,  9  Allen,  123;  International  Trust  Co.  v.  Boardman,  149  Mass. 
158  ;  Burlingame  v.  Goodspeed,  153  Mass.  24  ;  Warwicker  v.  Bretnall,  23  Ch.  D.  188  ; 
Leeds  v.  Cheetham,  1  Sim.  146  ;  Rayner  v.  Preston,  18  Ch.  D.  1 ;  Kearney  v.  Kear- 
ney, 2  C.  E.  Green,  59,  71.  The  contract  of  insurance  is  a  personal  contract,  and 
inures  to  the  benefit  of  the  party  with  whom  it  is  made,  and  by  whom  the  premiums 
are  paid.  It  is  a  contract  of  indemnity  against  loss.  The  sum  paid  '  is  in  no  proper 
or  just  sense  the  proceeds  of  the  property.'  King  v.  State  Ins.  Co.,  7  Cush.  1  ;  Wilson 
V.  Hill,  3  Met.  66;  Suffolk  Ins.  Co.  v.  Boyden,  9  Allen,  123;  Lerow  i'.  Wilmarth, 
9  Allen,  382,  385;  Columbia  Ins.  Co.  v.  Lawrence,  10  Pet.  507,  512. 

"It  is  not  averred,  and  does  not  appear,  that  the  defendant  intended  to  make  a 
present  of  the  proceeds  of  the  policy  to  the  plaintiff,  or  was  insuring  for  her  benefit. 
Whether  the  amount  of  indemnity  received  by  the  defendant  for  her  loss  was  more  or 
less  than  the  value  of  her  interest  cannot  affect  the  plaintiff.  Nor  can  tlie  defendant 
be  converted  into  a  trustee  for  the  plaintiff  by  the  mere  fact  that  the  amount  which 
she  received  was  equal  to  the  full  value  of  the  house.  It  was  paid  to  and  received  by 
her  as  indemnity  for  the  loss  which  she  had  sustained,  and,  as  already  observed,  does 
not  stand  in  the  place  of  the  property  insured.  .  .  . 

"  The  plaintiff  argues  that  sound  public  policy  requires  that  money  received  by  a 
life  tenant  on  a  total  lo.ss  by  fire  should  be  used  in  rebuilding,  or  should  go  to  the 
remainderman,  reserving  the  interest  to  the  life  tenant  for  life.  This  argument  pro- 
ceeds on  the  a,ssumption  that  the  proceeds  of  the  insurance  take  the  place  of  the  prop- 
erty insured,,-^ a  view  whicli,  as  we  have  seen,  is  contrary  to  our  own  and  other 
decisions." 

For  the  view  opposed  to  Harrison  t".  Pepper,  supra,  see  Green  r.  Green,  50  S.  Car. 
514,  532-536  (1897). —  Ed. 


SECT.  II.]  INSURANCE   COMPANY   V.    STINSON.  921 

be  called  the  "Webster  House,  at  Marshfield,  Plymouth  Count}', 
Massachusetts,  for  tlie  sum  of  $25,000,  and  had  nearly  completed  it; 
but,  failing  to  get  his  payments  from  tlie  owner,  he  stopped  work  and 
took  the  necessary-  steps  for  securing  a  mechanic's  lien  on  the  building. 
For  this  purpose  he  filed  the  required  statement  with  the  town  clerk, 
and  commenced  an  action  to  enforce  his  lien  within  the  period  prescribed 
by  law.  Whilst  that  action  was  pending,  in  July,  1875,  lie  procured 
the  policy  in  question  from  the  plaintiffs  in  error,  the  defendants  below, 
insuring  him  for  three  months  against  loss  or  damage  by  fire  to  the 
amount  of  $5,000  on  the  building,  —  the  polic}-  stating  his  interest  to 
be  that  of  contractor  and  builder.  The  loss  occurred  daring  the  con- 
tinuance of  the  policy,  and  due  notice  was  given.  After  the  fire  the 
plaintiff  did  not  further  prosecute  his  action  to  enforce  the  lien  ;  but 
commenced  the  present  action  for  the  amount  of  his  insurance.  When 
the  building  contract  was  entered  into,  and  until  the  loss  occurred,  the 
propert}'  on  which  the  building  was  erected  was  subject  to  a  mortgage 
for  a  debt  of  $17,000  being  the  purchase-money  which  the  owner  had 
agreed  to  pay  to  the  former  owner ;  and  which  is  conceded  to  have 
been  a  lien  on  the  whole  property'  prior  to  that  of  the  plaintiff.  Two 
defences  were  made  by  the  insurance  companj*  to  the  action :  first,  the 
failure  of  the  plaintiff  to  prosecute  his  suit  for  enforcing  his  lien ; 
secondly,  want  of  insurable  interest,  from  the  alleged  fact  that  the 
property,  at  the  time  of  the  loss,  was  not  worth  more  than  the  amount 
of  the  prior  mortgage.  The  court  overruled  these  defences,  and 
charged  tlie  jury  substantially  as  follows,  namely :  that  if  the  plaintiff 
had  a  valid  builder's  lien  when  the  polic}-  was  eflected,  which  could  have 
been  enforced  by  the  decree  of  the  appropriate  court  against  the  equity 
of  redemption  of  the  propertv,  and  if  it  was  a  valid  and  subsisting  lien 
at  the  time  of  the  loss,  it  was  immaterial  whether  he  did  or  did  not 
subsequently  perform  those  acts,  the  non-performance  of  which  as  con- 
ditions subsequent  might  have  dissolved  the  lien. 

The  court  further  instructed  the  jury  in  substance  that  if  the  plaintiff 
had  such  builder's  lien  when  the  policy  was  effected,  which  could  have 
been  enforced  by  the  decree  of  the  appropriate  court,  and  by  virtue  of 
which  he  could  have  recovered  the  equity  of  redemption  on  that 
propert}',  then  he  was  entitled  to  recover,  without  regard  to  the  ques- 
tion what  his  equity  of  redemption  might  or  might  not  have  realized 
at  an  auction  sale ;  that  if  a  party  has  a  valid  and  subsisting  second 
security  for  a  given  amount,  and  he  enters  into  a  contract  of  indemnity 
against  the  destruction  of  that  security,  and  a  loss  b}'  fire  occurs,  both 
parties  having  full  knowledge  of  the  state  of  the  property  and  the  title 
when  the  contract  is  entered  into,  such  insurance  would ^  cover  that 
second  security,  although  by  the  subsequent  course  of  events  the  older 
and  prior  security  might  have  swept  away  the  value  of  the  second  ;  and 
that  if  the  jury  found  in  this  case  that  tliis  plaintiff  had  a  valid  claim 
for  a  given  amount  subsisting  at  the  time  of  the  loss,  and  which  he  had 
done  everything  that  was  required  of  him  to  enforce  up  to  the  time  of 


922 


INSURANCE   COMPANY   V.    STINSON.  [CHAP.  YIII. 


the  loss,  and  that  it  was  such  a  claim,  for  instance,  as  he  could  have 
recovered  a  judgment  for  $0,000  or  $6,000  or  $8,000,  and  a  judg- 
ment against  that  equity  of  redemption  on  that  property,  tliat  was,  for 
the  purposes  of  this  trial,  an  insurable  interest,  and  an  interest 
which  he  liad  on  that  property,  whetlier  by  any  course  of  events  tliat 
property  might  have  been  by  subsequent  events  more  or  less  affected  ; 
and  for  the  purposes  of  tliis  trial  the  court  instructed  the  jury  to  so 
consider  it. 

To  tliis  charge,  and  to  the  refusal  to  give  instructions  to  the  contrar}', 
the  defendants  took  a  bill  of  exceptions. 

We  think  tliat  the  instructions  were  correct.  As  to  the  first  point, 
based  on  the  abandonment  by  the  plaintiff,  after  the  destruction  of  the 
building,  of  tlie  proceedings  to  enforce  his  lien,  it  is  apparent  from  tiie 
evidence  adduced  by  the  defendants  themselves  that  it  could  not  have 
injured  them.  But,  aside  from  tliis  consideration,  if  the  plaintiff  had 
an  insurable  interest  at  the  time  of  issuing  the  policy  and  at  the  time 
of  the  loss,  equal  to  the  amount  insured,  he  had  a  complete  and  abso- 
lute cause  of  action  against  the  defendants;  and  it  was  no  concern 
of  theirs  whether  he  farther  prosecuted  his  lien  or  not  unless  they 
desired  to  be  subrogated  to  his  rights,  and  gave  him  notice  to  that 
effect.  Whether,  if  they  had  done  this,  and  had  offered  to  indemnify 
him  against  all  costs  and  expenses,  a  refusal  on  his  part  to  con- 
tinue the  proceedings  would  have  been  a  defence  to  this  action,  it 
is  unnecessary  to  inquire.  No  such  course  was  taken  by  the  defend- 
ants. We  may  remark,  however,  that  where  a  creditor  effects  insur- 
ance on  property  mortgaged  or  pledged  to  him  as  security  for  the 
payment  of  his  debt,  the  insurers  do  not  become  sureties  of  the  debt, 
nor  do  they  acquire  all  the  rights  of  such  sureties.  They  are  insurers 
of  the  particular  property  only,  and  so  long  as  that  property  is  liable 
for  the  debt,  so  long  its  destruction  by  fire  would  be  a  loss  to  the 
creditor  within  the  terms  of  the  policy.  A  surety  of  the  debt  might 
complain  if  the  creditors  should  surrender  to  the  debtor  collateral 
securities  ;  but  an  insurer  of  property  for  the  benefit  of  the  mortgagee 
would  have  no  just  ground  of  complaint.  True,  after  a  loss  has 
occurred  and  the  insurance  has  been  paid,  sufficient  to  discharge  the 
debt,  the  insurers  may  be  entitled  to  be  subrogated  to  the  rights  of 
the  creditor  against  tiie  debtor,  and  to  any  collateral  securities  which 
the  creditor  may  then  hold  and  which  are  primarily  liable  for  the  debt 
before  the  insurers.  But  even  then  we  do  not  think  that  the  creditor 
is  bound  to  take  any  active  steps  to  realize  the  fruits  of  a  collateral,  or 
to  keep  it  from  expiring,  unless  the  insurance  be  first  paid  and  notice 
be  given  to  him  of  a  desire  on  the  part  of  the  insurers  to  be  subrogated 
to  his  rights,  with  a  tender  of  indemnity  against  expenses.  We  are 
aware  that  views  somewhat  differing  from  these  have  been  held  by 
respectable  authority  ;  but  we  think  without  any  sound  reason.  See 
May  on  Insurance,  §  457  ;  Insurance  Company  v.  Woodruff,  2  Dutch. 
(N.  J.)  541.     To  impose  such  restrictions   and  obligations  upon  the 


SECT,  n.]  INSURANCE    COMPANY   V.   STINSON.   *  923 

creditor  would  be  to  add  to  the  contract  of  insurance  conditions 
never  contemplated  l^y  the  parties,  making  of  it  a  mere  shadow  of  se- 
curit3',  and  increasing  the  avenues  of  escape  from  obligation  to  pa}*, 
alread}-  too  numerous  and  oppressive.  "When  a  building  is  insured  in 
the  interest  of  a  mortgagee,  the  insurance  company  does  not  inquire 
what  other  collaterals  he  holds,  and  never  reduces  its  jDremium  on  any 
such  consideyxtion. 

As  to  the  other  question,  relating  to  the  insurable  interest  of  the 
plaintiff,  we  think  that  the  charge  given  was  equally  free  from  excep- 
tion. There  is  no  doubt  that  the  owner  of  the  property-  had  an  insur- 
able interest  to  the  extent  of  the  value  of  the  buildins;  notwithstandins: 
the  existence  of  a  mortgage  on  the  property  of  sufficient  amount  to 
absorb  it.  Leading  authorities  on  the  point  may  be  found  cited  in 
May  on  Insurance,  §§  81,  82.  The  remarks  of  ^Ir.  Chief  Justice 
Marshall,  in  delivering  the  opinion  of  the  court  in  Columbian  Insurance 
Co.  V.  Lawrence,  2  Pet.  25,  are  apposite  and  illustrative.  The  assured 
in  that  case,  though  in  possession,  had  only  a  contract  for  a  purchase 
of  the  property,  subject  to  a  condition  which  had  not  been  complied 
with,  but  of  Avhich  the  vendor  had  taken  no  advantage  at  the  time  of 
effecting  the  insurance,  or  at  the  time  of  the  loss.  The  Chief  Justice 
says:  "That  an  equitable  interest  may  be  insured  is  admitted.  We 
can  perceive  no  reason  which  excludes  an  interest  held  under  an  execu- 
tor}'  contract.  While  the  contract  subsists,  the  person  claiming  under 
it  has  undoubtedly  a  substantial  interest  in  the  propert3-.  If  it  be 
destroyed,  the  loss  in  contemplation  of  law  is  his.  If  the  purchase- 
money  be  paid,  it  is  his  in  fact.  If  he  owes  the  purchase-money  the 
property  is  its  equivalent,  and  is  still  valuable  to  him.  The  embarrass- 
ment of  his  affairs  may  be  such  that  his  debts  may  absorb  all  his 
property  ;  but  this  circumstance  has  never  been  considered  as  proving 
a  want  of  interest  in  it.  The  destruction  of  the  property  is  a  real  loss 
to  the  person  in  possession,  who  claims  title  under  an  executory  con- 
tract, and  the  contingency  that  his  title  may  be  defeated  by  subsequent 
events  does  not  prevent  this  loss." 

The  principle  asserted  in  these  remarks,  as  well  as  the  reason  of  the 
thing,  leads  to  the  conclusion,  that  the  owner  of  an  equit}'  of  redemp- 
tion has  an  insurable  interest  equal  to  the  value  of  the  insurable 
property  embraced  therein,  whether  he  is  personally  liable  for  the 
mortgage  debt  or  not.  His  interest  arises  from  his  ownership,  carrying 
with  it  the  incidental  right  of  redeeming  the  property  from  the  incum- 
brances on  it.  If  he  is  also  personally  liable  for  such  incumbrances,  it 
only  makes  his  interest  more  direct  and  exacting. 

Such  being  the  insurable  interest  of  the  owner  of  the  equity  of  redemp- 
tion, it  follows  that  one  who  has  a  mechanic's  lien  on  the  property  by 
virtue  of  a  contract  with  such  owner,  has  an  equal  insurable  interest, 
limited  only  by  the  value  of  the  property  and  the  amount  of  his  claim. 
In  the  present  case  it  is  admitted  that  the  value  of  the  building  insured 
exceeded  the  amount  of  the  plaintiff's  claim  ;  and  that  the  latter  was 


924  FOLEY   V.   MANUFACTURERS',   ETC.   FIRE    INS.   CO.       [CHAP.  VIII. 

equal  to  the  amount  insured.  The  insurable  interest  of  the  lienholder 
arises  from  the  nature  of  the  lien,  which  is  a  Jus  ad  rem.  All  the 
owner's  rights  in  the  propert}'  are  potentially  his.  They  are  under 
hypothecation  to  him  for  his  security,  and  he  can  reduce  them  to  pos- 
session if  the  debt  be  not  paid.  He  is,  therefore,  directly  interested  in 
the  property  to  the  extent  of  his  demand,  whatever  other  security  he 
may  hold  ;  and  is  entitled  to  insure  to  that  extent ;  and,  if  a  loss 
occurs,  to  recover  the  full  amount  of  his  insurance,  or  so  much  thereof 
as  may  be  necessary  to  satisfy  his  debt. 

We  think  that  there  is  no  error  in  the  record. 

Judgment  affirmed. 


FOLEY  ET  AL.,  Respondents,  v.  MANUFACTURERS  AND 
BUILDERS'    FIRE   INS.  CO.,  Appellants. 

Court  of  Appeals  of  New  York,  1897.     152  N.  Y.  131. 

Appeal  from  a  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  fourth  judicial  department,  entered  November  30,  1894,  which 
affirmed  a  judgment  in  favor  of  plaintiffs  entered  upon  a  verdict. 

This  action  was  brought  by  plaintiffs  upon  a  policy  of  insurance,  to 
recover  damages  alleged  to  have  been  caused  by  fire  to  three  dwelling- 
houses  in  process  of  construction  for  them. 

The  facts,  so  far  as  material,  are  stated  in  the  opinion. 

Frank  lEscock,  for  appellant. 

William  P.  Ooodelle,  for  respondents. 

Andrews,  C.  J.  The  sole  question  in  this  case  is  whether  the 
plaintiffs  had  an  insurable  interest  equal  to  the  full  value  of  the  incom- 
plete buildings  in  course  of  construction  on  their  lot  when  the  fire 
occurred.  It  is  the  contention  on  the  part  of  the  defendant  that,  as 
the  houses  were  being  constructed  under  a  contract  by  which  the  con- 
tractors were  to  furnish  the  materials  and  build  the  houses  (above  the 
foundations),  and  to  complete  them  by  a  time  specified,  which  had  not 
expired  at  the  time  of  the  fire,  for  a  specified  sum  to  be  paid  within  ten 
days  after  tiieir  completion,  the  plaintiffs  had  no  interest  to  protect  in 
the  structures  while  in  their  incomplete  state,  since  their  destruction 
by  fire  would  be  the  loss  of  the  contractors  and  not  of  the  owners, 
whose  obligation  to  build  and  complete  the  houses,  as  the  condition  of 
payment,  would  continue  after  as  before  the  fire.  It  may  be  admitted 
that  the  contractors  would  remain  bound  by  the  contract,  notwithstand- 
ing the  destruction  of  the  buildings  by  fire,  and  that  the  owners  would 
not  be  bound  to  paj'  for  the  work  done  or  materials  supplied  up  to  the 
time  of  the  fire.  Tompkins  v.  Dudley,  25  N.  Y.  272.  The  contention 
of  the  defendant  rests  upon  a  misconception  of  the  insurer's  contract 
and  as  to  the  insurable  interest  of  the  plaintiffs  jn  the  structures.   The 


SECT.  II.]       FOLEY   V.    MANUFACTURERS',    ETC.    FIRE    INS.    CO.  925 

defendant,  b}'  its  contract,  undertook  to  insure  the  plaintiffs  against 
loss  by  fire,  not  exceeding  the  sum  specified  to  the  "  described  prop- 
erty," the  loss  or  damage  to  be  ascertained  "according  to  the  actual 
cash  value  "  of  the  property'  at  the  time  of  the  fire.  The  parties  by 
this  contract  made  the  value- of  the  property  insured,  within  the  limit, 
the  measure  of  the  insurer's  liabilit}'.  It  is  an  undoubted  principle  in 
fire  insurance  that  there  must  be  an  insurable  interest  in  the  insured,  or 
an  insurable  interest  which  he  represents  in  the  subject  of  insurance, 
existing  at  the  time  of  the  happening  of  the  event  insured  against  to 
enable  him  to  maintain  an  action  on  a  fire  policy.  This  flows  from  the 
nature  of  the  contract  of  fire  insurance,  which  is  a  contract  of  indem- 
nity ;  and  where  there  is  no  interest  there  is  no  room  for  indemnit}'. 
The  plaintiffs  had  an  interest  in  the  subject  of  insurance  both  at  the 
inception  of  the  contract  and  at  the  time  of  the  fire.  They  owned  the 
land  upon  which  the  structures  were  being  erected.  They  themselves 
had  constructed  the  foundations  of  the  buildings,  and  in  describing  the 
propert}-  insured  the  foundations  were  specificalh*  named.  They  were 
in  possession  of  the  premises,  and  the  ownership  of  the  fee  of  the  land 
on  which  the  contractors  were  erecting  the  buildings  carried  with  it 
the  ownership  of  the  structures  as  the}-  progressed,  which,  according  to 
the  general  rule  of  law,  became  part  of  the  realty  b}'  annexation.  It 
is  not  claimed,  nor  could  it  upon  the  evidence  be  claimed,  that  there 
was  any  intention  either  on  the  part  of  the  owners  or  the  contractors 
to  sever  the  ownership  of  tiie  structures  from  the  ownership  of  the 
land  while  the  work  was  in  progress  or  that  the  contractors  should  re- 
tain title  to  the  materials  put  into  the  buildings  upon  their  completion. 
The  defendant  is  compelled  to  admit  that  the  loss  sued  for  is  within  the 
exact  terras  of  the  policy.  It  is  conceded  that  the  recovery  does  not 
exceed  the  property*  loss  occasioned  by  the  tire,  and  if  counsel  can  be 
deemed  to  have  denied  that  the  legal  ownership  of  the  structures  was 
in  the  owners  of  the  land  at  the  time  of  the  fire,  the  denial  is  very  in- 
distinct and  certainly  is  not  justified  b}'  the  facts  or  the  law.  The 
defence  comes  to  this  :  That  as  the  plaintiffs,  b}'  their  contract  with 
third  persons,  have  imposed  upon  them  the  risk  and  expense  of  furnish- 
ing complete  structures,  and  have  assumed  no  liability  until  the  struc- 
tures are  completed,  they  had  no  insurable  interest  and  have  sustained 
no  loss.  But  the  contract  relations  between  the  plaintiffs  and  the  con- 
tractors is  a  matter  in  which  the  defendant  has  no  concern.  When  the 
policy  was  issued  it  could  not  be  known  whether  the  contractors  would 
perform  their  contract.  If  they  abandoned  it  the  owners  would  derive 
such  advantage  as  would  accrue  from  the  partial  construction  of  the 
buildings  prior  to  such  abandonment.  It  is  possible  that  if  the  de- 
fendant is  compelled  topaj-  the  polic}'  the  plaintiflfs  ma}-,  if  they  insist 
upon  their  rights  against  the  contractors,  get  double  compensation 
unless  they  should  be  adjudged  to  hold  the  fund  recovered  for  the  con- 
tractors. But,  however  this  may  be.  the  owners  had  an  insurable 
interest  to  the  whole  value  of  the  buildings  on  their  land,  and  the  de- 


926 


FOLEY    V.   MANUFACTUKERS',    ETC.    FIRE    INS.    CO.       [CHAP,  VIII. 


fendants  neither  can  compel  the  plaintiffs  to  put  the  loss  on  the  con- 
tractors, nor  can  they  resort  to  the  terms  of  the  building  contract  to 
diminish  the  liability  for  an  actual  loss  within  the  terms  of  the  policy. 

The  fact  that  improvements  on  land  may  have  cost  the  owner  nothing, 
or  that  if  destroyed  by  fire  he  may  compel  another  person  to  replace 
tliem  without  expense  to  him,  or  that  he  may  recoup  his  loss  by  resort 
to  a  contract  liability  of  a  third  person,  in  no  way  affects  the  liability 
of  an  insurer,  in  the  absence  of  any  exemption  in  the  policy.  See 
Clover  V.  Greenwich  Ins.  Co.,  101  N.  Y.  277  ;  Kernochan  v.  N.  Y. 
Bowery  F.  Ins.  Co.,  17  N.  Y.  428  ;  Riggs  v.  C.  M.  Ins.  Co.,  125  N.  Y. 
7  ;    International  Trust  Co.  v,  Boardman,  149  Mass.  158. 

The  judgment  should  be  affirmed. 

All  concur,  except  Martin  and  Vann,  JJ.,  not  sitting. 

Judgment  affirmed.^ 

1  For  mariue  cases  on  limited  interests,  see  ante,  p.  857,  n.  —  Ed. 


SECT.  III.]  GODSALL   V.    BOLDERO,  927 


SECTION     III. 
Life  Insurance. 

GODSALL  AND   Others  v.  BOLDERO   and   Others. 

King's  Bench,  1807.     9  East,  72. 

This  was  an  tction  of  debt  on  a  policy  of  insurance  made  the  29th 
of  November,  1803,  under  seal  of  the  defendants,  as  three  of  the 
directors  of  the  Pelican  Life  Insurance  Company,  on  behalf  of  the 
company,  which  recited  that  the  plaintiffs,  coachmakers  in  Long-acre, 
being  interested  in  the  life  of  the  Right  Hon.  William  Pitt,  and  desir- 
ous of  making  an  insurance  thereon  for  seven  years,  had  subscribed 
and  delivered  into  tlie  office  of  the  company-  the  usual  declaration  set- 
ting forth  his  health  and  age,  etc.,  and  having  paid  the  premium  of 
£15  15s.  as  a  consideration  for  the  assurance  of  £500  for  one  year 
from  the  28th  of  November,  1803,  it  was  agreed  that  in  ease  Mr.  Pitt 
should  hai)pen  to  die  at  any  time  within  one  year,  etc.,  the  funds  of 
the  company  should  be  liable  to  pay  and  make  good  to  the  plaintiffs, 
their  executors,  etc.,  within  three  months  after  his  demise  should  have 
been  duly  certified  to  the  trustees,  etc.,  the  sum  of  £500.  And  further, 
that  that  policy  might  be  continued  in  force  from  yeav  to  year  until  the 
expiration  of  the  term  of  seven  years,  provided  the  annual  premium 
should  be  duly  paid  on  or  before  the  28th  of  November  in  each  year. 
The  plaintiffs  then  averred  thai  at  the  time  of  the  making  of  the  said 
assurance,  and  from  thence  until  the  death  of  Mr.  Pitt,  they  were  inter- 
ested in  his  life  to  the  amount  of  the  sum  insured  ;  and  that  they  duly 
paid  the  annual  premium  of  £15  156\  before  the  28th  of  November, 
1804,  and  the  further  sum  of  £15  15s.  before  the  28th  of  November, 
1805  ;  and  that  after  tliat  day  and  while  the  assurance  was  in  force, 
and  before  the  exhibiting  the  bill  of  the  plaintiffs ;  viz.,  on  the  23d  of 
February,  1806,  Mr.  Pitt  died ;  that  his  demise  was  afterwards  duly 
certified  to  the  trustees,  etc.  ;  since  when  more  than  three  months  have 
elapsed  before  the  commencement  of  tliis  suit,  etc.  :  but  that  the  £500 
has  not  been  paid  or  made  good  to  the  plaintiffs.  There  were  also 
counts  for  so  much  money  had  and  received  by  the  defendants  to  the 
plaintiffs'  use,  and  upon  an  account  stated.  To  this  the  defendants 
pleaded:  first,  nil  debent ;  secondl}',  that  the  plaintiffs,  at  the  time  of 
making  the  assurance,  and  from  thence  until  the  death  of  Mr.  Pitt, 
were  not  interested  in  his  life  in  manner  and  form  as  they  have  com- 
plained, etc. ;  thirdl}-,  as  to  the  first  count,  that  the  interest  of  the 
plaintiffs  in  the  policy,  and  thereby  intended  to  be  covered,  was  a. cer- 
tain debt  of  £500  at  the  time  of  making  the  policy,  due  from  Mr.  Pitt 
to  the  plaintiffs,  and  no  other ;  and  that  the  said  debt  afterwards,  and 


928  GODSALL   V.   BOLDERO.  [CHAP.  VIII. 

after  the  death  of  Mr.  Pitt,  and  before  the  exhibiting  of  the  plaintiffs' 
bill;  to  wit,  on  the  6th  of  March,  1806,  was  fully  paid  to  the  plaintiffs 
by  the  Earl  of  Chatham  and  the  Lord  Bishop  of  Lincoln,  executors  of 
the  will  of  Mr.  Pitt.  Issues  were  taken  on  the  two  lirst  pleas  ;  and  as 
to  the  last,  the  plaintiffs,  protesting  that  their  interest  in  the  policy 
thereby  intended  to  be  covered  was  not  the  said  debt  mentioned  in  that 
plea  to  be  due  to  them  from  Mr.  Pitt,  and  no  other;  replied,  that  the 
said  debt  was  not  afterwards,  and  after  the  death  of  Mr.  Pitt,  and  be- 
fore the  exhibiting  of  their  bill,  fully  paid  to  them  by  the  Earl  of 
Chatham  and  the  Lord  Bishop  of  Lincoln,  executors  of  Mr.  Pitt,  in 
manner  and  form  as  alleged,  etc.  :  on  which  also  issu(?  was  joined. 

The  defendants  paid  £31  into  court  upon  the  first  count ;  and  on  the 
trial  of  the  cause  before  Lord  Ellenborough,  C.  J.,  at  Guildhall,  it 
was  agreed  that  a  verdict  should  be  entered  on  the  several  issues, 
according  to  the  direction  of  the  court,  on  the  following  case  reserved. 

The  policy  mentioned  in  the  declaration  was  duly  executed,  and  the 
premiums  thereon  were  regularly  paid.  Mr.  Pitt,  mentioned  in  the 
policy,  died  on  the  23d  of  January,  1806,  which  event  was  duly  certified 
in  Februar}-,  1806,  to  the  trustees  of  the  Pelican  Life  Insurance  Com- 
pan}'.  The  defendants,  before  Trinity  Term  last,  were  served  with 
process  issued  in  this  cause  on  the  3d  of  June,  1806.  Mr.  Pitt  was 
indebted  to  the  plaintiffs  at  the  time  of  the  execution  of  the  policy, 
and  from  thence  up  to  and  at  the  time  of  his  death  above  £500.  and 
died  Insolvent^  On  the  6th  of  March7l806,  the  executors  of  Mi\JEitt 
paid  to  the  plaintiffs  out  of  the  money  granted  by  ParlijimentjQiJlie 
payment  oflMr.  Pitt's  debts," £1, 109  Jlg.  6c?.  as  in  full  for  the  debt  due 
to  them  from  Mr.  PlttT    The  case  was  argued  in  the  last  term  by 

Dampier^  for  the  plaintiffs. 

Marryat^  contra. 

Cur.  adv.  vult. 

Lord  Ellenborough,  C.  J.,  now  delivered  the  judgment  of  the 
court. 

This  was  an  action  of  debt  on  a  policy  of  insurance  on  the  life  of  the 
late  Mr.  Pitt,  effected  by  the  plaintiffs,  who  were  creditors  of  Mr.  Pitt 
for  the  sum  of  £500.  The  defendants  were  directors  of  the  Pelican 
Life  Insurance  Compan}-,  with  whom  that  insurance  was  effected.  [His 
lordship,  after  stating  the  pleadings  and  the  case,  proceeded  — ]  This 
assurance,  as  ever}'  other  to  which  the  law  gives  effect  (with  the  excep- 
tions only  which  are  contained  in  the  2d  and  3d  sections  of  the  Stat. 
19  Geo.  II.  c.  27),  is  in  its  nature  a  contract  of  indemnity,  as  distin- 
guished from  a  contract  by  way  of  gaming  or  wagering.  The  interest 
which  tlie  plaintiffs  had  in  the  life  of  Mr.  Pitt  was  that  of  creditors  ;  a 
description  of  interest  which  has  been  held  in  several  late  cases  to  be 
an  insurable  one,  and  not  within  the  prohibition  of  the  Stat.  14  Geo.  III. 
c.  48.  §  1.  That  interest  depended  upon  the  life  of  Mr.  Pitt,  in  respect 
of  the  means,  and  of  the  probability,  of  payment  which  the  continuance 
of  his  life  afforded  to  such  creditors,  and  the  probability  of  loss  which 


SECT.  III.]       BEVIN    V.   CONNECTICUT    MUTUAL    LIFE    INS.    CO. 


929 


resulted  from  his  death.  The  event  against  which  the  inderanit}'  was 
sought  by  this  insurance,  was  substantially  the  expected  consequence 
of  his  death  as  effecting  the  interests  of  these  individuals  assured  in  the 
loss  of  their  debt.  This  action  is,  in  point  of  law,  founded  upon  a  sup- 
posed damnification  of  the  plaintiffs,  occasioned  by  his  death,  existing 
and  continuing  to  exist  at  the  time  of  the  action  brought;  and  being 
so  founded,  it  follows  of  course,  that  if,  before  the  action  was  brought, 
the  damage,  which  was  at  first  supposed  likely  to  result  to  the  creditors 
from  the  death  of  Mr.  Pitt,  were  wholly  obviated  and  prevented  by  the 
payment  of  his  debt  to  them,  the  foundation  of  any  action  on  their 
part,  on  the  ground  of  such  insurance,  fails.  And  it  is  no  objection  to 
this  answer  that  the  fund  out  of  which  their  debt  was  paid  did  not  (as 
was  the  case  in  the  present  instance)  originally  belong  to  the  executors 
as  a  part  of  the  assets  of  the  deceased  ;  for  though  it  were  derived  to 
them  aliunde,  the  debt  of  the  testator  was  equally  satisfied  by  them 
thereout ;  and  the  damnification  of  the  creditors,  in  respect  of  which 
their  action  upon  the  assurance  contract  is  alone  maintainable,  was  fully 
obviated  before  their  action  was  brought.  This  is  agreeably  to  the 
doctrine  of  Lord  Mansfield  in  Hamilton  v.  Mendes,  2  Burr.  1210.  The 
words  of  Lord  Mansfield  are  :  "The  plaintiff's  demand  is  for  an  indem- 
nity :  his  action  then  must  be  founded  upon  the  nature  of  the  damnifi- 
cation as  it  really  is  at  the  time  the  action  is  brought.  It  is  repugnant, 
upon  a  contract  for  indemnity,  to  recover  as  for  a  total  loss  when  the 
event  has  decided  that  the  damnification  in  truth  is  an  average,  or  per- 
haps no  loss  at  all.  .  .  .  Whatever  undoes  the  damnification  in  the 
whole,  or  in  part,  must  operate  upon  the  indemnity  in  the  same  degree. 
It  is  a  contradiction  in  terms  to  bring  an  action  for  indemnity  where, 
upon  the  whole  event,  no  damage  has  been  sustained."  Upon  this 
ground,  therefore,  that  the  plaintiffs  had  in  this  case  no  subsisting  cause 
of  notion  in  point  of  law,  in  respect  of  their  contract,  regarding  it  as  a 
contract  of  indemnity,  at  the  time  of  the  action  brought,  we  are  of 
opinion  that  a  verdict  must  be  entered  for  the  defendants  on  the  first 
and  third  pleas^  notwithstanding  the  finding  in  favor  of  the  plaintiffs  on 
the  second  plea. 


BEVIN  u.   CONNECTICUT  MUTUAL   LIFE  INS.    CO. 

Supreme  Court  of  Connecticut,  1854.     23  Conn.  244.^ 

This  was  an  action  of  assumpsit  upon  a  policy  of  insurance  in  favor 
of  the  plaintiff  on  the  life  of  George  Barstow,  for  $1,000.  The  plain- 
tiff had  paid,  for  four  annual  premiums  and  certain  permits,  S192.80. 
Before  procuring  the  policy,  the  plaintiff  had  paid  to  Barstow  $350  as 
consideration  for  an  agreement  that  Barstow  should  go  to  California, 

1  The  statement  has  been  rewritten,  and  matter  foreign  to  the  amount  of  recovery 
has  been  omitted.  —  Ed. 

69 


930 


BEVIN    V.    CONNECTICUT   MUTUAL   LIFE    INS.    CO.       [CHAP.  VIIL 


engage  in  mining  for  gold,  anrl  divide  equally  with  the  plaintiff  the  pro- 
cecdsi  less  expenses,  until  Barstow  should  return  home,  which  should 
be  at  least  one  year.  After  ttie  issue  of  the  policy,  the  plaintiff  ad- 
vanced to  Barstow  personal  property  to  the  amount  of  $19.  Barstow 
proceeded  to  California,  for  three  years  and  upwards  engaged  in  mining, 
in  accordance  with  the  agreement,  and  then  died. 

There  were  questions  in  the  case  as  to  Barstow's  proceeding  to  Cali- 
fornia by  a  prohibited  route,  and  as  to  waiver. 

The  court  made  a  finding  of  facts  and  reserved,  for  the  advice  of  this 
court,  the  question  what  judgment  ought  to  be  rendered. 

Bidkeley,  for  the  plaintiff. 

W.  B.  Shipman,  for  the  defendants. 

Ellsworth,  J.  Several  questions  of  some  practical  importance  are 
presented  for  our  decision  in  this  case.  We  have  occasion  to  decide 
only  some  of  them,  in  order  to  make  an  end  of  this  case,  and  shall, 
therefore,  allude  to  such  only  with  particularity. 

It  is  said,  first,  that  the  plaintiff  had  no  interest  in  the  life  of  Barstow, 
when  the  policy  was  obtained,  and  if  any,  not  the  $1,000  stated  in  the 
policy.  In  marine  and  fire  insurances  the  questions  and  rules  for 
ascertaining  interest  are,  in  general,  well  settled  and  of  every-day  oc- 
currence. In  them  the  rule  is  that  the  contract  of  insurance  is  one  of 
indemnity  only,  recognizing  policies  being  held  to  be  illegal  and  void. 
The  same  is  true,  we  suppose,  in  insurance  on  lives.  In  England  the 
statutes  of  George  II.  and  George  III.  declare  all  policies  of  insurance 
without  interest  to  i)e  null  and  void,  and  .although  the  phraseology  of 
the  statute  of  George  III.  has  given  rise  to  distinctions  there,  in  this 
country  we  hold  the  English  statutes  to  be  in  affirmance  of  the  principle 
of  the  common  law,  that  policies  of  insurance  are  contracts  of  indem- 
nity only. 

Without  deciding  what  is  an  insurable  interest  in  the  life  of  another, 
in  every  case  —  whether  it  must  be  one  of  a  pecuniary  value,  or  prop- 
erty, which  the  law  recognizes  as  property,  or  may  be  something  less 
or  different,  as  the  interest  in  one's  relative,  or  in  the  life  of  another 
pevson  —  in  this  case  we  have  no  doubt  tliere  was  an  insurable  interest, 
and  one  which  the  parties  could  well  value,  to  the  extent  it  was  valued 
in  the  policy.  The  plaintiff  had  advanced  to  Barstow  the  sum  of  $-300, 
besides  articles  of  personal  property,  to  enable  him  to  go  to  California 
and  tliere  labor,  for  at  least  one  year,  and  to  account  to  tlie  plaintiff 
for  one  half  of  his  gains  in  that  business.  He  was  the  plaintiff's  debtor 
and  partner,  giving  to  the  plaintiff  an  interest  in  the  continuance  of  his 
life,  as  by  that  means,  through  his  skill  and  efforts,  the  plaintiff  might 
expect  not  only  to  get  back  what  he  had  advanced,  but  to  acquire  great 
gains  and  profits  in  the  enterprise.  All  the  books  hold  this  to  be  a 
sufficient  interest  to  sustain  a  policy  of  insurance.  As  to  the  value  of 
this  interest,  we  think  it  must  be  held  to  be  what  the  parties  agreed  to 
consider  it  in  the  policy.  This  was  tlie  sum  asked  for  by  the  plaintiff, 
and  which  the   defendants  agreed  to  pay  in  case  of   death,  and  for 


SECT.  III.]       BEYIN    V.    CONNECTICUT   MUTUAL    LIFE    INS.    CO.  931 

which  they  were  paid  in  the  premiums  given  by  the  insured.  The 
policy  must,  we  thinlc,  be  held  to  be  a  valued  policy.  If  otherwise, 
and  the  question  of  interest  is  open  for  proof  on  the  trial,  to  be  deter- 
mined by  the  estimate  which  jurors  may  put  upon  the  value  of  Barstow's 
life,  under  the  circumstances,  the  policy  may  afford  an  inadequate  and 
precarious  security.  Who  can  tell  what  the  plaintiff  would  have 
gained  if  Barstow  had  lived  and  labored  under  his  contract  in  Cali- 
fornia? The  plaintiff  declared  in  the  policy  that  he  had  an  interest  in 
the  life  of  Barstow  of  $1,000  ;  the  defendants  received  this  declaration 
as  true,  and  made  it  the  basis  of  the  insurance  and  of  their  premium  ; 
now,  without  deciding  that  such  a  declaration  is,  in  all  cases,  conclu- 
sive, as  to  the  interest  or  damage,  we  hold  that  in  cases  like  the 
present,  where  there  is  not  a  definite  and  specific  interest,  and  much  is 
to  depend  uj)on  the  character  and  continuance  of  the  enterprise,  such 
declaration,  if  honestly  made,  is  the  agreed  value  of  interest.  The  de- 
fendants knew  what  was  claimed  to  be  the  interest  of  the  insured  ;  what 
the  damages  were  estimated  to  be  in  case  of  death,  and  what  -amount 
the  plaintiff  wanted  to  secure,  and  the  defendants  agreed  to  this  sum. 
It  would  be  against  good  faith  and  against  the  meaning  of  the  parties 
for  the  defendants  now  to  refuse  to  pay  as  they  agreed.  In  marine 
insurance  policies  on  profits  always  are,  and  must  be  of  necessity, 
valued.     Mumford  r.  Hallet,  1  Johns,  433. 

In  Lord  v.  Dall,  12  Mass.  115,  a  sister  obtained  an  insurance  on  her 
brother's  life,  about  going  to  sea,  on  whose  generosity  and  assistance 
she  was  dependent  for  support.  She  recovered  the'  whole  sum  ;  no 
question  seems  to  have  been  made  as  to  the  amount,  but  only  whether 
it  was  an  interest  which  the  law  would  recognize.  So,  in  every  case 
M-here  a  person,  on  his  own  account,  insures  the  life  of  a  relative,  if  the 
sum  named  in  the  policy  is  not  to  be  the  rule  of  damages,  we  inquire, 
what  is?  The  impossibility  of  satisfactorily  going  into  the  question', 
in  most  cases,  and  especially  where  there  is  nothing  to  guide  the 
inquiry  and  everything  is  uncertain,  would  lead  us  to  hold  tluat  a  policy 
like  this  is  a  valued  policj',  as  most  consistent  with  the  understanding 
of  the  parties  and  the  principles  of  law.  2  Phil.  Ev.  52  ;  Bury  on  Ins° 
24  ;  3  Kent's  Com.  219  ;  Aug.  Life  Ins.  321  ;  12  Mass.  118. ^  ... 

We  advise  judgment  for  the  plaintiff. 

In  this  opinion  the  other  judges  concurred. 

Judgment /or  the  plaintiff'. 
1  Passages  foreign  to  the  amount  of  recovery  have  been  omitted.  —  Ed. 


932  DALBY   V.    INDIA    AND    LONDON    LIFE   ASSUR.    CO.       [CHAP.  VIII. 

DALBY  v.   INDIA   AND   LONDON   LIFE  ASSURANCE  CO. 
ExciiEQCER  Chamber,  1854.     15  C.  B.  365. 

For  a  statement  and  part  of  the  opinion,  see  ante,  p.  108. 

Parke,  B.^  .  .  .  The  question  arises  on  the  tliird  clause.  It  is  as 
follows:  "  And  be  it  further  enacted  that,  in  all  cases  where  the  in- 
sured hath  interest  in  such  Ijfe  or  lives,  event  or  events,  no  greater 
sum  shall  be  recovered  or  received  from  the  insurer  or  insurers  than 
the  amount  or  value  of  the  interest  of  the  assured  in  such  life  or  lives, 
or  other  event  or  events." 

Now,  what  is  the  meaning  of  this  provision  ? 

On  the  part  of  the  plaintiff,  it  is  said,  it  means  onl}'  that  in  all  cases 
in  which  the  party  insuring  has  an  interest  when  he  effects  the  polic}', 
his  right  to  recover  and  receive  is  to  be  limited  to  that  amount ;  other- 
wise, under  color  of  a  small  interest,  a  wagering  polic}'  might  be  made 
to  a  large  amount,  — as  it  might  if  the  first  clause  stood  alone.  The 
right  to  recover,  therefore,  is  limited  to  the  amount  of  the  interest  at  the 
time  of  effecting  the  policy.  Upon  that  value  the  assured  must  have 
the  amount  of  premium  calculated  ;  if  he  states  it  truly,  no  difficulty 
can  occur  ;  he  pays  in  the  annuity  for  life  the  fair  value  of  the  sum  pay- 
able at  death.  If  he  misrepresents,  by  over- rating  the  value  of  the 
interest,  it  is  his  own  fault,  in  paying  more  in  the  way  of  annuity  than 
he  ought ;  and  he  can  recover  only  the  true  value  of  the  interest  in  re- 
spect of  which  he  effected  the  policy  ;  but  that  value  he  can  recover. 
Thus  the  liability  of  the  assurer  becomes  constant  and  uniform,  to  pay 
an  unvarying  sum  on  the  death  of  the  cestui  que  vie,  in  consideration 
of  an  unvarying  and  uniform  premium  paid  by  the  assured.  The  bar- 
gain is  fixed  as  to  the  amount  on  both  sides. 

This  construction  is  effected  by  reading  the  word  "  hath  "  as  referring 
to  the  time  of  effecting  the  policy.  By  the  first  section  the  assured  is 
prohibited  from  effecting  an  insurance  on  a  life  or  on  an  event  wherein 
he  "shall  have"  no  interest,  —  that  is,  at  the  time  of  assuring  ;  and  then 
the  third  section  requires  that  he  shall  cover  only  the  interest  that  he 
"  hath."  If  he  has  an  interest  when  the  policy  is  made  he  is  not  wager- 
ing or  gaming,  and  the  prohibition  of  the  statute  does  not  apply  to  his 
case.  Had  the  third  section  provided  that  no  more  than  the  amount  or 
value  of  the  interest  should  be  insured,  a  question  might  have  been 
raised,  whether,  if  the  insurance  had  been  for  a  larger  amount,  the 
whole  would  not  have  been  void  ;  but  the  prohibition  to  recover  or  re- 
ceive more  than  that  amount  obviates  any  difficult}'  on  that  head. 

On  the  other  hand,  the  defendants  contend  that  the  meaning  of  this 
clause  is,  that  the  assured  shall  recover  no  more  than  the  value  of  the 

^  The  immediately  preceding  parts  of  the  opinion  have  been  reprinted  ante,  pp.  109- 
111.  — Ed. 


SECT.  III.]       DALBY    V.    IXDIA   AND   LONDON    LIFE   ASSL'R.    CO.  933 

interest  which  he  has  at  the  time  of  the  recovery,  or  receive  more  than 
its  value  at  the  time  of  the  receipt. 

The  words  must  be  altered  materially  to  limit  the  sum  to  be  recov- 
ered to  the  value  at  the  time  of  the  death,  or  (if  payable  at  a  time  after 
death)  when  the  cause  of  action  accrues. 

But  there  is  the  most  serious  objection  to  any  of  these  constructions. 
It  is,  that  the  written  contract,  which,  for  the  reasons  given  before,  is 
not  a  wagering  contract,  but  a  valid  one,  permitted  by  the  statute,  and 
very  clear  in  its  language,  is  by  this  mode  of  construction  completely 
altered  in  its  terms  and  effect.  It  is  no  longer  a  contract  to  pay  a  cer- 
tain sum  as  the  value  of  a  then-existing  interest,  in  the  event  of  death, 
in  consideration  of  a  fixed  annuity  calculated  with  reference  to  that 
sum  ;  but  a  contract  to  pay,  contrary  to  its  express  words,  a  varying 
sum,  according  to  the  alteration  of  the  value  of  that  interest  at  the 
time  of  the  death,  or  the  accrual  of  the  cause  of  action,  or  the  time  of 
the  verdict,  or  execution ;  and  yet  the  price,  or  the  premium  to  be  paid, 
is  fixed,  calculated  on  the  original  fixed  value,  and  is  unvarying  ;  so 
that  the  assured  is  obliged  to  pay  a  certain  premium  every  year,  calcu- 
lated on  the  value  of  his  interest  at  the  time  of  the  policy,  in  order  to 
have  a  right  to  recover  an  uncertain  sum,  viz.,  that  which  happens  to 
be  the  value  of  the  interest  at  the  time  of  the  death,  or  afterwards,  or 
at  the  time  of  the  verdict.  He  has  not,  therefore,  a  sum  certain,  which 
be  stipulated  for  and  bought  with  a  certain  annuity  ;  but  it  may  be  a 
much  less  sum,  or  even  none  at  all. 

This  seems  to  us  so  contrary  to  justice  and  fair  dealing  and  common 
honesty  that  this  construction  cannot,  we  think,  be  put  upon  this  sec- 
tion. We  should,  therefore,  have  no  hesitation,  if  the  question  were 
res  integra,  in  putting  the  much  more  reasonable  construction  on  the 
statute,  that  if  there  is  an  interest  at  the  time  of  the  policy,  it  is  not  a 
wagering  policy,  and  that  the  true  value  of  that  interest  may  be  recov- 
ered, in  exact  conformity  with  the  words  of  the  contract  itself. 

The  only  effect  of  the  statute  is  to  make  the  assured  value  his  inter- 
est at  its  true  amount  when  he  makes  the  contract. 

But  it  is  said  that  the  case  of  Godsall  v.  Boldero,  9  East,  72,  has 
concluded  this  question. 

Upon  considering  this  case,  it  is  certain  that  Lord  Ellenborough 
decided  it  upon  the  assumption  that  a  life-policy-  was  in  its  nature  a 
contract  of  indemnit}-,  as  policies  on  marine  risks,  and  against  fire, 
undoubtedly  are,  and  that  the  action  was,  in  point  of  law,  founded  on 
the  supposed  damnification,  occasioned  by  the  death  of  the  debtor,  ex- 
isting at  the  time  of  the  action  brought ;  and  his  Lordship  relied  upon 
the  decision  of  Lord  Mansfield  in  Hamilton  v.  Mendes,  2  Burr.  1270, 
that  the  plaintiflTs  demand  was  for  an  indemnity  onl}*.  Lord  Mansfield 
was  speaking  of  a  policy  against  marine  risks,  which  is  in  its  terms  a 
contract  for  indemnitv  onlv.  But  that  is  not  of  tb^jiature  of  w^hat  is 
termed  an  assurance  for  life  ;  it  really  is  what  it  is  on  the  face  of  it,  — 
a  contract  to  pay  a  certain  sum  in  the  event  of  death.     It  is  valid  at 


931  DALBY    V.    INDIA   AND    LONDON    LIFE    ASSUH.    CO.       [cHAP.  VIIL 

common  law  ;  and  if  it  is  made  by  a  person  having  an  interest  in  the 
duration  of  the  life,  it  .is  not  prohibited  by  the  statute  14  G.  III.  c.  48. 

But,  thougli  we  are  quite  satisfied  that  the  case  of  Godsall  v.  Boldero 
was  founded  on  a  mistaken  analogy  and  wrong,  we  should  hesitate  to 
overrule  it,  though  sitting  in  a  court  of  error,  if  it  had  been  constantly 
approved  and  followed,  and  not  questioned,  though  many  opportunities 
had  been  offered  to  question  it.  It  was  stated  that  it  had  not  been 
disputed  in  practice,  and  had  been  cited  by  several  eminent  judges  as 
established  law.  The  judgment  itself  was  not,  and  could  not  be,  ques- 
tioned in  a  court  of  error ;  for  one  of  the  issues,  Jiil  debet,  was  found 
for  the  defendant. 

Since  that  case  we  know  practically,  and  that  circumstance  is  men- 
tioned by  some  of  the  judges  in  the  cases  hereinafter  referred  to,  that 
the  insurance  offices,  generally  speaking,  have  not  availed  themselves 
of  the  decision,  as  they  found  it  very  injurious  to  their  interest  to  do 
so.  They  have  therefoi-e,  generally  speaking,  paid  the  amount  of  their 
life-insurances,  so  that  the  number  of  cases  in  which  it  could  be  ques- 
tioned is  probably  very  small  indeed.  And  it  may  truly  be  said  that, 
instead  of  the  decision  in  Godsall  v.  Boldero  being  uniformly  acqui- 
esced in,  and  acted  upon,  it  has  been  uniformly  disregarded. 

Then  as  to  the  cases.  There  is  no  case  at  law,  except  that  of  Bar- 
ber V.  Morris,  1  M.  &  Rob.  62,  in  which  the  case  of  Godsall  v.  Boldero 
was  incidentally  noticed  as  proving  it  to  be  necessary  that  the  interest 
should  continue  till  the  death  of  the  cestui  que  vie.  Is  was  proved  in 
that  case  to  be  the  practice  of  the  particular  office  in  which  that  assur- 
ance was  made,  to  pay  the  sums  assured,  without  inquiry  as  to  the  ex- 
istence of  an  insurable  interest ;  and  on  that  account  it  was  held  that 
the  policy,  though  in  that  case  the  interest  had  ceased,  was  a  valuable 
policy,  and  the  plaintiff  could  not  recover,  on  the  ground  that  the  de- 
fendant, the  vendor  of  it,  was  guilty  of  fraudulent  concealment  in  not 
disclosing  that  the  interest  had  ceased.  This  was  the  point  of  the  case  ; 
and  though  there  was  a  dictum  of  Lord  Tenterden  that  the  paymentof 
the  sum  insured  couKl  not  be  enforced,  it  was  not  at  all  necessary  to 
the  decision  of  the  case. 

The  other  cases  cited  on  the  argument  in  this  case  were  cases  in 
equity,  where  the  propriety  of  the  decision  of  Godsall  v.  Boldero  did 
not  come  in  question. 

The  questions  arose  as  to  the  right  of  the  creditor  and  debtor,  inter 
se,  where  the  otfices  have  paid  the  value  of  a  policy,  in  Humphrey  v. 
Arabin,  2  Lloyd  &  G.  318,  Henson  v.  Blackwell,  4  Hare,  434,  cor.  Sir 
J.  Wigram,  V.  C,  Phillips  v.  Eastwood,  1  Lloyd  &  G.  (Cas.  temp.  Sug- 
den)  281,  where  the  point  decided  was  that  a  life  policy,  as  a  security 
for  a  debt,  passed  under  a  will  bequeathing  debts,  the  Lord  Chancellor 
stating  that  the  offices  found  it  not  for  their  benefit  to  act  on  the  rigid 
rule  of- Godsall  v.  Boldero.  In  these  cases  the  different  judges  con- 
cerned in  them  do  not  dispute,  —  some,  indeed,  appear  to  approve  of, 
—  the  case  of  Godsall  v.  Boldero ;  but  it  was  not  material  in  any  to 


SECT.  III.]       DALBY   V.   INDIA   AND    LONDON    LIFE    AS.SUR.    CO.  935 

controvert  it;  and  the  questions  to  be  decided  were  quite  independent 
of  the  autliority  of  tbat  case. 

We  do  not  think  we  ought  to  feel  ourselves  bound,  sitting  in  a  court 
of  error,  by  the  authority  of  this  case,  which  itself  could  not  be  ques- 
tioned by  writ  of  error ;  and  as  so  few,  if  any,  subsequent  cases  have 
arisen  in  which  the  soundness  of  the  principle  there  relied  upon  could 
be  made  the  sul)ject  of  judicial  inquiry,  and,  as  in  practice,  it  may  be 
said  that  it  has  been  constantly  disregarded. 

Judfjme)it  reo-ersed,  and  venire  de  novo} 

1  In  Law  V.  London  Indisputable  L.  Policy  Co.,  1  K  &  J.  223  (1855),  s.  c.  3  Eq.  338, 
the  plaintiff  was  entitled  by  purchase  from  his  son  to  a  legacy  of  £3,000,  which  liad 
been  bequeathed  to  the  son  at  the  age  of  thirty  and  was  contingent  upon  his  attaining 
that  age  ;  and  when  the  son  lacked  twenty  months  of  thirty  years  tlie  plaintiff  pro- 
cured insurance  for  £2,999  on  his  son's  life  for  two  years.  The  plaintiff  paid  two 
annual  premiums  of  .£39  each.  The  son  died  after  attaining  the  age  of  thirty  years, 
but  "before  the  expiration  of  the  policy.  The  plaintiff  received  the  legacy  in  full,  and 
it  was  held  that  he  was  entitled  to  recover  £2,999  from  the  insurance  company. 
Wood,  V.  C,  said :  "  Policies  of  insurance  against  fire  or  marine  risk  are  contracts  to 
recoup  the  loss  which  parties  may  sustain  from  particular  causes.  When  such  loss  is 
made  good  aliunde,  the  companies  are  not  liable  for  a  loss  which  has  not  occurred  ; 
but  in  a  life  policy  there  is  no  such  provision.  The  policy  never  refers  to  the  reason 
for  effecting  it.  It  is  simply  a  contract  that,  in  consideration  of  a  certain  annual 
payment,  the  company  will  pay  at  a  future  time  a  fi.xed  sum,  calculated  Ijy  them  witii 
reference  to  the  value  of  tlie  premiums  which  are  to  be  paid,  in  order  to  purchase 
the  postponed  payment.  Wliatever  event  m.-ry  happen  meanwhile  is  a  matter  of  in- 
difference to  the  company.  They  do  not  found  their  calculations  upon  that,  but 
simply  upon  the  probabilities  of  human  life,  and  they  get  paid  tiie  full  value  of  that 
calculation.  On  what  principle  can  it  be  said  that,  if  some  one  else  satisfies  the  risk, 
on  account  of  which  the  policy  may  liave  been  effected,  the  company  should  be  released 
from  their  contract  ^  The  company  would  be  in  the  same  position  wjiether  the  object 
of  the  insured  were  accomplished  or  not ;  whether  he  were  in  a  better  or  worse  posi- 
tion, tliat  could  have  no  effect  upon  the  contract  with  the  company,  which  was  simply 
calculated  upon  the  value  of  the  life  which  they  had  to  insure." 

In  Connecticut  Mut.  L.  Ins.  Co.  v.  Schaefer,  94  V.  S.  457  (1876),  .«.  c.  in  part,  ante, 
p.  110,  n  ,  husband  and  wife  procured  a  policy  on  their  joint  lives,  payable  to  the  sur- 
vivor. The  parties  were  divorced,  and  alimony  was  decreed  and  paid  to  the  wife.  Each 
party  married  again.  After  tlie  death  of  one  of  the  parties,  the  other,  who  had  paid 
the  premium  that  became  due  after  the  divorce,  brought  action  upon  the  policy,  and 
recovered.     Bradley,  J.,  for  tlie  court,  said  :  — 

"  The  policy  in  question  might,  in  our  opinion  be  sustained  as  a  joint  insurance,  with- 
out reference  to  any  other  interest,  or  to  the  question  whether  the  ces.sation  of  interest 
avoids  a  policy  good  at  its  inception.  We  do  not  hesitate  to  say,  however,  that  a  policy 
taken  out  in  good  faith,  and  valid  at  its  inception,  is  not  avoided  by  the  cessation  of  the 
insured's  interest,  unless  such  be  the  necessary  effect  of  the  provisions  of  the  policy  itself. 
Of  course,  a  colorable  or  merely  temporary  interest  would  present  circumstances  from 
which  want  of  good  faith  and  an  intent  to  evade  the  rule  might  be  inferred.  And  in  cases 
where  the  insurance  is  effected  merely  by  way  of  indemnity,  as  where  a  creditor  insures 
tlie  life  of  his  debtor  for  the  purpose  of  securing  his  debt,  the  amount  of  insurable  in- 
terest is  tiie  amount  of  the  debt. 

"  But  supposing  a  fair  and  proper  insuralile  interest,  of  whatever  kind,  to  exist  at 
the  time  of  taking  out  the  policy,  and  that  it  be  taken  out  in  good  faith,  the  object 
and  purpose  of  the  rule  which  condemns  wager  policies  is  suflBciently  attained ;  and 
there  is  then  no  good  reason  why  the  contract  should  not  be  carried  out  according  to 
its  terms.  This  is  more  manifest  where  the  consideration  is  liquidated  by  a  single 
premium  paid  in  advance  than  where  it  is  distributed  in  annual  payments  during  the 


936  DALBY   V.   INDIA   AND   LONDON   LIFE   ASSUR.    CO.      [CHAP.  VIIL 

insured  life.  But,  in  any  case,  it  would  be  very  difficult,  after  the  policy  had  con- 
tinued for  any  considerable  time,  for  the  courts,  without  the  aid  of  legislation,  to  at- 
tempt an  adjustment  of  equities  arising  from  a  cessation  of  interest  in  the  insured  life. 
A  right  to  receive  the  equitable  value  of  the  policy  would  probably  come  as  near  to  a 
proper  adjustment  as  any  that  could  be  devised.  But  if  the  parties  themselves  do  not 
provide  for  the  contingency,  the  courts  cannot  do  it  for  them." 

And  see  Trenton  Mut.  L.  &  F.  Ins.  Co.  v.  Johnson,  24  N.  J.  L.  (4  Zab.)  576,  582- 
583,  586-587  (1854),  s.  c.  in  part,  ante,  p.  22,  n. ;  Sides  v.  Knickerbocker  L.  Ins.  Co., 
16  Fed.  R.  650  (C.  C,  W.  D.  Teun.,  1883).  — Ed. 


SECT.  I.]  EANDAL   V.   COCKRAN.  937 


CHAPTER    IX. 
SUBROGATION. 


SECTION   L 

Marine  Insurance. 

RANDAL  V.   COCKRAN. 
Chancery,  1748.     1  Ves.  Sr.  98. 

The  king  having  granted  general  letters  of  reprisal  on  the  Spaniards 
for  the  benefit  of  his  subjects,  in  consideration  of  the  losses  they  sus- 
tained by  unjust  captures,  the  commissioners  would  not  suffer  the  in- 
surers to  make  claim  to  part  of  the  prizes,  but  the  owners  only,^ 
although  they  were  already  satisfied  for  their  loss  by  the  insurers; 
who  thereupon  brought  the  present  bill. 

Lord  Chancellor^  was  of  opinion  that  the  plaintiffs  had  the  plain- 
est equity  that  could  be.  The  person  originally  sustaining  the  loss  was 
the  owner,  but  after  satisfaction  made  to  him,  the  insurer.  No  doubt 
but  from  that  time,  as  to  the  goods  themselves,  if  restored  in  specie,  or 
compensation  made  for  them,  the  assured  stands  as  a  trustee  for  the 
insurer,  in  proportion  for  what  he  paid  ;  although  the  commissioners 
did  right  in  avoiding  being  intangled  in  accounts,  and  in  adjusting  the 
proportion  between  them.  Their  commission  was  limited  in  time  ;  they 
see  who  was  owner ;  nor  was  it  material  to  them  to  whom  he  assigned 
his  interest,  as  it  was  in  efl'ect  after  satisfaction  made.* 

1  Seepos?,  p.  950,  n.  —  Ed. 

2  Lord  Hakdwicke.  —  Ed. 

3  Ace:  Blaauwpot  v.  DaCosta,  1  Eden,  130  (1758),  where  Lord  Keeper  Henley 
said  :  — 

"  I  am  of  opinion  that  upon  the  policy,  and  the  peril  happening,  and  the  payment  of 
the  money  by  the  underwriters,  the  whole  rights  of  the  assured  vested  in  them.  The 
assured  had  this  right  of  restitution  vested  in  them  against  the  Spanish  captors,  which 
was  afterwards  prosecuted  by  the  Crown  by  reprisals.  Satisfaction  having  been  made 
in  consequence  of  that  capture,  I  think  the  plaintiffs  are  entitled  to  that  benefit,  and 
that  it  was  received  by  the  executors  of  Elias  DePaz  [one  of  the  persons  insured]  in 
trust  for  them." 

And  see  Comegys  v.  Vasse,   1  Pet.  193,  213-217  (1828).  — Ed. 


938         ATLANTIC  INS.  CO.  V.    STORROW  AND  BOYD.   [CHAP.  IX. 

ATLANTIC   INS.    CO.   v.   STORROW   and   BOYD. 

Court  of  Chancery  of  New  York,  1835.     5  Puige,  285. 

This  was  an  appeal  from  a  decree  of  the  Vice  Chancellor  of  the  First 
Circuit.  The  facts  of  the  case,  as  the\-  appeared  from  the  bill  and 
answer,  were  as  follows:  In  Februar}-,  1831,  the  complainants  insured 
the  defendant  Storrow  \\^)0\\  a  box_of_ S[)ec|e,  laden  oji jboarcl^the 
"  Charles  Carrol l,"*f rom  JS^ewVork  to  Havre,  for  which  specie  a  bill  of 
luding^in  the  usuaj^ioiinJjad  been  signed  by  tlie  master  of  the  vessel. 
A  da^-  or  two  after  the  underwriting  of  the  policy,  but  after  the  com- 
mencement of  the  risk,  the  specie  was  stolen  from  the  ship  while  she 
lay  at  the  wharf  in  New  York,  in  the  absence  of  the  master  and  ship's 
crew,  whereby  Storrow  claimed  a  total  loss.  On  the  9th  of  March,  1831, 
he  abandoned  to  the  underwriters,  who  l)eing  advised  that  they  were 
not  liable  for  a  loss  accruing  at  the  place  of  lading,  declined  pa}  ing  the 
same.  Storrow  thereupon  commenced  a  suit  upon  the  policy,  in  the 
Superior  Court  of  the  city  of  New  Y''ork,  in  May  term  of  the  same  year. 
In  the  progress  of  the  suit,  and  before  the  trial,  the  complainants 
obtained  an  order  from  the  Superior  Court  against  the  plaintiff  and  his 
assignee,  for  a  discover}'  on  oath,  of  all  receipts,  instruments  of  assign- 
ment and  of  compromise  relating  to  the  si)ecic  insured,  and  to  the  claim 
of  the  plaintiff  in  that  suit.  Under  that  order  the  plaintiff  and  John  I. 
Boyd,  his  assignee,  produced  the  original  bill  of  lading,  and  an  absolute 
assignment  from  Storrow  to  Boyd,  of  the  policy  of  insurance,  and  of 
sums  of  money,  interest,  benefit,  and  advantage  then  due,  or  thereafter 
to  rise.  The  assignment  appeared  to  be  for  the  sole  benefit  of  Boyd, 
and  was  without  date.  Storrow  and  Boyd  also  accompanied  these 
documents  by  their  affldavit,  sworn  on  the  14th  of  July,  1831,  that  these 
were  all  the  papers  relating  to  the  insurance  and  the  transfer  of  the 
plaintiffs  interest  therein.  Shortly  after  this  the  complainants  wrote 
to  Storrow,  that  being  unable,  in  the  suit  conducted  in  his  name,  to  as- 
certain and  establish  the  fact  that  he  had  transferred  his  right  to  the 
bill  of  lading  and  recourse  against  the  shipowners,  they  should,  in  case 
of  a  recovery  against  the  company  in  that  suit,  expect  to  receive,  on  his 
abandonment,  every  necessary  document  to  enable  the  company  to  en- 
force their  remedy  against  the  shipowners  in  his  name  ;  and  should  hold 
him  resi)onsible  therefor,  if  the  company  was  made  liable  for  the  loss. 
To  this  letter  Storrow  answered,  that  upon  l)eing  reimbursed  the  amount 
of  specie  shii)ped  on  board  the  •'  Cliarles  Carroll,"  he  assigned  to  the 
owners  all  claims  against  the  company  ;  in  consequence  of  which  assign- 
ment he  had  no  longer  an}"  interest  in  the  matter,  nor  had  he  any  docu- 
ment wiiich  could  aid  in  the  suit  which  the  company  might  bring  against 
the  shipowners.  On  the  day  after  the  receipt  of  this  answer,  the  com- 
pany again  wrote  to  Storrow:  "  It  is  necessary  that  you  should  fully 
understand  the  situation  in  which   we  stand  as  to  the  specie  by  the 


SECT.  I.]  ATLANTIC    INS.    CO.    V.   STORROW   AND    BOYD.  939 

'Charles  Carroll.'  If  you  have,  either  before  or  after  the  abandon- 
ment, received  from  the  owners  of  the  vessel  the  amount  of  the  subject 
insured,  we  shall  look  to  you,  in  case  of  our  being  subjected  to  pay  a 
loss  on  the  policy  to  you  or  your  assignee,  for  full  reimbursement.  We 
have  not  as  yet  been  able  to  procure  proof  of  the  owners'  haAing  paid 
the  claim  to  you,  and  therefore  are  unal)le  to  protect  ourselves  from  re- 
covery on  that  ground,  although  we  hope  to  do  so  upon  others."  After 
a  recovery  was  had  against  the  company  in  the  suit  prosecuted  in  the 
name  of  Storrow,  the  complainants  wrote  to  him  and  the  attorney  in 
that  suit,  stating  their  readiness  to  pay  the  amount  of  such  recovery, 
provided  the  bill  of  lading  of  the  specie  should  be  assigned  to  them, 
with  suitable  covenants  that  the  remedy  against  the  ship  master  or  ship 
owners  was  not  impaired  ;  and  that  unless  that  should  be  done,  the 
complainants  would  be  compelled  to  seek  relief  in  this  court ;  and  in 
that  case  would  claim  the  costs  to  which  they  should  necessarily  be 
subjected.  Iiij-ej)l\,J;he  attorney  in  the  suit  informed  tlie-camplainnnls 
that  the  bill  of  lading  had  "  long  since  been  delivered  up  by  Storrow  to 
the  master  of  the  '  Charles  Carroll,'  to  be  cancelled."  And  Storrow  also 
referred  the  complainants  to  the  attorney  in  the  suit,  for  an  answer. 
The  complainants  alleged,  in  their  bill,  that  until  the  receipt  of  those 
answers,  they  were  ignorant  that  the  bill  of  lading  had  been  cancelled, 
or  otherwise  discharged,  but  supposed  it  was  still  outstanding,  and 
assigned  to  Boyd.  By  the  answer  of  the  defendants,  it  appeared  that 
the  bill  of  lading  was  in  the  hands  of  Boyd,  tlie  assignee  of  the  policy, 
at  the  commencement  of  the  suit ;  and  that  the  same  was  delivered  up 
to  the  master  of  the  ship  and  cancelled,  after  the  judgment  was  ren- 
dered in  that  suit. 

The  Vice  Chancellor  decided  that  the  jmderwnt£rs_w:fixas_by_tbe  lojs_ 
and  by^the  abandonment,  entitled  to  be  subrogated  to  the  rights  of Jthe 
assured,  if  the}' paid  the  loss.  _And  he  made  a  decree  that  the  com- 
plainants be  allowed  the  amount  which  the  master  or  shipowners  would 
have  been  liable  for,  and  that  the  judgment  should  only  be  enforced  for 
the  residue,  if  anything.  He  also  charged  the  defendants  with  the 
costs  of  the  suit  in  this  court.  From  the  whole  of  this  decree  the  de- 
fendants Boyd  and  Storrow  entered  a  joint  appeal. 

J.  Antho7i,  for  tlie  appellants. 

D.  Lord,  Jr.,  for  the  respondents. 

The  Chancellor.^  ...  It  is  insisted,  however,  on  the  part  of  the 
respondents,  that,  although  the}-  have  succeeded  in  satisfying  the  Supe- 
1  ior  Court  that  this  was  a  loss  for  which  the  underwriters  were  liable  on 
this  policy,  it  was  a  case  in  which  the  underwriters  and  shipowners 
were  equally  liable,  and  that  the  equities  of  both  were  equal  as  to  the 
assured.  Even  if  this  were  so,  it  does  not  follow  that  the  assured  had  a 
right  to  receive  the  amount  of  the  loss  from  either,  and  assign  over  to 
the  one  from  whom  it  was  received  the  right  to  claim  the  full  amount 

1  Hou.  Eecben  H.  Walworth. 

A  passage  on  loss  by  theft  has  been  omitted.  — Ed. 


940 


ATLANTIC   INS.   CO.   V.    STORROW   AND   BOYD.      [CHAP.  IX. 


from  the  other  party.  It  would  rather  present  a  case  of  equitable  con- 
tribution, in  which  each  should  contribute  a  moiety  towards  the  loss,  as 
in  the  case  of  a  double  insurance.  The  insurers,  however,  are  not  liable 
to  contribute  for  a  loss,  for  which  the  master  or  ship  owners  are  also 
liable  to  the  assured.  The  contract  of  insurance  is  a  mere  contract  of 
indemnity  to  the  assured  against  such  losses  as  he  may  actually  sustain 
by  reason  of  any  of  the  perils  assured  against.  And  upon  an  abandon^ 
ment  and  pa^-ment,^i-Lip^nj\^-cco\ery,  as_for  a  total  loss,  the  under-^ 
VriTerTjare  entitlecTto  subrog^tioni^^^ 

aiid  remedies  which  the  assured  has  to  the  property  which  is  not  actir^ 
alTy  destro^-ecl,  including  the  spes  reciq^erandi  Jvom  any  other  source ;_ 
unless  the  underwriters  haTeYelinqmsliecl  tlfat  right  by  a  stipulation  in 
the  policy.  On  this  question,  I  fully  concur  with  the  Vice  Chancellor 
in  the  conclusion  at  which  he  arrived,  and  also  as  to  the  reasons  and 
^eio-ht  of  authority  upon  which  his  decision  was  based.  If  it  had  ap- 
peared upon  the  trial  of  the  suit  at  law  that  the  assured  had  received  a 
compensation  for  his  loss  from  the  shipowners,  or  the  master,  and  that 
the  assignment  was  made  for  their  benefit  merely,  to  enable  them  to  re- 
cover back  the  amount  of  the  insurance  from  the  underwriters  on  the- 
policy,  there  can  be  no  reasonable  doubt  that  it  would  have  been  a 
good  defence  at  law,  at  least  to  the  amount  thus  received.  And  the 
result  would  have  been  the  same,  if  it  had  appeared  that  Boyd,  the  as- 
signee, had  received  such  compensation  after  the  assignment  of  the 
policy  to  him.  The  defence  would  have  been  equally  available,  if  the 
underwriters  could  have  shown  that  Storrow,  or  his  assignee,  had  can- 
celled the  bill  of  lading,  or  otherwise  discharged  his  claim  against  the 
master  and  shipowners. 

The  particular  manner  in  which  the  matter  has  been  managed,  prob- 
ably with  a  view  to  defraud  the  underwriters  of  their  remedy  over 
against  the  shipowners  or  master,  cannot,  in  this  court,  vary  the  rights 
and  equities  of  these  parties.  It  was  stated,  in  the  letter  of  Storrow  to 
the  underwriters,  in  the  latter  part  of  July  previous  to  the  trial,  that 
he  assigned  to  the  ship  owners  all  claims  against  the  company,  upon 
being  reimbursed  by  them  the  amount  of  the  specie  shipped  on  board 
the  "  Charles  Carroll."  But  before  that  time  the  complainants  had 
been  furnished  with  his  affidavit,  and  a  copy  of  the  assignment ;  by 
which  it  appeared  that  he  had  assigned  the  policy  absolutely  to  Boyd, 
and  in  his  own  right.  The  letter  of  the  nominal  plaintiff  could  not, 
therefore,  have  been  used  as  evidence  on  the  trial  to  defeat  the  rights 
acquired  by  the  assignee,  under  the  previous  assignment.  Neither 
could  Storrow  himself  have  been  a  witness  to  prove  the  facts  stated  in 
his  letter ;  as  he  was  the  nominal  plaintiff  in  the  suit.  Even  if  the 
facts  stated  in  that  letter  were  true,  tiierefore,  I  do  not  see  how  the 
complainants  could  have  availed  themselves  of  them,  as  a  defence  on 
the  trial  at  law. 

Whether  Boyd  was  in  fact  a  bona  fide  assignee  of  the  polic}',  or  only 
took  the  assignment  under  a  fraudulent  arrangement  entered  into  be- 


SECT.  I.]       AMAZON    INS.    CO.    V.    STEAMBOAT    IRON    MOUNTAIN.  941 

tween  the  shipowners  and  Storrow,  for  the  purpose  of  depriving  the 
underwriters  of  legal  and  equitable  right  of  subrogation,  does  not  ap- 
pear from  the  pleadings  in  this  suit.  The  complainants  do  not  pretend 
to  know  how  the  fact  reall}-  was  ;  and  the  defendants  are  entirel}'  silent 
on  the  subject.  They  simpl}'  admit  the  writing  of  the  letters  referred 
to  in  the  bill ;  but  without  saying  whether  the  information  contained 
therein  was  true  or  otherwise.  In  the  absence  of  all  proof  on  this  sub- 
ject, I  must  therefore  presume,  from  the  assignment  itself,  notwith- 
standing what  was  stated  in  the  letters,  that  there  was  a  bona  fide 
assignment  to  Boyd,  who  had  a  legal  right  to  recover  upon  the  policy, 
by  being  substituted  in  the  place  of  the  assignor.  But  by  giving  up  the 
bill  of  lading  to  the  master  to  be  cancelled,  after  the  judgment  was 
obtained,  the  complainants  were  deprived  of  their  remedy  over  against 
the  shipowners ;  and  standing  merel}'  in  the  character  of  sureties,  to 
indemnify  the  assured  against  actual  loss,  the  judgment  must,  in  equity, 
be  considered  as  satisfied  pro  tanto.  The  Vice  Chancellor  has  therefore 
very  properly  directed  that  the  amount  which  the  master  and  shipown- 
ers would  have  been  liable  for  upon  the  bill  of  lading,  should  be  de- 
ducted from  the  amount  of  the  judgment,  instead  of  decreeing  a 
perpetual  injunction  against  the  collection  of  the  whole  debt  and 
costs.^  .  .  . 


AMAZON   INS.   CO.   v.    STEAMBOAT    IRON   MOUN- 
TAIN   ET  AL. 

Circuit  Court  of  the  United   States  for  the  Southern  District 
OF  Ohio,  1876.     1  FUppin,  616. 

The  facts  are  fully  stated  in  the  opinion  of  the  court. 

Moidton,  Johnson  &  Levy,  for  libellant. 

Hoadly,  Johnson  &  Colston,  for  respondents. 

Swing,  J.  The  libel  filed  in  this  case  seeks  to  recover  for  the  value 
of  one  hundred  and  twenty-five  barrels  of  flour  alleged  to  have  been 
lost  through  the  negligence  or  wrongful  act  of  respondents,  as  owners  of 
the  steamboat  "  Iron  Mountain  "  and  barge  "  Ironsides  No.  3,"  on  which 
flour  libellant  had  insured  the  owner,  to  whom  it  paid  the  insurance; 
he  having  abandoned  to  it  the  property  upon  the  happening  of  the 
accident  entailing  the  loss.  The  bill  of  lading  contracted  to  carry  the 
flour  from  the  port  of  Mt.  Vernon,  Ind.,  at  which  port  it  was  shipped, 
to  the  port  of  New  Orleans,  La.,  and  the  insurance  by  libellant  was 
upon  the  flour  in  transit  between  these  points,  to  be  transported  by  the 
boat  and  barge  named,  against  the  usual  risks  of  river  navigation, 
excepting,  however,  such  losses  for  which  the  carrier  would  be  liable  to 
the  owner  of  the  insured  property.     The  respondents  —  owners  of  the 

1  A  passage  on  costs  has  been  omitted.  —  Ed. 


942        AMAZON   INS.    CO.    V.    STEAMBOAT    IRON   MOUNTAIN.       [CHAP.  IX. 

boat  and  barge  —  file  exceptions  to  the  libel,  claiming,  first,  that  the 
action  should  have  been  brought  in  the  name  of  the  owner  of  the  flour ; 
and,  second,  that  the  libel  cannot  be  maintained  by  the  insurance  com- 
pan}-  in  its  own  name. 

The  exceptions  cannot  be  sustained.  In  Propeller  Monticcllo  v. 
Mollison,  17  How.  152,  the  Supreme  Court  say:  ''ilis_ti'ue_thatjn_ 
courts  of  common  law  the  injured  party  alone  can  sue  for  a  trespass,  as 
tlrrtlaniaTges^l^  noFTegally  assignable,  and  if  tliore  be  an  equitable 
cTamiant,  he  can^sue  onTy'in  the  nam_e_^of  the  injured  party,  wlicreas  iii_^ 
5(Trairalty,  tlie"  person  equitably  entitled  may  sue  in  his  own  naine." 
In  the  case  of  The  ^Manistee,  5  Diss.  381,  the  libel  was  filed  by  the 
insurance  company  in  its  own  name  in  an  action  similar  to  the  present, 
and  it  seems  to  have  been  conceded  that  it  was  properly  brouglit.  To 
the  same  eflTect,  see  Insurance  Co.  v.  The  C.  D.  Jr.,  1  Woods,  72. 

The  second  exception  to  the  libel  is,  that,  inasmuch  as  the  loss 
happmieTFdunng  air  unlarwfnt~devtation  on  the  part  of  the  carrierTor 
was  caused  by  improper  conduct  of  the  master,  the  insurance  company 
was  not  legally  liable  to  the  insuredlforAli« Joss,  and  the  payment^ by 
it^f  the  insurance  was  but  volimtar^i;.  hence,  subrogation  to  his  rights 
tol^cover  from  the  carrier  did  not  arise,  and  consequently  libellant  has 
no  remedy  over  against  the  owners  of  the  boat  and  barge  for  the  loss. 
The  same  objection  was  made,  and  the  question  expressly  raised,  in 
the  case  of  The  C.  D.  Jr.,  above  cited,  where  Judge  Woods  summarily 
disposed  of  it  in  the  following  brief  sentences:  "  Respondents  further 
claim,  that,  having  shown  by  the  testimony,  as  they  allege,  that  the 
insurance  company  was  not  legally  bound  to  indemnify  the  insured  for 
the  loss  the  latter  sustained  by  the  collision,  therefore  the  libellants 
have  no  cause  of  action  against  the  respondents,  although  they  have 
paid  the  loss.  But  I  am  of  opinion  that  the  authorities  are  adverse  to 
this  claim,  and  adopt  the  conclusion  of  the  district  judge,  and  refer  to 
the  case  of  Monticello  v.  Mollison,  17  How.  152." 

Respondents'  solicitors,  however,  suggest  that  perhaps  the  point  was 
not  fully  considered  by  Judge  Woods ;  but  it  appears  to  me  that  the 
contrary  inference  can  only  be  drawn  from  the  report,  as  the  learned 
judge  states  his  opinjon  as  the  "  result  of  the  authorities,"  which  must 
have  been  cited  pro  and  con  by  the  counsel  for  the  respective  parties. 
Besides,  it  is  evident  that  the  question  had  been  fully  argued  before 
the  district  judge,  who  bad  decided  it  in  the  same  way,  and  the  counsel 
for  the  respondents,  in  the  case  before  me,  have  failed  to  cite  any 
authority  to  sustain  the  opposite  view,  and  I  have  not  been  able  to  find 
any  which  gives  it  support.  In  Monticello  v.  Mollison,  vbi  siqyra,  it 
was  held  that,  while  in  courts  of  Admiralty,  in  contradistinction  to 
those  at  common  law,  "  the  person  equitably  entitled  may  sue  in  his 
own  name,  yet  that  the  same  reasons  why  the  wrong  doer  cannot  be 
nllowerl  to  set  up  as  a  defence  the  equities  between  the  insurer  and  the 
insured,  equally  apply  to  both  courts."  "  The  respondent,"  the  court 
proceed  to  say,  "  is  not  presumed  to  know  or  bound  to  inquire  as  to 


SECT.  I.]       AMAZON    INS.    CO.    V.   STEAMBOAT    lUON    MOUNTAIN,  943 

the  relative  equities  of  parties  claiming  the  damages.  He  is  bound  to 
make  satisfaction  fur  the  injury  he  has  done.  When  he  has  once  made 
it  to  the  injured  party,  h»  cannot  be  made  liable  to  another  suit  at  the 
instance  of  any  merely  equitable  claimant.  If  notified  of  such  a  claim 
before  i)ayment,  he  may  compel  the  claimants  to  interplead  ;  otherwise, 
in  making  reparation  for  a  wrong  done,  he  need  look  no  further  than 
to  the  party  injured."  Again,  the  same  court,  in  Hall  et  al.  v.  Rail- 
road Company,  13  Wall.  367,  pertinently  say:  "It  is  too  well  settled 
by  the  authorities  to  admit  of  question,  that,  as  between  a  common 
carrier  of  goods  and  an  underwriter  upon  them,  the  liability  to  the 
owner  for  their  loss  or  destruction  is  primarily  upon  the  carrier,  while 
the  liability  of  the  insurer  is  only  secondary.  The  contract  of  the 
carrier  may  not  be  first  in  order  of  time,  but  it  is  first  and  principal  in 
ultimate  liability.  In  res|)ect  to  the  ownership  of  the  goods,  and  the 
risk  incident  thereto,  the  owner  and  the  insurei'  are_  considered  as  one 
jjersonj^jiaving  togetjier  the  beneficial  right  to  the  indemnity  due  from 
the  carrier  for  a  breach  of  his  contract,  or  for  non-performance  of 
hTs~legal^  duty.  Standing  thus,  as  the  insurer  does,  practically  in  the 
position  of  a  suret}',  stipulating  that  the  goods  shall  not  be  lost  or 
injured  in  consequence  of  the  peril  insured  against,  whenever  he  has 
indemnified  the  owner  for  the  loss,  he  is  entitled  to  all  the  means  of 
indemnity  which  the  satisfied  owner  held  against  the  party  primarily 
liable.  His  right  rests  upon  familiar  principles  of  equit}'.  It  is  tlie 
doctrine  of  subrogation,  dependent  not  at  all  upon  privity  of  contract, 
but  worked  out  through  the  right  of  the  creditor  or  owner."  In  the 
case  of  The  Manistee,  xihi  supra,  it  was  contended  on  behalf  of  the 
carrier,  "  that  the  insurance  policy  was  void,  because  it  was  issued  in 
disregard  of  the  requirements  of  the  laws  of  the  State."  But  the 
learned  judge  held  that,  "in  his  opinion,  the  carrier  should  not  be 
permitted  to  make  that  defence,"  adding,  "that  the  shipper  might 
have  brought  a  libel  for  the  use  of  the  company  (tlie  underwriter),  and 
if  the  use  were  not  expressed  in  the  record,  the  court  Avould  protect  the 
company  even  after  a  decree  in  favor  of  the  libellant."  The  result 
from  these  principles  and  authorities  seems  plainly  to  be  that  the 
carrier  in  this  class  of  cases  cannot  set  up  an}'  different  defence  against 
the  underwriter  than  he  could  have  against  the  owner  of  the  goods 
lost,  were  the  action  brought  by  the  latter.  Substantialh*  the  action  is 
to  be  considered  and  treated  as  though  prosecuted  by  and  in  the  name 
of  the  insured  owner  or  shipper  for  the  use  of  the  underwriter,  to  be 
defended  on  the  same  grounds,  and  determined  by  the  observance  of 
the  same  rules,  and  the  application  of  the  same  legal  princi[)les.  It 
would  be  an  anomaly  indeed,  if,  in  a  case  where  it  was  admitted,  the 
owner  could  recover  against  the  carrier  for  the  use  of  the  underwriter, 
the  latter  having  paid  the  loss,  and  suing  directly  in  his  own  name  in 
Admiralty,  as  he  may,  thus  standing,  as  we  have  seen,  substantially  in 
the  place  of  the  owner,  could  not  recover.  Such  a  result  would  be 
extremely  inconsistent  and  illogical.     The  carrier  has  all  the  privileges 


944  SIMPSON    &   CO.    V.    THOMSON,   BURRELL    ET   AL.       [CHAP.  IX. 

and  immunities  to  which  he  is  justly  entitled  when  he  is  allowed  to 
interpose  the  same  defences  against  the  underwriter  which  he  could 
against  the  owner,  no  more  nor  less,  however.  No  4orivit3'  of  contract 
existing,  as  has  been  shown,  he  cannot  be  permitted  to  inquire  into  the 
equities  which  may  have  existed  between  the  underwriter  and  the 
owner,  and  thus  divert  the  issue  to  be  tried  from  the  question  of  his 
unlawful  acts  or  negligence  to  that  of  the  liability  or  non-liability  of 
the  underwriter  to  the  owner.  What  he  must  negative,  is  his  liability 
to  the  owner,  not  that  of  the  insurer  to  the  owner.^ 

The  exceptions  will  be  overruled. 


SIMPSON  &  CO.  ET  AL.,  Appellants,  v.  THOMSON,   BURRELL 
ET  AL.,    Respondents. 

House  of  Lords  (Scotch),  1877.     3  App.  Cas.  279.* 

The  steamship  "  Dunluce  Castle"  was  run  down  by  the  steamship 
"  Fitzmaurice,"  owing  to  the  negligence  of  those  in  charge  of  the  latter. 
Both  vessels  belonged  to  Burrell.  The  underwriters  on  the  "  Dunluce 
Castle,"  paid  Burrell  £6,000  as  for  a  total  loss.  Burrell  petitioned  the 
court  under  the  Mercantile  Shipping  Acts,  17  &  18  Vict.  c.  104,  §  514, 
and  25  &  26  Vict.  c.  63,  §  54,  to  limit  to  £3,590,  being  the  value 
of  the  ship  in  fault  at  £8  per  ton,  his  liability,  as  owner  of  the  "Fitz- 
maurice," to  those  who  had  suffered  from  the  collision,  including  Simp- 
son &  Co.,  owners  of  the  cargo  lost  with  the  "  Dunluce  Castle."  In 
the  same  suit,  Thomson  and  the  other  underwriters  on  tlie  "  Dunluce 
Castle  "  claimed  to  rank  with  Simpson  &  Co.  and  the  other  claimants 
upon  the  fund  of  £3,590.  The  First  Division  of  the  Court,  of  Session 
pronounced  an  interlocutor,  allowing  this  claim  of  the  underwriters  ; 
and  the  interlocutor  was  confirmed,  the  court  repelling  the  objection 
of  Simpson  &  Co.,  that  the  underwriters  were  not  entitled  to  rank  pari 
passu  with  them.     4  Session  Cases,  Fourth  Series,  177  and  1133. 

On  appeal  to  the  House  :  — 

Mr.  Watkin  Williams,  Q.  C,  and  Mr.  X  C.  Mathew^  for  the 
appellants. 

Mr.  Benjamin,  Q.  C,  and  Mr.    E.  Clarkson,  for  the  respondents. 

The  Lord  Chancellor,^  ...  I  know  of  no  foundation  for  the  right 
of  underwriters,  except  the  well-known  principle  of  law,  that  where 
one  person  has  agreed  to  indemnify  another,  he  will,  on  making  good 
the  indemnit}',  be  entitled  to  succeed  to  all  the  ways  and  means  by 

1  Ace.  :  Pearse  v.  Quebec  Steamship  Co.,  24  Fed.  R.  285  (D.  C,  S.  D.  N.  Y.,  1885). 
—  Ed. 

'  The  statement  has  been  rewritten,  and  only  a  small  part  of  each  opinion  haa 
been  reprinted.  —  Ed. 

^  Lord  Cairns.  —  Rep. 


SECT.  I.]         SIMl'SOX    &    CO.    V.   THOMSON,    BUKKELL    ET   AL.  945 

■which  the  person  indemnified  might  have  protected  himself  against 
or  reimbursed  himself  for  the  loss.  It  is  on  this  principle  that  the 
underwriters  of  a  ship  that  has  been  lost  are  entitled  to  the  ship  in 
specie  if  thej  can  find  and  recover  it ;  and  it  is  on  the  same  principle 
that  they  can  assert  an}'  right  which  the  owner  of  the  ship  might  have 
asserted  against  a  wrong-doer  for  damage  for  the  act  which  has  caused 
the  loss.  But  this  right  of  action  for  damages  tlie}"  must  assert,  not  in 
their  own  name,  but  in  the  name  of  the  person  insured,  and  if  the  per- 
son insured  be  the  person  who  has  caused  the  damage,  I  am  unable 
to  see  how  the  right  can  be  asserted  at  all.  .  .  . 

The  right  of  the  underwriters  is  merel}'  to  make  such  claim  for  dam- 
ages  as  thej^nsured  bimaelf  cofild  haYe  Hade,^  and  it  is  forthjs,  reason 
that  (according  to  the  English  mode  of  procedure)  the}'  would  liave  to 
malve  it  in  his  name;  and  if  this^is  so,  it  cannot  of  course  be  made 
against  the  insured  himself.  .  .  . 

Lord  Penzance.  ...  In  answer  to  this  objection  it  seems  to  have 
been  considered  by  the  Court  below  that  by  the  payment  of  a  total 
loss  and  the  cession  or  transfer  to  the  underwriters  of  the  vessel  (or 
■whatever  might  remain  of  her)  ■which  followed  thereupon  b}'  operation 
of  law  ;  some  new  right  of  action  sprung  up,  or  was  created,  against 
the  owner  of  the  wrong-doing  ship  in  favor  of  the  underwriters. 

I  say  "  new  '"'  right  of  action,  because  the  right  of  action  contem- 
plated is  something  different  from,  and  other  than,  the  right  of  action 
which  resided  in  the  owner  of  the  injured  ship,  the  benefit  of  which 
could  only  be  made  available  to  the  underwriters  b}'  transference  from 
that  owner,  and  consequentl}'  could  only  be  insured  in  his  name. 

]\[y  Lords,  I  entirely  agree  with  the  reasoning  of  the  Lord  Chancellor 
upon  this  head,  and  am  of  opinion  that  there  is  no  warrant  to  be  found 
in  the  existing  decisions  for  such  a  proposition.   .  .  . 

Lord  Blackburn,  ...  In  England,  the  action  must  be  in  the  name 
of  the  shipowner,  not  of  the  underwriters.  I  think  this  material,  as 
showing  that  it  is  the  personal  right  of  action  of  the  shipowner,  the 
benefit  of  which  is  transferred  to  the  underwriters.  In  other  systems 
of  jurisprudence,  or  it  may  be  in  our  own  as  altered  hereafter,  the 
assignee  of  such  a  right  may  be  able  to  sue  in  his  own  name.  The 
important  question  will  still  remain  :  Is  it  a  transfer  of  a  right  of  action, 
which  cannot  be  transferred  unless  it  already  exists  ;  or  a  fresh  right 
created  ?  The  whole  reasoning  of  the  court  below  is  applicable  to  the 
case  of  a  total  loss,  and  of  a  total  loss  only.  It  would  not  be  applicable 
to  the  case  of  a  partial  loss  of  99  per  cent  or  even  more.  I  think, 
however,  the  reason  of  the  law  is  not  more  applicable  to  those  who 
have  indemnified  for  a  total  loss  than  to  those  who  have  indemnified 
for  a  partial  one.  .   .  . 

Lord  Gordon.  .  .  .  The  view  which  I  take  of  the  case  is  a  very 
short  one,  and  it  is  this :  I  think  the  case  must  be  looked  at  as  if  the 
owner  of  the  "  Dunluce  Castle"  had  not  been  insured.  His  having 
effected  insurances  was  a  very  proper  and  prudent  act,  but  he  did  it 

60 


946 


BUUNAND    V.    RODOCANACHI.  [CHAP.  IX. 


for  his  own  benefit,  and  the  underwriters  cannot  complain  that  they 
have  had  to  meet  the  risk  against  which  they  insured.  Now  I  think  it 
is  clear  that  if  the  owner  of  the  "  Duuhice  Castle  "  had  not  been  insured 
he  could  have  had  no  claim  against  himself  as  the  owner  of  the  "  Fitz- 
maurice,"  which  caused  the  injury  to  tlie  "  Dunluce  Castle."  The  injury 
to  that  ship  was  substantially  caused  by  its  own  owner,  and  he  could 
not  be  liable  to  himself  for  the  damage  so  caused.  And  if  he  could 
not  be  liable  to  himself,  he  could  not  assig^ijinyjjght,  either  exiiress]}- 
or  by  implication  of  law,  to  any  third  perspik,ai_  he  had  none_to 
convey.  No  doubt  the  rights  of  underwriters  are  well  established, 
and  iTis  one  of  these  that  on  payment  of  the  risk  as  for  a  total  loss 
they  are  entitled  to  all  the  rights  in  the  injured  ship  which  belonged 
to  its  owner;  but  they  are  not  entitled  to  more.  And  if  the  owner  of 
the  "Dunluce  Castle"  had  no  right  to  sue  the  owner  of  the  "  Fitz- 
maurice,"  neither  can  the  underwriters  on  the  "  Dunluce  Castle," 
whose  rights  were  derived  from  the  owner  of  that  vessel.  .  .   . 

Declared,  That  the  objections  .  .  .  ought  not  to  have  been  re- 
pelled;  and  .  .  .    Ordered,    That   the   cause   be   remitted 


back. 


BURNAND    (on   behalf  ok   himself   and   all   other   the   under- 

WIUTERS  UPON  THE  POLICIES  OF  INSURANCE  ON  TOBACCO  PER  "  LAMP- 
LIGHTER"  effected  by  THE  DEFENDANTS),  APPELLANT,  V.  RODO- 
CANACHI SONS   &  CO.,  Respondents. 

House  of  Lords,  1882.     7  App.  Cas.  333. 

Appeal  from  a  judgment  of  the  Court  of  Appeal  in  favor  of  the 
respondents  2  reversing  a  judgment  of  Lord  Coleridge,  C.  J.,  in  favor 
of  the  appellant.* 

The  facts  are  fully  set  out  in  the  report  of  the  case  below.* 
The  defendants  effected  with  the  plaintiffs,  who  are  underwriters, 
two  valued  policies  for  £7,500  each  on  tobacco  valued  in  the  policies  at 
£15,000,  which  formed  the  cargo  of  the  "  Lamplighter,"  a  United 
States  merchant  ship,  on  a  voyage  from  New  York  to  Genoa.  The 
insurance  included  war  risks,  and  afterwards,  during  the  insured 
voyage,  the  cargo  was  totally  destroyed  by  the  "  Alabama,"  a  cruiser 
of  the  Confederate  States  of  America,  then  at  war  with  the  United 
States.     The  plaintiffs  accordingly  paid  the  defendants  £15,000,  the 

1  Ace:  Globe  Ins.  Co.  v.  Sherlock,  25  Ohio  St.,  50,  68.    (1874).  —  Eu. 

2  6  Q.  B.  D.  6.3.3.  —  Rep. 
8  5  C.  P.  D.  424.  —  Rep. 

*  The  following  statement  has  been  reprinted  from  the  report  in  the   Court   of 
Appeal,  6  Q.  B.  D.  633  (1881).  — Ed. 


SECT.  I.]  BURNAND    V.    EODOi'AXACHI.  947 

sum  insured  as  for  a  total  loss  of  the  said  cargo.     Tlie  actual" value  of 
the  cargo  exceeded  such  sum  by  £6,557  7s.  dd. 

The  loss  of  the  cargo  of  the  "  Lamplighter  "  formed  one  of  the  Hems 
of  claim  made  b}-  the  United  States  against  Great  Britain  in  respect 
of  the  damage  done  by  the  "  Alabama"  and  other  Confederate  cruisers, 
and  which,  pursuant  to  a  treaty  between  the  two  sovereign  States, 
made  at  Wasliington  in  1871,  was  referred  to  arbitration,  which 
resulted  in  an  award  under  which  Great  Britain  paid  the  sum  awarded 
to  the  United  States  in  satisfaction  of  such  claim. 

Afterwards,  namely  in  June,  1874,  the  United  States  passed  an 
Act  of  Congress^  for  constituting  a  court  for  the  distribution  of  such 
sum  amongst  the  subjects  of  the  United  States  who  had  been  injured 
by  the  Confederate  cruisers,  and  whose  claims  should  be  allowed  by  that 
court  under  the  provisions  of  such  act,  amongst  which  was  section  12, 
as  follows  :  "  No  claim  shall  be  admissible  or  allowed  by  said  court 
for  any  loss  or  damage  for  or  in  respect  to  which  tlie  party  injured,  his 
assignees,  or  legal  representatives  shall  have  received  compensation 
or  indemnity  from  any  insurance  company,  insurer,  or  otherwise,  but 
if  such  compensation  or  indemnity  so  received  shall  not  have  been 
equal  to  the  loss  or  damage  so  actually  suffered,  allowance  may  be 
made  for  tlie  difference.  And  in  no  case  shall  any  claim  be  admitted 
or  allowed  for  or  in  respect  to  unearned  freights,  gross  freiglits,  pro- 
spective profits,  freights,  gains,  or  advantages,  or  for  wages  of  ofHcers 
and  seamen  for  a  longer  time  than  one  year  next  after  the  breaking  up 
of  a  voyage  by  the  acts  aforesaid  :  And  no  claim  shall  be  admissible 
or  allowed  by  the  sjjd_coiirt_bv^r  on  behalf  of  any  insurance  company 
or  iiisurmU-eithmLln  its  oiMiis_ownjjght,  or  as  assignee  ol-  otherwise 
in  the  right  of  a  person_or| partTlniured  as  afoi-esald,"  unless  such 
claimant  sliall  sh^vv^  to  the  satisfaction  of  said  court,  thaF^Iuring  tlie 
late  rebellion  the_sum  of  its  or  his  losses  in  respect  to  it^~or  his  war 
risks,esfceeded_the  sum  of  its  or  his~premiums~oF^treT~gluns~upon~or 
in  respgct^to-su^JLwar  risks ;  and,  iiTcase  d^fan^-^lich^llowance,  the"^ 
same  shall  not  be  greater  than  such  excess  of  loss  :  and  no  claim  shall 
be^admissible  or  allowed  by  said  court  arising  in^hvor  of  any  in- 
surance  company  nj)t^Iawi"uTTv^existing^jit  The  time'of  the  loss^rincTer 
tlieTaws  of  some  one  of  the  United  States^  And  no  claim  siralTTje 
ad^tnissTble  or  allowed  by  said  court  arising  in  favor  of  any  person  not 
entitled  at  the  time  of  his  loss  to  the  protection  of  the  United  States 
in  the  premises,  not  arising  in  favor  of  any  person  who  did  not,  at  all 
times  during  the  late  rebellion,  bear  true  allegiance  to  the  United 
States." 

The  defendants  claimed  in  the  court  so  constituted,  under  the  Act 
of  Congress,  the  difference  between  the  actual  value  of  the  said  cargo 
of  the  "  Lamplighter'-  and  the  sum  so  insured,  and  such  claim  was 

1  The  Court  of  Commissioners  of  Alabama  Claims  was  created  by  Acts  of  the 
Forty -third  Congress,  First  Session,  chap.  459,  approved  June  33,  1874.  18  U.  S. 
Statutes  at  Large,  part  3,  p.  245. — Ed. 


948  BUEXAND    V.    RODOCANACHI.  [CHAP.  IX. 

allowed,  but  in  consequence  of  some  heav^-  deductions  for  commission 
and  expenses  in  prosecuting  and  establisliing  such  claim,  the  actual 
sum  received  b}-  the  defendants  was  only  £2,803  lis.  2d. 

The  plaintiffs  alleged  that  they  had,  by  payment  of  the  total  loss 
under  the  policies,  become  subrogated  to  the  position  of  the  defendants, 
and  were  therefore  entitled  to  the  sum  which  the  defendants  had  so 
received  from  the  United  States  Government. 

Butt,  Q.  C,  and  Cohen,  Q.  C,  {Ilollams  with  them),  for  the 
appellant. 

Sir  H.  James,  A.  G.,  and  Hon.  A.  E.  Gathorne  Hardy,  for  the 
respondents,  were  not  heard. 

Lord  Selborke,  L.  C  My  Lords,  this  is  a  short  but  interesting 
and  important  question.  Your  Lordships  have  heard  a  very  able 
argument,  and  have  had  the  benefit  of  considering  the  able  opinions  of 
the  learned  judges  in  both  the  courts  below,  and  I  believe  there  is  no 
doubt  in  the  minds  of  any  of  your  Lordships  that  the  judgment  under 
appeal  is  right. 

Now,  if  I  may  venture  to  do  so,  with  that  sincere  respect  which  I 
always  feel  for  everything  wliich  falls  from  judges  so  eminent  as  Lord 
Coleridge  and  Baggallay,  L.  J.,  I  will  indicate  what  I  think  is  the 
fallacy  in  the  reasoning  of  those  learned  judges.  It  is  this  :  they  have 
taken  the  valuation  of  the  policy  as  conclusive  and  as  operating  by 
w\ay  of  estoppel  between  these  parties  for  a  purpose  for  which,  as  it 
appears  to  me,  it  is  not  conclusive  and  does  not  estop  them.  For  the 
purpose  of  the  contract  of  insurance  and  for  the  purpose  of  all  rights 
arising  from  that  contract,  it  may  well  be  that  the  valuation  in  a  valued 
policy  is  conclusive,  and  the  effect  of  it  may  be  that  for  those  purposes 
the  assured  is  not  entitled  to  say  "  My  loss  has  been  greater  than  that 
which  was  covered  by  the  policy."  He  cannot  say  that,  for  the  pur- 
pose of  withholding  from  the  insurer  any  indemnity  or  right  by  way 
of  subrogation  or  substitution  to  which  by  the  true  legal  result  of  the 
contract  the  insurer  is  entitled.  Whenever  it  is  sought  to  set  up  an 
estoppel  founded  upon  the  valuation  for  any  purpose  going  beyond  that 
which  I  liave  endeavoured  to  indicate,  the  law  does  not  justify  such 
a  use  of  it.  It  is  admitted  that  tliat  is  the  English  law  when  it  is 
attempted  to  use  the  valuation  for  the  purpose  of  determining  what  is 
and  what  is  not  a  constructive  total  loss. 

Now  it  appears  to  me  that  for  every  other  purpose  collateral  to  the 
contract,  for  the  purpose  of  every  question  as  to  whether  a  particular 
claim  to  something  which  has  arisen  aliunde  is  or  is  not  within  those 
rights  which  result  in  law  from  the  contract,  there  is  no  more  reason  for 
holding  the  valuation  to  be  conclusive  between  the  parties  or  to  operate 
by  way  of  estoppel  than  there  is  in  the  case  in  which  it  is  admitted  that 
in  England  it  does  not  so  follow.  The  title  to  a  particular  indemnity 
granted  in  particular  terms  out  of  a  particular  fund  at  the  disposal 
of  the  United  States  of  America  by  an  Act  of  the  supreme  legislature 
of  the  United  States  is  not  a  title  which  I  think  can  possibly  result 


SECT.  I.]  BURXAND    V.    RODOCANACHI.  949 

in  law  from  the  contract  itself.  If  such  a  right  exists,  it  must  exist  bj- 
the  combined  effect  of  the  contract  between  tlie  assurer  and  the  assured, 
and  tlie  Act  of  Congress.  It  cannot  follow  from  the  contract  of  in- 
surance alone  without  the  Act  of  Congress. 

If  the  Act  of  Congress  is  consistent  with  such  a  right,  having  regard 
to  the  contract  of  insurance,  still  more  if  the  xVct  of  Congress  fairly 
and  equitably  interpreted  confers  such  a  right,  there  is  no  reason 
whatever  why  the  right  should  not  receive  full  effect.  But  how  is 
it  possible  that  such  an  effect  can  be  produced  as  to  a  right  which 
could  have  no  existence  apart  from  the  Act  of  Congress,  if  the  Act  of 
Congress  itself  expressly  excludes  it?  I  cannot  for  a  moment  under- 
stand the  doctrine  of  moral  right  and  obligation  or  implied  trusts 
affecting  supreme  governments  and  independent  states,  as  applied  to 
a  question  of  tliis  kind.  The  rights  resulting  from  the  contract  must 
be  such  as  in  point  of  law  the  contract  makes  :  the  rights  resulting 
from  the  Act  of  Congress  must  be  such  as  according  to  its  true  con- 
struction and  legal  effect  the  Act  of  Congress  makes  ;  and  the  rights 
resulting  from  both  together  must  be  such  as  are  consistent  with  and 
flow  from  the  legitimate  operation  of  the  whole.  Here  it  is  admitted 
that  there  is  in  the  Act  of  Congress  everything  said  and  done  which  a 
supreme  legislature  could  possibly  say  or  do  for  the  purpose  of  exclud- 
ing tlie  pi-esent  claim  and  attributing  that  fund  which  has  been  appro- 
priated in  this  case  to  the  sufferers  by  the  capture,  not  to  the  valued 
part  but  to  the  unvalued  part  of  the  loss.  That  distinction,  which  in 
my  opinion  docs  exclude  for  this  purpose  the  part  covered  by  the 
valuation  of  the  policy  of  insurance,  is  made  by  the  Act  of  Congress. 
It  was  a  true  and  bona  fide  valuation,  but  it  did  not  cover  the  actual 
loss.  The  fund  awarded  by  the  Act  of  Congress  of  the  United  States 
is  only  for  that  part  of  the  actual  loss  which  the  valuation  did  not 
cover  and  which  the  insurers  have  not  paid. 

Whatever  views  of  moral  obligation  may  be  entertained  with  regard 
to  the  Act  of  Congress,  I  think  it  is  correctly  described  by  Brett,  L.  J., 
as  an  act  of  pure  gift  from  the  American  Government.  6  Q.  B.  D. 
643-0.  We  cannot  go  behind  it  and  inquire  into  the  motives  for  an 
act  of  a  supreme  legislature  on  a  matter  within  their  legislative  powers  ; 
and  that  being  so,  I  am  entirely  unable,  for  any  practical  purpose,  to 
distinguish  this  case  — in  which  the  supreme  Government  of  the 
United  States  having  absolute  power  of  disposition  over  this  fund 
have  by  a  solemn  Act  of  their  Congress  declared  that  it  should  be 
given,  not  in  respect  of  the  loss  which  had  been  indemnified  as  between 
tlie  assurers  and  the  assured,  but  in  respect  of  the  loss  which  the 
assured  had  suffered  beyond  that  amount — from  the  case  of  a  volun- 
tary gift  by  an  individual  in  the  same  terms.  Mr.  Butt,  in  his  able 
argument,  which  was  as  candid  I  think  as  it  was  able,  admitted  that  if 
a  member  of  the  family  of  the  shipowner  who  had  suffered  the  loss,  or 
the  owner  of  the  cargo,  had,  after  the  insurers  had  paid  the  loss,  made 
a  will  in  the  precise  terms  of  this  Act  of  the  Congress  of  the  United 


950  BURNAXD    V.    RODOCANACHI.  [CIIAP.  IX. 

States,  an(T  had  given  a  fund,  over  which  lie  had  absolute  control,  for 
the  purpose  of  iudemnifving  his  relatives  or  his  friends  for  that  portion 
of  the  loss  which  the  insurance  had  not  covered,  the  insurers  could  not 
have  claimed  the  gift.  I  ain  unable  to  sec,  for  any  legal  purpose,  a 
distinction  between  such  a  case  and  the  present. 

It  is  a  satisfaction  to  me  to  find  that  in  taking  that  view  of  the 
matter  I  only  differ  from  Baggallay,  L.  J.,  so  far  as  this  :  he  thought 
that  the  cases  of  Randal  v.  Cockran  -^  and  Blaauwpot  v.  Da  Costa  ^ 
before  Lord  Hardwicke  and  Lord  jSorthington,  under  the  Order  in 
Council  of  the  18th  of  June,  1741,  were  authorities  in  point  and  cover- 
ing the  present  case.  With  the  greatest  respect  for  that  very  learned 
judge  I  am  unable  to  agree  in  that  conclusion.  I  should  not  have 
had  any  didlculty  at  all  in  this  case  in  upholding  the  claim  of  the 
appellant  if  the  Act  of  Congress  of  the  United  States  had  been  in 
terms  similar  to  the  terms  of  that  proclamation.^  The  dif!'ercnce  is 
that  when  the  king  of  Great  Britain  came  to  distribute  the  fund  which 
arose  from  tlic  seizures  of  goods  which  had  been  taken,  hy  way  of 
reprisal,  from  Spain,  the  Crown  directed  it  to  be  divided  into  moieties : 
one  moiet}'  was  to  go  to  the  officers  and  sailors  of  the  ships  that  had 
made  the  captures,  but  the  other  moiety  was  to  be  paid  to  and  amongst 
such  of  His  Jlajesty's  subjects  as  had  sulfercd  by  the  unjust  seizures 
and  depredations  of  the  Spaniards.  There  was  no  such  exclusion  of 
insurers  as  there  is  in  the  present  case ;  in  point  of  law  and  equity  too, 
the  true  result  of  the  contract  of  insurance  was  that  the  insurers  had 

1  Ante,  p.  937  (1748).  — Ed.  -  Anfi',  p.  937,  n.  (1758).— Ed. 

3  During  the  argument  Lord  Sef.borne,  L.  C,  sent  for  the  London  Gazette  No.  8024, 
June  16  to  June  20,  1741,  wliioh  contained  the  proclamation  dated  18  June,  1741.  It 
was  headed  "  By  the  Lords  Justices,  a  Declaration  appointing  the  distribution  of 
I'rizes  taken  by  way  of  reprisal  before  His  Majesty's  declaration  of  War."  It  recited 
(inter  alia)  that  whereas  the  king,  having  taken  into  consitleratiou  the  de])redatious 
and  unjust  seizures  by  Spanish  ships  contrary  to  the  law  of  nations  and  in  violation  of 
the  treaties  between  Great  Britain  and  Spain,  whereby  the  king's  "  trading  subjects 
had  sustained  great  losses,"  and  liaving  determineii  to  take  measures  for  vindicating 
the  iionor  of  his  Crown  and  "  for  procuring  reparation  and  s.atisfaction  to  his  injured 
subjects,"  was  pleased  with  the  advice  of  his  Privy  Council  on  the  10th  of  July,  1739, 
to  order  that  general  reprisals  should  be  granted  against  tlie  ships'  goods  and  subjects 
of  the  king  of  Spain ;  and  whereas  between  that  date  and  the  king's  declaration  of 
war  on  the  lOtli  of  October  following  the  king's  ships  had  taken  several  ships,  vessels, 
and  goods  belonging  to  the  king  of  Spain  or  his  subjects  or  inhabitants,  the  property 
whereof  became  vested  in  the  king  ;  the  Lords  Justices  having  taken  tiie  same  into 
consideration,  "together  with  the  great  losses  Ihe  king's  subjects  had  sustained  by 
the  repeated  depredations  by  the  Spaniards  for  many  years  past  for  wliich  they  had 
received  no  reparation;"  declared  that  the  net  produce  arising  from  the  sale  or 
disposal  of  all  the  ships,  vessels,  and  goods  wliich  had  been  so  seized  and  taken  and 
which  liad  been  or  should  be  condemned,  should  be  divided  into  two  moieties,  one 
"  to  be  paid  to  and  amongst  such  of  the  king's  sul)jects  as  had  suffered  by  the  unjust 
seizures  and  de])redations  of  the  Spaniards,  and  to  be  distributed  in  such  manner  and 
j-roportions  and  under  such  regulations  as  the  king  should  thereafter  be  pleased  to 
appoint ; "  the  otlier  moiety  to  be  paid  to  and  amongst  the  officers  and  sailors  of 
the  king's  ships  who  were  concerned  in  the  captures,  to  be  divided  in  the  manner 
provided.  —  Hep. 


SECT.  I.]  BUENAND    V.   KODOCANACHI.  951 

taken  the  loss  upon  themselves  and  were  entitled  to  all  indemnities 
received  in  respect  of  the  loss  ;  the}'  were  sufferers  in  cquit}"  at  all 
events  if  not  in  the  strictest  legal  sense  from  tliose  depredations  ;  they 
were  to  take  the  place  of  the  original  sufferers,  and  to  have  all  their 
lights,  and  therefore,  according  to  the  true  effect  of  that  proclamation, 
it  was  a  grant  bj-  the  Crown  in  their  favor.  If  an3-thing  of  the  same 
sort  iiad  been  done  by  the  Act  of  Congress  in  the  present  case,  it 
would  be  very  probable  that  your  Lordsliips  would  come  to  the  same 
conclusion.  I  sec  that  Brett,  L.  J.,  expresses  some  liesitation  upon  that 
subject.  It  is  not  necessar}-  for  me  to  say  more  aliout  it,  excepting 
that  I  do  not  myself  share  that  hesitation.  I  i)ut  the  matter  entirely 
upon  the  groun*!  that  the  terms  of  the  grant  in  the  cases  which  have 
been  referred  to  not  only  impliedly  but  actually,  according  to  their  fair 
and  legitimate  construction  in  law  and  equit\',  operated  in  favor  of 
the  insurers,  who  having  paid  the  loss  were  entitled  to  be  recouped. 

Those  cases,  then,  appear  to  me  to  be  clearly  and  broadly  distin- 
guishable from  the  present  case.  I  think  that  the  view  taken  by  the 
majorit}'  of  the  Court  of  Appc^al  is  correct,  and  therefore  I  move  your 
Lordsliips  to  dismiss  this  ai)peal  with  costs. 

Lord  Blackburn.  Mj'  Lords,  I  am  of  the  same  opinion.  The 
point,  when  one  comes  at  it  (and  I  should  sa\',  in  justice  to  JMr.  Butt, 
that  he  has  avoided  making  any  false  points,  and  lias  brought  it  to  us 
ver}-  clearly),  is  a  very  short  one,  and  one  upon  which  I  have  no  doubt 
at  all. 

The  general  rule  of  law  (and  it  is  olivious  justice)  is  that  where 
there  is  a  contract  of  indemnity  (it  matters  not  whether  it  is  a  marine 
policy,  or  a  polic\'  against  fire  on  land,  or  any  other  contract  of  in- 
demnity) and  a  loss  happens,  anything  which  reduces  or  diminishes 
that  loss  reduces  or  diminishes  the 'amount  which  the  indemnifier  is 
bound  to  pa}- ;  and  if  tlie  indemnifier  has  alread}'  paid  it,  then,  if 
anything  which  diminishes  the  loss  comes  into  the  hands  of  the  person 
to  whom  he  has  paid  it,  it  becomes  an  equity  that  the  person  who  has 
already  paid  the  full  indemnity  is  entitled  to  be  recouped  by  having 
that  amount  back. 

The  first  question  is  this.  There  had  been  a  policy  of  insurance 
and  a  total  loss  b}'  capture  and  destruction  of  the  propert}'  insured  and 
a  paj-ment  of  the  full  value  insured  —  a  payment  of  the  total  loss 
under  that  policv.  Subsequently  to  that  payment  there  came  the 
Treaty  of  Washington  ;  and  afterwards,  in  consequence  of  an  Act  of 
Congress,  a  sum  of  money  was  paid  to  the  persons  who  had  received 
pa3'inent  under  the  polic}' ;  and  the  question,  I  appj-ehend,  comes  to 
be,  Was  that  sum  or  was  it  not  paid  so  as  to  be  a  reduction  or  diminu- 
tion of  their  loss  ? 

The  cases  which  have  been  cited,  Randal  v.  Cockran^  and  Blaauwpot 
V.  Da  Costa, ^  bear  this  resemblance  to  the  present  case,  that  after  the 
loss  had  occurred  there  was  a  sum  of  money  coming  into  the  hands  of 
1  Ante,  p.  937  (1748).  — Ed.  ^  j„^^^  p  937^  n   (1758).— En 


952  BURNAND   V.   EODOCAXACHI.  [CHAP.  IX. 

the  English  Government;  and  the  king  was  pleased  (for  I  think  it  is 
clear  that  he  was  not  bound)  to  say  that  half  of  that  money  should  be 
applied  to  those  who  had  suffered  from  the  captures.  It  was,  certainh', 
I  think,  a  voluntary  gift  on  the  part  of  the  Crown,  and  was*for  the 
benefit  of  the  sufferers.  But  then  I  think  that  that  gift  being  made,  as 
it  was  made,  for  tlie  benefit  of  those  who  had  suffered  from  the  cap- 
tures, and  the  money  being  paid  for  that  purpose,  it  did  diminish  the 
loss  ;  and  consequently  the  benefit  of  it  enured  to  the  persons  who  were 
bound  to  indemnify  ;  and  it  was  so  decided  in  those  two  cases.  It 
was  not  because  the  king  was  bound  to  pay  the  money  —  he  was  not : 
it  was  not  because  there  was  a  moral  obligation  to  pay  it  —  as  if  it  had 
been  said  that  our  Government  would  have  been  shabby  if  they  had 
not  done  it :  it  was  bccnuse  de  facto  there  was  a  payment  which  pre- 
vented, or  diminished  pro  tanto,  the  loss  against  which  the  insurers 
were  bouhd  to  indemnify  the  assured. 

There  was  a  subsequent  case,  which  has  not  been  cited,  which  pro- 
ceeded upon  an  error  and  has  been  since  reversed  (I  mean  tiie  case  of 
Godsall  V.  Boldero^)  where  a  person  had  insured  the  life  of  Mr.  Pitt, 
having  no  other  interest  in  his  life  than  as  a  creditor  of  Mr.  Pitt,  which 
gave  him  an  interest,  and  the  House  of  Commons  voted  out  of  pure 
grace  and  favor  a  large  sum  of  money  to  pay  Mr.  Pitt's  debts,  and  the 
executors  paid  this  debt.  The  insurance  company  set  up  the  defence 
that  tins  was  a  contract  of  indemnity  and  that  Mr.  Pitt's  debt  having 
been  paid  there  could  not  be  a  right  to  recover  against  them.  Lord 
EUenborough  falling  into  a  blunder  which  has  been  since  corrected 
thought  that  the  contract  of  life  assurance  was  a  contract  of  indemnit}', 
and  accordingly  held  that  that  was  a  good  defence  on  the  part  of  the 
insurance  company.  I  have  been  told  by  people  connected  with  in- 
surance companies  and  other  people  with  whom  I  have  been  brought 
into  contact  in  the  course  of  my  professional  experience,  that  no 
sooner  had  that  been  done  than  there  was  such  an  outcry  that  every 
one  said  he  would  never  insure  with  a  company  which  was  capable 
of  doing  such  a  shabby  thing.  Consequently  the  insurance  company 
instantly  paid  the  whole  loss  and  the  whole  of  the  costs,  and  published 
everywhere  that  they  had  done  so.  Nevertheless  Lord  EUenborough's 
decision  stood  until  it  was  decided  in  the  Exchequer  Chamber  ^  that 
that  case  went  altogether  upon  a  mistaken  idea  that  a  contract  of  life 
insurance  was  a  contract  of  indemnity,  whereas  it  was  nothing  of  the 
sort.  But  if  it  had  been  a  contract  of  indemnity  the  grant  of  Parlia- 
ment to  pay  Mr.  Pitt's  debts  would  have  prevented  the  man's  sustain- 
ing any  loss  by  the  death  of  Mr.  Pitt,  and  consequently  the  decision 
would  have  been  right.  I  mention  this  merel}'  to  show  that  the  ques- 
tion is  not  wliether  the  mone}'  was  voluntaril}'  paid  or  not  voluntarih' 
paid,  but  whether  de  facto  the  money  which  was  paid  did  reduce  the 
loss. 

1  Ante,  p.  927  (1807).  — En. 

2  Dalby  V.  India  aud  London  Life  Assur.  Co.,  ante,  p.  932  (Ex.  Ch.,  1854).  —  Ed. 


SECT.  I.]  BURNAND    V.    EODCCANACHI.  953 

In  the  present  case  the  Government  of  the  United  -States  did  not  pay 
it  with  the  intention  of  reducing  the  loss.  Lord  Coleridge  saj-s  in  his 
judgment,  and  says  very  truly,  that  the  Government  of  the  United 
States  cannot  by  an}'  action  of  theirs  deprive  a  man  suing  in  this 
country'  of  an}'  right  which  he  has.  I  quite  agree  in  that ;  but  I  think 
that  Lord  Coleridge,  if  he  had  taken  the  same  view  as  I  do  of  the 
matter,  would  have  seen  that  an  Act  of  Congress  of  the  United  States 
might  effectually  prevent  any  such  right  arising.  If  once  the  right 
had  vested  to  recover  any  such  sura,  of  course  an  Act  of  Congress 
could  not  take  it  awa}' ;  but  when  Congress  in  express  terras  say, 
"We  do  not  pay  the  monej'  for  the  purpose  of  repaying  or  reducing 
the  loss  against  which  the  insurance  company  have  indemnified,  but 
for  another  and  a  different  purpose,"  it  effectuallv'  prevents  the  right 
arising.  Bramwell,  L.  J.,  in  his  judgment  has  used  the  phrase,  "  It  was 
not  given  as  salvage."  6  Q.  B.  D.  640.  I  should  myself  prefer  to  use 
ray  own  phrase  expressing  the  same  idea  and  to  say  that  it  was  not 
paid  in  such  a  manner  as  to  reduce  the  loss  against  which  the  plaintiffs 
had  to  indemnify  the  defendants ;  it  is  the  same  thing  but  rather 
differently  expressed. 

That,  I  think,  would  dispose  of  the  case  if  it  were  not  for  a  point 
which  Mr.  Butt  has  urged,  or  rather  submitted  (for  I  do  not  think  he 
argued  very  strongh'  in  favor  of  it),  nameh',  that  because  this  was  a 
valued  policy  of  insurance,  the  value  being  put  at  £1.5,000.  the  defend- 
ants could  never  under  any  circumstances,  as  against  the  plaintiffs, 
set  up  the  fact,  which  is  a  fact,  that  the  value  of  the  property  exceeded 
.£15,000.  Upon  the  statement  of  that  point  it  looks  so  artificial  when 
applied  to  these  facts  that  one  might  almost  rest  there  and  sa}',  "  It 
cannot  be."  I  think  it  is  plain  that  the  reasons  for  which  the  value 
has  been  held  to  be  conclusive  extend  no  further  than  this,  that  for  the 
purposes  of  the  contract  between  the  parties  the  policy  may  be  valued 
at  so  much.  "\Yhether  the  principle  was  righth'  applied  in  the  case  of 
the  North  of  England  Insurance  Association  v.  Armstrong^  it  is  not 
necessar}'  now  to  sav.  I  own  that  if  I  had  a  similar  case  to  decide 
sitting  in  the  Court  of  Error,  I  should  pause  before  I  said  that  it  was 
rightly  decided,  but  whether  that  decision  was  right  or  wrong  it  is  not 
at  all  necessary  to  consider  here.  It  is  plain  to  my  mind  that  the 
valuation  being  only  for  the  purpose  of  the  policy  of  insurance  and  for 

^  In  Xortli  of  England  Iron  Steamship  Ins.  Assn.  v.  Armstrong,  L.  R.  5  Q.  B.  244 
(1870),  an  in^urnuce  company  issued  a  policy  of  £6,000  on  the  steamship  "  Hetton," 
which  was  valued  in  the  policy  at  the  same  sum.  The  real  value  was  £9,000.  The 
"  Hetton  "  was  run  down  by  the  steamship  "  Uhlenhorst  "  and  totally  lost.  The 
insurance  company  paiil  the  policy  in  full.  By  litigation  after  this  payment  the  owners 
of  the  "  Hetton"  recovered  fri)m  the  owners  of  the  "Uhlenhorst"  upwards  of  £5,000, 
the  amount  thus  recovered  being  the  limit  of  the  "  Uhlenhorst's  "  liability  nnder  the 
Merchants  Shipping  Act.  The  insurance  company  brought  action  to  recover  from 
the  owners  of  tlie  '"  Hetton  "  the  amount  realized  from  that  liti^ration,  e.xcept  certain 
sums  belonging  to  the  master  and  crew  and  the  owners  of  the  cargo  and  freight. 
It  was  held  that  the  insurance  company  was  entitled  to  recover.  —  Ed. 


951  BURNAND    V.    RODOCANACHI.  [CHAP.  IX. 

the  purpose  of  binding  the  defendants  to  admit  it  in  favor  of  tlie  plain- 
tiffs, this  sum  was  not  paid  in  siicli  a  way  as  to  reduce  the  loss  against 
wiiich  tlie  plaintiffs  had  contracted  to  indemnify  lliem.  The  circum- 
stance that  by  agreement  between  the  parties  the  amount  they  had 
contracted  to  pay  was  not  to  exceed  £15,000  appears  to  nie  quite 
immaterial. 

For  these  reasons  I  agree  that  the  judgment  as  it  stands  is  right  and 
ought  to  be  affirmed. 

Lord  Watson.  My  Lords,  I  have  come  to  the  same  opinion  as  your 
Loi-dships  upon  this  point,  which  is  one  of  novelty  but  not  of  great 
diliicully,  and  which  arises,  I  tliink,  entirely  upon  the  terms  of  the  Act 
of  Congress.  If  compensation  has,  under  that  statute,  been  awarded 
b\-  the  American  Congress  to  the  respondents  in  respect  of  their  losses, 
tliL'U  I  take  it  that  the  same  rule  would  be  followed  as  was  adopted 
bv  the  courts  in  the  two  cases  which  have  been  referred  to  of  Randal 
V.  Cockran  ^  and  Blaauwpot  v.  Da  Costa.^  In  that  case  the  money 
voted  would  have  been  received  by  the  respondents  towards  indemnifi- 
cation for  the  loss  against  which  they  were  insured  ;  and  upon  the 
principle  that  one  who  has  been  already  indemnified  against  that  loss 
must  impart  to  those  who  have  indemnified  him  any  benefits  which  he 
subsequently  obtains  of  that  description  the  appellant  would  have  been 
entitled  to  judgment.  But  in  this  case  the  Act  of  Congress  declares 
in  very  express  terms,  when  you  take  the  whole  of  section  12  together, 
in  the  first  place  that  no  compensation  is  to  be  given  by  the  com- 
missioners on  account  of  loss  which  has  been  insured  against  or 
covered  b3-  insurance,  and  secondly  that  underwriters  are  not  to  re- 
ceive any  benefit  from  the  funds  distributed  under  the  Act,  and  that 
the  compensation  given  to  any  claimant  must  be  given  to  compensate 
him  for  any  loss  eitiier  from  want  of  insurance  or  from  being  under- 
insured.  In  the  present  case  it  is  perfectly  obvious  from  the  state- 
ments ma<le  by  the  parties,  upon  vvhicli  they  agreed,  that  comj^ensation 
was  awarded  to  the  respondents  upon  the  second  of  these  grounds, 
namely,  in  respect  that  the  insurance  which  they  effected  fell  short  of 
protection  against  the  whole  loss  which  they  sustainecL 

It  is  conceded  that  compensation  might  1)0  given  to  the  respondents 
in  these  very  terms  and  upon  this  footing  by  any  benevolent  individual, 
who  being  under  no  obligation  to  give  it,  chose  to  indemnify  the  re- 
spondents ;  and  it  is  conceded  that  in  the  event  of  his  doing  so  no 
claim  would  lie  to  that  money  at  tlie  instance  of  the  underwriters. 
Why  the  American  Congress  were  not  in  a  position  to  do  the  same  as 
any  third  party  might  have  done,  not  being  under  any  obligation  to  do 
so,  I  have  not  been  able  to  understand  in  the  course  of  this  argument; 
and  T  do  not  think  that  any  cause  whatever  has  been  shown  why  they 
should  not  do  so.  Legal  obligation  is  out  of  the  question  ;  but  we 
have  heard  something  about  moral  obligation.  I  do  not  at  all  under- 
stand  what  that  means.     I  think  that  this  fund  was  entirely  at  the 

1  Ante,  p.  937  (1748).  — Ed.  '^  Ante,  p.  937,  n.  (1758).  — Ed. 


SECT.  I,]  BUKNAXD    V.   r.ODOCANACIII.  955 

disposal  of  the  legislature  of  the  United  States,  that  it  was  an  act  of 
grace  on  their  part  to  assign  it,  and  give  it  either  to  one  or  to  the 
other  of  the  losers  b3'  the  acts  of  the  "  Alabama,"  and  that  in  giving 
it  as  tliey  have  done,  they  were  attaching  a  condition  to  the  gift,  whicli 
condition  was  not  only  entire!}'  witliin  their  power  but  which  tliey 
miglit  attach  without  violating  any  legal  responsibility  or  moral 
obHgation. 

Those  being  my  views,  I  entirely  concur  in  tlie  disposal  of  this  case 
in  the  manner  which  j'our  Lordships  suggest. 

Lord  Fitzgerald.  My  Lords,  I  concur  in  the  judgment  pronounced 
by  the  noble  and  learned  Lord  on  the  woolsack,  and  in  the  reasons  he 
has  pressed  for  that  judgment.  I  adopt  also  his  criticisms  on  the 
authorities  cited  and  his  limitation  to  tlie  I'ulc  wliicli  was  contended 
for  by  the  appellant  as  tlie  result  of  some  of  tliose  autliorities,  viz.,  tliat  is 
that  on  a  valued  policy  tlie  value  agreed  on  was  as  between  tlie  parties 
conclusive  under  all  circumstances  and  for  all  purposes,  whether  in- 
cidental to  the  contract  or  collateral  and  subsequent.  I  liope  that  I 
am  not  exceeding  my  province  in  saying  that  I  should  have  thought 
this  a  very  pin  in  case  if  it  had  not  been  that  I  was  induced  to  hesitate  on 
reading  the  judgments  of  Lord  Coleridge  and  Baggallay,  L.  J.,  whose 
opinions  are  of  such  weight  and  justly  entitled  to  so  muc-h  respect. 

The  case  presented  itself  to  my  mind  thus  —  this  is  really  the  old 
action  for  mone}'  had  and  received.  The  parties  have  expanded  by 
their  pleadings  the  facts  on  which  they  respectively  rest.  The 
plaintiff  alleges  that  the  defendant  has  received  a  sum  of  money  which 
in  equity  and  good  conscience  he  ought  not  to  retain,  but  should  pa}- 
over  to  the  plaintiff.  The  defendant  admits  he  received  the  sum  in 
controversy  through  the  judgment  of  the  American  tribunal,  but  denies 
the  plaintiff's  equity. 

I  have  been  wholly  unable  to  discover  on  what  the  plaintiff's  sup- 
posed equity  rests.  I  agree  with  Brett,  L.  J.,  that  the  United  States 
Government  might  have  done  as  it  pleased  with  the  whole  £3,100,000, 
and  that  when  it  was  devoted  to  the  purposes  specified  in  the  Act  of 
Congress  it  may  be  regarded  as  a  free  gift  for  those  purposes. 

The  12th  section  prohil)its  its  application  to  such  a  claim  as  the 
plaintiffs'.  The  whole  matter  is  well  expressed  by  Bramwell,  L.  J., 
when  he  says  in  effect  that  the  defendant  received  the  money  under  the 
Act  of  Congress  and  judgment  of  the  American  court  to  keep  for  him- 
self, and  not  to  pay  it  over  to  the  plaintiff. 

Order  appealed  from  affirmed  ;  and  appeal  dismissed  ivith  costs. ^ 

1  Contra,  on  the  relation  between  subrogation  and  agreed  valuation  :  The  St 
Johns,  101  Fed.  R.  469  (D.  C,  S.  D.  N.  Y.,  1900).  — Ed. 


956  PHCENIX   INS.    CO.    V.    ERIE    TRANSPORTATION   CO.       [CIIAP.  IX. 


PHCENIX   INSURANCE   CO.    v.    ERIE   AND   WESTERN 
TRANSPORTATION  CO. 

Supreme  Court  of  the  United  States,   1886.     117  U.  S.  312. 

Appeal  from  the  Circuit  Court  of  the  United  States  for  the  Eastern 
District  of  Wisconsin. 

This  was  a  Ubel  in  admiralty  against  a  common  carrier  b}-  an  insur- 
ance compan}'  which  had  insured  the  owners  upon  the  goods  carried, 
and  had  paid  them  the  amount  of  the  insurance,  and  claimed  to  be 
subrogated  to  their  rights  against  the  carrier.  The  defence  relied  on 
was  that,  by  a  provision  of  the  contract  of  carriage,  the  carrier  was  to 
have  the  benefit  of  any  insurance  upon  the  goods.  The  District  Court 
held  that  this  provision  was  valid,  and  tlierefore  no  right  of  subrogation 
accrued  to  the  libellant,  and  entered  a  decree  accordingly.  The  libel- 
lant  appealed  to  the  Circuit  Court, ^  .   .   .   and  ...  to  this  court. 

Mr.  Geo.  D.  Van  Dyke  for  appellant  (Mr.  Geo.  A.  Black  also  filed 
a  brief  for  same). 

Mr.  Geo.  B.  Hibbard,  for  appellee. 

Mr.  Justice  Gray  ^  .  .  .  delivered  the  opinion  of  the  court.  .  .  . 

The  polic}'  of  insurance  contains  no  express  stipulation  for  the  assign- 
ment to  the  insurer  of  the  assured's  right  of  action  against  third  per- 
sons. In  the  bills  of  lading,  it  is  expressly  stipulated  that  the  carriers 
whose  railroad  or  vessels  form  part  of  the  line  of  transportations,  shall 
not  be  liable  for  loss  or  damage  by  fire,  collision,  or  dangers  of  naviga- 
tion ;  and  that  each  carrier  shall  be  liable  onlj-  for  a  loss  of  the  goods 
while  in  its  custody,  "  and  the  carrier  so  liable  shall  have  the  full  bene- 
fit of  any  insurance  that  may  have  been  effected  upon  or  on  account  of 
said  goods." 

The  question  is,  whether  under  these  circumstances  the  insurer,  upon 
payment  of  a  loss,  became  subrogated  to  the  right  to  recover  damages 
from  the  carrier. 

When  goods  insured  are  totally  lost,  actually  or  constructively,  by 
perils  insured  against,  the  insurer,  upon  payment  of  the  loss,  doubtless 
becomes  subrogated  to  all  the  assured's  rigiits  of  action  against  third 
persons  who  have  caused  or  are  responsible  for  the  loss.  No  express 
stipulation  in  the  policy  of  insurance,  or  abandonment  by  the  assured, 
is  necessary  to  perfect  the  title  of  the  insurer.  From  the  verj-  nature 
of  the  contract  of  insurance  as  a  contract  of  indemnit}',  the  insurer, 
when  he  has  paid  to  the  assured  the  amount  of  the  indemnit}-  agreed 
on  between  them,  is  entitled,  by  way  of  salvage,  to  the  benefit  of  an}-- 
thing  that  may  be  received,  citlier  from  the  remnants  of  the  goods 
or  from  damages  paid  by  third  persons  for  the  same  loss.     But  the 

1  Only  a  part  of  the  statement  has  been  reprinted  —  Ed. 

^  In  reprinting  the  opinion,  some  passages  foreign  to  subrogation  have  been  omitted. 
—  Ed. 


SECT.  1.]       PHCEXIX    IXS.    CO.    V.   ERIE    TRANSPORTATION    CO.  957 

insurer  stands  in  no  relation  of  contract  or  of  privity  with  such  persons. 
His  title  arises  out  of  the  contract  of  insurance,  and  is  derived  from 
the  assured  alone,  and  can  only  be  enforced  in  the  right  of  tiie  latter. 
In  a  court  of  common  law,  it  can  only  be  asserted  in  his  name,  and, 
even  in  a  court  of  equity  or  of  admiralty,  it  can  only  be  asserted  in  his 
right.  In  any  form  of  remedy,  the  insurer  can  take  nothing  by  subro- 
gation but  the  rights  of  the  assured.  Comegys  v.  Vasse,  1  Pet.  193, 
214;  Fretz  v.  Bull,  12  How.  4G6,  468;  The  Monticello,  17  How.  152, 
155;  Garrison  v.  Memphis  Ins.  Co.  19  How.  312,  317;  Hall  r.  Rail- 
road Cos.,  13  Wall.  3G7,  370,  371  ;  The  Potomac,  105  U.  S.  630,  634, 
635;  Mobile  &  Montgomery  Railway  v.  Jurey,  111  U.  S.  584,  594; 
Clark  t\  Wilson,  103  Mass.  219;  Simpson  v.  Thomson,  3  App.  Cas. 
279,  286,  292,  293.  That  the  right  of  the  assured  to  recover  damages 
against  a  third  person  is  not  incident  to  the  property  in  the  thing 
insured,  but  only  a  personal  right  of  the  assured,  is  clearly  shown  by 
the  fact  that  the  insurer  acquires  a  beneficial  interest  in  that  right  of 
action,  in  proportion  to  the  sum  paid  by  him,  not  only  in  the  case  of  a 
total  loss,  but  likewise  in  the  case  of  a  partial  loss,  and  when  no  inter- 
est in  the  property  is  abandoned  or  accrues  to  him.  Hall  i\  Railroad 
Cos.,  The  Potomac,  and  Simpson  v.  Thomson,  above  cited. 

The  right  of  action  against  another  person,  the  equitable  interest  in 
which  passes  to  the  insurer,  being  only  that  which  the  assured  has,  it 
follows  that  if  the  assured  has  no  such  right  of  action,  none  passes  to 
the  insurer ;  and  that  if  the  assured's  right  of  action  is  limited  or  re- 
stricted by  lawfid  contract  between  him  and  the  person  sought  to  be 
made  responsible  for  the  loss,  a  suit  by  the  insurer,  in  the  right  of  the 
assured,  is  subject  to  like  limitations  or  restrictions. 

For  instance,  if  two  ships,  owned  by  the  same  person,  come  into 
collision  by  the  fault  of  the  master  and  crew  of  the  one  ship  and  to  the 
injury  of  the  other,  an  underwriter  who  has  insured  the  injured  ship, 
and  received  an  abandonment  from  the  owner,  and  paid  him  the 
amount  of  the  insurance  as  and  for  a  total  loss,  acquires  thereby  no 
right  to  recover  against  the  other  ship,  because  the  assured,  the  owner 
of  both  ships,  could  not  sue  himself  Simpson  v.  Thompson,  above 
cited  ;  Globe  Ins.  Co.  v.  Sherlock,  25  Ohio  St.  50,  68. 

Upon  the  same  principle,  any  lawful  stipulation  between  the  owner 
and  the  carrier  of  the  goods,  limiting  the  risks  for  which  the  carrier 
shall  be  answerable,  or  the  time  of  making  the  claim,  or  the  value  to 
be  recovered,  applies  to  any  suit  brought  in  the  right  of  the  owner,  for 
the  benefit  of  his  insurer,  against  the  carrier ;  as,  for  instance,  if  the 
contract  of  carriage  expressly  exempts  the  carrier  from  liability  for 
losses  by  fire  :  York  Co.  v.  Central  Railroad,  3  Wall.  107  ;  or  requires 
claims  against  the  carrier  to  be  made  within  three  months  :  Express 
Co.  V.  Caldwell,  21  Wall.  264  ;  or  fixes  the  value  for  which  the  carrier 
shall  be  responsible:  Hart  v.  Pennsylvania  Railroad,  112  U.  S.  331. 
So  the  stipulation,  not  now  in  controversy,  in  the  bills  of  lading  in  the 
present  case,  making  the  value  of  the  goods  at  the  place  and  time  of 


958  PHdXIX   IXS.    CO.    V.    EKIE    TRANSPORTATION    CO.       [CIIAP.  IX. 

shipment  the  measure  of  the  carrier's  liability,  would  control,  although 
in  the  absence  of  such  a  stipulation  the  carrier  would  be  liable  for  the 
value  at  the  place  of  destination,  as  held  in  Mobile  &  Montgomery 
Railway  v.  Jurey,   111  U.  S.  584. 

The  sti[)ulation  in  these  bills  of  lading,  that  the  carriers  "  shall  not 
be  liable  for  loss  or  damage  by  fire,  collision,  or  the  dangers  of  naviga- 
tion," clearlv  does  not  protect  them  from  liability  for  any  loss  occa- 
sioned by  their  own  negligence.  By  the  settled  doctrine  of  this  court, 
even  an  express  stipulation  in  the  contract  of  carriage,  that  a  common 
carrier  shall  be  exempt  from  liability  for  losses  caused  by  the  ucgii- 
o-ence  of  himself  and  his  servants,  is  unreasonable  and  contrary  to 
public  policy,  and  therefore  void.  Railroad  Co.  v.  Lockwood,  17  Wall. 
3.37  ;  Railroad  Co.  v.  Pratt,  22  Wall.  123  ;  Bank  of  Kentucky  v.  Adams 
Express  Co.,  93  U.  S.  174;  Railroad  Co.  v.  Stevens,  95  U.  S.  655. 
And  it  may  be  that,  as  held  by  Judge  Wallace  in  a  case  in  the  Circuit 
Court,  a  stipulation  that  "  no  damage  that  can  be  insured  against  will 
be  paid  for"  would  not  protect  the  carrier  from  liability  for  his  own 
negligence,  because  that  would  be  to  compel  the  owners  of  the  goods 
to  insure  against  the  negligence  of  the  carrier.  The  Iladji,  22  Blatchf. 
235. 

But  the  stipulation  upon  the  subject  of  insurance,  in  the  bills  of  lad- 
ing before  us,  is  governed  by  other  considerations.  It  does  not  compel 
the  owner  of  the  goods  to  stand  his  own  insurer,  or  to  obtain  insurance 
on  the  goods  ;  nor  does  it  exempt  the  carrier,  in  case  of  loss  by  negli- 
(Tence  of  himself  or  his  servants,  from  liabilit}-  to  the  owner,  to  the 
same  extent  as  if  the  goods  were  uninsured.  It  simply  provides  that 
the  carrier,  when  liable  for  the  loss,  shall  have  the  benefit  of  any 
insurance  effected  upon  the  goods.^  .  .  . 

As  the  carrier  might  lawfully  himself  obtain  insurance  against  the 
loss  of  the  goods  by  the  usual  perils,  though  occasioned  by  his  own 
negligence,  he  may  lawfuU}'  stipulate  with  the  owner  to  be  allowed  the 
benefit  of  insurance  voluntarily  obtained  by  the  latter.  This  stipulatioa 
does  not,  in  terras  or  in  effect,  prevent  the  owner  from  being  reimbursed 
the  full  value  of  the  goods ;  but  being  valid  as  between  the  owner  and 
the  carrier,  it  does  prevent  either  the  owner  himself,  or  the  insurer, 
who  can  onh'  sue  in  his  right,  from  maintaining  an  action  against  the 
carrier  upon  an}'  terms  inconsistent  with  this  stipulation. 

Nor  does  this  conclusion  impair  any  law^ful  rights  of  the  insurer. 
His  right  of  subrogation,  arising  out  of  the  contract  of  insurance  and 
payment  of  the  loss,  is  only  to  such  rights  as  the  assured  has,  by  law 
or  contract,  against  third  i)ersons.  The  policy  containing  no  express 
stipulation  upon  the  subject,  and  there  being  no  evidence  of  any  fraud- 
ulent concealment  or  misrepresentation  by  the  owner  in  obtaining  the 

1  Here  followed  passages  to  the  effect  that  an  owner  of  a  ship  or  of  goods  may 
procure  insurance  against  the  result  of  his  own  ne,<,'ligence,  and  that  any  one  who 
has  simply  made  himself  responsible  as  an  insurer  or  a  warehouseman  or  a  carrier 
may  do  the  like.  —  Ed. 


SECT.  I.}  WILLIAMS   V.    HAYS.  959 

insurance,  the  existence  of  the  stipulation  l)etween  the  owner  and  the 
carrier  would  have  afforded  no  defence  to  an  action  on  the  policy, 
according  to  two  careful  judgments  rendered  in  June  last  and  inde- 
pendently of  each  other,  the  one  by  the  English  Court  of  A[)peal, 
and  the  other  by  the  Supreme  Judicial  Court  of  Massachusetts.  Tate  v. 
Hyslop,  15  Q.  B.  D.  368  ;  Jackson  Co.  c.  Boylston  Ins.  Co.,  139  Mass. 
508.1  ^  _   _ 

It  may  be  added  that  our  conclusion  accords  with  tlie  decision  of 
Judge  Shipman  in  Rintoul  v.  New  York  Central  Railroad,  21  Blatchf. 
439,  as  well  as  with  those  of  Judge  Dyer  in  the  District  Court, 
ajid  Judge  Drummond  in  the  Circuit  Court,  in  the  present  case.  10 
Biss.  18,  38.  See  also  Carstairs  v.  Mechanics'  &  Traders'  Ins.  Co., 
18  Fed.  Rep.  473  ;  The  Sidney,  23  Fed.  Rep.  88  ;  Mercantile  Ins.  Co. 
V.  Calebs,  20  N.  Y.  173. 

Decree  affirmed. 

Mr.  Justice  Bradley  dissented.- 


WILLIAMS,   Appellant,  v.  HAYS,    Respondent. 

Supreme  Court  of  New  York,  First  Department,  General  Term, 
1892.     64  Hun,  202.^ 

The  Phenix  Insurance  Company  issued  a  policy  to  Parsons  &  Loud, 
part  owners,  upon  their  shai-e  in  the  brig  "  I^mily  T.  Sheldon."  The 
brig  was  lost,  and  the  loss  was  caused,  as  alleged,  bv  the  negligrence, 
misconduct,  and  improper  navigation  of  Hays,  who  was  charterer, 
master,  and  part  owner.  The  company  paid  Parsons  &  Loud's  loss, 
and  assigned  to  Williams  its  claim  by  way  of  subrogation  against  Hays, 
and  thereupon  Williams  brought  tiiis  action.  The  defence  was  that 
Hays  had  had  separate  insurance  upon  his  share  in  the  brig  from  the 
same  company-,  that  he  had  brought  action  against  the  company  for 
the  same  loss,  that  the  issues  in  that  action,  so  far  as  the  loss  of  the 
brig  was  concerned,  were  the  same  as  in  this,  and  that  in  that  action, 
Hays  had  a  verdict  and  judgment,  which  had  been  affirmed  by  the 
Court  of  Appeals. *^ 

Upon  the  trial  at  the  New  York  Circuit  the  court  directed  a  verdict 
for  the  defendant ;  and  from  the  judgment  on  this  verdict  this  appeal 
was  taken. 

G.  A.  Black,  for  the  appellant. 

W.  W.  Goodrich,  for  the  respondent. 

1  Here  these  cases  were  summarized.  —  Ed. 

2  The  dissenting  opinion  may  he  found  in  118  U.  S.  210. —  Ed. 
^  The  statement  ha.?  been  rewritten.  — Ed. 

*  That  litigation  may  be  found  in  Hays  v.  Pheni.x  Ins.  Co.,  25  Jones  &  Spencer, 
199  (I889)j  s.  c.  affirmed,  127  N.  Y.  656  (1897].  — Ed. 


960  WILLIAMS    V.    HAYS.  [cHAP.  IX. 

Van  Brunt,  P.  J.^  .  .  .  The  single  question  presented  is  whether 
the  plaintiff  is  estopped  by  the  judgment  in  the  case  of  the  defendant 
against  the  Phenix  Insurance  Compan}'  above  referred  to. 

Undoubtedly,  a  recovery  by  the  defendant  in  his  action  against 
the  Phenix  Insurance  Conapany  upon  his  policy  of  insurance  is  a  bar 
against  the  insurance  company  from  setting  up,  in  its  own  right,  any 
claim  against  the  defendant  because  of  the  loss  of  the  vessel,  because 
a  recovery  upon  the  policy  is  inconsistent  with  the  existence  of  such 
right  of  action.  Doty  v.  Brown,  4  N.  Y.  71  ;  Castle  v.  Noyes,  14 
N.  Y.  329;  Gates  v.  Preston,  41  N.  Y.  113,  But  the  plaintiff  in  this 
action  does  not  represent  any  claim  which  the  insurance  company  had 
as  against  the  defendant,  but  that  which  Parsons  &  Loud  had  as  part 
owners  of  the  vessel. 

Such  being  the  case,  therefore,  the  judgment  rendered  in  the  case  of 
Hays  V.  Phenix  Insurance  Company  in  no  way  operated  as  an  estoppel 
against  Parsons  &  Loud  from  maintaining  an  action  upon  the  same 
ground  upon  which  the  insurance  company  based  its  defence.  This  is 
clearly  so,  because  estoppels  to  be  available  must  be  mutual.  Law- 
rence V.  Campbell,  32  N.  Y.  455. 

If,  therefore,  Parsons  &  Loud  were  not  precluded  from  maintaining 
an  action  against  the  defendant,  their  assignees  are  endowed  with  all 
the  rights  which  they  themselves  possessed. 

It  being,  therefore,  the  claim  of  Parsons  &  Loud  which  is  sought 
to  be  enforced  in  tliis  action,  and  the  plaintiff  being  merely  their 
successor  in  interest,  he  would  seem  to  be  entitled  to  all  the  rights 
which  the}'  could  have  enforced  against  the  defendant.  The  mere 
fact  that  the  intermediary  was  the  Phenix  Insurance  Company  in  no 
way  affects  this  right,  because  he  represented  a  different  and  distinct 
interest  from  that  which  the  insurance  company  represented  in  the  ac- 
tion of  Hays  against  it.     Mersereau  v.  Pearsall,  19  N.  Y.  109. 

We  think,  therefore,  that  the  previous  judgment  did  not  operate  as 
an  estoppel,  and  the  plaintiff  had  a  right  to  try  the  issue  presented 
only  upon  the  merits. 

The  judgment  should  be  reversed  and  a  new  trial  ordered,  with  costs 
to  appellant  to  abide  event. 

O'Brien  and  Andrews,  JJ.,  concurred. 

Judgment  reversed  and  7iew  trial^  ordered^  with  costs  to  appel- 
lant to  abide  event. ^ 

1  After  stating  the  case.  —  Ed. 

2  The  result  of  the  new  trial  may  be  found  in  Williams  v.  Hays,  143  N.  Y.  442 
(1894).— Ed. 

*  On  the  general  topic  of  subrogation  in  marine  insurance  see  also  :  — 
Yates  V.  Whyte,  4  Bing  N.  C.  272  (1838),  s.c.  5  Scott,  640 ; 
White  V.  Dobinson,  14  Sim.  273  (1844)  ; 
Clark  V.  Wilson,  103  Ma.ss.  219  (1869); 
Mercantile  M.  Ins.  Co.  v.  Clark,  118  Mass.  288  (1875) ; 
Sea  Ins.  Co.  v.  Haddeu,  13  Q.  B.  D.  706  (C.  A.,  1884).  — Ed. 


SECT.  II.]  MASON    V.    SAINSBURY.  961 

SECTION   11. 

I^ire  Insurance. 

MASON  V.  SAINSBURY  and  Another. 
King's  Bench,  1782.     3  Doug.  61.^ 

This  Avas  an  action  on  the  riot  act,  to  recover  damages  sustained 
b}-  the  demolition  of  a  house  in  the  riots  of  1780.  There  was  a  verdict 
for  tlie  plaintiff,  with  £259  damages,  subject  to  the  opinion  of  the 
court,  on  a  case  which  stated  that  the  plaintiff  had  insured  the  house  in 
the  Hand-in-Hand  fire  office,  which  had  paid  the  loss ;  and  that  this 
action  was  brought  in  the  plaintiff's  name,  and  with  his  consent,  for  the 
benefit  of  the  insurance  office.  The  case  was  argued  in  Hilary  Terra, 
b}-  Minga}'  for  the  plaintiff",  and  b}-  Davenport  for  the  defendants. 

The  court,  considering  it  to  be  a- case  of  great  importance,  directed 
another  argument,  which  came  on  in  this  term. 

Wallace,  A.  G.,  for  the  plaintiff. 

Adair,  Sergeant,  contra. 

Lord  Mansfield.  The  facts  of  this  case  lie  in  a  narrow  compass. 
The  argument  turns  much  on  want  of  precision  in  stating  the  case,  as 
most  arguments  do.  The  office  paid  without  suit,  not  in  ease  of 
the  Hundred,  and  not  as  co-obligors,  but  without  prejudice.  It  is,  to 
all  intents,  as  if  it  had  not  been  paid.  The  question^  then,  conies__to 
thfs.  Can  the  owner,  having  insured,  sue  the  Hundred?  Who_is  first 
liable?  If  theJELindred,  it  makes  no  difference  ;  if  the  insurer,  then  it 
is  a  satisfaction,  and  the  Hundred  is  not  liable.  But  the  contrary  is 
evident  from  the  nature  of  the  contract  of  insurance.  It  is  an  indemnity. 
Every  da}'  the  insurer  is  put  in  the  place  of  the  insured.  In  every 
abandonment  it  is  so.  The  insurer  uses  the  name  of  the  insured.  The 
case  is  clear :  the  act  puts  the  Hundred,  for  civil  purposes,  in  the  place 
of  the  trespassers  ;  and,  upon  principles  of  polic}',  as  in  the  case  of 
other  remedies  against  the  Hundred,  I  am  satisfied  that  it  is  to  be  con- 
sidered as  if  the  insurers  had  not  paid  a  farthing. 

WiLLES,  J.  I  am  of  the  same  opinion.  I  cannot  distinguish  this 
from  the  case  of  the  escape.  The  Hundred  is  not  answerable  criminall}-, 
but  they  cannot  be  considered  as  free  from  blame.  They  ma\'  have 
been  negligent,  which  is  partU'  the  principle  of  the  act. 

AsHURST,  J.  At  all  events  the  plaintiff  must  have  a  verdict  for  the 
amount  of  the  premium,  as  to  which  he  has  received  no  compensation. 
But,  on  the  larger  ground,  I  agree  with  m}'  lord,  that  it  is  like  the  case 
of  an  abandonment.  They  are  not  to  be  in  a  worse  condition  b}'  pa}-- 
ing  without  a  suit.  . 

1  s.  c.  Marshall  on  Ins.  (2d  ed.)  794.  —  Ed. 
61 


962  HART   V.    WESTERN    RAILROAD    CORPORATION.       [CHAP.  IX. 

BuLLER,  J.  Whether  this  case  be  considered  on  strict  legal  prin- 
ciples, or  upon  the  more  liberal  principles  of  insurance  law,  the  plaintiff 
is  entitled  to  recover.  Strictl}',  no  notice  can  be  taken  of  anything  out 
of  the  record.  Taken  in  its  narrow  form,  the  contract  is  only  a  wager ; 
more  liberally  construed,  it  is  an  indemnit}-.  Still,  upon  the  words, 
and  as  to  third  persons,  it  is  only  a  wager,  of  which  third  persons  shall 
not  avail  themselves.  It  has  been  admitted,  and  rightl}-,  that  the  Hun- 
dred is  put  in  the  place  of  the  trespassers.  How  could  they  have  availed 
themselves  of  this  defence?  By  plea  of  accord  and  satisfaction?  It 
was  not  paid  as  satisfaction,  and  the  evidence  would  not  have  supported 
such  a  plea.  In  the  case  put  of  the  escape,  the  recovery  is  not  a  satis- 
faction, and  the  sheriff  may  sue. 

The  better  way  is  to  consider  this  as  a  contract  of  indemnity.  The 
principle  is,  that  the  insurer  and  insured  are  one,  and,  in  that  light, 
paying  before  or  after  can  make  no  difference.  I  am,  therefore,  clearly 
of  opinion  that  the  Hundred  cannot  avail  themselves  of  this  defence. 

Fostea  to  the  plaintiff.'^ 


HART  AND  Others  v.  WESTERN  RAILROAD  CORPORATION. 
Supreme  Judicial  Court  op  Massachusetts,  1847.     13  Met.  99. 

This  was  an  action  of  trespass  upon  the  case,  founded  on  St.  1840, 
c.  85,  to  recover  the  amount  of  a  loss  which  the  plaintiffs  sustained  by 
a  fire  alleged  to  have  been  communicated  to  their  dwelling-house  b}'  a 
locomotive  engine  of  the  defendants.  The  parties  submitted  the  case 
to  the  court,  on  the  following  agreed  facts  :  — 

On  the  9th  of  Juh*,  1845,  a  carpenter's  shop,  owned  b}'  "William  W. 
Boyington,  adjoining  the  railroad  track  of  the  defendants,  near  their 
passenger  depot  in  Springfield,  was  destroj'ed  b}'  fire  communicated  b}' 
the  locomotive  engine  of  the  defendants.     There  was  a  high  wind,  which 

^  In  London  Assur.  Co.  v.  Sainsbury,  3  Doug.  245  (Ex.  Ch.,  1785),  the  insurance 
company  brought  action  in  its  own  name  against  the  Hundred.  The  declaration  stated 
that  the  plaintiff  had  insured  Langdale,  that  divers  persons  destroyed  the  house  and 
goods  by  fire,  and  that  the  plaintifiE  paid  to  Langdale  its  share  of  the  loss.  The  plea 
was  the  general  issue,  and  also  that  Langdale  had  brought  action  against  the  Hundred 
and  had  had  a  verdict,  which  still  remained  in  force.  The  plaintiff  replied  that  it  paid 
Langdale  before  Langdale  brought  his  action  ;  that  in  that  action  the  jury  deducted 
from  the  damages  the  amount  of  the  insurance  and  did  so  declare  to  the  court  at  the 
time  of  giving  the  verdict ;  and  that  the  damages  sustained  by  Langdale  amounted  in 
fact  to  the  aggregate  of  that  verdict  and  the  sum  paid  by  the  insurance  company. 
Upon  demurrer,  judgment  was  rendered  in  the  King's  Bench  for  the  defendants 
by  a  divided  court;  and  in  the  Exchequer  Chamber  this  judgment  was  unanimously 
affirmed. 

In  Clark  i'.  Inhabitants  of  Bly thing,  2  B.  &  C.  254  (1823),  the  owner  of  property 
maliciously  burnt  brought  action  against  the  Hundred  ;  and  it  was  held  on  the  authority 
of  the  principal  case  that  he  could  recover,  although  he  had  collected  from  an  insurance 
office  the  full  amount  of  bis  loss.  —  Ed. 


SECT.  II.]         HART    V.   WESTERN    RAILROAD    CORPORATION.  963 

wafted  sparks  from  this  shop,  while  it  was  burning,  over  Lyman  Street, 
sixty  feet,  upon  the  dwelling-house  of  the  plaintiffs,  and  set  it  on  fire, 
whereb}-  it  was  partially  consumed. 

"The  plaintiffs  were  insured  by  the  Springfield  Mutual  Fire  Insur- 
ance Compan}-,  who  requested  the  plaintiffs  to  commence  a  suit  against 
the  defendants,  to  compel  payment  l)y  them  of  the  plaintiffs'  loss,  and 
offered  to  indemnify  the  plaintiffs  from  costs,  and  to  save  them  harm- 
less, in  reference  to  said  suit.  The  plaintiffs  refused  to  commence  a 
suit,  as  requested,  but  demanded  the  amount  of  their  loss  of  the  said 
insurance  company,  who  paiil  the  same,  first  notifying  to  tlie  defend- 
ants that  they  did  not  intend  therebj-  to  relinquish  any  claim  which 
they  might  have  against  the  defendants  for  the  amount,  in  their  own 
or  in  the  plaintiffs'  names.  The  insurance  company,  in  the  name  of 
the  plaintiffs,  then  brouglit  this  action  to  recover  the  amount  paid  In- 
said  company  to  the  plaintiffs.  After  the  action  was  commenced,  and 
before  the  eiilry.oI the :5vilt,  the  plaTnti]!s~exceuted  an  instrument,  de- 
claringjliat  they  had  received  payment  of  tiieir  loss,  of  the  insurance 
company;  that  they  had  iifl_claim.  against  the  defendants  j_  tiiat  the}' 
(the  plaintiffs)  had  not  authorized  the  commencement  of  this  action 
against  the  defendants,  and  did  not  wish  to  have  it  prosecuted  ;  and  fully 
releasing  any  claim  which  they  might  have  against  the  defendants  on. 
account  of  said  loss. 

"  At  the  May  term  of  this  court,  in  1847,  the  case  was  opened  to  the 
jiuT,  and  the  defendants  presented  the  aforesaid  release  from  the  plain- 
tiffs, and  contended  tliat  the  insurance  company,  in  consequence  of  this- 
release,  could  not  maintain  this  action.  The  court  ruled,  that  receiving 
payment  of  the  loss  by  the  plaintiffs  of  the  insurance  company  consti- 
tuted an  equitable  assignment,  by  the  plaintiffs,  to  the  company,  of  any 
claim  they  might  have  had.  Whereupon  the  parties  agreed  the  facts- 
before  recited  in  relation  to  the  origin  of  the  fire. 

"In  case  the  court  are  of  opinion  that  receiving  payment  by  the^ 
plaintiffs,  of  the  insurance  company,  amounted  to  an  equitable  assign- 
ment by  them  of  any  claim  they  might  have  had  against  the  defendants  ; 
that  the  release  referred  to  was  in  fraud  of  the  insurance  company  ;  and 
that  the  defendants  arc  liable  for  the  loss,  on  the  facts  stated,  the 
plaintiffs  arc  to  have  judgment  for  the  sum  of  $623. Go  damages,  and 
interest  on  this  sum,  from  the  14th  of  November,  1845.  Otherwise  the 
plaintiffs  are  to  become  nonsuit." 

J.  Willard  and  R.  A.  Chapman,  for  the  plaintiffs. 

Phelps^  for  the  defendants. 

Shaw,  C.  J.  This  is  an  action  of  first  impression,  and  is,  we  be- 
lieve, the  first  brought  upon  the  St.  of  1840,  c.  85,  involving  the  present 
question.  The  action  is  brought,  in  fact,  by  the  Springfield  Mutual 
Fire  Insurance  Comi)any  for  their  own  benefit,  in  the  name  of  the 
present  plaintiffs,  under  the  circumstances  mentioned  in  the  agreed 
statement  of  facts,  on  which  the  case  was  submitted  to  our  decision.^  , .  . 
1  Passages  foreign  to  subrogation  have  been  omitted.  —  Ed. 


964  HAKT    V.   WESTERN    RAILROAD    CORPORATION.       [CHAP.  IX. 

The  next  question  is,  whether  the  insurance  company,  having,  pur- 
suant to  their  contract  of  indemnity,  paid  the  loss  to  the  plaintiffs, 
are  entitled  to  maintain  this  suit  in  the  plaintiffs'  name,  but  for  their 
own  beneiit,  to  recover  the  damages  to  which  the  defendants  are  liable 
by  the  statute. 

We  consider  this  to  be  a  statute  purely  remedial,  and  not  penal. 
Railroad  companies  acquire  large  profits  by  their  business  ;  but  their 
business  is  of  such  a  nature  as  necessarily  to  expose  the  property  of 
others  to  danger;  and  yet,  on  account  of  the  great  accommodation 
and  advantage  to  the  public,  companies  are  authorized  by  law  to  main- 
tain them,  dangerous  though  they  are,  and  so  they  cannot  be  regarded 
as  a  nuisance.  The  manifest  intent  and  design  of  this  statute,  we 
think,  and  its  legal  effect,  are,  upon  the  considerations  stated,  to  afford 
some  indemnity  against  this  risk  to  those  who  are  exposed  to  it,  and 
to  throw  the  responsibility  upon  those  who  are  thus  authorized  to  use  a 
somewhat  dangerous  apparatus,  and  who  realize  a  profit  from  it.  This 
indemnity,  provided  by  law  against  a  special  risk,  may  be  considered 
as  a  quality  annexed  to  the  estate  itself,  and  passing  with  it  to  any  and 
all  persons  who  may  stand  in  the  relation  of  owners,  however  divided 
and  distributed  such  ownership  may  be.  The  effect  of  the  statute  is 
to  diminish  the  specific  risk  to  which  such  buildings  may  be  exposed 
from  their  proximity  to  the  railroad,  and  in  this  respect  to  put  tliem 
upon  an  equality  with  other  risks. 

Now,  when  the  owner,  who  jjr/mrt /acre  stands  to  the  whole  risk,  and 
suffers  the  whole  loss,  has  engaged  another  person  to  be  at  that  par- 
ticular risk  for  him,  in  whole  or  in  part,  the  owner  and  the  insurer  are, 
in  respect  to  that  ownership  and  the  risk  incident  to  it,  in  effect  one 
person,  having  together  the  beneficial  right  to  an  indemnity  provided 
by  law  for  those  who  sustain  a  loss  by  that  particular  cause.  If,  there- 
fore, the  owner  demands  and  receives  payment  of  that  very  loss  from 
the  insurer,  as  he  may,  by  virtue  of  his  contract,  there  is  a  manifest 
equity  in  transferring  the  right  to  indemnity,  which  he  holds  for  the 
common  benefit,  to  the  assurer.  It  is  one  and  the  same  loss,  for  which 
he  has  a  claim  of  indemnity,  and  he  can  equitably  receive  but  one  sat- 
isfaction. So  that  if  the  assured  first  applies  to  the  railroad  company, 
and  receives  the  damages  provided,  it  diminishes  his  loss  pro  tanto, 
by  a  deduction  from,  and  growing  out  of,  a  legal  provision  attached  to, 
and  intrinsic  in,  the  subject  insured.  Tlie  liability  of  the  railroad  com- 
pany is,  in  legal  effect,  first  and  principal,  and  that  of  the  insurer 
secondary  ;  not  in  order  of  time,  but  in  order  of  ultimate  liability.  The 
assured  may  first  apply  to  whichever  of  these  parties  he  pleases  ;  to  the 
railroad  company,  by  his  right  at  law,  or  to  the  insurance  company,  in 
virtue  of  his  contract.  But  if  he  first  applies  to  the  railroad  company, 
who  pay  him,  he  thereby  diminishes  his  loss,  by  the  application  of  a 
sura  arising  out  of  the  subject  of  the  insurance,  to  wit,  the  building  in- 
sured, and  his  claim  is  for  the  balance.  And  it  follows,  as  a  necessary 
consequence,  tiiat  if  he  firs^  apjiUesto  the  injurer,  and  receives  hi3_ 


SECT.  11.]  KING   V.    STATE   MUTUAL   FIKE    INS.    CO.  965 

whole  loss,  he  holds  the  claim  against  the  railroad  companj'  in  trust  for 
tTie^  insurers.  Where  such  an  equit}-  exists,  the  party  holding  the  legal 
right  is  conscientiously  bound  to  make  an  assignment  in  equity  to  the 
person  entitled  to  the  benefit ;  and  if  he  fails  to  do  so,  the  cestui  que 
trust  ma}'  sue  in  the  name  of  the  trustee,  and  his  equitable  interest  will 
be  protected. 

But  we  think  this  position  is  exceedingly  well  sustained  hy  author- 
ities.^ .  .   . 

In  regard  to  the  right  of  the  insurance  company  to  sue  in  the  name 
of  the  assured,  we  think  tlie  cases  fully  affirm  the  position,  that  b}^^ic^ 
ceptTiTg  payment  of  the  insurers,  the  assured  do  implicitly  assign  tlicIF 
right_of  inderanityj^from  a  pju'ty  liable^  to  the  assured.  It  is  in  the 
nature  of  an  equitable  assignment,  which  authorizes  the  assignee  to  sue 
in  the  name  of  tlie  assignor  for  his  own  benefit ;  and  this  a  right  which 
a  court  of  law  will  support,  and  will  restrain  and  prohibit  the  assignor 
from  defeating  it  b}'  a  release.  The  formal  discharge,  therefore,  given 
by_tli e  n o m i n al  jjla i n tjlTs ,  is  not  aTBar  to  the.  actiQn._^  See  Payne  v. 
Rogers,  1  Doug.  407;  Whitehead  v.  Hughes,  2  Crompt.  &  Mees.  318  ; 
Phillips  V.  Clagett,  11  Mees.  &  Welsh.  81;  Timan  v.  Leland,  6  Hill, 
237  ;  Browne  on  Actions,  105. 

Judgment  for  the  lAaintiffs.'^ 


KING   V.    STATE   MUTUAL   FIRE   INS.    CO. 
Supreme  Judicial  Court  of  Massachusetts,   1850.     7  Cush.  1.^ 

Assumpsit  on  a  polic}'  of  fire  insurance,  submitted  to  the  Court  of 
Common  Pleas  and,  on  appeal,  to  this  court. 

J.  A.  Andrew,  for  the  plaintiff. 

0.  S.  Keith,  for  the  defendants. 

Shaw,  C.  J.  This  case  comes  before  the  court  on  a  statement  of 
facts.  The  statement  is  not  very  full  and  exact.  We  understand, 
from  the  statement  and  from  the  polic}',  which  is  made  part  of  it,  that 
the  plaintiff  made  the  insurance  in  his  own  name  and  for  his  own  bene- 
fit, not  describing  his  interest  as  that  of  a  mortgagee,  and  paid  the  pre- 
mium out  of  his  own  funds.  The  insurance  was  for  $300,  on  his 
interest  in  a  two-story  wooden  barn.  That  interest,  in  fact,  as  it  ap- 
pears in  the  statement  of  facts  and  the  mortgage  deed  produced,  was 
that  of  a  mortgagee  under  a  deed  previously  made  to  him,  by  one 
Murphy,  conditioned  for  the  payment  of  S400,  which  debt  was  out- 

1  The  discussion  of  the  authorities  has  been  omitted.  —  Ed. 

2  See  Monmouth  County  Mut.  F.  Ins.  Co.  v.  Hutchinson,  21  N.  J.  Eq.  (6  C.  E. 
Green)  107  (1870);  Connecticut  F.  Ins.  Co.  v.  Erie  Ry.  Co.,  73N.  Y.  399  (1878).  — Ed. 

3  The  reporter's  statement  has  been  omitted.  —  Ed. 


966  KING   V.    STATE    MUTUAL    FIRE   INS.    CO.  [CHAP.  IX. 

standing  and  unpaid  at  the  time  of  making  the  polic}',  the  fire,  and  the 
demand  of  payment.  The  defendants  admit  the  loss  bj'  fire,  within 
the  time,  and  admit  their  liabilit}-,  unless  the}-  have  a  right,  as  a  pre- 
liminary condition  to  such  payment,  to  demand  an  assignment  of  the 
plaintiff's  mortgage  interest,  as  set  forth  in  the  statement  of  facts,  or 
such  proportion  thereof,  as  the  amount  so  to  be  paid  b}'  them  would 
bear  to  the  whole  mortgage  debt.  The  plaintiff  declined  making  such 
assignment,  and  brought  tliis  action  to  recover  a  total  loss. 

The  court  are  of  opinion  that  the  plaintiff  having  insured  for  his  own 
benefit,  and  paid  the  premium  out  of  his  own  funds,  and  the  loss  hav- 
ing occurred  by  the  peril  insured  against,  he  has,  prima  facie,  a  good 
right  to  recover;  and  having  the  same  insurable  interest  at  the  time  of 
the  loss  which  he  had  at  the  time  of  the  contract  of  insurance,  he  is 
entitled  to  recover  a  total  loss.  The  court  are  further  of  opinion  that, 
if  the  defendants  could  have  any  claim,  should  the  plaintiff  hereafter 
recover  his  debt  in  full  of  the  mortgagor,  it  must  be  purely  equitable  ; 
that  the  defendants  can  have  no  claim  until  such  money  is  recovered, 
if  at  all ;  and,  therefore,  that  thej*  have  no  right  to  demand  the  partial 
transfer  of  the  mortgage  debt,  by  them  required,  as  a  condition  to  their 
liability  to  pa}',  pursuant  to  the  terms  of  their  policy.  This  considera- 
tion is  perhaps  decisive  of  the  present  case  ;  but  the  question  having 
been  argued  upon  broader  grounds,  and  some  authorities  cited  to  sus- 
tain the  claim  of  the  defendants,  which  ma}'  give  rise  to  further  litiga- 
tion, we  have  thought  it  best  to  consider  the  other  question  now. 

We  are  inclined  to  the  opinion,  both  upon  principle  and  authority, 
that  when  a  mortgagee  causes  insurance  to  be  made  for  his  own  bene- 
fit, paying  the  premium  from  his  own  funds,  in  case  a  loss  occurs  be- 
fore his  debt  is  paid,  he  has  a  right  to  receive  the  total  loss  for  his  own 
benefit ;  that  he  is  not  bound  to  account  to  tlie  mortgagor  for  any  part 
of  the  money  so  recovered,  as  a  part  of  the  mortgage  debt ;  it  is  not  a 
payment  in  whole  or  in  part ;  but  he  has  still  a  right  to  recover  his 
whole  debt  of  the  mortgagor.  And  so,  on  tlie  other  hand,  when  the 
debt  is  thus  paid  by  the  debtor,  the  money  is  not,  in  law  or  equity,  the 
money  of  the  insurer  who  has  thus  paid  the  loss,  or  money  paid  to  his 
use. 

The  contract  of  insurance  with  the  mortgagee,  is  not  an  insurance  of 
the  debt  or  of  the  payment  of  the  debt ;  that  would  be  an  insurance  of 
the  solvency  of  the  debtor  ;  of  course,  as  a  contract  of  indemnity,  it  is 
not  broken  by  the  non-payment  of  the  debt,  or  saved  by  its  payment. 

It  is  not,  strictly  speaking,  an  insurance  of  the  property,  in  the  sense 
of  a  liability  for  the  loss  of  the  property  by  fire,  to  any  one  who  may 
be  tlie  owner.  It  is  rather  a  personal  contract  with  the  person  having  a 
proprietary  interest  in  it,  that  the  property  shall  sustain  no  loss  by  fire 
within  the  time  expressed  in  the  policy.  It  is  a  personal  contract,  which 
does  not  pass  to  an  assignee  of  the  property.  Lynch  v.  Dalzell,  3  Bro. 
P.  C.  497  ;  Columbia  Ins.  Co.  v.  Lawrence,  10  Pet.  507.  A  mortgagee 
has  a  proprietary  interest,  a  title  as  owner,  in  the  mortgaged  property, 


SECT.  II.]  KING   V.    STATE   MUTUAL   FIRE   INS.   CO.  967 

not  indeed  absolute,  but  defeasible  ;  still,  it  is  a  proprietary  interest  in 
that  propert}',  and  the  insurer  guarantees  to  him,  that  the  subject  in 
which  he  has  such  interest  shall  not  be  destroyed  or  diminished  b\-  the 
peril  insured  against. 

There  is  no  privit}'  of  contract  or  of  estate,  in  fact  or  in  law,  between 
the  insurer  and  the  mortgagor;  but  each  has  a  separate  and  independ- 
ent contract  with  the  mortgagee.  On  what  ground,  then,  can  the 
money  thus  paid  by  the  insurer  to  the  mortgagee  be  claimed  by  the 
mortgagor?  But  if  he  cannot,  it  seems  a  fortiori^  that  the  insurer  can- 
not claim  to  charge  his  loss  upon  the  mortgagor,  which  he  would  do,  if 
he  were  entitled  to  an  assignment  of  the  mortgage  debt,  either  in  full 
ox  ITfO  tanto. 

The  better  to  understand  the  precise  case  under  consideration;  it  maj' 
be  well  to  distinguish  it  from  some,  which  may  seem  like  it,  but  depend 
on  other  principles. 

If  the  mortgage  debt  is  paid,  and  the  mortgage  discharged  before  the 
loss  b\'  fire,  it  ma}'  well  be  held,  that  the  mortgagee,  the  assured,  can- 
not recover  ;  not  merely  because  the  debt  is  paid,  but  because  the  mort- 
gage is  thereb}-  redeemed,  and  revested  in  the  mortgagor ;  and  the  pro- 
prietary interest  of  the  assured  in  the  property  insured,  iu  respect  to 
which  alone  he  had  an}'  insurable  interest,  is  determined.  And  it  is  a 
fixed  rule  of  law,  that,  to  make  a  policy  valid,  and  enable  the  assured  to 
recover  a  loss,  he  must  have  an  interest  in  the  subject,  when  the  contract 
is  made,  and  when  the  loss  occurs.  He  must  have  such  an  interest 
when  the  contract  Is  made,  otherwise  it  is  a  wager  policy,  and  void  ; 
and  when  the  fire  occurs,  otherwise  he  sustains  no  loss  by  any  damage 
done  by  the  fire  to  the  thing  insured,  and  he  has  no  claim  on  the  con- 
tract of  indemnit}'.  So,  if  an  owner  insure  his  house,  which  is  burnt 
within  the  time  limited  ;  if  he  has  sold  his  house  in  the  meantime,  he 
has  no  legal  claim  to  recover.^  .  .  . 

But  it  is  said,  and  in  this  certainly  lies  the  strength  of  the  argument, 
that  it  would  be  inequitable  for  the  mortgagee  first  to  recover  a  total 
loss  from  the  underwriters,  and  afterwards  to  recover  the  full  amount 
of  his  debt  from  the  mortgagor,  to  his  own  use.  It  would  be,  as  it  is 
said,  to  receive  a  double  satisfaction.  This  is  plausible,  and  requires 
consideration  ;  let  us  examine  it.  Is  it  a  double  satisfaction  for  the 
same  thing,  the  same  debt  or  duty? 

The  case  supposed  is  this :  A  man  makes  a  loan  of  mone}',  and  takes 
a  bond  and  mortgage  for  security.  Sa}'  the  loan  is  for  ten  years.  He 
gets  insurance  on  his  own  interest,  as  mortgagee.  At  the  expiration 
of  seven  years  the  buildings  are  burnt  down  ;  he  claims  and  recovers  a 
loss  to  the  amount  insured,  being  equal  to  the  greater  part  of  his  debt. 
He  afterwards  receives  the  amount  of  his  debt  from  the  mortgagor,  and 
discharges  his  mortgage.  Has  he  received  a  double  satisfaction  for  one 
and  the  same  debt? 

He  surely  may  recover  of  the  mortgagor,  because  he  is  his  debtor, 

1  The  omitted  passages  discussed  the  mortgagor's  rights.  —  Ed. 


968  KING   V.   STATE    MUTUAL   FIEE    INS.    CO.  [CHAP.  IX. 

and  on  good  consideration  has  contracted  to  pay.  The  money  received 
from  the  underwriters  was  not  a  payment  of  his  debt;  there  was  no 
privity  between  the  mortgagor  and  the  underwriters ;  he  had  not  con- 
tracted with  them  to  pay  it  for  liim,  on  any  contingency  ;  he  had  paid 
them  nothing  for  so  doing.  They  did  not  pay  because  the  mortgagor 
owed  it ;  but  because  they  had  bound  themselves,  in  the  event  which 
has  happened,  to  pay  a  certain  sum  to  the  mortgagee. 

But  the  mortgagee,  when  he  claims  of  the  underwriters,  does  not 
claim  the  same  debt.  He  claims  a  sum  of  money  due  to  him  upon  a 
distinct  and  independent  contract,  upon  a  consideration,  paid  by  him- 
self, that  upon  a  certain  event,  to  wit,  the  burning  of  a  particular  house, 
they  will  pay  him  a  sum  of  money  expressed.  Taking  the  risk  or  re- 
moteness of  the  contingency  into  consideration  (in  other  words,  the 
computed  chances  of  loss),  the  premium  paid  and  the  sum  to  be  re- 
ceived are  intended  to  be,  and  in  theory  of  law  are,  precisely  equiva- 
lent. He  then  pays  the  whole  consideration,  for  a  contract  made 
without  fraud  or  imposition ;  the  terms  are  equal,  and  precisely  under- 
stood by  both  parties.  It  is  in  no  sense  the  same  debt.  It  is  another  and 
distinct  debt,  arising  on  a  distinct  contract,  made  with  another  party, 
upon  a  separate  and  distinct  consideration  paid  by  himself.  The  argu- 
ment opposed  to  this  view  seems  to  assume  that  it  would  be  inequitable, 
because  the  creditor  seems  to  be  getting  a  large  sum  for  a  very  small 
one.  This  may  be  true  of  «ftny  insurance.  A  man  gets  $1,000  insured 
for  $D,  for  one  year,  and  the  building  is  burnt  within  the  year ;  he  gets 
$1,000  for  $5.  This  is  because,  by  experience  and  computation,  it  is 
found  that  the  chances  are  only  one  in  two  hundred  that  the  house  will 
be  burnt  in  any  one  year,  and  the  premium  is  equal  to  the  chance  of 
loss.  But  suppose  —  for  in  order  to  test  a  principle  we  may  put  a 
strong  case  —  suppose  the  debt  has  been  running  twenty  years,  and 
the  premium  is  at  five  per  cent,  the  creditor  may  pay  a  sum,  equal  to 
the  whole  debt,  in  premiums,  and  yet  never  receive  a  dollar  of  it  from 
either  of  the  other  parties.  Not  from  the  underwriters,  for  the  contin- 
gency has  not  happened,  and  there  has  been  no  loss  by  fire  ;  nor  from 
the  debtor,  because,  not  having  authorized  the  insurance  at  his  expense, 
he  is  not  liable  for  the  premiums  paid. 

Wliat,  tlien,  is  there  inequitable,  on  the  part  of  the  mortgagee, 
towards  either  part}-,  in  holding  both  sums?  They  are  both  due  upon 
valid  contracts  with  him,  made  upon  adequate  considerations  paid  by 
himself  There  is  nothing  inequitable  to  the  debtor,  for  he  pays  no 
more  than  he  originally  received,  in  money  loaned  ;  nor  to  the  under- 
writer, for  he  has  only  paid  upon  a  risk  voluntarily  taken,  for  which  he 
was  paid  by  the  mortgagee  a  full  and  satisfactory  equivalent.^ 

1  Dicta  ace:  Suffolk  F.  Ins.  Co.  v.  Boyden,  9  Allen,  123, 12.5-127  (1864),7)er  Hoar, 
J. ;  Internatioual  Trust  Co.  v.  Boardman.  149  Mass.  158,  161  (1889),  per  C.  Allen,  J. 

Dirta  contra  :  vEtiia  F.  Ins.  v.  Tyler,  ante,  p.  890  (18.36),  per  Walworth,  C.  ;  Car- 
penter V.  Providence  Washington  Ins.  Co.,  atite,  p.  91.5,  n.  (1842),  per  Story,  J.; 
Smith  i>.  Columbia  Ins.  Co.,  17  Fa.  253,  260-261  (1851),  per  Gibson,  J.  j  Kernochan  v. 


SECT.  II.]  KING   V.    STATE    MUTUAL   FIRE    INS.    CO.  969 

It  may  be  said,  that,  upon  these  grounds  a  wager  polic}'  might  be 
held  valid,  and  a  good  ground  of  action.  We  suppose  a  wager  poliey 
is  not  held  void  because  it  is  without  consideration,  or  unequal  between 
the  parties;  but  because  it  is  contrary  to  public  policy,  and  prohibited 
by  positive  law.  But,  independently  of  considerations  of  public  policy, 
if  an  insurance  were  made  on  a  subject  in  which  the  assured  has  no 
pecuniary  interest  — although  in  other  respects  he  may  be  deeplv  con- 
cerned in  it,  and  on  that  ground  be  willing  to  pay  a  fair  premium 

made  with  a  full  knowledge  of  all  the  circumstances,  by  both  parties, 
without  coercion  or  fraud,  we  cannot  perceive  wh}-  it  would  not  be  valid 
as  between  the  parties.  But  upon  the  strong  objections,  on  grounds  of 
public  policy,  to  all  gaming  contracts,  and  especially  to  contracts  which 
would  create  a  temptation  to  destroy  life  or  property,  such  policies, 
without  interest,  are  justly  held  to  be  void. 

We  are  not  unaware,  that  there  are  very  respectable  authorities  op- 
posed to  the  views  of  the  law  above  taken. 

Mr.  Phillips,  in  treating  of  the  rights  of  parties  after  an  abandon- 
ment, seems  to  put  the  rights  of  the  underwriter,  who  has  paid  a  loss, 
on  the  ground  of  subrogation,  and  then  adds  :  "  Where  a  policy  against 
fire  is  effected  by  a  mortgagee  for  his  own  benefit,  in  case  of  loss,  and 
payment  by  the  underwriters,  they  thereby  become  entitled  to  a  propor- 
tional interest  in  the  debt  secured  by  the  mortgage."  2  Phil.  Ins. 
(2d  ed.)  419.  In  support  of  this  position,  the  learned  author  cities 
several  authorities,  which  we  propose  to  examine. 

Robert  v.  Traders'  Ins.  Co.,  17  Wend.  631.  We  think  this  case  does 
not  su})port  the  position  for  which  it  is  cited.^  .  .  . 

Mr.  Phillips  also  cites  Tyler  v.  JEtna.  Ins.  Co.,  16  AVend.  385.  Some 
portion  of  the  language  of  the  chancellor,  in  giving  the  judgment  of  the 
Court  of  Errors,  in  that  case,  is  certainly  more  in  point.^  .  .  . 

Looking  at  the  analogies  and  illustrations  on  which  the  reasoning  of 
the  learned  chancellor  is  founded,  it  may  be  a  question,  whether  he  has 
not  relied  too  much  on  the  cases  of  marine  insurance,  in  which  the  doc- 
trines of  constructive  total  loss,  abandonment,  and  salvage,  are  fully 
acknowledged,  but  which  have  slight  application  to  insurances,  against 
loss  by  fire. 

We  are  then  brought  to  the  case  of  Carpenter  v.  Providence  AVash- 
ington  Ins.  Co.,  16  Pet.  495.     The  language  of  Mr.  Justice  Story,  in 

New  York  Bowery  F.  Ins.  Co.,  5  Duer,  1.  5-6  (1855),  per  Dcer,  J.;  Sussex  County 
Mut.  Ins.  Co.  V.  Woodruff,  26  N.  J.  L.  (2  Dutch.)  541,  554-558  (1857),  per  Willia.m- 
soy,  C. ;  Honore  v.  Lamar  F.  Ins.  Co.,  51  111.  409,  414  (1869),  per  Lawrence,  J.; 
Washington  F.  Ins.  Co.  v.  Kelly,  32  Md.  421,  441-444  (1870),  per  Stewart,  J.; 
Thamas  v.  Montauk  F.  Ins.  Co.,  43  Hun,  218,  220-221  (1887),  per  Bradley,  J. 

Compare  Clark  v.  Wilson,  103  Mass.  219  (1869),  a  marine  case;  Mercantile  M.  Ins. 
Co.  V.  Clark,  118  Mass.  288  (1875),  also  a  marine  case. 

See  Kernochan  v.  New  York  Bowery  F.  Ins.  Co.,  17  N.  Y.  428,  436  (1858) :  Pear- 
man  V.  Gould,  42  N.  J.  Eq.  (15  Stew.)  4,  9-10  (1886);  Nelson  v.  Bound  Brook  Mut. 
F.  Ins.  Co.,  43  N.  J.  Eq.  (16  Stew.)  256  (1887) ;  Phenix  Ins.  Co.  v.  First  Nat.  Bank, 
85  Va.  765  (1889).  — Ed. 

1  The  discussion  of  this  case  has  been  omitted.  —  Ed. 


970      TRASK    V.   HARTFORD   AND   NEW   HAVEN   RAILROAD.       [CHAP.  IX. 

giving  the  opinion  of  the  court  in  that  case,  is  certainly  very  strong; 
but  the  part  of  it  which  bears  upon  the  point  of  the  present  case  was 
not  necessary  to  the  judgment  of  the  court.^  .  .  . 

It  is  obvious  to  remark,  as  the  result  of  all  these  cases,  concurring 
with  many  others,  that  a  mortgagee  has  an  insurable  interest ;  that  he 
may  insure  generally  on  the  property,  and  need  not  disclose  the  pecul- 
iar nature  of  his  interest,  unless  inquired  of;  that,  before  payment  of 
his  debt,  he  may  recover  and  receive  to  the  amount  of  his  debt ;  and 
that  it  is  no  defence  for  the  underwriter,  that  the  plaintiff  holds  a  de- 
feasible, and  not  an  absolute,  title  to  the  property  insured. 

Some  other  cases  are  referred  to,  as  analogous,  but  the  analogy  is 
not  very  clear  or  direct.'^ .  .  . 

On  a  view  of  the  whole  question,  the  court  are  of  opinion,  that  a 
mortgagee  who  gets  insurance  for  himself,  when  the  insurance  is  gen- 
eral upon  the  property,  without  limiting  it  in  terms  to  his  interest  as 
mortgagee,  but  when,  in  point  of  fact,  his  only  insurable  interest  is  that 
of  a  mortgagee,  in  case  of  a  loss  by  fire,  before  the  payment  of  the 
debt  and  discharge  of  the  mortgage,  has  a  right  to  recover  the  amount 
of  the  loss  for  his  own  use. 

Judgment  for  the  lAaintiff. 


TRASK  V.   HARTFORD  AND  NEW  HAVEN   RAILROAD   CO. 
Supreme  Judicial  Court  of  Massachusetts,  18G1.     2  Allen,  331. 

Tort  to  recover  damages_for  the  destrnction  of  th£4ilauitiff!s_dwell- 
incr-house  and  shed  by  fire  communicated  by  the  locomotive  engine  of 
thV  defbndantsT  At  the  trial  in  the  superior  court,  it  appeare^l  „that 
heretofore  the  plaintiff  recovered  judgment  agamst  the  defendaiits  for 
iWToss  of  a  shop  by  fire  from  the  same  cause,  and  that  tiie  house  and 
shed  took  fire  from  the  burning  of  the  shop.  At  the  time  of  the  fire, 
he  held  a  policy  of  insurance  on  tlie  dwelling-house,  issued  by  the 
Merchants  and  Farmers'  Mutual  Fire  Insurance  Company ^the  amount 
of  which  they  aftenvards  pajcHoLliLm^juMLll^'eui^on  caused  this  action 
to  be  brought  and  prosecuted  for  their  benefit.  Morton,  J.,  ruled  that 
the  former  judgment  was  a  bar  to  this  action,  and  a  verdict  was  ac- 
cordingly returned  for  the  defendants.     The  plaintiff  alleged  exceptions. 

11.  Morris,  for  the  plaintiff. 

N'.  A.  Leonard^  for  the  defendants,  was  not  called  upon. 

Merrick,  J.^  It  is  an  established  principle  of  law,  that  judgment  in 
a  civil  suit  upon  a  certain  alleged  cause  of  action  is  conclusive  upon 
the  parties  in  relation  to  it,  and  that  another  suit  for  the  same  cause 

1  The  discussion  of  this  case  has  beeu  omitted.  —  Ed. 

2  The  omitted  passages  dealt  chiefly  with  Godsall  v.  Boldero,  ante,  p.  927  (1S07). — 
Ed. 

8  Dewet,  J.,  did  not  sit  in  this  case.  —  Rep. 


SECT.  II.]       TKASK   V.   HARTFORD    AND    NEW    HAVEN    RAILROAD.  971 

cannot  be  maintained  for  any  purpose  whatever.  No  man  is  liable  to 
be  twice  charged,  or  to  be  a  second  time  proceeded  against  in  a  civil 
action,  for  the  same  unlawful  act,  if  the  first  has  been  pursued  to  final 
judgment.  1  Stark.  Ev.  (4th  Amer.  ed.)  196;  Eastman  c.  Cooper, 
15  Pick.  276.  Tliis  doctrine  was  affirmed,  explained,  and  enforced  by 
this  court,  in  the  recent  case  of  Bennett  v.  Hood,  1  Allen,  47  ;  and  in 
its  proper  application  to  the  facts  disclosed  in  the  bill  of  exceptions  is 
decisive  of  the  present  action.  The  tortious  act  of  the  defendants, 
which  is  stated  and  complained  of  in  the  writ  and  declaration,  is  the 
setting  fire  by  one  of  their  locomotive  engines  to  the  shop  of  the  plain- 
tiff, by  means  of  which  his  dwelling-house  and  shed  were  burnt  and 
consumed.  This  same  cause  of  action  was  set  forth  in  the  former  suit, 
a  copy  of  the  judgment  in  which  was  produced  by  the  plaintiff  on  the 
trial  of  this.  As  to  that  cause  of  action,  therefore,  the  judgment  was 
final  and  conclusive  upon  both  of  the  parties.  The  loss  of  the  shop 
and  of  the  dwelling-house  and  shed  were  distinct  items  or  grounds  of 
damage,  but  they  were  both  the  result  of  a  single  and  indivisible  act. 
The  plaintiff  therefore  does  not  show  any  right  to  maintain  another 
action  to  recover  additional  damages  merely  by  showing  that,  in  con- 
sequence of  his  omission  to  produce  upon  the  trial  all  the  evidence 
which  was  admissible  in  his  behalf,  he  failed  to  obtain  the  full  amount 
of  compensation  to  which  in  that  event  he  might  have  been  entitled. 
Having  chosen  to  submit  the  determination  of  the  issue  upon  the  evi- 
dence which  he  did  in  fact  produce,  he  is  bound  to  abide  by  the  verdict 
which  was  rendered,  and  to  accept  the  judgment  in  full  satisfaction  of 
his  claim.  It  would  be  unjust,  as  well  as  in  violation  of  the  fixed  rule 
of  law,  to  allow  him  to  subject  the  defendants  to  the  hazard  and  ex- 
penses of  another  suit  to  obtain  an  advantage  which  he  lost  either  by 
his  own  carelessness  and  neglect,  or  by  an  intentional  withholding  of 
a  part  of  his  proof-  ^oi"  can  it  make  an}-  diflTerence  that  the  Merchants 
and  Farmers'  Insurance  Company  had  an  equitable  interest,  as  insurers 
of  the  dwelling-house  and  shed  lost  by  the  fire,  in  the  damages  which 
the  plaintiff  might  have  recovered  for  the  destruction  of  that  propert}-. 
To  j)rqtecjjtheir  jnterest,  the  insurance  company  should  have  season- 
ably intervened  and  supplied,  or  caused  to  be  supplied,  the  evidence 
winch'wourd  have  shown  that  the  plaintiff  ought  to  recover  compensa- 
fion  as  well  for  the  burning  of  the  dwelling-house  and  shed  as  for  the 
shop ;  both  having  been  destroyed  at  the  same  time,  by  one  and  the 
same  tortious  and  unjustifiable  act  of  the  defendants.  The  fact  there- 
fore that  the  insurance  company  had  an  equitable  interest,  which  the 
law  will  protect  —  Hart  r.  ^Yestern  Railroad,  13  Met.  99  —  in  a  part  of 
•the  damages  which  the  plaintiff  was  entitled  to  recover  against  the  de- 
fendants, affords  no  reason  why  they  should  be  deprived  of  the  benefit 
of  the  general  principle  of  law  which  protects  all  parties  against  the 
unnecessary  multiplication  of  suits,  and  the  hazard,  vexation,  and 
charges  which  unavoidably  attend  them.  The  presiding  judge  sus- 
tained this  principle,  and  the  exceptions  taken  on  this  account  must 
therefore  be  overruled. 


972  HALL   &   LONG   V.    THE    RAILROAD    COMPANIES.       [CHAP.  IX. 


HALL   &   LONG  v.  THE   RAILROAD     COMPANIES. 
Supreme  Court  of  the  United  States,  1871.     13  Wall.  367. 

Error  to  the  Circuit  Court  for  the  Middle  District  of  Tennessee. 

Hall  &  Long  allowed  this  suit  in  their  names,  for  the  use  of  certain 
insurance  companies,  against  the  Nashville  and  Chattanooga  Railroad 
Company,  to  recover  the  value  of  cotton  shipped  by  them  on  the  road 
of  the  defendant  as  a  common  carrier,  which  was  accidentally  consumed 
by  fire,  while  being  transported,  and  "  became  and  was  a  total  loss." 
The  cotton  had  been  insured  by  Hall  &  Long  against  loss  by  fire,  in  the 
companies  for  whose  use  the  suit  was  brought,  and  these  companies 
had  paid  the  amount  insured  by  them,  respectively.  On  jdemurrer  the 
question_jvvas  whether. the_undei- writer  who  insures^  p_ersoiial_ i^roperty 
against  loss  by  fire,  and  jiaysjthe  insurance  upon  a  total  loss  by_acci- 
delital  burningT^hile  in  transition ,_can  brino;  an  action  in  the  name  of 
the  owner,  for  U^  use  against  the  common  carrier,  based  upjMi  the 
common-law  liaJjility  of^such  common  carrier.  The  court  below  ad- 
judged that  he  could  not,  and  the  plaintiffs  brought  the  case  here  on 
error. 

Mr,  Henry  Coo2)er,  in  support  of  the  judgment  below. 

Mr.  W.  Aticood,  contra. 

Mr.  Justice  Strong  delivered  the  opinion  of  the  court. 

It  is  too  well  settled  by  the  authorities  to  admit  of  question  that,  as 
between  a  common  carrier  of  goods  and  an  underwriter  upon  them,  the 
liability  to  the  owner  for  their  loss  or  destruction  is  primarily  upon  the 
carrier,  while  the  liability  of  the  insurer  is  only  secondary.  The  con- 
tract of  the  carrier  may  not  be  first  in  order  of  time,  but  it  is  first  and 
principal  in  ultimate  liabilit}-.  In  respect  to  the  ownership  of  the  goods, 
and  the  risk  incident  thereto,  the  owner  and  the  insurer  are  considered 
but  one  person,  having  together  the  beneficial  right  to  the  indemnity 
due  from  tlie  carrier  for  a  breach  of  his  contract  or  for  non-performance 
of  his  legal  duty.  Standing  thus,  as  the  insurer  does,  practically,  in 
the  position  of  a  surety,  stipulating  that  the  goods  shall  not  be  lost  or 
injured  in  consequence  of  the  peril  insured  against,  whenever  he  has 
indemnified  the  owner  for  the  loss,  he  js  entitled  to  all  the  means  of 
indemnity  which  the  satisfied  owner  held  against  the  party  primarily 
liable.  His  right  rests  upon  familiar  principles  of  equity-.  It  is  tlie 
doctrine  of  subrogation,  dejjcndent  not  at  all  upon  privity  of  contract. 
but  worked  out  throughthe  right  of  the  creditor  or  owner.  Hence  it 
has  often  been  ruled  that  an  insurer,  who  has  paid  a  loss,  may  use  the 
name  of  the  assured  in  an  action  to  obtain  redress  from  the  carrier 
■whose  failure  of  duty  caused  the  loss.  It  is  conceded  that  this  doctrine 
prevails  in  cases  of  marine  insurance,  but  it  is  denied  that  it  is  appli- 
cable to  cases  of  fire  insurance  upon  land,  and  the  reason  for  the 
supposed  difference  is  said  to  be  that  the  insurer  in  a  marine  policy 


SECT.  II.]       HALL   &   LONG    V.   THE    RAILROAD    COMPANIES.  973 

becomes  the  owner  of  the  lost  or  injured  property  b}'  abandonment  of 
the  assured,  while  in  land  policies  there  can  be  no  abandonment.  But 
it  is  a  mistake  to  assert  that  the  right  of  insurers  in  marine  policies  to 
proceed  against  the  carrier  of  the  goods,  after  the}'  have  paid  a  total 
loss,  grows  wholly,  or  even  principallj-,  out  of  an}'  abandonment.  There 
can  be  no  abandonment  where  there  has  been  total  destruction.  There 
is  nothing  upon  which  it  can  operate,  and  an  insured  party  may  recover 
for  a  total  loss  without  it.  It  is  laid  down  in  Phillips  on  Insurance, 
§  1723,  that  "  a  mere  payment  of  a  loss,  whether  partial  or  total, 
gives  the  insurers  an  equitable  title  to  what  may  afterwards  be  recov- 
ered from  other  parties  on  account  of  the  loss,"  and  that  "  the  effect  of 
a  payment  of  a  loss  is  equivalent  in  this  respect  to  that  of  abandon- 
ment." There  is,  then,  no  reason  for  the  subrogation  of  insurers  b}' 
marine  policies  to  the  rights  of  the  assured  against  a  carrier  b}'  sea 
which  does  not  exist  in  support  of  a  like  subrogation  in  case  of  an  in- 
surance against  fire  or  land.  Nor  do  the  authorities  make  any  distinc- 
tion between  the  cases,  though  a  carrier  may,  b}-  stipulation  with  the 
owner  of  the  goods,  obtain  the  benefit  of  insurance.^  .  ,  . 

It  has  been  argued,  however,  that  these  decisions  rest  upon  the  doe- 
trine  that  a  wrong-doer  is  to  be  punished  ;  that  the  defendants  against 
whom  such  actions  have  been  maintained  were  wrong-doers  ;  but  that, 
in  the  present  case,  the  fire  b}'  which  the  insured  goods  were  destroj'ed 
was  accidental,  without  fault  of  the  defendants,  and,  therefore,  that^ 
they  stood,  in  relation  to  the  owner,  at  most  in  the  position  of  double, 
insurers.  The  argument  will  not  bear  examination.  A  carrier  is  not 
an  insurer,  though  often  loosely  so  called.  The  extent^  his  responsi- 
bility may_be  equal  to  that  of  an  insurer,  and  even  grealeiv  but_its 
natin-e  is  not  the  same,  ^is  contract  is  not  one  for  indemnity,  inde- 
pendent of  the  care  and  custodj'  of  the^goods.  He  is  not  entitled  to  a 
cession  of  the  remains  of  the  propert}',  or  to  have  the  loss  adjusted  on 
principles  peculiar  to  the  contract  of  insurance  ;  and  when  a  loss  occurs, 
unless  caused  b}'  the  act  of  God,  or  of  a  public  enemy,  he  is  always  in 
fault.  The  law  raises  against  him  a  conclusive  presumption  of  mis- 
conduct, or  breach  of  duty,  in  relation  to  ever}-  loss  not  caused  by 
excepted  perils.  Even  if  innocent,  in  fact,  he  has  consented  by  his 
contract  to  be  dealt  with  as  if  he  were  not  so.  He  does  not  stand, 
therefore,  on  the  same  footing  with  that  of  an  insurer  who  ma}'  have 
entered  into  his  contract  of  indemnity,  relying  upon  the  carrier's  vigi- 
lance and  responsibility.  In  all  cases,  when  liable  at  all,  it  is  because 
he  is  proved,  or  presumed  to  be,  the  author  of  the  loss.  There  is 
nothing,  then,  to  take  the  case  in  hand  out  of  the  general  rule  that  an 
underwriter,  who  has  paid  a  loss,  is  entitled  to  recover  what  he  has 
paid  by  a  suit  in  the  name  of  the  assured  against  a  carrier  who  caused 
the  loss. 

Judgment  reversed,  and  the  cause  remanded  for  further  pro- 
ceedings. 

■  ^  Here  followed  a  discussion  of  authorities.  —  Ed. 


974  CASTELLAIN  V.    PRESTON.  [CHAP.  IX. 

CASTELLAIN  v.  PRESTON. 
Court  of  Appeal,  1883.     11  Q.  B.  D.  380. 

Appeal  of  the  plaintiff  from  the  judgment  of  Chitty,  J.,  in  favor  of 
the  defendants.  The  facts  are  fully  stated  in  the  report  of  the  proceed- 
ings before  Chitty,  J.  (8  Q.  B.  D.  613),  and  it  is  necessary  here  only 
to  briefly  recapitulate  them. 

The  plaintiff  sued  on  behalf  of  the  London,  Liverpool,  and  Globe 
Insurance  Company  to  recover  a  sum  of  £330,  with  interest  since  the 
25th  of  September,  1878.  On  the  25th  of  March,  1878,  the  defendants, 
as  owners  of  certain  lands  and  buildings  in  Liverpool,  effected  an 
insurance  on  the  buildings  against  loss  by  fire,  and  they  kept  the  policy 
on  foot  by  payment  of  the  premiums  until  after  the  fire  hereinafter 
mentioned  occurred.  The  policy  was  in  the  usual  form,  giving  the 
insurers  the  option  of  reinstating  the  propert}'.  On  the  31st  of  July, 
1878,  the  defendants  contracted  to  sell  the  land  and  the  buildings  to 
their  tenants,  Messrs.  Rayner,  for  the  sum  of  £3,100,  and  the}'  received 
a  deposit.  The  contract  provided  that  the  time  of  the  completion 
should  be  such  day  within  two  years  from  the  date  as  the  vendors 
should  name.  On  the  15th  of  August  in  the  same  year  a  fire  occurred 
damaging  part  of  the  buildings.  A  claim  was  made  on  belialf  of  the 
defendants,  and  after  negotiation  as  to  the  sum  to  be  paid,  the  amount 
of  the  claim  was  ultimately  fixed  at  £330,  and  that  sura  was,  in  fact, 
paid  on  the  25th  of  September,  1878,  by  the  insurers,  who  were  at  that 
time  ignorant  of  the  existence  of  the  contract  for  sale.  On  the  25th  of 
March,  1879,  the  defendants  named  the  5th  of  May  as  the  day  of  com- 
pletion, and  on  the  following  12th  of  December  the  conve3'ance  was 
executed  ami  the  balance  of  the  purchase-mone}'  paid. 

The  present  action  was  commenced  on  the  3Ist  of  October,  1881. 

Charles  Jiussell,  Q.  C,  and  A.  Aspinall  Tobin,  for  the  plaintiff. 

Gully,  Q.  C,  and  W.  Ji.  Kennedy,  for  the  defendants. 

Brett,  L.  J.  In  this  case  the  action  is  brought  by  the  plaintiff,  as 
representing  an  insurance  compan}',  against  the  defendants  in  respect 
of  money  which  has  been  paid  by  that  company  to  the  defendants  on 
account  of  the  loss  by  fire  of  a  building.  The  defendants  were  the 
owners  of  property  consisting  partly  at  all  events  of  a  house,  and  the 
defendants  had  made  a  contract  of  sale  of  that  property-  with  third  per- 
sons, which  contract,  upon  the  giving  of  a  certain  notice  as  to  the  time 
of  pa3'nient,  would  oblige  those  third  persons,  if  the}'  fulfilled  the  con- 
tract, to  pay  the  agreed  price  for  the  sale  of  that  propert}',  a  part  of 
which  was  a  house,  and,  according  to  the  peculiarity  of  such  a  sale  and 
purchase  of  land  or  real  propert}',  the  vendees  would  have  to  pay  the 
purchase-mone}',  whether  the  house  was,  before  the  date  of  payment, 
burnt  down  or  not.  After  the  contract  was  made  with  the  third  per- 
sons, and  before  the  day  of  payment,  the  house  was  burnt  down.     The 


SECT.  II.]  CASTELLAIN    V.    PKESTON.  975 

vendors,  the  defendants,  having  insured  the  house  in  the  ordinarj-  form 
with  the  plaintiff's  companv,  it  is  not  suggested  that  upon  the  house 
being  burnt  down  the  defendants  liad  not  an  insurable  interest.  Tlie}' 
had  an  insurable  interest,  as  it  seems  to  me,  — first,  because  the}-  were 
at  all  events  the  legal  owners  of  the  property  ;  and,  secondly,  l)ecause 
the  vendees  or  third  persons  might  not  carry  out  the  contract ;  and  if  for 
any  reason  they  should  never  carry  out  the  contract,  then  the  vendors,  if 
the  house  was  burnt  down,  would  suffer  the  loss.  Upon  the  happening 
of  the  fire,  the  defendants  made  a  claim  on  the  insurance  company  repre- 
sented by  the  plaintiff,  and  were  paid  a  certain  sum  which  represented 
the  damage  done  to  the  house.  After  that,  the  contract  of  sale  between 
the  defendants  and  the  third  persons,  the  vendees  of  the  property,  was 
carried  out,  and  the  full  amount  of  the  purchase-money  was  paid  by 
the  third  persons  to  the  defendants  notwithstanding  the  fire.  Under 
those  circumstances  the  plaintiff  representing  the  insurance  company 
brings  this  action.  I  do  not  say  that  he  brings  it  to  recover  back  the 
money  which  has  been  paid  by  the  insurance  compan}'  (for  that  ex- 
pression of  opinion  would  rather  interfere  with  the  form  of  the  action), 
but  he  brings  the  action  in  respect  of  that  money. 

The  question  is  whether  this  action  is  maintainable.  The  case  was 
tried  before  Chitty,  J.,  and  he,  in  a  very  careful  and  elaborate  judg- 
ment (8  Q.  B.  D.  613,  at  p.  615),  has  come  to  the  conclusion  that  tlie 
insurance  company  cannot  recover  against  the  defendants  in  respect  of 
the  money  paid  by  them.  It  seems  to  me  that  the  foundation  of  his 
judgment  is  this,  that  he  considers  that  the  doctrine  of  subrogation  of 
the  insurer  into  the  position  of  the  assured  is  confined  within  limits 
which  prevent  it  from  extending  to  the  present  case.  I  must  now  con- 
sider whether  I  can  agree  with  him. 

In  order  to  give  m}-  opinion  upon  this  case,  I  feel  obliged  to  revert 
to  the  very  foundation  of  every  rule  which  has  been  promulgated  and 
acted  on  b}-  the  courts  with  regard  to  insurance  law.  The  very  foun- 
dation, in  m}'  opinion,  of  every  rule  which  has  been  applied  to  insurance 
law  is  this,  namely,  that  the  contract  of  insurance  contained  in  a  ma- 
rine or  fire  polic}'  is  a  contract  of  indemnity,  and  of  indemnity  only, 
and  that  this  contract  means  that  the  assured,  in  case  of  a  loss  against 
which  the  policy'  has  been  made,  shall  be  fully  indemnified,  but  shall 
never  be  more  than  fully  indemnified.  That  is  the  fundamental  prin- 
ciple of  insurance;  and  if  ever  a  proposition  is  brought  forward  which 
is  at  variance  with  it,  that  is  to  say,  which  either  will  prevent  the 
assured  from  obtaining  a  full  indemnity,  or  which  will  give  to  the 
assured  more  than  a  full  indemnity,  that  proposition  must  certainlj-  be 
wrong. 

In  the  course  of  this  discussion  man}'  propositions  and  rules  well 
known  in  insurance  law  have  been  glanced  at.  For  instance,  to  speak 
of  marine  insurance,  the  doctrine  of  a  constructive  total  loss  originated 
solely  to  carry  out  the  fundamental  rule  which  I  have  mentioned.  It 
was  a  doctrine  introduced  for  the  benefit  of  the  assured ;  for,  as  a 


976  CASTELLAIN   V.    PRESTON.  [CHAP.  IX. 

matter  of  business,  a  constructive  total  loss  is  equivalent  to  an  actual 
total  loss  ;  and  if  a  constructive  total  loss  could  not  be  treated  as  an 
actual  total  loss,  the  assured  would  not  recover  a  full  indemnitv.  But 
grafted  upon  the  doctrine  of  constructive  total  loss  came  the  doctrine 
of  abandonment,  which  is  a  doctrine  in  favor  of  the  insurer  or  under- 
writer, in  order  that  the  assured  may  not  recover  more  than  a  full 
indemnity.  The  doctrine  of  constructive  total  loss  and  the  doctrine  of 
notice  of  abandonment  engrafted  upon  it  were  invented  or  promulgated 
for  the  purpose  of  making  a  policy  of  marine  insurance  a  contract  of 
indemnity  in  the  fullest  sense  of  the  term.  I  ma}-  point  out  that  the 
doctrine  of  notice  of  abandonment  is  most  difficult  to  justif)-  upon  prin- 
ciple ;  it  was  introduced  rather  as  a  matter  of  justice  in  favor  of  the 
underwriters,  so  as  to  prevent  the  assured  from  obtaining  by  fraud 
more  than  a  full  indemnit}-.  That  doctrine  is  to  a  certain  extent  tech- 
nical ;  that  is  to  sa}',  although  the  assured  has  in  realit}-  suffered  a 
constructive  total  loss,  and  althougli  he  is  upon  general  principles 
entitled  to  recover,  nevertheless  he  must  fail  unless  he  has  given  a 
notice  of  abandonment.  I  suppose  that  the  doctrine  of  notice  of  aban- 
donment was  originally  introduced  b}'  merchants  and  underwriters,  and 
afterwards  adopted  as  part  of  the  law  as  to  marine  insurance  ;  but  at 
first  sight  it  seems  a  mere  encroachment  of  the  judges. 

I  have  mentioned  the  doctrine  of  notice  of  abandonment  for  the  pur- 
pose of  coming  to  the  doctrine  of  subrogation.  That  doctrine  does  not 
arise  upon  any  of  the  terras  of  the  contract  of  insurance  ;  it  is  only 
another  proposition  which  has  been  adopted  for  the  purpose  of  carrying 
out  the  fundamental  rule  which  I  have  mentioned,  and  it  is  a  doctrine 
in  favor  of  the  underwriters  or  insurers  in  order  to  prevent  the  assured 
fi'om  recovering  more  than  a  full  indemnit\- ;  it  has  been  adopted  solely 
for  that  reason.  It  is  not,  to  ni}-  mind,  a  doctrine  applied  to  insurance 
law  on  the  ground  tliat  underwriters  are  sureties.  Underwriters  are 
not  always  sureties.  The}'  have  rights  which  sometimes  are  similar  to 
tlie  riglits  of  sureties  ;  but  that,  again,  is  in  order  to  prevent  the  assured 
from  recovering  from  them  more  than  a  full  indemnity.  But  it  being 
admitted  that  the  doctrine  of  subrogation  is  to  be  applied  merely  for 
the  purpose  of  preventing  the  assured  from  obtaining  more  than  a  full 
indemnity,  the  question  is  whether  that  doctrine  as  applied  in  insur- 
ance law  can  be  in  any  way  limited.  Is  it  to  be  limited  to  this,  that 
the  underwriter  is  subrogated  into  the  place  of  the  assured  so  far  as  to 
enable  the  underwriter  to  enforce  a  contract,  or  to  enforce  a. right  of 
action?  Why  is  it  to  be  limited  to  that,  if  when  it  is  limited  to  that 
it  will,  in  certain  cases,  enable  the  assured  to  recover  more  than  a  full 
indemnity?  The  moment  it  can  be  shown  that  such  a  limitation  of  the 
doctrine  would  have  that  effect,  then,  as  I  said  before,  in  my  opinion, 
it  is  contrary  to  the  foundation  of  the  law  as  to  insurance,  and  must  be 
wrong.  And,  with  the  greatest  deference  to  my  Brother  Chitty,  it 
seems  to  me  that  that  is  the  fault  of  his  judgment.  He  has  by  his  judg- 
ment limited  this  doctrine  of  subrogation  to  placing  the  insurer  in  the 


SECT.  II.J  CASTELLAIN   V.   PRESTON.  977 

position  of  the  assured  onl\'  for  the  purpose  of  enforcing  a  right  of 
action  to  which  the  assured  ma}-  be  entitled.  In  order  to  apply  the 
doctrine  of  subrogation,  it  seems  to  me  that  the  full  and  absolute 
meaning  of  the  word  must  be  used  ;  that  is  to  say,  the  insurer  must  be 
placed  in  the  position  of  the  assured.  Now,  it  seems  to  me  that  in 
order  to  carry  out  the  fundamental  rule  of  insurance  law,  this  doctrine 
of  subrogation  must  be  carried  to  the  extent  which  I  am  now  about  to 
endeavor  to  express,  namely,  that  as  between  the  underwriter  and  the 
assured  the  underwriter  is  entitled  to  the  advantage  of  every  right  of 
the  assured,  whether  such  right  consists  in  contract,  fulfilled  or  unful- 
filled, or  in  remedy  for  tort  capable  of  being  insisted  on  or  already 
insisted  on,  or  in  any  other  right,  whether  by  way  of  condition  or  other- 
wise, legal  or  equitable,  which  can  be,  or  has  been  exercised  or  has 
accrued,  and  whether  such  right  could  or  could  not  be  enforced  by  the 
insurer  in  the  name  of  the  assured  by  the  exercise  or  acquiring  of  which 
right  or  condition  the  loss  against  which  the  assured  is  insured,  can  be 
or  has  been  diminished.  That  seems  to  me  to  put  this  doctrine  of 
subrogation  in  the  largest  possible  form,  and  if  in  that  form,  large  as 
it  is,  it  is  short  of  fulfilling  that  which  is  the  fundamental  condition, 
I  must  have  omitted  to  state  something  which  ought  to  have  been 
stated.  But  it  will  be  observed  that  I  use  the  words  -"of  every 
right  of  the  assured."  I  think  that  the  rule  does  require  that  limit. 
In  Burnand  v.  Rodocanachi,^  the  foundation  of  the  judgment,  to  my 
mind,  was,  that  what  was  paid  by  the  United  States  government 
could  not  be  considered  as  salvage,  but  must  be  deemed  to  have 
been  only  a  gift.  It  was  only  a  gift  to  which  the  assured  had  no 
right  at  any  time  until  it  was  placed  in  their  hands.  I  am  aware  that 
with  regard  to  the  case  of  reprisals,  or  that  which  a  person  whose  vessel 
had  been  captured  got  from  the  English  government  by  way  of  reprisal, 
the  sum  received  has  been  stated  to  be,  and  perhaps  in  one  sense  was, 
a  gift  of  his  own  government  to  himself;  but  it  was  always  deemed 
to  be  capable  of  being  brought  within  the  range  of  the  law  as  to  insur- 
ance, because  the  English  government  invariably  made  the  *'gift,"  so 
invariably,  that  as  a  matter  of  business,  it  had  come  to  be  considered 
as  a  matter  of  right.  This  enlargement,  or  this  explanation,  of  what  I 
consider  to  be  the  real  meaning  of  the  doctrine  of  subrogation,  shows 
that,  in  my  opinion,  it  goes  much  further  than  a  mere  transfer  of  those 
rights  which  may  at  any  time  give  a  cause  of  action  either  in  contract 
or  in  tort,  because  if  upon  the  happening  of  the  loss  there  is  contract 
between  the  assured  and  a  third  person,  and  if  that  contract  is  imme- 
diately fulfilled  by  the  third  person,  then  there  is  no  right  of  action  of 
any  kind  into  which  the  insurer  can  be  subrogated.  The  right  of  action 
is  gone  ;  tlie  contract  is  fulfilled.  In  like  manner  if  upon  tlie  happen- 
ing of  a  tort  the  tort  is  immediately  made  good  by  the  tort  feasor,  then 
the  right  of  action  is  gone ;  there  is  no  right  of  action  existing  into 
which  the  insurer  can  be  subrogated.     It  will  be  said  that  there  did  for 

1  Ante,  p.  946  (H.  L.,  1882).  — Ed. 
62 


978  CASTELLAIN   V.   PRESTON.  [CHAP.  IX. 

a  moment  exist  a  right  of  action  in  favor  of  the  assured  into  which  the 
insurer  could  have  been  subrogated.  But  he  cannot  be  subrogated  into 
a  right  of  action  until  he  has  paid  the  sum  insured  and  made  good  the 
loss.  Therefore  innumerable  cases  would  be  taken  out  of  the  doctrine 
if  it  were  to  be  confined  to  existing  rights  of  action.  And  I  go  further 
and  hold  that  if  a  right  of  action  in  the  assured  has  been  satisfied,  and 
the  loss  has  been  thereby  diminished,  then,  although  there  never  was 
nor  could  be  an}'  right  of  action  into  which  the  insurer  could  be  subro- 
gated, it  would  be  contrary  to  the  doctrine  of  subrogation  to  say  that 
the  loss  is  not  to  be  diminished  as  between  the  assured  and  the  insurer 
by  reason  of  the  satisfaction  of  that  right.  I  fail  to  see  at  present  if 
the  present  defendants  would  have  had  a  right  of  action  at  any  time 
against  the  purchasers,  upon  which  they  could  enforce  a  contract  of 
sale  of  their  property  whether  the  building  was  standing  or  not,  why 
the  insurance  company  should  not  have  ])een  subrogated  into  that  right 
of  action.  But  I  am  not  prepared  to  say  that  they  could  be,  more 
particularly  as  I  understand  my  learned  Brother,  who  knows  much 
more  of  the  law  as  to  specific  performance  than  I  do,  is,  at  all  events, 
not  satisfied  that  they  could.  I  pass  by  the  question  without  solving  it, 
because  there  was  a  right  in  the  defendants  to  have  the  contract  of  sale 
fulfilled  by-  the  purchasers  notwithstanding  the  loss,  and  it  was  ful- 
filled. The  assured  have  had  the  advantage  therefore  of  that  right, 
and  by  that  right,  not  by  a  gift  which  the  purchasers  could  have  de- 
clined to  make,  the  assured  have  recoA'cred,  notwithstanding  the  loss, 
from  the  purchasers,  the  very  sum  of  money  which  they  were  to  obtain 
whether  this  building  was  burnt  or  not.  In  that  sense  I  cannot  con- 
ceive that  a  right,  by  virtue  of  which  the  assured  has  his  loss  dimin- 
ished, is  not  a  right  which,  as  has  been  said,  affects  the  loss.  This 
right,  which  was  at  one  time  merely  in  contract,  but  which  was  after- 
wards fulfilled,  either  when  it  was  in  contract  only,  or  after  it  was  ful- 
filled, does  affect  the  loss ;  that  is  to  say,  it  affects  the  loss  by  enabling 
the  assured,  the  vendors,  to  get  the  same  money  which  they  would  have 
got  if  the  loss  had  not  happened. 

While  I  am  applying  the  doctrine  of  subrogation  which  I  have  en- 
deavored to  enunciate,  I  think  it  due  to  Chitty,  J.,  to  point  out  what 
passages  in  his  judgment  require  some  modification  (8  Q.  B.  D.  at 
p.  617).  I  find  him  reading  this  passage:  "  I  know  of  no  foundation 
for  the  right  of  underwriters,  except  the  well-known  principle  of  law, 
that  where  one  person  has  agreed  to  indemnify  another,  he  will,  on 
making  good  the  indemnity,  be  entitled  to  succeed  to  all  the  ways  and 
means  b}-  which  the  person  indemnified  might  hav^  protected  himself 
against  or  reimbursed  himself  for  the  loss."  That  is  a  quotation  from 
Lord  Cairns  in  Simpson  v.  Thomson.^  The  learned  judge  then  goes 
on  :  "  What  is  the  principle  of  subrogation  ?  On  payment  the  insurers 
are  entitled  to  enforce  all  the  remedies,  whether  in  contract  or  in  tort, 
which  the  insured  has  against  third  parties,  whereby  the  insured  can 

1  Ante,  p.  944  (H.  L.  Sc,  1877).  — Ed. 


SECT.  II.]  CASTELLAJN    V.   PRESTON.  979 

compel  such  third  parties  to  make  good  the  loss  insured  against."  That 
is,  as  it  seems  to  me,  to  confine  this  doctrine  of  subrogation  to  the 
principle  that  the  insurers  are  entitled  to  enforce  all  remedies,  whether 
in  contract  or  in  tort.  I  sliould  venture  to  add  this:  "And  if  the 
assured  enforces  or  receives  tlie  advantage  of  such  remedies,  the  in- 
surers are  entitled  to  receive  from  the  assured  the  advantage  of  such 
remedies."  Then  wlien  we  come  to  this  illustration,  "  Where  the  land- 
lord insures,  and  he  has  a  covenant  b}-  the  tenant  to  repair,  the  insurance 
office,  on  payment  in  lilce  manner,  succeeds  to  the  right  of  the  landlord 
against  his  tenant,"  I  would  add  this,  —  "and  if  the  tenant  does  re- 
pair, the  insurer  has  the  right  to  receive  from  the  assured  a  benefit 
equivalent  to  the  benefit  which  the  assured  has  received  from  such 
repair."  Then,  dealing  with  the  case  of  Burnand  v.  Rodocanachi,^ 
the  learned  judge  cites  the  opinion  of  Bramwcll,  L.J.  (8  Q.  B.  D.  at 
p.  G18).  He  says  that  Bramwcll,  L.  J.,  in  his  judgment,  held  that  it 
was  not  salvage,  but  "that  in  the  circumstances  the  sum  received  by 
the  shipowner  was  but  a  pure  gift,  and  there  was  no  right  on  the  part 
of  the  insurers  to  recover  an}'  part  of  it  over  against  him."  I,  for 
myself,  venture  to  add  this  as  the  reason,  "because  there  was  no  right 
in  the  assured  to  demand  the  compensation  from  the  American  govern- 
ment." There  was  no  right  to  demand  it ;  it  was  bestowed  and  received 
as  a  pure  gift.  Darrell  v.  Tibbitts'^  seems  to  me  to  be  entirely  in  favor 
of  the  plaintiff  in  this  case.  I  shall  not  retract  from  the  very  terms 
which  I  used  in  that  case.  It  seems  to  me  that  in  Darrell  v.  Tibbitts 
the  insurers  were  not  subrogated  to  a  riglit  of  action  or  to  a  remedy. 
They  were  not  subrogated  to  a  right  to  enforce  the  remedy,  but  what 
they  were  subrogated  into  was  the  right  to  receive  the  advantage  of 
the  remedy  which  had  been  applied,  whether  it  had  been  enforced  or 
voluntarily  administered  by  the  person  who  was  bound  to  administer 
it.  That  seems  to  me  to  be  the  doctrine.  Then  with  regard  to  the 
passage,^  '"The  doctrine  is  well  established  that  where  something  is 
insured  against  loss,  either  in  a  marine  or  a  fire  polic}-,  after  the 
assured  has  been  paid  by  the  insurers  for  the  loss,  the  insurers  are  put 
into  the  place  of  the  assured  with  regard  to  ever}-  right  given  to  him  by 
the  law  respecting  the  subject-matter  insured."  I  wish  to  explain  that 
that  was  a  distinct  clause,  and  it  was  so  intended  b}'  me  when  I  stated 
it,  I  then  mentioned  contracts:  " And  with  regard  to  every  contract 
which  touches  tlie  subject-matter  insured,  and  which  contract  is  affected 
by  the  loss  or  the  safety  of  the  subject-matter  insured  b}'  reason  of  the 
peril  insured  against."  I  fail  to  conceive  any  contract  which  gives  a 
right  over  the  thing  insured  which  is  not  affected  by  the  loss  oi-  safety 

1  Ante,  p.  946  (H.  L.,  1882).  — Ed. 

2  In  Darrell  v.  Tibbitts,  5  Q.  B.  D.  .560  (C.  A.,  1880),  an  insurance  society  paid  a 
landlord  a  loss  under  a  policy,  and  later  discovered  that  the  tenants  had  repaired  the 
damage,  as  was  required  by  their  lease ;  and  it  was  held  that  the  insurance  society 
was  entitled  to  recover  from  the  landlord  the  sum  paid  by  it.  —  Ed. 

3  Per  Brett,  L.  J.,  in  Darrell  i'.  Tibbitts,  supra.  —  Ed. 


980 


CASTELLAIN    V.    PKESTON.  [CHAl*.  IX. 


of  it  and  if  it  is  necessary  to  bring  the  present  case  within  those  terms, 
it  seems  to  me  that  the  contract  of  purchase  and  sale  was  affected  by 
ihat  loss.    I  will  not  go  further  with  the  judgment  of  Chitty,  J.,  except 
to  sav  this,  that  at  the  end  my  learned  Brother  has  put  it  thus,  that 
-  the  onlv  principle  applicable  is  that  of  subrogation  as  understood  in 
the  full  sense  of  that  term  "  (8  Q.  B.  D.  at  p.  625).    There  I  agree  with 
him,  only  ray  view  of  the  full  sense  is  larger  than  that  wliich  he  adopted. 
"And  that  where  the  right  claimed  is  under  a  contract  between  the 
insured  and  third  parties,  it  must  be  couflned  to  the  case  of  a  contract 
relating  to  the  subject-matter  of  tlie  insurance,  which  entitled  the  in- 
surers to  have  the  damages  made  good."     I  think  it  would  be  better 
expressed  in  this  way,  —  "which  entitles  the  assured  to  be  put  by  such 
third  parties  into  as  good  a  position  as  if  the  damage  insured  against 
had  not  happened."     If  it  is  put  in  that  sense,  it  seems  to  me  to  be 
consistent  with  the  proposition  which  1  laid  down  at  the  beginning  of 
what  I  have  said,  and  to  cover  this  case.     I  will  rei)eat  it,  — "which 
entitles  the  assured  to  be  put  by  such  third  parties  into  as  good  a  posi- 
tion as  if  the  damage  insured  against  had  not  happened."     Tlie  con- 
tract in  the  present  case,  as  it  seems  to  me,  does  enable  the  assured 
to  be  put  by  the  third  party  into  as  good  a  position  as  if  llie  fire  had 
not  liappened,  and  that  result  arises  from  this  contract  alone.     There- 
fore, according  to  the  true  principles  of  insurance  law,  and.  in  order  to 
carrv  out  the  fundamental  doctrine,  namely,  that  the  assured  can  re- 
cover a  full  indemnity,  but  shall  never  recover  more,  exccpt,.perhaps, 
in   the   case  of  the  suing  and  laboring  clause  under  certain   circum- 
stances, it  is  necessary  that  the  plaintiff  in  this  case  should  succeed. 
The  case  of  Darrell  v.  Tibbitts^  has  cut  away  every  technicality  which 
would  prevent  a  sound  decision.     The  doctrine  of  subrogation  must  be 
carried  out  to  the  full  extent,  and  carried  out  in  this  case  by  enabling 
the  plaintiff  to  recover. 

Cotton,  L.  J.  In  this  case  the  appellant's  company  insuied  a  house 
belonging  to  the  defendants,  and  before  there  was  any  loss  by  fire  the 
defendants  sold  the  house  to  certain  purchasers.  Afterwards  there 
was  a  fire,  and  an  agreed  sum  was  paid  by  the  insurance  office  to  the 
defendants  in  respect  of  the  loss.  The  appellant  apparently  seeks  to 
recover  the  sum  which  the  office  paid  to  the  defendants,  and  if  the 
plaintiffs  claim  could  be  shaped  only  in  this  form,  I  tliink  my  opinion 
would  be  against  him.  The  plaintiff's  claim  may  be  treated  in  sub- 
stance in  another  way,  namely,  the  company  seek  to  obtain  the  benefit 
either  wholly  or  partly  of  the  amount  paid  by  them  out  of  the  purchase- 
money  which  the  defendants  have  received  since  the  fire  from  the  pur- 
chasers. In  my  opinion  the  plaintiff  is  right  in  that  contention.  I 
think  tliat  the  question  turns  on  the  consideration  of  what  a  policy  of 
insurance  against  fire  is,  and  on  that  the  right  of  the  plaintifiT  depends. 
Tlie  policy  is  really  a  contract  to  indemnify  the  person  insured  for  the 
loss  which  he  has  sustained  in  consequence  of  the  peril  insured  against 
1  ^N^e,  p.  979,  n.  (C.  A.,  1880).  —  Ed. 


SECT.  II.]  CASTELLAIX   V.    PRESTON.  981 

which  has  happened,  and  from  that  it  follows,  of  course,  that  as  it 
is  only  a  contract  of  indemnity,  it  is  only  to  pay  that  loss  which  the 
assured  may  have  sustained  by  reason  of  the  fire  which  has  occurred. 
In  order  to  ascertain  what  that  loss  is,  everything  must  be  taken  into 
account  which  is  received  b}'  and  comes  to  the  hand  of  the  assured,  and 
wliich  dim.inishes  that  loss.  It  is  only  the  amount  of  the  loss,  when  it 
is  considered  as  a  contract  of  indemnity,  which  is  to  be  paid  after 
taking  into  account  and  estimating  those  benefits  or  .sums  of  money 
which  the  assured  may  have  received  in  diminution  of  the  loss.  If  the 
proposition  is  stated  in  that  manner,  it  is  clear  that  the  office  would  be 
entitled  to  the  benefit  of  anything  received  by  the  assured  before  the 
time  when  the  policy  is  paid  ;  and  it  is  established  by  the  case  of  Dar- 
rell  V.  Tibbitts  that  the  insurance  company  is  entitled  to  that  benefit, 
whether  or  not  before  they  pay  the  money  they  insist  upon  a  calcula- 
tion being  made  of  what  can  be  recovered  in  diminution  of  the  loss  b}- 
the  assured;  if  the}- do  not  insist  upon  that  calculation  being  made, 
and  if  it  afterwards  turns  out  that  in  consequence  of  something  which 
ought  to  have  been  taken  into  account  in  estimating  the  loss,  a  sum  of 
money,  or  even  a  benefit,  not  being  a  sum  of  money,  is  received,  then 
the  office,  notwithstanding  the  payment  made,  is  entitled  to  say  that 
the  assured  is  to  hold  that  for  its  benefit;  and  although  it  was  not 
taken  into  account  in  ascertaining  the  sum  which  was  paid,  yet  when 
it  has  been  received  it  must  be  brought  into  account ;  and  if  it  is  not 
a  sum  of  monc}-,  but  a  benefit,  that  has  been  received,  its  value  must 
be  estimated  in  money. 

Now,  Lord  Blackburn,  in  the  case  of  Burnand  v.  Rodocanachi,^  states 
the  principle  in  these  words:  '"The  general  rule  of  law  (and  it  is  ob- 
vious justice)  is,  that  where  there  is  a  contract  of  indemnity  (it  matters 
not  whether  it  is  a  marine  policy  or  a  policy  against  fire  on  land,  or 
any  other  contract  of  indemnity),  and  a  loss  happens,  anything  which 
reduces  or  diminishes  that  loss  reduces  or  diminishes  the  amount  which 
the  indemnificr  is  bound  to  pay ;  and  if  the  indemnifier  has  already 
paid  it,  then,  if  anything  which  diminishes  the  loss  comes  into  the  hands 
of  the  person  to  whom  he  has  paid  it,  it  becomes  an  equity  that  the 
person  who  has  already  paid  the  full  indemnity  is  entitled  to  be  re- 
couped by  having  that  amount  back."  In  Darrell  v.  Tibbitts,^  to  which 
I  have  alread}"  referred,  the  question  which  we  had  to  consider  was 
whether  the  insurance  office  was  entitled  to  the  benefit  produced  in 
consequence  of  a  covenant  to  repair  if  the  building  should  be  damaged 
bv  an  explosion  of  gas.  In  my  opinion  it  was  not  intended  in  any  way 
to  limit  the  right  of  the  insurer  as  an  insurer  to  cases  where  the  con- 
tract in  respect  of  which  benefit  had  been  received  related  to  the  same 
loss  or  damage  as  that  against  which  the  contract  of  indemnity  was 
created  by  the  polic}'.  That  was  what  was  before  this  court  in  that 
case,  and  undoubtedly  expressions  do  occur  as  to  a  contract  relating  to 


1  An'e,  p.  946  (H.  L.,  1882).— Ed. 

2  Ante,  p.  979,  n.  (C.  A.,  1880).  — Ed. 


982  CASTELLAIN    V.    PRESTON".  [CHAP.  IX. 

the  loss  or  affecting  the  loss,  but  the  principle  was  not  limited  to  con- 
tracts. The  principle  which  I  have  enunciated  goes  further  ;  and  if 
there  is  a  money  or  an}'  other  benefit  received  which  ought  to  be  taken 
into  account  in  diminishing  the  loss  or  in  ascertaining  what  the  real 
loss  is  against  which  the  contract  of  indemnity'  is  given,  the  indemnifier 
ought  to  be  allowed  to  take  advantage  of  it  in  order  to  calculate  what 
the  real  loss  is,  even  although  the  benefit  is  not  a  contract  or  right  of 
suit  which  arises  and  has  its  birth  from  the  accident  insured  against. 
Of  course  the  difflcult}'  is  to  consider  what  ought  to  be  taken  into 
account  in  estimating  that  loss  against  which  the  insurer  has  agreed  to 
indemnify,  and  we  have  been  pressed  in  argument  with  man}'  difficul- 
ties. One  which  possibly  was  put  to  us  most  strongly  was  that  the 
contract  of  sale  has  nothing  to  do  with  destruction  by  fire,  and  if  any 
part  of  the  purchase-mone}'  is  to  be  taken  into  account,  why  is  a  gift 
not  to  be  taken  into  account?  That  may  be  said  to  diminish  the  loss 
as  well  as  a  contract  of  sale.  The  answer  is  that  when  a  gift  is  made 
afterwards  in  order  to  diminish  the  loss,  it  is  bestowed  in  such  terms 
as  to  show  an  intention  to  benefit  the  assured,  and  to  give  the  insurer 
the  benefit  of  that  would  be  to  divert  the  gift  from  its  intended  object 
to  a  difl'erent  person.  That  really  was  what  was  decided  in  Burnand  if. 
Rodocanachi.^  There  the  monc}'  bestowed,  not  as  a  matter  of  right 
but  as  a  gift,  was  intended  to  benefit  the  assured  be3-ond  the  amount 
which  they  had  got  in  consequence  of  any  insurance.  There  is  another 
ground  which  may  possibly  exclude  gifts.  It  may  be  that  the  right  of 
the  insurer  to  have  a  sum  brouglit  into  account  in  diminution  of  the 
loss,  against  which  he  has  given  a  contract  of  indemnity,  is  confined  to 
that  whicli  is  a  riglit  or  other  incident  belonging  to  the  person  insured, 
as  an  incident  of  the  property  at  the  time  wlicn  tlie  loss  takes  place. 
Tliis  definition  would  not  include  a  sum  sul)sequently  bestowed  on  the 
assured  b}"^  wa}'  of  gift,  for  it  can  in  no  wa}'  be  said  to  have  been  apper- 
taining to  him  as  owner  of  the  propert}'  at  the  time  when  the  loss  took 
place.  But  in  the  present  ease  what  we  have  to  consider  is  whether 
the  contract  of  sale  is  not  an  incident  of  the  property  belonging  to  the 
owners  at  the  time  of  the  loss  in  such  a  way  that  it  ought  to  be  brought 
into  account  in  estimating  the  loss,  against  which  the  insurer  has  un- 
dertaken to  indemnify.  What  was  the  position  of  the  parties?  The 
defendants'  house  was  insured,  and  there  was  a  loss  from  fire,  the 
damage  caused  by  the  fire  being  estimated  by  the  parties  at  £330. 
Ultimately,  the  property  having  been  already  agreed  to  be  sold  at  a 
fixed  price,  the  assured  received  the  whole  amount  of  that  price.  Now, 
they  did  that  in  respect  of  a  contract  relating  to  the  suliject  insured, 
the  house ;  and,  to  m}'  mind,  if  they  received  the  whole  amount  of  the 
price  which  they  previously  had  fixed  as  the  value  of  the  house,  that 
must  of  necessity  be  brought  into  account  when  it  was  received,  for 
the  purpose  of  ascertaining  what  was  the  ultimate  loss  against  which 
they  had  concluded  a  contract  of  indemnity  with  the  insurance  office. 

1  Ante,  p.  946  (H.  L.,  1882).  — Ed. 


SECT.  II.]  CASTELLAIN   V.   PRESTON.  983 

Here  the  purchasers  have  paid  the  money  in  full ;  and  as  the  property 
was  valued  between  the  vendors  and  the  purchasers  at  £3,100,  the 
vendors  got  that  sum  in  respect  of  that  which  had  been  burned,  but 
which  had  not  been  burned  at  the  time  when  the  contract  was  entered 
into.  The}'  had  fixed  that  to  be  the  value ;  and  then  any  money  which 
they  get  from  the  purchasers,  and  which,  together  with  £330,  the  sum 
paid  by  the  office,  exceeds  the  value  of  the  property  as  fixed  b}-  them 
under  the  contract  to  sell,  must  diminish,  and  in  fact  entireh'  extin- 
guishes the  loss  occasioned  to  the  vendors  of  the  property  by  the  fire. 
Therefore,  though  it  cannot,  to  my  mind,  be  said  that  the  insurers  are 
entitled,  because  the  purchase  is  completed,  to  get  back  the  money 
which  they  have  paid,  yet  they  are  entitled  to  take  into  account  the 
money  subsequently  received  under  a  contract  for  the  sale  of  the  prop- 
erty existing  at  the  time  of  the  loss,  in  order  to  see  what  the  ultimate 
loss  was  against  which  the}-  gave  their  contract  of  indemnity-.  On  the 
principle  of  Darrell  v.  Tibbitts,^  when  the  benefit  afterwards  accrued 
by  the  completion  of  the  purchase,  the  insurance  company  were  entitled 
to  demand  that  the  mone}-  paid  b}-  them  should  be  brought  into  ac- 
count. Therefore  the  conclusion  at  which  I  have  arrived  is,  that  if  the 
purchase-money  has  been  paid  in  full,  the  insurance  office  w-ill  get  back 
that  which  they  have  paid,  on  the  ground  that  the  subsequent  payment 
of  the  price  which  had  been  before  agreed  upon,  and  the  contract  for 
payment  of  which  was  existing  at  the  time,  must  be  brought  into 
account  b}'  the  assured,  because  it  diminishes  the  loss  against  which 
the  insurance  office  merel}'  undertook  to  indemnify  them.  In  ray  opin- 
ion, therefore,  the  decision  below  was  erroneous.  I  think  Chitty,  J., 
based  it  upon  this,  that  in  this  case  there  was  no  right  of  subrogation, 
no  contract  which  the  office  could  have  insisted  upon  enforcing  for  their 
benefit.  I  think  it  immaterial  to  decide  that  question,  because  the 
vendors  have  exercised  their  right  to  insist  upon  the  completion  of  the 
purchase. 

BowEN,  L.  J.     I  am  of  the  same  opinion. 

The  answer  to  tlie  question  raised  before  us  appears  to  me  to  follow 
as  a  deduction  from  the  t^o  propositions,  first,  that  a  fire  insurance  is 
a  contract  of  indemnity ;  and,  secondh',  that  when  there  is  a  contract 
of  indemnity  no  more  can  be  recovered  b}'  the  assured  than  the  amount 
of  his  loss. 

First  of  all,  is  a  fire  insurance  a  contract  of  indemnity?  It  appears 
to  me  it  is  quite  as  much  a  contract  of  indemnity  as  a  marine  insurance 
is ;  the  differences  between  the  two  are  caused  b}-  the  diversitj-  of  the 
subject-matters.  On  a  marine  policy  a  ship  may  be  insured  which  is  at 
a  distance  and  movable,  or  goods  may  be  insured  on  board  of  vessels 
which  are  at  a  distance,  and  on  a  fire  policy  a  house  is  insured  which 
is  fixed  to  the  land  ;  but  both  are  contracts  of  indemnit}'.  Only  those 
can  recover  who  have  an  insurable  interest,  and  the}-  can  recover  only 
to  the  extent  to  which  that  insurable  interest  is  damaged  by  the  loss. 

1  Ante,  p.  979,  n.  (C.  A.,  1880). 


984  CASTELLAIN    V.   PRESTON.  [CHAP.  IX. 

In  the  course  of  the  argument  it  has  been  sought  to  establish  a  distinc- 
tion between  a  fire  polic}'  and  a  marine  polic}'.  It  has  been  urged  that 
a  fire  policy  is  not  quite  a  contract  of  indemnit}',  and  that  the  assured 
can  get  something  more  than  what  he  has  lost.  It  seems  to  me  that 
there  is  no  justification  in  authorit}',  and  I  can  see  no  foundation  in  rea- 
son, for  any  suggestion  of  that  kind.  What  is  it  that  is  insured  in  a  fire 
policy?  Not  the  bricks  and  the  materials  used  in  building  the  house, 
but  the  interest  of  the  assured  in  the  subject-matter  of  insurance,  not 
the  legal  interest  only,  but  the  beneficial  interest ;  and  I  do  not  know 
any  reason  why  there  should  be  a  different  definition  of  what  is  an 
insurable  interest  in  fire  policies  from  that  which  is  well  known  as  the 
established  definition  in  marine  policies,  allowance  being  made  for  the 
differences  of  the  subject-matter.  It  seems  to  me  that  it  is  an  ocular 
illusion  to  suppose  that  under  any  circumstances  more  may  be  obtained 
by  the  assured  than  the  amount  of  the  loss.  I  think  this  illusion  can 
be  detected  if  it  is  recollected  what  are  the  ordinary  business  rules 
according  to  which  insurances  are  made.  It  is  well  known  in  marine 
and  in  fire  insurances  that  a  person  who  has  a  limited  interest  may 
insure  nevertheless  on  the  total  value  of  the  subject-matter  of  the  insur- 
ance, and  lie  may  recover  the  whole  value,  subject  to  these  two  provi- 
sions :  First  of  all,  the  form  of  his  policy  must  be  such  as  to  enable 
him  to  recover  the  total  value,  because  the  assured  ma}'  so  limit  him- 
self by  the  way  in  which  he  insures  as  not  really  to  insure  the  whole 
value  of  the  subject-matter ;  and,  secondly,  he  must  intend  to  insure 
the  whole  value  at  the  time.  When  the  insurance  is  effected  he  cannot 
recover  the  entire  value  unless  he  has  intended  to  insure  the  entire 
value.  A  person  with  a  limited  interest  may  insure  either  for  himself, 
and  to  cover  his  own  interest  only,  or  he  may  insure  so  as  to  cover  not 
merely  his  own  limited  interest,  but  the  interest  of  all  others  who  are 
interested  in  the  property'.  It  is  a  question  of  fact  what  is  his  intentioa 
when  he  obtains  the  polic}'.  But  he  can  only  hold  for  so  much  as  he 
has  intended  to  insure.  Let  us  take  a  few  of  the  cases  which  are  most 
commonly  known  in  commerce  of  persons  who  insure.  Tliere  are  per- 
sons who  have  a  limited  interest  and  yet  who  insure  for  more  than  a 
limited  interest,  who  insure  for  the  total  value  of  the  subject-matter. 
There  is  the  case,  which  is  I  suppose  the  most  common,  of  carriers  and 
wharfingers  and  commercial  agents,  who  have  an  interest  in  the  adven- 
ture. It  is  well  known  what  their  rights  are.  Then,  to  take  a  case 
which  perhaps  illustrates  more  exactl}'  the  argument,  let  us  turn  to  the 
case  of  a  mortgagee.  If  he  has  the  legal  ownership,  he  is  entitled  to 
insure  for  the  whole  value ;  but  even  supposing  he  is  not  entitled  to 
the  legal  ownership,  he  is  entitled  to  insure  prima  facie  for  all.  If  he 
intends  to  cover  only  his  mortgage,  and  is  only  insuring  his  own  in- 
terest, he  can  only  in  the  event  of  a  loss  hold  the  amount  to  which  he 
has  been  damnified.  If  he  has  intended  to  cover  other  persons  beside 
himself,  he  can  hold  the  surplus  for  those  whom  he  has  intended  to 
cover.     But  one  thing  he  cannot  do,  that  is,  having  intended  only  to 


SECT.  II.]  CASTELLAIX    V.    PRESTON.  985 

cover  himself,  and  being  a  person  whose  interest  is  onl}'  limited,  he 
cannot  hold  anything  beyond  the  amount  of  the  loss  caused  to  his  own 
particular  interest.  Suppose  for  a  moment  the  case  of  a  ship  and  a 
mortgagee  who  has  lent  £500  on  the  ship.  The  siiip  is  worth  £10,000. 
If  he  insures  for  £10,000,  meaning  only  to  cover  his  own  interest  and 
not  the  interest  of  anybody  besides,  can  it  for  a  moment  be  supposed 
that  the  mortgagee  who  insures  under  those  circumstances  can  hold  the 
£10,000?  That  would  be  an  over  insurance,  and  to  treat  it  in  any 
other  way  would  be  to  make  a  marine  policy  not  a  contract  of  indem- 
nity, but  a  wager,  a  speculation  for  gain.  Suppose,  again,  thei-e  are 
several  mortgagees  for  small  sums,  can  they  all  recover  and  hold 
(having  ex  hypoi/iesi  insured  their  separate  interests  only)  the  entire 
value  of  the  ship?  It  seems  to  me  they  cannot.  They  can  recover 
only  what  they  have  lost.  That  being,  as  I  apprehend,  the  law  about 
mortgages  of  ships,  is  there  any  real  distinction  between  that  and  the 
mortgagee  of  a  house?  I  can  see  none.  It  seems  to  me  that  the  same 
principle  applies,  and  here,  as  in  many  other  problems  of  insurance 
law,  the  problem  will  be  solved  by  going  back  and  resting  upon  the 
doctrine  of  indemnity. 

Let  us  take  another  instance  which  has  been  much  pressed  upon  us 
in  the  course  of  the  argument,  the  case  of  a  tenant  for  years  or  a  tenant 
from  year  to  year.  We  have  been  asked  to  hold  that  a  tenant  from 
year  to  year  can  always  recover  the  full  value  of  the  house  from  the 
insurance  company,  although  he  has  intended  to  insure  only  his  limited 
interest  in  it.  There  is  some  justification  for  that  in  the  language  of 
James,  L.  J.,  in  Rayner  v.  Preston.^  He  says  this:  "  In  my  view  of 
the  case  it  is  perhaps  unnecessary  to  refer  to  the  Act  of  Parliament  as 
to  fire  insurance.  But  that  Act  seems  to  me  to  show  that  a  polic}-  of 
insurance  on  a  house  was  considered  by  the  legislature,  as  I  believe  it 
to  be  considered  by  the  universal  consensus  of  mankind,  to  be  a  policy 
for  the  benefit  of  all  persons  interested  in  the  property  ;  and  it  appears 
to  me  that  a  purchaser  having  an  equitable  interest  under  a  contract  of 
sale  is  a  person  having  an  interest  in  the  house  within  the  meaning 
of  the  Act.  I  believe  that  there  is  no  case  to  be  found  in  which 
the  liability  of  the  insurance  office  has  been  limited  to  the  value  of 
the  interest  of  the  insured  in  the  house  destroyed.  If  a  tenant  for 
life  having  insured  his  house  has  the  house  destroyed  or  damaged 
by  fire,  I  have  never  heard  it  suggested  that  the  insurance  office 
could  cut  down  his  claim  by  showing  that  he  was  of  extreme  old 
age  or  suffering  from   a   mortal  disease."      Now,   with  tiie  greatest 

1  In  Rayner  v.  Preston,  18  Ch.  D.  1  (C.  A.,  1881),  vendees  brought  action  against 
vendors  to  establish  a  right  to  a  sum  received  by  the  vendors  from  underwriters  upon 
insurance  written  before  the  contract  of  sale  was  made.  The  contract  contained  no 
reference  to  insurance.  Between  the  date  of  the  contract  and  the  time  for  com- 
pletion, the  buildings  purchased  were  injured  by  fire.  It  was  held  by  the  majority 
(Cotton,  L.  J.,  and  Bbett,  L.  J.,  but  James,  L.  J.,  dissenting)  that  the  action  did 
not  lie.  —  Ed. 


986  CASTELLAIN   V.   PRESTON.  [CHAP.  IX. 

possible  respect  and  reverence  for  all  that  is  left  to  us  of  the  judg- 
ments of  a  great  judge  like  James,  L.  J.,  I  confess  I  do  not  follow 
that.  I  have  no  doubt  the  insurance  offices  seldom  take  the  trouble 
to  look  to  the  exact  interest  of  the  tenant  who  insures,  and  perhaps  of 
the  landlord  who  insures,  and  for  the  best  of  all  reasons,  because  it  is 
generall}-  intended  that  the  insurance  shall  be  made  not  merelj-  to  cover 
the  limited  interest  of  the  tenant,  but  also  to  cover  the  interest  of  all 
concerned.  In  most  cases  the  covenants  as  to  repair  throw  liability 
on  one  side  or  the  other,  and  in  a  large  class  of  leases  the  liability  to 
repair  is  by  the  provisions  of  the  lease  thrown  upon  the  tenant.  There- 
fore in  these  cases  no  question  ever  can  arise  between  the  insurance 
office  and  the  tenant  from  year  to  year,  or  the  tenant  for  years,  as  to 
the  amount  which  the  insurance  office  ought  to  pay.  But  if  a  tenant 
for  a  year,  or  a  tenant  for  six  months,  or  a  tenant  from  week  to  week, 
insures,  meaning  only  to  cover  his  interest,  does  anybody  really  sup- 
pose tliat  he  could  get  the  wliole  value  of  the  house?  It  is  true  that 
in  most  cases  the  claim  of  the  tenant  from  year  to  year,  or  for  years, 
cannot  be  answered  by  handing  over  to  him  what  may  be  the  market- 
able value  of  his  property  ;  and  the  reason  is  that  he  insures  more  than 
the  marketable  value  of  his  property,  and  he  loses  more  than  the  mar- 
ketable value  of  his  property  ;  he  loses  the  house  in  wliich  he  is  living, 
and  the  beneficial  enjoyment  of  the  house  as  well  as  its  pecuniary 
value.  That  I  think  is  all  that  was  meant  by  the  Vice-Chancellor  in 
Simpson  v.  Scottish  Union  Insurance  Co.,  1  H.  &  M.  618,  at  p.  628. 
I  will  pass  on  to  the  case  of  a  life  tenant.  I  will  take  the  case  of  a 
life  tenant  who  is  a  very  old  man,  and  whose  house  is  burnt  down» 
but  who  has  intended  only  to  insure  his  own  interest.  I  am  far  from 
saying  that  he  could  not  under  any  conceivable  circumstances  be  en- 
titled to  have  the  house  reinstated.  A  man  cannot  be  compensated 
simply  by  paying  him  for  the  marketable  value  of  his  interest.  But  it 
does  not  follow  from  that  that  he  gets  or  can  keep  more  than  he  has 
lost.  I  very  much  doubt  whether  if  a  life  tenant,  having  intended  to 
insure  only  his  life  interest,  dies  within  a  week  after  the  loss  by  fire, 
the  court  would  award  his  executors  the  whole  value  of  the  house.  In 
all  these  difficult  problems  I  go  back  with  confidence  to  the  broad  prm- 
ciple  of  indemnit}'.  Apply  that  and  an  answer  to  the  difficult}-  will 
always  be  found.  The  present  case  arises  between  vendors  and  ven- 
dees. That  does  not  fall  within  the  category  of  the  cases  which  I  have 
been  discussing,  where  a  person  with  a  limited  interest  intends  only  to 
cover  his  own  interest.  But  can  it  be  any  exception  to  the  infallible 
rule  that  a  man  can  only  be  indemnified  to  the  extent  of  his  loss? 
What  is  really  the  interest  of  the  vendors,  the  assured  ?  Their  insur- 
able interest  is  this :  they  had  insured  against  fire,  and  they  had  then 
contracted  with  the  purchasers  for  the  sale  of  the  house,  and  after  the 
contract,  but  before  the  completion,  the  fire  occurred.  Their  interest, 
therefore,  is  that  at  law  they  are  the  legal  owners,  but  their  beneficial 
interest  is  that  of  vendors  with  a  lien  for  the  unpaid  purchase-money ; 


SECT.  II.]  CASTELLAIN   V.    PRESTON".  987 

the}'  would  get  ultimate!}-  all  the  purcliase-raone}'  provided  the  matter 
did  not  go  off  owing  to  defective  title.  Such  persons  in  the  first  in- 
stance can  obviously  recover  from  the  insurance  company  the  entire 
amount  of  the  purciiase-monej'.  That  was  decided  in  the  case  of  Col- 
lingridge  v.  Royal  Exchange  Assurance  Corporation  ;  ^  but  can  they 
keep  tlie  whole,  having  lost  onlj-  half  ?  Surel}-  it  would  be  monstrous  to 
say  that  the}'  could  keep  the  whole,  having  lost  only  half.  Suppose  for  a 
moment  that  only  £oO  remained  to  be  paid  of  the  purchase-money,  and 
that  a  house  had  been  burnt  down  to  the  value  of  £10,000,  would  it  be  in 
accordance  with  any  principle  of  indemnity  that  persons  who  were  only 
interested,  and  could  only  be  interested  to  the  extent  of  £50,  could 
recover  £10,000?  They  would  be  getting  a  windfall  by  the  fire  ;  their 
•  contract  of  insurance  would  not  be  a  contract  against  loss  ;  it  would 
be  a  speculatibn  for  gain.  Then  wliat  is  the  principle  whi(;h  must  be 
applied?  It  is  a  corollary  of  the  great  law  of  indemnity,  and  is  to  the 
following  effect :  That  a  person  who  wishes  to  recover  for  and  is  paid 
by  the  insurers  as  for  a  total  loss,  cannot  take  with  both  hands.  If  he 
has  a  means  of  diminishing  the  loss,  t!ie  result  of  tlie  use  of  thqge 
means  belongs  to  the  underwriters.  If  he  does  diminish  the  loss,  he 
must  account  for  the  diminution  to  the  underwriters.  In  Simpson  )k 
Thomson,-  it  is  said  Ity  Lord  Cairns,  L.  C.  :  "I  know  of  no  foundation 
for  the  riglit  of  underwriters,  except  the  well-known  principle  of  law, 
tliat  where  one  person  has  agreed  to  indemnify  another,  lie  will,  on 
making  good  the  indemnity,  be  entitled  to  succeed  to  all  the  ways  and 
means  by  wliich  the  person  indemnified  might  have  protected  himself 
against  or  reimbursed  himself  for  the  loss." 

Is  there  any  real  distinction  here  between  fire  policies  and  marine 
policies  ?  It  seeras  to  me  that  the  learned  judge  below,  and  the  Amer- 
ican authorities  on  which  he  relies,  have  fallen  into  the  mistake  of 
supposing  that  the  distinction  which  obtains  as  to  certain  incidents  of 
marine  policies  and  fire  policies,  is  derived  from  a  difference  of  prin- 
ciple, and  not  from  the  diversity  of  the  subject-matter.  In  any  case 
the  principle  of  indemnity  is  the  same,  and  there  is  no  departure 
from  it.  I  will  make  plain  what  I  mean  by  reading  the  language  of 
Chitty,  J.  He  says  (8  Q.  B.  D.  618)  :  "An  obvious  distinction  exists 
between  the  case  of  marine  insurance  and  of  insurance  of  buildings 

1  In  Colliiigridge  v,  Royal  Exchange  Assur.  Corp.,  3  Q.  B.  D.  173  (1877),  action 
was  brought  upon  a  policy  of  insurance  by  an  owner  whose  buikiings,  after  the  making 
of  the  policy,  liad  been  required  by  the  Metropolitan  Board  of  Works  for  the  purpose 
of  making  new  streets  and  other  improvements.  After  the  vahie  of  the  property  had 
been  determined  by  arbitration  and  the  title  had  been  approved  by  the  Board,  but 
before  payment  or  conveyance,  the  buildings  were  destroyed  by  fire.  The  under- 
writers contended  that  they  were  not  liable  to  pay  anything,  and  that,  if  they  were 
liable  to  pay  at  all,  the  only  loss  was  incurred  by  the  Board,  and  that,  as  the  premises 
would  be  pulled  down  upon  conveyance,  the  amount  of  recovery  could  not  exceed  the 
damage  done  to  the  buildings,  considered  as  old  materials.  It  was  held  that  the 
owner  was  entitled  to  recover,  and  that  the  underwriters  must  pay  the  damage  to 
the  buildings,  considered  as  buildings.  —  Ed. 

2  Ante,  p.  944  (H.  L.  Sc,  1877).  — Ed. 


988  CASTELLAIN   V.    PRESTON,  [CHAP.  IX. 

annexed  to  the  soil.  In  the  case  of  marine  insurance  where  there  is  a 
constructive  total  loss,  the  thing  is  considered  as  abandoned  to  tlie 
underwriters,  and  as  vesting  the  property  directly  in  them.  But  this 
doctrine  of  abandonment  cannot  be  applied  to  the  insurance  of  build- 
ings annexed  to  the  soil;  although  the  buildings  annexed  are  deslioyed, 
tliere  cannot  be  a  cession  of  the  right  to  the  soil  itself:"  It  seems  to 
me,  if  I  may  venture  to  say  it  of  so  experienced  a  judge,  that  there  is 
an  ambiguity  in  the  way  in  which  he  is  dealing  with  the  doctrine  of  con- 
structive total  loss.  The  doctrine  of  abandonment  is  itself  based  upon 
the  principle  of  indemnity.  It  is  well  known,  historically,  that  that  is 
so,  and  in  reason  it  must  be  so.  It  is  only  since  marine  policies  have 
ceased  to  be  wager  policies  throughout  the  world  and  become  contracts 
of  indemnity,  that  the  doctrine  of  abandonment  has  become  universal ; 
and  so  far  from  its  constituting  a  ditference  of  principle  between  ma- 
rine insurance  law  and  fire  insurance  law,  it  is  the  same  principle  of 
indemnity,  only  worked  out  differently,  because  what  happens  at  sea  is 
the  loss  of  a  ship,  and  what  happens  on  land  is  the  loss  of  a  house.  It 
is  true  that  the  doctrine  of  abandonment  is  inapplicable.  But  if  the 
buildings  annexed  to  the  soil  are  destroyed,  it  is  not  a  question  of  con- 
structive total  loss,  it  is  a  question  of  actual  total  loss.  The  same 
ambiguity,  I  think,  is  to  be  found  in  the  language  of  the  American 
case^  which  Chitty,  J.,  cites  at  page  624.  The  learned  judge  in  that 
case  says  :  "  It  may  be  a  question  whether  he  "  (the  Chancellor)  "  has 
not  relied  too  much  on  the  cases  of  marine  insurance  in  wliich  the  doc- 
trine of  constructive  total  loss,  abandonment,  and  salvage  are  fully 
acknowledged,  but  which  have  slight  application  to  insurance  against 
loss  by  fire."  Slight  application  it  is  true,  but  not  because  the  doctrine 
of  indemnity  is  not  to  be  carried  out  to  its  extreme  in  case  of  loss  by 
fire,  but  because  the  subject-matter  in  the  one  case  is  the  vessel  lost  at 
sea,  and  in  the  other  the  house  burned,  which  is  annexed  to  the  soil. 
Chitty,  J.,  goes  on  to  discuss  the  case  on  the  basis  of  what  he  calls  the 
principle  of  subrogation.  I  will  add  very  little  to  what  Brett,  L.  J., 
has  said  about  that.  It  seems  to  me  that  a  good  deal  of  confusion 
would  be  caused  if  one  were  to  suppose  that  insurers  are  in  the  position 
of  sureties.  A  surety  is  a  person  who  answers  for  the  default  of  an- 
other, and  an  insurer  is  a  person  who  guarantees  against  loss  by  an 
event.  The  default  or  non-default  of  another,  as  between  that  other 
and  the  person  who  is  insured,  may  diminish  or  increase  the  loss ;  but 
what  the  insurer  is  guaranteeing  is  not  the  default  of  that  person  ;  he 
is  guaranteeing  that  no  loss  shall  happen  by  the  event.  And  subroga- 
tion is  itself  only  the  particular  application  of  the  principle  of  indemnity 
to  a  special  subject-matter,  and  there,  I  think,  is  where  the  learned 
judge  has  gone  wrong.  He  has  taken  the  term  "subrogation"  and  has 
applied  it  as  if  it  were  a  hard  and  fast  line,  instead  of  seeing  that  it  is 
part  of  the  law  of  indemnity.  If  there  are  means  of  diminishing  the 
loss,  the  insurer  may  pursue  them,  whether  he  is  asking  for  contracts 

1  King  V.  State  Mut.  F.  Ins.  Co.,  ante,  p.  965  (1850).  — Ed. 


SECT.  II.]  CASTELLAIN    V.    PRESTON.  989 

to  be  carried  out  in  the  name  of  the  assured,  or  -whether  lie  is  suing  for 
tort.  It  is  said  that  the  law  only  gives  the  underwriters  the  riglit  to 
stand  in  the  assured's  shoes  as  to  rights  which  arise  out  of,  or  in 
consequence  of,  the  loss.  I  venture  to  think  there  is  absolutely  no 
authorit}'  for  that  proposition.  The  true  test  is,  can  the  right  to  be 
insisted  on  be  deemed  to  be  one  the  enforcement  of  which  will  diminish 
the  loss?  In  this  case  the  right,  whatever  it  be,  has  been  actually 
enforced,  and  all  that  we  have  to  consider  is  whether  the  fruit  of  that 
right  after  it  is  enforced  does  not  belong  to  the  insurers.  It  is  insisted 
that  only  those  payments  are  to  be  taken  into  consideration  which  have 
been  made  in  respect  of  the  loss.  I  ask  why,  and  where  is  the  au- 
thority? If  the  payment  diminishes  the  loss,  to  my  mind  it  falls  within 
the  application  of  the  law  of  indemnity.  On  this  point  I  should  like  to 
panse  one  instant  to  consider  the  definition  which  Brett,  L.J.,  has 
given.  It  does  seem  to  me  that,  taking  his  language  in  the  widest 
sense,  it  substantially  expresses  what  I  should  wish  to  express,  with 
one  small  appendage  that  I  desire  to  make.  I  wish  to  prevent  the 
danger  of  his  definition  being  supposed  to  be  exhaustive  by  saying 
that  if  anything  else  occurs  outside  it  the  general  law  of  indemnity  must 
be  looked  at. 

With  regard  to  gifts,  all  that  is  to  be  considered  is,  has  there  been  a 
loss,  and  what  is  the  loss,  and  has  that  loss  been  in  substance  reduced 
by  anything  that  has  happened?  Now,  I  admit  that,  in  the  vast  ma- 
jority of  cases,  it  is  difficult  to  conceive  a  voluntary  gift  which  does 
reduce  the  loss.  I  do  not  think  that  the  question  of  gift  was  the  root 
of  the  decision  in  Burnand  v.  Rodocanachi,^  although  it  seems  to  me 
that  it  was  a  ver}'  essential  matter  in  considering  the  case.  I  think 
the  root  of  the  decision  in  Burnand  v.  Rodocanachi  was  that  the  pay- 
ment which  had  been  made  did  not  reduce  the  loss,  not  having  been 
intended  to  do  so.  The  truth  was  that  the  English  government  and 
the  American  government  agreed  that  the  sums  which  were  to  be  paid 
were  to  be  paid  not  in  respect  of  the  loss,  but  in  respect  of  something 
else,  and  therefore  the  payment  could  not  be  a  reduction  of  the  loss. 
Suppose  that  a  man  who  has  insured  his  house  has  it  damaged  by  fire, 
and  suppose  that  his  brother  offers  to  give  him  a  sum  of  money  to 
assist  him.  The  effect  on  the  position  of  the  underwriters  will  depend 
on  the  real  character  of  the  transaction.  Did  the  brother  mean  to  give 
the  money  for  the  benefit  of  the  insurers  as  well  as  for  the  benefit  of 
the  assured?  If  he  did,  the  insurers,  it  seems  to  me,  are  entitled  to 
the  benefit ;  but  if  he  did  not,  but  only  gave  it  for  the  benefit  of  the 
assured,  and  not  for  the  benefit  of  the  underwriters,  then  the  gift  was 
not  given  to  reduce  the  loss,  and  it  falls  within  Burnand  v.  Rodocan- 
achi. If  it  was  given  to  reduce  the  loss,  and  for  the  benefit  of  the 
insurers  as  well  as  the  assured,  the  case  would  fall  on  the  other  side  of 
the  line,  and  be  within  Randal  v.  Cockran,*  to  which  allusion  has  been 
made.     In  the  present  case  the  vendors  have  been  paid  the  whole  of 

1  Ante,  p.  946  (II.  L.,  1882).  — Ed.  ^  ^^te,  p.  937  (1748).  — Ed. 


990  CASTELLAIN    V.   PRESTON.  [CHAP.  IX. 

their  purchase-money.  Even  if  the}-  had  not  been  paid,  but  had  still 
the  purchase-money  outstanding,  the}-  would  have  had  some  beneficial 
interest  in  the  nature  of  their  vendors'  lien.  An  unpaid  vendor's  lien 
is  worth  something,  I  suppose.  I  do  not  say  that  it  is  necessary  to 
decide  the  point,  and  I  only  mention  it  to  make  more  clear  m}'  view  of 
this  case,  not  as  laying  down  the  law  for  future  occasions.  But  if  an 
unpaid  vendor's  lien  is  worth  something,  on  what  principle  could  a 
vendor  keep  the  unpaid  vendor's  lien  and  be  paid  for  it  bj'  the  insurers? 
In  such  a  case  he  would  be  taking  with  both  hands.  Now,  why  should 
not  underwriters  be  entitled  at  aU  events  to  insist  on  the  vendor's  lien? 
As  to  specific  performance  I  say  nothing.  I  am  not  familiar,  as  Cot- 
ton, L.  J.,  is,  with  that  branch  of  the  law,  and  there  may  be  some 
special  reasons  why  the  insurers  should  not  be  able  to  insist  upon 
specific  performance  ;  but  why  should  not  they  insist  upon  the  unpaid 
vendor's  lien  ?  The  vendor,  if  he  did  not  exercise  it  for  their  benefit, 
would  be  trying  to  make  the  contract  between  himself  and  the  insurers 
more  than  a  contract  of  indemnity.  Chitty,  J.,  seems  to  think  that  in 
this  instance  it  is  necessary  to  recollect  that  the  contract  of  sale  was 
not  a  contract,  either  directly  or  indirectly,  for  the  preservation  of  the 
buildings  insured  ;  that  the  contract  of  insurance  was  a  collateral  con- 
tract wholly  distinct  from  and  unaffected  by  the  contract  of  sale.  What 
does  it  matter?  The  beneficial  interest  of  the  vendors  in  the  house 
depends  on  the  contract  being  fulfilled  or  not,  and  the  fulfilment  of 
the  contract  lessens  the  loss,  its  non-fulfilment  aflTects  it.  Chitty,  J., 
indeed,  says  further,  that  ''the  attempt  now  made  is  to  convert  the 
insurance  against  loss  by  fire  into  an  insurance  of  the  solvency  of  the 
purchaser"  (8  Q.  B.  D.  G21).  That  may  be  answered  in  the  same  way. 
It  is  not  that  the  solvency  of  the  purchaser  is  guaranteed,  but  that  the 
vendors  arc  guaranteed  against  the  loss  which  is  diminished  or  in- 
creased according  as  the  purchaser  turns  out  to  be  solvent  or  not.  The 
solvency  of  the  purchaser  affects  the  loss  ;  that  is  the  only  way  in 
which  it  touches  the  insurance ;  it  is  not  because  the  insurance  is 
directly  an  insurance  of  his  solvency.  Finally  (and  this  is  the  last 
observation  that  I  wish  to  make  upon  the  judgment  of  Chitty,  J.),  he 
puts  the  case  of  a  landlord  insuring,  and  the  tenant  under  no  obliga- 
tion to  repair.  lie  takes  a  case  "where,  under  an  informal  agreement 
evidently  drawn  by  the  parties  themselves,  the  large  rent  of  £700  was 
reserved,  and  tlie  tenant,  notwithstanding  the  fire,  was  bound  to  pay 
the  rent."  He  says :  "Assume  that  the  building  in  such  a  case  was 
ruinous,  and  Avould  last  the  length  of  the  term  only.  Could  the  insurers 
recover  a  proportionate  part  of  each  payment  of  rent  as  it  was  made, 
or  could  they  wait  until  the  end  of  the  term,  and  then  say  in  effect, 
'  You  have  been  paid  for  the  whole  value  of  the  building,  and  therefore 
we  can  recover  against  you'  ?  "  That  seems  to  me  at  first  sight  to  look 
as  if  it  were  a  very  difldcult  point ;  but  I  think  this  difficulty  diminishes, 
if  it  does  not  vanish,  as  soon  as  it  is  considered  what  are  the  conditions 
of  the  hypothesis.     Is  the  learned  judge  supposing  that  the  landlord. 


SECT.  II.]  CASTELLAIN    V.   PRESTON.  991 

who  is  a  person  with  a  limited  interest,  did  intend  to  insure  all  other 
interests  besides  his  own?  The  landlord  can  do  so  if  he  so  intended  ; 
the  question  is,  has  he  done  so?  If  the  landlord  intended  to  insure  all 
other  interests  besides  his  own,  the  difficulty  dissipates  itself  into  thin 
air.  If  he  did  not,  it  would  be  a  very  odd  case,  and  perhaps  one  might 
ride  safeh"  at  anchor  by  saying  that  one  would  wait  till  it  arose.  But 
I  am  not  desirous  of  being  over  cautious,  because  I  am  satisfied  to 
rest  on  the  broad  principle  of  indemnity,  and  I  say,  ''Apply  the  broad 
principle  of  indemnity,  and  you  have  the  answer."  The  vendor  cannot 
recover  for  greater  loss  than  he  suffers  ;  and  if  he  has  only  a  limited 
interest  in  the  subject-matter,  and  only  intends  to  insure  that  interest, 
I  know  of  no  means  in  law  or  equity  by  which  he  is  entitled  to  obtain 
anything  else  out  of  the  insurance  office  except  what  is  measured  by 
the  measure  of  his  loss.  As  to  the  form  of  action,  I  need  add  nothing 
to  what  has  fallen  already  from  the  other  members  of  the  court.  I  am 
so  much  in  accord  with  their  views  that  I  should  not  have  added  a 
judgment  as  long  as  mine  has  been  if  it  were  not  for  the  great  impor- 
tance, to  my  mind,  of  keeping  clear  in  these  insurance  case*  what  is 
really  the  basis  and  foundation  of  all  insurance  law. 

Judgment  reversed} 

1  On  the  topic  of  this  section,  see  also:  — 

Rockingham  Mut.  F.  Ins.  Co.  v.  Bosher,  39  Me.  253  (18.55); 

Midland  Ins.  Co.  i-.  Smith,  6  Q.  B.  D.  5GI  (1881) ; 

Kiagara  F.  Ins.  Co.  v.  Fidelity  Title  &  Trust  Co.,  123  Pa.  516  (1889); 

Ins.  Co.  of  North  America  f.  Fidelity  Title  &  Trust  Co.,  123  Pa.  523  (1889) ; 

West  of  England  F.  Ins.  Co.  v.  Isaacs,  [1897]  1  Q.  B.  226  (C.  A.,  1896) ; 

United  States  v.  American  Tobacco  Co.,  166  U.  S.  468  (1897) ; 

Farmers'  F.  Ins.  Co.  v.  Johnston,  113  Mich.  426,  429-430  (1897) ; 

Lake  Erie  &  Western  KaUroad  Co.  v.  Falk,  62  Ohio  St.  297  (1900).  —Ed. 


992  CONN.  MUT.  LIFE  INS.  CO.  V.  N.  Y.  &  N.  H.  K.  K.  [CHAP.  IX. 

SECTION    III. 

Life  Insurance. 

CONNECTICUT  MUTUAL  LIFE  INS.  CO.  v.  NEW  YORK   AND 
NEW   HAVEN   RAILROAD   CO. 

Supreme  Court  of  Connecticut,  1856.     25  Conn.  265.^ 

AcTiox  on  the  case.  On  demurrer  to  the  plea,  the  questions  of  law 
were  reserved  for  the  advice  of  this  court. 

Ihmgerford  and  W.  D.  Sliipman,  for  the  plaintiffs. 

I>aldici?i,  for  the  defendants. 

Storrs,  J.  The  defendants,  a  railroad  company  are  charged  with 
having  negligentlj'  occasioned  the  death  of  one  Dr.  Beach,  by  which 
event  the  plaintiflTs,  a  life  insurance  compan}',  have  been  compelled 
to  pay  to. his  representatives  tlie  amount  of  an  insurance  effected  upon 
his  life,  of  which  amount  a  recovery  is  sought  in  this  action.  A  plea 
in  bar  sets  forth  a  "payment  to  the  administratrix  of  the  deceased  of 
the  damages  of  which  the  defendants'  negligence  had  rendered  them 
legally  liable,  and  also  a  discharge  by  her.  This  plea  and  the  demurrer 
thereto  require  no  examination,  as  they  are  immaterial  in  the  view 
which  we  take  of  the  declaration. 

It  is  clear  from  the  declaration,  that  a  pecuniary  injury  has  been  sus- 
tained b}'  the  plaintiffs,  in  consequence  of  the  unlawful  conduct  of  the 
defendants.  If  the  injury  thus  set  forth  be  actionable,  or  an  injury 
in  a  legal  sense,  there  must  be  a  recover^-.  But  we  are  of  the  opinion, 
that  the  wrong  complained  of  is  not  the  proper  subject  of  a  suit  at 
law,  both  for  reasons  appertaining  to  the  peculiar  nature  of  the  injur}', 
and  to  the  manner  in  which  its  consequences  are  brought  home  to  the 
party  claiming  redress. 

The  act  com.plained  of  is  the  producing  of  death.  We  are  at  once 
met  with  the  inquiry,  whether  under  the  common  law  system,  a  party 
is  liable,  civiliter,  for  the  destruction  of  human  life,  whatever  the  nature 
of  the  consequences  ma}'  be,  or  however  clearly  such  a  wrong  may  in- 
volve pecuniary  damage.^  .  .  . 

We  have  no  inclination  to  abrogate  tlie  common  law  doctrine,  that 
the  death  of  a  human  being,  whatever  may  be  its  consequences  in  a 
pecuniary  or  in  any  other  aspect,  is  not  an  actionable  injury. 

The  other  branch  of  our  inquiry,  relating  to  the  manner  in  which 
the  injury  complained  of  was  brought  home  to  the  i)arty  claiming  to 
have  suffered  by  it,  concerns  principles  of  great  practical  interest  and 
novel  in  their  present  application.  The  plaintiffs  sustain  no  relations 
to  the  authors  of  the  wrong  other  than  that  of  mere  contractors  with 

1  The  reporter's  statement  has  not  been  reprinted.  —  Ed. 

2  The  discussion  of  this  question  has  been  omitted.  — Ed. 


SECT.  III.]         CONN.  MUT.  LIFE  INS.  CO.  V.  N.  Y.  A  N.  11.  E.  R.  993 

the  part}-  injured  ;  and  their  contract  liability  is  the  medium  through 
which  the  injury  is  brought  home  to  them.     They  justly  say,    that 
their  loss  is  in  fact  distinctly  traceable  and  solely  due  to  the  miscon- 
duct of  the  defendants  ;  that  the  death  of  Dr.  Beach,  caused  by  the 
defendants,  in  a  legal  sense  determined  the  only  contingency  out  of 
which  their  liability  grew,  and  brought  upon  them  the  consequences 
of  that  liability,  which,  through  the  defendants'  unlawful  acts,  had  now 
become  fixed.     Still  the  question  remains,  notwithstanding  this  precise 
exhibition  of  cause  and  effect,  whether  these  consequences,  of  which 
the  deceased  was  primarily  the  subject,  and  which  affected  the  plaintiffs 
only  because  they  had  put  themselves  into  the  position  of  contractors 
with  him,  were  in  a  legal  view  brought  home  to  the  plaintiffs,  directly 
or  indirectly.     The  completeness  of  the  proof  of  connection  between 
the  acts  of  the  defendants  and  the  loss  of  the  plaintiffs,  does  not  vary, 
although  it  may  tend  to  confuse  the  aspects  of  the  case.     The  single 
question  is,  whether  a  plaintiff  can  successfully  claim  a  legal  injury  to 
himself  from  another,    because   the  latter   has  injured  a  third    person 
in  such  a  manner  that  the  plaintiffs'   contract  liabilities   are  thereby 
affected.     An  individual  slanders  a  merchant  and  ruins  his  business  ; 
is  the  wrong  doer  liable  to  all  the  persons,  who,  in  consequence  of  their 
relations  by  contract  to  the  bankrupt,  can  be  clearly  shown  to  have 
been  damnified   b}'  the  bankruptcy?     Can  a  fire  insurance  company, 
who  have  been  subjected  to  loss  by  the  burning  of  a  building,  resort  to 
the  responsible  author  of  the  injury,  who  had  no  design  of  affecting 
their  interest,  in  their  own  name  and  right?     Such  are  the  complica- 
tions of  human  affairs,  so  endless  and  far-reaching  the  mutual  promises 
of  man  to  man,  in  business  and  in  matters  of  money  and  property,  that 
rarely  is  a  death  produced  by  a  human  agency,  which  does  not  affect 
the  pecuniary  interest  of  those  to  whom  the  deceased  was  bound  by 
contract.     To   open    the  door   of  legal   redress    to   wrongs    received 
through  the  mere  voluntar}-  and  factitious  relation  of  a  contractor  with 
the  immediate  subject  of  the  injury,  would  be  to  encourage  collusion  and 
extravagant  contracts  between  men,  by  which  the  death  of  either  through 
the  involuntary  default  of  others,  might  be  made  a  source  of  splendid 
profits  to  the  other,  and  would  also  invite  a  system  of  litigation  more 
portentous  than  our  jurisprudence  has  yet  known.     So  self-evident  is 
the  principle  that  an  injury  thus  suffered  is  indirectlj-  brought  home  to 
the   part}'  seeking  compensation  for  it,  that  courts  have  rarely  been 
called   upon  to  promulgate   such  a  doctrine.     The  case,   however,  of 
Anthony  v.  Slaid,  11  Mete,  290,  referred  to  at  the  bar,  is  in  point.     A 
contractor  for  the  support  of  paupers  had  been  subject  to  extra  expense 
by  means  of  a  beating  which  one  of  those  paupers  had  received,  and  he 
sought  from  the  assailant  a  recovery  of  the  expenditure.     But  the  court 
held  that  the  damage  was  remote  and  indirect ;  having  been  sustained 
not  by  means   of  any  natural  or  legal  relation  between  the  plaintiff 
and  the  party  injured,  but  by  means  of  the  special  contract  by  which 
he  had  undertaken  to  support  the  town  paupers. 


994  CONN.  MUT.  LIFE  INS.  CO.  V.  N.  Y.  &  N.  H.  R.  R.         [CHAP.  IX. 

The  case,  however,  -would  present  a  different  aspect,  if,  h}'  virtue 
of  the  contract  between  the  raih-oad  company  and  the  deceased,  a  direct 
relation  was  established  between  the  former  and  the  insurers.     If  the 
contract  for  the  transportation  of  Dr.  Beach  safeh-,  either  in  its  terms, 
or  through  its  necessary  legal  incidents,  or  by  fair  inference  as  to  the 
intent  of  the  parties,  devolved  upon  the  railroad  company-,  a  duty  to- 
wards the  present  plaintiffs,  the  latter  might  sue  for  a  violation  of  that 
duty.     An  obligation  thus  imposed  will  not  always  require  a  suit  for 
its  breach  to  be  brought  by  a  party  to  the  contract ;  an  independent 
right  of  action  resides  in  the  party  to  whom  the  duty  was  to  be  per- 
formed.    In  'this  respect  there  is  no  difference  between  an  obligation 
imposed  by  law  and  by  contract.     Where  the  duty  of  keeping  a  high- 
way is  lodged  in  a  certain  quarter  by  statute,  the  way  is  to  be  kept  in 
repair  by  the  public,  for  everybody,  and  when  an}-  person  is  injured 
by  its  defects,  the  breach  of  duty  is  to  him,  and  he  has  an  action  for 
the  violation  of  his  right.     If  a  stage  coach  proprietor  agrees  with  a 
master  to  carr}'  his  servant,  and  injures  the  latter  on  the  road,  he  is 
liable  directly  to  the  servant ;  for  although  undertaken  at  the  request 
of    and    by  agreement    with   another,  the    duty    was   directly  to   the 
party  injured.     Longmeid  and  ux.  v.  Holliday,  6  Eng.  Law  &  Eq.  R. 
563.     But  it  is  evident  that  the  present  case  cannot  be  brought  witliin 
the  principle  of  such  decisions.     It  would  be  unfair  to  argue,  that  when 
two  parties  make  a  contract,  they  design  to  provide  for  an  obligation 
to  any  other  persons  than  themselves  and  those  named  expressly  there- 
in, or  to  such  as  are  naturally  within  the  direct  scope  of  the  duties  and 
obligations  prescribed  by  the  agreement.     On  this  point  it  is  enough 
to  say,  that  when  an  agreement  is  entered  into,  neither  party  contem- 
plates the  requirement  from  the  other,  of  a  duty  towards  all  the  persons 
to  whom  he  may  have  a  relation  by  numberless  private  contracts,  and 
who  may  therefore  be  affected  by  the  breach  of  the  other's  undertakings. 
We  cannot  find  that  any  public  law  charged  the  present  defendants 
with   any   duty  to   the  plaintiffs   regarding  Dr.   Beach's  life ;  nor  can 
we   see    that  Dr.  Beach    exacted,    either  expressly    or    b^-  reasonable 
intendment,  any  obligation  from  the  defendants  towards  the  insurers 
of  his  life,  when  he  contracted  for  his   transportation  to  New  York. 
Had  the  life  of  Dr.  Beach  been  taken  with  intent  to  injure  the  plaintiffs 
through  their  contract  liabilit}',  a  different  question  would  arise,  inas- 
much as  every  man  owes  a  duty  to  every  other  not  intentionally  to  bijure 
him. 

We  decide,  that  in  the  absence  of  any  privit}'  of  contract  between 
the  plaintiffs  and  defendants,  and  of  any  direct  obligation  of  the  latter 
to  the  former  growing  out  of  the  contract  or  relation  between  the  in- 
sured and  the  defendants,  the  loss  of  the  plaintiffs,  although  due  to  the 
acts  of  the  railroad  companj',  being  brought  home  to  tlie  insurers  only 
through  the  artificial  relation  of  contractors  with  the  part}'  who  was 
the  immediate  subject  of  the  wrong  done  by  the  railroad  compan}',  was 
a  remote  and  indirect  consequence  of  the  misconduct  of  the  defendants, 
and  not  actionable. 


SECT.  III.]         COXX.  MUT.  LIFE  IXS.  CO.  V.  N.  Y.  &  N.  H.  R.  R.  995 

Since  the  determination  of  this  case  ^ve  have  observed  a  decision 
recently  made  in  Maine,  Rockingham  M.  F.  Ins.  Co.  c.  Bosher,  39 
Maine  R.  253,  fully  confirming  the  legal  theory  which  we  have  ad- 
vanced. The  suit  was  brought  against  a  party  who  had  wilfully  fired 
a  store,  by  the  insurance  company,  who  had  paid  the  consequent  loss, 
and  in  their  own  name.  The  court  dismissed  tlie  action  on  demurrer  ; 
taking  the  same  view  of  the  common  law  doctrine  which  we  have 
expressed,  relative  to  the  indirect  and  remote  manner  in  which  the 
interests  of  the  insurer  were  prejudiced  by  the  misconduct  of  the  wrong 
doer. 

The  cases  in  which  insurers  have  been  permitted  to  recover  against 
the  authors  of  their  losses,  are  not  in  contraA-ention  of  these  principles. 
They  have  recovered,  not  by  color  of  their  own  legal  right,  but  under 
a  general  doctrine  of  equity  jurisprudence,  commonly  known  as  the 
doctrine  of  subrogation,  applicable  to  all  cases,  wherein  a  party,  who 
has  indemnified  another  in  pursuance  of  his  obligation  so  to  do,  suc- 
ceeds to,  and  is  entitled  to  a  cession  of,  all  the  means  of  redress 
held  by  the  party  indemnified  against  the  party  who  has  occasioned' 
the  loss.  In  some  instances  the  doctrine  has  been  carried  so  far,  that 
an  insurer  has  been  permitted  to  recover  from  the  insured  such  com- 
pensation as  the  latter  has  subsequently  obtained  from  the  wrong  doer  ; 
as  if  the  money  paid  by  the  tort  feasor,  under  such  circumstances,  was 
really  paid  for  the  use  of  the  insurer.  By  virtue  of  this  doctrine,  there 
is  no  doubt  of  the  right  of  an  insurer,  who  has  paid  a  loss,  to  use  the 
name  of  the  insured,  in  order  to  obtain  redress  from  the  author  of  the 
wrong  ;  a  right  to  be  exercised  for  the  benefit  of  the  party  equitably 
entitled  to  its  benefits,  not  to  be  enforced  by  its  possessor  in  his  own 
name,  but  by  him  as  the  successor  to  the  remedies  of  the  person  whom, 
ho  has  indemnified.  Having  no  independent  claim  on  the  wrong  doer,, 
ho  might  be  successfully  met  by  the  superior  equities  of  the  wrong  doer,, 
such  for  instance  as  a  payment  to  the  party  directly  injured,  without 
notice  of  tiie  insurer's  claim  to  be  subrogated.  Nothing  can  be  plainer 
than  that  an  indirect  liability  of  this  kind  is  an  argument  rather  against 
the  claim  of  a  direct  responsibility  of  the  wrong  doer,  than  a  sugges- 
tion in  its  favor.  The  views  taken  hy  courts  in  recognizing  the  insur- 
er's right  of  subrogation,  tend  to  sustain  the  principle  which  we  now 
maintain.  [See  case  of  Propeller  Monticello,  17  How.  R.  154.  Mason 
V.  Sainsbury,  26  E.  C.  L.  R.  36  ;  Yates  v.  White,  33  E.  C.  L.  R.  349  ; 
Quebec  Fire  Ins.  Co.  r.  St.  Louis,  22  Eng.  Law  &  Eq.  Rep.  73  ;  Hart 
V.  W.  B.  R.  Co.,  13  Met.  99.] 

"We  advise  the  superior  court  to  render,  judgment  for  the  defendants. 

In  this  opinion,  the  other  judges,  Waite  and  Hixman",  concurred. 

Judgment  for  defendants.^ 

1  Ace.  :  Insurance  Co.  v.  Brame,  95  U.  S.  734  (IS77). 

See  Harding  v.  Town  of  Townshend,  43  Vt.  536  (1871)  ;  Bradburn  v.  Great  Wes- 
tern Ry.  Co.,  L.  R.  10  Ex.  1  (1874) :  Grand  Trunk  Ry.  Co.  v.  Jennings,  13  App.  Caa. 
800  (P.  C,  1888). —Ed. 


996  LENOX    V.   UNITED   INS.   CO.  [CHAP.  X. 


CHAPTER   X. 
CONDITIONS  APPLICABLE   AFTER  LOSS. 


SECTION   I. 
Marine  Insurance} 

LENOX  V.   UNITED   INS.    CO. 

Supreme  Court  of  New  York,   1802.     3  Johns.  Cas.  224. 

This  was  an  action  on  a  policy  of  insurance,  dated  the  13th  March, 
1800,  on  three  boxes  of  muslins,  on  board  of  the  vessel  called  the 
"  Rambler,"  at  and  from  New  York  to  Monte  Christo,  etc.  The  goods 
were  valued  at  $2,610,  the  sum  insured.  Tl>e  vessel  was  captured  b}' 
the  French  during  the  voyage,  and  the  plaintiff  al)andoned  for  a  total 
loss.  By  the  policy,  the  loss  was  made  payable  '' tliirty  days  after 
proof  thereof."  The  plaintiff,  at  the  time  he  abandoned  and  claimed  a 
total  loss,  exhibited  to  the  defendants  the  customary  protest  of  the 
master,  stating  the  loss,  and  the  bill  of  lading  and  invoice  of  the  goods. 

ThpJ^qmJnttpp  xvf^rP'  nnt,  Rwnrn  to,   anrl  thp,  (^^pfpi^r|y^|^ts  vf^ftispd  to  arlmif. 

tlie  invojce.  without  the  <^'^*^^  of  thp.  plaintiff'  which  he  declined  to  give, 
as  not  requisite  on  his  part^ 

At  the  trial,  the  interest,  loss,  and  abandonment  were  fully  proved 
by  the  plaintiff,  and  the  jury  found  a  verdict  for  the  plaintiff  for  a  total 
loss. 

A  motion  was  made  to  set  aside  the  verdict,  and  for  a  new  trial. 

Hamilton^  for  the  plaintiff. 

Harrison  and  Troxip^  contra. 

Thompson,  J.  The  true  question  arising  out  of  the  above  case,  and 
which  is  submitted  to  the  decision  of  the  court,  appears  to  be  to  deter- 
mine what  is  the  construction  to  be  given  to  that  part  of  the  polic}'' 
which  declares  "  that  the  loss  is  made  payable  in  thirty  days  after 
proof  thereof."  On  the  part  of  the  defendant  it  is  contended  that  proof 
of  loss  is  a  condition  precedent ;  that  the  plaintiff  commenced  his  action 
prematurely,  without  producing  to  the  underwriters  the  kind  of  proof 
contemplated  by  the  policy  ;  that  the  proof  previously  necessary  to  be 
exhibited,  must  be  proof  of  interest  as  well  as  loss,  and  that  by  wit- 
nesses, or  at  least  by  the  oath  of  the  part}'  himself.     In  the  present 

1  For  notice  of  abandonment,  as  a  step  toward  a  claim  for  constructive  total  loss, 
Bee  ante,  Chap.  VIII.,  Sect.  I.,  (C).  — Ed. 


SECT.  I.]  LENOX  V.   UNITED  INS.  CO.  997 

case,  no  such  proof  was  offered  before  the  commencement  of  the  plain- 
tiff's action.  The  evidence  of  loss  and  interest  exhibited  to  the  defend- 
ants consisted  of  the  customary  protest,  and  the  bill  of  lading,  and 
invoice  of  the  muslins  ;  but  the  bill  of  lading  was  not  sworn  to.  On 
the  part  of  the  plaintiffs  it  is  contended  that  these  were  all  that  were 
necessar}-  to  be  offered,  in  order  to  satisfy  the  terms  of  the  contract. 

It  is  a  governing  rule,  in  expounding  policies  of  insurance,  as  well  as 
other  contracts,  that  the  intent  of  the  parties  ought  to  be  sought  after 
and  carried  into  effect  where  it  can  be  discovered  from  the  instrument 
itself.  Proof,  in  strict  legal  construction,  means  evidence  before  a 
court  or  jury,  in  a  judicial  way.  It  is  certain,  however,  that  such  could 
not  have  been  the  understanding  of  the  parties  to  this  contract  as  to 
the  meaning  of  the  term.  And  it  was  not  contended  by  the  defendants' 
counsel  that  such  kind  of  proof  was  contemplated  ;  but  that  proof  col- 
lateral, and  out  of  court,  would  satisfy  the  terms  of  the  contract ;  that 
this  proof  must  be  either  by  witnesses,  or  by  the  affidavit  of  the 
plaintiff. 

The  parties  to  a  contract  have  undoubtedly  a  right  to  modify  it  as 
the}'  think  proper,  and  to  impose  on  each  other  such  restrictions  as  they 
shall  choose,  if  not  illegal.  So  that,  if  it  was  clearly  inferrible  from  the 
instrument,  that  it  was  the  intent  of  the  parties,  that  before  the  loss  was 
payable,  proof  by  witnesses,  or  b}'  the  oath  of  the  party,  of  both  loss 
and  interest,  must  be  exhibited  to  the  underwriters,  the  contract  ought 
to  be  so  construed  as  to  carry  that  intention  into  effect.  But  I  think 
the  terms  do  not  necessarily  warrant  such  an  inference,  and  all  rational 
presumption  is  against  such  conclusion.  It  is  not  fairly  to  be  presumed 
that  the  plaintiff  would  lay  himself  under  restrictions  that  might  totally 
prevent  a  recovery  in  case  of  a  loss  ;  and  such  might  be  bis  situation 
in  case  it  was  necessary  for  him  to  produce  proof  by  witnesses,  of  his 
interest  and  loss,  before  he  could  bring  his  action,  as  no  mode  is  pro- 
vided in  the  law  to  compel  witnesses  to  appear  before  any  officer  or 
magistrate  to  attest  to  such  facts.  Although  it  was  in  the  power  of  the 
plaintiff,  by  his  own  affidavit,  to  attest  to  his  interest,  yet,  in  my  judg- 
ment, that  ought  not  to  be  required,  unless  it  was  essential,  in  order  to 
satisfy  the  terms  of  the  contract.  And  although  I  do  not  think  it 
necessary,  for  the  purpose  of  deciding  the  present  question,  to  deter- 
mine how  far  voluntary  oaths  ought  to  be  toleratetl,  yet  I  do  not  hesitate 
to  say  they  ought,  very  rarely,  if  ever,  to  be  administered. 

It  is  a  circumstance  worthy  of  notice  that  by  this  policy  the  loss  is 
made  payable  in  thirty  days  after  proof  of  loss  only,  and  not  after 
proof  of  loss  and  interest ;  and  although  on  the  trial  it  is  incumbent  on 
the  insured  to  prove  his  interest  as  well  as  loss,  yet  he  would  be  bound 
to  do  this,  independent  of  this  clause  in  the  policy.  This  is  a  clause 
peculiar  to  our  own  policies,  and  I  cannot  think  it  ought  to  receive  a 
construction  that  will  impose  on  the  insured  the  necessity  of  producing 
the  same  proof  preliminarily,  that  would  be  requisite  on  the  trial,  to  en- 
title him  to  recover.     Admitting,  therefore,  that  proof  necessarily  im- 


998  LENOX   V.    UNITED    INS.    CO.  [CHAP.  X. 

plies  evidence  under  oath,  still,  as  to  loss  (which  is  all  that  is  expressly 
required  by  the  policy),  tlie  protest  of  the  captain  furnishes  that  species 
of  proof.  It  was  stated  in  argument  by  tlie  plaintiff's  counsel,  and  not 
denied  by  the  defendants,  that  policies  had  lately  undergone  an  altera- 
tion in  this  clause;  that  formerly  the  loss  was  made  payable  in  so 
many  days  after  proof  of  loss  and  interest,  but  that  lately  the  word 
interest  had  been  expunged.  Taking  this,  tlien,  as  a  fact,  it  would 
afford  a  strong  inference  that  it  was  the  intention  of  the  parties  to  dis- 
pense with  any  proof  of  interest,  as  a  preliminary  step  under  this  clause; 
at  all  events,  that  nothing  more  should  be  required  than  the  usual  docu- 
ments, to  wit,  the  invoice  and  bill  of  lading.  The  interest  of  commerce, 
as  well  as  the  convenience  of  parties,  demands  this  construction,  unless 
forbidden  by  the  terms  of  the  contract,  and  more  especially  as  the 
clause  is  peculiar  to  our  own  policies.  One  of  the  principal  objects  of 
this  clause,  no  doubt,  was  to  give  the  underwriters  time  to  determine, 
after  being  apprized  of  the  loss,  whetlier  they  would  pay  without  a  suit ; 
and  for  the  purpose  of  furnishing  them  with  evidence  on  which  to 
ground  tbeir  determination,  they  ought  to  have  offered  what  may  afford 
them  a  reasonable  satisfaction,  according  to  the  course  of  mercantile  busi- 
ness. I  am,  therefore,  of  opinion  that  the  documentary  proof,  to  wit, 
the  protest,  bill  of  lading,  and  invoice  of  the  goods  insured,  were  all  the 
preliminary  proofs  necessary  for  the  plaintiff  to  exhibit  to  the  under- 
writers, previous  to  his  bringing  his  action,  according  to  the  legal  im[)ort 
and  true  interest  and  meaning  of  this  clause  in  the  policy ;  and  more 
especiallv,  in  the  present  case,  as  it  is  stated,  that  the  plaintiff's  interest 
and  loss'  were  fully  proved  on  the  trial,  and  the  only  possible  benefit 
resulting  to  the  defendants  from  the  contrary  construction,  would  be  to 
turn  the  plaintiff  round  to  bring  a  new  suit.  This  consideration  ought 
not,  however,  to  influence  the  decision,  if  it  was  clearly  made  necessary 
by  tlie  contract  that  the  preliminary  proof  should  be  different  from  that 
offered.  But  as  I  do  not  think  that  requisite,  I  am  of  opinion  the  ver- 
dict ought  not  to  be  set  aside. 

Radcliff,  J.^  The  question  is  whether  by  the  terms  of  the  policy 
the  plaintiff  was  obliged  to  make  oath  of  his  interest  in  the  cargo  before 
he  was  entitled  to  demand  payment  of  the  defendants.  .  .  .  The  ex- 
pression is  general,  "thirty  days  after  proof  of  loss."  It  must  be 
taken  in  connection  with  the  subject-matter,  and  according  to  the  usual 
course  of  such  proceedings.  The  loss  itself  is  usually  proved  by  the  . 
protest  of  the  captain.  ...  As  far  as  proof  of  interest  may  be  required, 
independent  of  the  captain's  protest,  I  think  it  can  only  be  construed 
to  mean  the  usual  documentary  proofs  attending  the  subject,  the  bill  of 
lading,  invoice,  and  other  papers,  if  there  be  any.  These  satisfy  the 
terms  of  the  expression,  granting  that  proof  of  loss  also  implies  proof 
of  interest,  which  may  admit  of  some  question.  The  parties  in  this 
case  could  not  mean  legal  proof,  which  can  only  be  taken  in  a  course  of 
legal  proceeding.  They  plainly  referred  to  a  different  mode  of  proof, 
1  The  greater  part  of  this  opinion  has  been  omitted.  —  Ed. 


SECT.  I.J  LENOX   V.  UNITED   INS.   CO.  999 

before  the  commencement  of  any  legal  process,  and  I  think  could  only 
have  contemplated  the  production  of  that  species  of  evidence  which 
would  satisfy  a  reasonable  mind.  .   .  . 

Upon  the  whole,  I  am  of  opinion  that  there  is  no  adjudged  case 
which  is  decisive  of  the  question  before  us,  and  that  on  principle 
and  reason,  and  according  to  the  usual  course  of  such  proceedings,  the 
proof  offered  by  the  plaintiff  was  sufficient. 

Kent,  J.  The  onl}'  question  raised  in  this  case  is,  whether  the 
plaintiff  produced  to  the  defendants  proof  of  loss,  before  bringing 
his  suit,  sufficient  to  entitle  him  to  recover  ? 

The  plaintiff  exhibited  the  protest,  bill  of  lading,  and  invoice.  This 
species  of  proof  has  been  aptly  termed  documentary  evidence.  The 
interest  of  the  assured  may  be  proved  by  such  documents.  The  bill  of 
lading  is  always  received  as  a  document  of  the  goods  laden  on  board, 
and  in  the  present  case,  the  authenticity  of  the  handwriting  of  the 
master  was  not  questioned.  The  protest  is,  in  mercantile  understand- 
ing, high  evidence  of  loss  ;  and  it  ma}'  well  have  been  intended  bj-  the 
parties,  since  the  strict  proof  requisite  on  a  trial  was  surel}'  never 
within  their  contemplation.  As  long  as  the  words  of  the  policy  can  be 
satisfied,  by  furnishing  the  papers  that  were  produced,  we  ought  not  to 
extend  them  so  far  as  to  include  proof  by  the  oath  of  witnesses,  or  the 
oath  of  the  part}',  which  seems  to  have  been  required  in  the  present 
case.  The  law  will  not  sanction  an  oath  administered,  at  the  instance 
of  an  individual,  when  there  is  not  a  lis  pendens,  unless  there  be  a 
positive  provision  for  the  case.  Many  difficulties  would  arise  under 
the  construction,  that  the  parties  intended  proof  b}'  witnesses.  These 
difficulties  are  avoided  by  confining  the  words  to  the  vouchers  respect- 
ing the  property  on  board,  and  as  to  the  loss  ;  and  such  \ouchers  are 
to  be  furnished  to  the  insurer,  not  in  the  light  of  proof,  technically  con- 
sidered, but  as  reasonable  information  or  notice,  upon  which  he  is  to 
act.i  .   .  . 

I  am  of  opinion,  accordingly,  that  the  plaintiff  is  entitled  to  judg- 
ment. 

Livingston,  J.,  dissented. 

Lewis,  C.  J.,  not  having  heard  the  argument,  gave  no  opinion. 

Judgment  for  the  plaintiff.'^ 

1  Here  followed  a  discussion  of  authorities.  —  Ed. 

2  See  Talcot  v.  Marine  lus.  Co.,  2  Johns.  1.30,  136  (1807). 

In  Barker  v.  Phoenix  Ins.  Co.,  8  Johns.  307,  317-318  (1811),  Kent,  C.  J.,  for  the 
conrt,  said :  "The  act  of  abandonment,  under  the  general  law  of  insurance,  and  the 
furnishing  the  preliminary  proofs,  under  the  special  stipulation  in  the  policy,  are  dis- 
tinct acts,  and  must  not  be  confounded.  The  clause  in  the  policy,  that  tlie  loss  is  to  be 
paid  thirty  days  after  proof  thereof,  gave  rise  to  what  is  termed  in  our  books  the  pre- 
liminary proofs  ;  and  as  its  object  was  only  to  furnish  reasonable  information  to  the 
insurer,  so  that  he  might  be  able  to  form  some  estimate  of  his  rights  and  duties,  before 
he  was  obliged  to  pay,  it  has  always  been  liberally  expounded,  and  is  construed  to  re- 
quire only  the  best  evidence  of  the  fact  that  the  party  possesses  at  the  time." 

In  Lawrence  v.  Ocean  Ins.  Co.,  11  Johns.  241  (1814),  the  insurance  was  on  goods, 
and  the  defendants  objected  to  the  sufficiency  of  the  preliminary  proof,  because  the 


1000  LENOX  V.    UNITED  INS.  CO.  [CHAP.  X. 

proof  of  loss  was  only  a  copy  of  a  letter  from  merchants  to  the  owners  of  the  ship, 
enclosing  a  letter  which  thay  had  received  from  the  master  to  the  effect  that  the  ship 
had  been  captured  and  condemned  as  prize ;  and  it  was  held  that  the  preliminary 
proof  of  loss  was  sufficient.  Thompson,  C.  J.,  for  the  court,  said :  "The  objection  to 
the  sufficiency  of  the  preliminary  proofs  was  properly  overruled.  The  usual  and  cus- 
tomary documents,  accompanied  with  an  affidavit  showing  the  interest  of  the  assured, 
were  exhibited  to  the  underwriters,  together  with  a  copy  of  a  letter  from  the  master 
.  .  .,  received  from  Messrs.  Parish  &  Co.,  and  which  was  the  only  evidence  of  loss  in 
their  possession;  and  this  was  all  that  could  be  required." 
On  the  topic  of  this  section,  see  also :  — 
•  Abel  V.  Potts,  3  Esp.  242  (1800) ; 

Ruan  V.  Gardner,  1  Wash.  C.  C.  U^,  148-149  (1804) ; 

Haff  V.  Marine  Ins.  Co.,  4  Johns.  132  (1803); 

Craig  V.  United  Ins.  Co.,  6  Johns.  226  (1810) ; 

Allegre  v.  Maryland  Ins.  Co.,  6  H.  &  J.  408,  410-412  (1825) ; 

Pacific  Ins.  Co.  v.  Catlett,  4  Wend.  75,  83-84  (1829); 

Child  V.  Sun  Mut.  Ins.  Co.,  3  Sandf.  26,  41-42  (1849) ; 

Savage  v.  Corn  Exchange  F.  &  Inland  Navigation  Ins.  Co.,  4  Bosw.  1,  12-13 
(18.58); 

Peoria  M.  &  F.  Ins.  Co.  v.  Walser,  22  Ind.  73,  84-85,  87  (1864) ; 

Fuller  V.  Detroit  F.  &  M.  Ins.  Co.,  36  Fed.  R.  469,  474  (C.  C.  N.  D.  111.,  1888). 
—  Ed. 


SECT.  II.]  WORSLEY   V.   WOOD.  1001 

SECTION  11. 
Fire  Insurance. 

WORSLEY  V.  WOOD  and  Others,  Assignties. 

King's  Bench,  in  Error,  1796.     6  T.  R.  710. 

This  was  an  action  of  covenant  brought  in  the  Court  of  Common 
Pleas.^  The  declaration  stated  that  by  a  policy  of  insurance  made 
before  Lockyer  and  Bream  became  bankrupts,  namely,  on  the  9th  of 
March,  1792,  it  was  witnessed  that  Lockyer  and  Bream  had  paid 
£11  16s.  to  the  Phoenix  Company,  and  had  agreed  to  pay  to  them,  at 
their  office,  the  sum  of  £11  16s.  on  the  25th  of  March,  1793,  and  the  like 
sum  yearly  on  the  said  day  during  the  continuance  of  the  policy  for 
insurance  from  loss  or  dau)age  by  fire,  not  exceeding  the  sum  of  £7,000. 
That  Worsley  covenanted  with  L.  and  B.  that  so  long  as  the  assured 
should  pay  the  above  premium,  the  capital  stock  and  funds  of  the 
Photjnix  Company  should  be  liable  to  pa3'  to  the  assured  an}-  loss  that 
the  assured  should  suffer  by  fire  on  the  property  therein  mentioned,  not 
exceeding  £7,000,  according  to  the  tenor  of  the  printed  proposals  deliv- 
ered with  the  policy.  That  in  the  printed  proposals  I'eferred  to  by  the 
policy  it  is  declared  that  the  companj-  would  not  be  accountable  for  any 
loss  by  fire  caused  by  foreign  invasion,  civil  commotion,  etc. ;  and  also 
that  all  persons  assured  sustaining  any  loss  by  fire  should  forthwith 
give  notice  to  the  company,  and  as  soon  as  possible  after  deliver  in  as 
particular  an  account  of  their  loss  as  the  nature  of  the  case  would 
admit,  and  make  proof  of  the  same  by  their  oath  and  by  their  book  of 
accounts  or  other  vouchers  as  should  be  reasonably  required ;  and 
should  procure  a  certificate  under  the  hands  of  the  minister  and  church- 
wardens and  of  some  reputable  householders  of  the  parish  not  concerned 
in  the  loss,  importing  that  they  were  acquainted  with  the  cliaracter  and 
circumstances  of  the  person  insured,  and  knew  or  believed  that  ho  b}' 
misfortune  and  without  any  kind  of  fraud  or  evil  practice  had  sus- 
tained by  such  fire  the  loss  and  damage  therein  mentioned  ;  and  in 
case  any  difference  should  arise  between  the  assured  and  the  compan\' 
touching  any  loss,  such  difference  should  be  submitted  to  the  judgment 
of  arbitrators  indifferently  chosen,  whose  award  should  be  conclusive, 
etc.  ;  and  when  an}'  loss  should  have  been  duly  proved,  the  assured 
siiould  immediately  receive  satisfaction  to  the  full  amount  of  the  same. 
The  declaration  then  stated  that  on  the  1st  of  July,  1792,  a  loss  hap- 
pened by  fire  in  the  house  of  L.  and  B.,  in  which  all  their  books  of 
account  were  destro3'ed  to  the  amount  of  £7,000.  That  L.  and  B.  on 
the  same  day  gave  notice  of  it  to  the  compan}',  and  on  the  same  day 

1  Reported  in  the  Common  Pleas,  sub.  nom.  "Wood  v.  Worsley,  2  H.  Bl.  574 
(1795).  — Ed. 


1002  WORSLEY   V.   WOOD.  [CHAP.  X. 

delivered  to  the  company  as  particular  an  account  of  their  loss  as  the 
nature  of  the  case  admitted,  and  were  then  and  tiiere  also  ready  and 
willing  and  then  and  there  tendered  to  make  proof  of  the  loss  by  their 
oath,  and  to  produce  such  vouchers  as  could  be  reasonably  required 
in  that  behalf  ;  that  on  tlie  same  day  they  procured  and  delivered  to 
the  said  company  a  certificate  under  the  hands  of  four  reputable  house- 
holders of  the  parish,  to  the  effect  required  in  the  i)rinted  proposals, 
and  applied  to  E.  Embry,  the  minister,  and  H.  llutchins  and  J. 
Bellamy,  the  churchwardens  of  the  parish,  to  sign  such  certificate,  but 
that  they  without  any  reasonable  or  probable  cause  wrongfully  and  un- 
justly refused  and  have  ever  since  refused  to  sign  it.  The  declaration 
then  stated  that  the  funds  of  the  company  were  sufficient  to  pay  this 
loss,  yet  the  company  have  not  paid  it  either  to  the  bankrupts  or  to 
their  assignees ;  nor  have  the  company  submitted  the  said  difference 
to  the  judgment  of  such  arbitrators,  etc.^  .  .   . 

The  defendant  pleaded  (to  the  first  count)  that  the  bankrupts  were 
not  interested  in  the  house  or  goods,  etc.,  at  tlie  time  of  tlie  loss  ;  on 
which  issue  was  taken  in  the  replication.  2dly.  That  the  loss  was 
occasioned  by  the  fraud  and  evil  practice  of  the  bankrupts  ;  on  which 
issue  was  taken,  etc.  3dly.  That  the  minister  and  churchwardens  did 
not  refuse  wrongfully  and  injuriously  and  without  any  reasonable  or 
probable  cause  to  sign  the  certificate  ;  on  which  issue  was  taken.   .  .   . 

To  the  last  of  these  pleas  the  plaintiffs  replied  that  the  bankrupts  as 
soon  as  possible  after  the  loss,  namely,  on  the  1st  of  July,  1792,  pro- 
cured and  delivered  to  the  company  such  certificate  as  is  required  in 
the  printed  proposals  under  the  hands  of  four  respectable  inhabitants, 
etc.,  but  that  the  minister  and  churchwardens  wrongfully  refused  to 
sign  it  without  any  reasonable  or  probable  cause  for  so  doing. 

The  rejoinder  stated  that  the  minister  and  churchwardens  did  not 
wrongfully  refuse,  etc.;  on  which  issue  was  taken  in  the  surrejoinder. 

The  jury  found  all  the  issues  for  the  plaintiffs,  and  gave  a  verdict  for 
£3,000. 

The  defendant  below  removed  the  record  into  this  court  by  writ  of 
error,  and  assigned  for  error  that  the  declaration,  the  replication,  and 
the  other  pleadings  of  the  plaintiffs  below  were  not  sufficient  in  law  to 
maintain  the  action. 

This  case  was  twice  argued  in  this  court,  the  first  time  in  last  Easter 
term  by  Wood  for  the  plaintiff  in  error  and  Lanibe  for  the  defendants, 
and  now  by  Law  for  the  former  and  Gibhs  for  the  latter. 

Lord  Kenyon,  C.  J.^  .  .  .  This  case  requires  our  serious  considera- 
tion, because  the  Court  of  Common  Pleas  have  already  given  their 
opinion  on  it  in  favour  of  the  plaintiff's  claim,  though  it  has  been 
suggested  that  it  was  not  the  unanimous  opinion  of  that  court.'  We 
are  called  upon  in  this  action  to  give  eflTect  to  a  contract  made  between 

1  In  reprinting  the  statement,  passages  as  to  a  second  count  have  been  omitted.  —  Ed. 

2  A  passage  on  the  second  count  has  beeu  omitted.  — Eu. 

8  Mr.  Justice  Heath  differed  from  the  rest  of  the  Court  of  C.  B.  — Bep. 


SECT.  II.]  WOKSLEY   V.   WOOD.  1003 

these  parties;  and  if  from  the  terms  of  it  we  discover  tliat  they  intended 
that  the  procuring  of  the  certificate  b\'  the  assured  should  precede  their 
right  to  recover,  and  tliat  it  has  not  been  procured,  we  are  bound  to 
give  judgment  in  favor  of  tlie  defendant  below.  These  insurance  com- 
panies, who  enter  into  very  extensive  contracts  of  this  kind,  are  liable 
(as  we  but  too  frequently  see  in  courts  of  justice)  to  great  frauds  and 
impositions;  common  prudence  therefore  suggests  to  them  the  [)ioi)riely 
of  taking  all  possible  care  to  protect  them  from  frauds  when  they  make 
these  contracts.  The  PhcEuix  Compuny  have  provided,  among  other 
things,  that  the  assured  should,  as  soon  as  possible  after  the  calamity 
has  happened,  deliver  in  an  account  of  their  loss  and  procure  a  certifi- 
cate under  the  hands  of  the  minister  and  churchwardens  and  of  some 
reputable  householders  of  the  parish,  importing  that  they  knew  the 
character  and  circumstances  of  the  assured,  and  believed  that  they  had 
sustained  the  loss  without  an}"  kind  of  fraud.  That  this  is  a  prudent 
regulation  this  very  case  is  sufficient  to  convince  us ;  for  it  a[)pcars  on 
the  record  that  soon  after  tiie  fire  the  assured  delivered  in  an  account 
of  their  loss  which  the}'  said  amounted  to  £7,000,  that  the}-  obtained  a 
certificate  from  some  of  the  reputable  inhabitants  that  the  luss  did 
amount  to  that  sum,  and  that  the  jury  after  inquiring  into  all  the  cir- 
cumstances were  of  opinion  that  the  loss  did  not  exceed  £3,000,  and 
yet  it  is  also  stated  that  the  minister  and  churchwardens,  who  refused 
to  certify  that  tliey  believed  that  the  loss  amounted  to  £7,000,  wrong- 
fully and  without  any  reasonable  or  probable  cause  refused  to  sign  such 
certificate.  The  great  question  here  is,  Whether  or  not  it  was  the  in- 
tention of  these  parties  that  that  certificate  should  precede  payment  by 
the  insurance  office ;  now  it  seems  to  me  from  the  printed  i)roposals 
that  it  was  their  intention  that  it  should  precede  payment.  What  is  a 
condition  precedent  or  what  a  condition  subsequent  is  well  expressed 
by  my  brother  Ashhurst  in  the  case  of  Hotham  v.  The  East  India  Com- 
pany,^ to  which  I  refer  in  general.  If  there  be  a  condition  precedent 
to  do  an  impossible  thing,  the  obligation  becomes  single  ;  but  however 
improbable  the  thing  may  be,  it  must  be  complied  with,  or  the  right 
which  was  to  attach  on  its  being  performed  does  not  vest.  If  the 
condition  be  that  A.  shall  enfeoff  B.,  and  A.  do  all  in  his  power  to 
perform  the  condition,  and  B.  will  not  receive  livery  of  seisin,  yet  from 
the  time  of  Lord  Coke  to  the  present  moment  it  has  not  been  doubted 
but  that  the  right  which  was  to  depend  on  tiie  performance  of  that  coa- 

1  III  Hotham  v.  East  India  Co.,  1  T.  R.  638,  645  (1787),  the  action  being  covenant 
on  a  charter-party,  Ashhcrst,  J.,  for  the  court,  said  :  "  There  are  no  precise  technical 
words  required  in  a  deed  to  make  a  stipulation  a  condition  precedent  or  subsequent; 
neither  doth  it  depend  on  the  circumstance,  whether  tlie  clause  is  placed  prior  or 
posterior  in  the  deed,  so  that  it  operates  as  a  proviso  or  covenant.  For  the  same  words 
have  been  construed  to  operate  as  either  the  one  or  the  otlier,  according  to  the  nature 
of  the  transaction.  The  merits  therefore  of  the  question  must  depend  on  the  nnture  of 
the  contract,  and  the  acts  to  be  performed  by  the  contracting  parties,  and  the  subse- 
quent facts  disclosed  on  the  record,  which  have  happened  in  consequence  of  tiiis 
contract." —  Ed. 


1004  WORSLEY   V.   WOOD.  [CIIAP.  X. 

dition  did  not  arise.  '  In  the  case  of  Hesketh  v.  Gray,^  which  has  been 
cited  as  a  determination  in  this  court,  there  was  also  an  appHcation  to 
the  great  seal  at  the  time  when  Lord  Ch.  J.  Willes  was  the  lirdt  com- 
missioner to  dispense  with  the  condition,  which  was  that  the  Bishop  of 
Chichester  should  accept  the  resignation  of  a  living;  but  it  was  held 
that  there  was  no  ground  for  a  Court  of  Equity  to  interfere.  This 
court  also  held,  when  the  case  came  before  them,  that  it  was  a  condi- 
tion precedent  and  must  be  performed. 

In  this  case,  however,  it  is  said  that,  though  the  minister  and  church- 
wardens did  not  certify,  some  of  the  inhabitants  did  certify,  and  that 
that  was  sutlicient,  it  being  a  performance  of  the  condition  cy  pres. 
But  I  confess  I  do  not  see  how  the  terms  cy  pres  are  applicable  to 
this  subject;  the  argument  for  the  plaintiffs  below  goes  to  show  that  if 
none  of  the  inhabitants  of  this  parish  certified,  a  certificate  by  the  in- 
habitants of  the  next  or  of  any  other  parish  would  have  answered  the 
purpose.  But  the  assured  cannot  substitute  one  thing  for  another.  In 
the  case  of  Campbell  v.  French, ^  we  explained  the  grounds  of  this  doc- 
trine, and  said  that  the  party  who  had  not  complied  with  the  condition 
could  not  substitute  other  terras  or  conditions  in  lieu  of  those  wliich  all 
the  parties  to  the  contract  had  originally  made.  So  here  it  was  com- 
petent to  the  insurance  office  to  make  the  stipulations  stated  in  their 
printed  proposals,  they  had  a  right  to  say  to  individuals  who  were 
desirous  of  being  insured,  "  Knowing  bow  liable  we  are  to  l)e  imposed 
upon,  we  will,  among  other  things,  require  that  the  minister,  church- 
wardens, and  some  of  the  reputable  inhabitants  of  your  parish  shall 
certify  that  they  believe  that  the  loss  happened  by  misfortune  and  with- 
out fraud,  otherwise  we  will  not  contract  with  you  at  all."  If  the 
assured  say  that  the  minister  and  churchwardens  may  obstinately  refuse 
to  certify,  the  insurers  answer,  "  We  will  not  stipulate  with  you  on  any 
other  terms."  Such  are  the  terras  on  which  I  understand  this  insur- 
ance to  have  been  effected;  and  therefore  I  am  clearly  of  opinion  that 
there  is  no  foundation  for  the  action,  and  that  the  judgment  below  must 
be  reversed.^  Judgment  reversed^ 

1  Saver,  185  (1755).  — Ed. 

2  6T.  R.  200  (1795). —Ed. 

8  Concurring  opinions  by  Asiihurst,  Grose,  and  Lawrence,  JJ.,  have  not  been 
reprinted.  —  ¥a>. 

■*  Other  early  cases  on  provisions  as  to  certificates  are  :  Oldman  v.  Bewicke,  2  H.  Bl. 
577,  n.  (1785)  ;  Koutledge  v.  Burrell,  1  H.  Bl.  254  (1789). 

See  Loudon  Guarantie  Co.  v.  Eearuley,  5  App.  Cae.  911,  916,  918  (1880).  —  Ed. 


SECT.  II.]  MASON    V.   HARVEY.  1005 


MASON   V.   HARVEY. 

Exchequer,  1853.     8  Excb.  819. 

Assumpsit  on  a  policy  of  insurance  effected  by  the  plaintiff,  a  pawn- 
broker, with  the  Norwich  Union  Fire  Insurance  Society.     The  declara- 
tion stated  the  insurance  to  be   {inter  alia)  £150  on  the  shop  of  the 
plaintiff,    and  £1,000   on  pledges  received  under  the   39  &  40  Geo. 
III.  c.  99;  also  that  there  was  indorsed  on  the  policy  the  following 
(among   other)    conditions  ^ :  —  "  Eighth :    Wlienever    any    fire    shall 
happen,  the  party  insured  shall  give  immediate  notice  thereof  to  one 
of  the  secretaries  or  agents  of  the  society,  and  within  tliree  calendar 
months  deliver  to  such  secretary  or  agent,  under  his  or  her  hand,  ac- 
counts exhibiting  the  full  particulars  and  amount  of  the  loss  sustained, 
estimated  with  reference  to  the  state  in  which  the  property  destroyed 
or  damaged  was  immediately  before  the  fire  happened  ;   and  such  ac- 
counts  shall,  if  required  by  the  directors,   be  supported  by  the  oral 
testimony,  and  by  the  depositions  or   affirmations  in    writing  of  the 
claimant,  and  of  his  or  her  servants,  and  by  the  production  of  his  or 
her  books  and  vouchers."     The    declaration  alleged  that,  whilst  the 
property  continued  so  insured,   the    "  said  shop   and  divers  pledges 
received  under  the  39  &  40   Geo.  III.   c.   99,   and   then  being  in  the 
said  shop,  were  damaged  and  destroyed  by  fire,"  etc.  —  Breach,   that 
the  loss  which  so  happened  has  not  been  made  good  to  the  plaintiff. 
Plea,  that  the  plaintiff  did  not,  within  the  period  of  three  calendar 
months  after  the  said  shop  and  pledges  were  so  damaged  and  destroyed 
by  fire,  deliver  to  any  secretary  or  agent  of  the  said  society,  under  his 
hand,  any  such  accounts  as  are  in  and  by  the  eighth  condition  men- 
tioned and  required,  exhibiting  the  full  particulars  and  amount  of  the 
loss  sustained  by  the  plaintiff  as  alleged,  estimated  with  reference  to 
the  state  in  which  the  property  damaged  and  destroyed  was  immediately 
before  the  fire  happened  by  which  the  property  was  so  damaged  and 
destroyed. 

Demurrer  and  joinder. 

Unthank,  in  support  of  the  demurrer.  The  plea  is  bad  in  su])stance. 
A  compliance  witli  the  requisitions  of  the  condition  in  question  is  not  a 
condition  precedent  to  the  plaintiff's  right  to  sue  on  the  poHcy,  but 
only  renders  him  liable  to  an  action  for  his  breach  of  duty.  The  case 
falls  within  the  principle  of  the  decisions,  that,  where  a  person  takes  an 
estate  or  benefit  under  a  contract,  subject  to  a  duty,  the  law  will  imply 
an  undertaking  to  perform  it ;  for  the  breach  of  which  an  action  may 
be  maintained  :  Burnett  v.  Lynch,  5  B.  &  C.  589.  The  language  and 
sense  of  the  condition  are  alike  opposed  to  its  construction  as  a  condi- 
tion precedent;  and,  moreover,  it  would  be  unjust  so  to  construe  it. 

1  Some  of  the  conditions  expressly  declared  that,  in  case  of  non-compliance  with 
their  requisitions,  "  the  policy  will  become  void."  —  Rep. 


1006  MASON   V.    HARVEY.  [CIIAP.  X. 

Suppose  the  plaintiff  delivered  particulars  of  his  loss,  but  some  few  of 
the  plcdires  were  omitted,  is  he  on  that  account  to  be  deprived  of  the 
whole  benefit  of  tlie  policy?  [Pollock,  C.  B.  The  term  "  full  par- 
ticulars" must  mean  the  best  particulars  the  assured  can  reasonably 
give;  otherwise  it  miglit  happen  that,  if  by  some  inadvertence  a  dupli- 
cate was  omitted,  or  mentioned  as  lost  when  in  fact  it  was  not,  the 
assui-ed  could  not  recover  at  all.]  Tlie  only  case  on  tlie  subject  is  tliat 
of  Worsley  v.  Wood,  6  T.  R.  710  ;  s.  c,  in  error,  2  H.  Blac.  574, 
where  one  of  the  conditions  of  the  policy  was,  that  persons  insured 
should  procure  a  certificate  of  tlie  minister,  churchwardens,  and  some 
reputable  housekeepers  of  the  parish,  importing  that  they  were  ac- 
quainted with  the  character  of  the  assured,  and  believed  that  he  had 
reallv  sustained  the  loss  without  fraud  ;  and  it  was  held  that  the  pro- 
curing such  certificate  was  a  condition  precedent  to  tiie  right  of  the 
assured  to  recover ;  and  that  it  was  immaterial  that  tlie  minister  and 
churchwardens  wrongfully  refused  to  sign  the  certificate.  In  that  case, 
however,  the  same  injustice  would  not  arise  from  construing  the  stipu- 
lation as  a  condition  precedent,  since  it  might  be  comiilied  with  at  any 
time.  [Platt,  B.,  referred  to  Oldham  v.  Bewicke,  2  H.  Blac.  557, 
note.] 

Crowder  {Breioer  with  him)  contra.  The  delivery  of  particulars  of 
the  loss  is  a  condition  precedent  to  the  right  of  the  assured  to  recover. 
Worsley  v.  Wood  in  effect  decides  this  case.  The  assured  is  bound  to 
give  the  best  particulars  which  he  can  under  the  circumstances.  He 
was  then  stopped  by  the  court. 

Pollock,  C.  B.  By  the  contract  of  the  parties,  the  delivery  of  the 
particulars  of  loss  is  made  a  condition  precedent  to  the  right  of  the 
assured  to  recover.  It  has  been  argued  that  such  a  construction  would 
be  most  unjust,  since  the  plaintiff  might  be  prevented  from  recovering  at 
all  by  the  accidental  omission  of  some  article.  But  the  condition  is 
not  to  be  construed  with  such  strictness.  Its  meaning  is,  that  the 
assured  will,  within  a  convenient  time  after  the  loss,  produce  to  the 
company  something  which  will  enable  them  to  form  a  judgment  as  to 
whether  or  no  he  has  sustained  a  loss.  Such  a  condition  is,  in  sub- 
stance, most  reasonable  ;  otherwise  a  party  might  lie  by  for  four  or  five 
years  after  the  loss,  and  then  send  in  a  claim  when  the  company  per- 
haps had  no  means  of  investigating  it.  The  plaintiff  may  have  liberty 
to  amend  by  withdrawing  the  demurrer,  otherwise  judgment  for  the 
defendant. 

Alderson,  B.,  Platt,  B.,  and  Martin,  B.,  concurred. 

Amendment  accordingly } 

1  See  Inman  v.  Western  F.  Ins.  Co.,  12  Wend.  452  (1834)  ;  Davis  ;;.  Davis,  49  Me. 
282  (1862) ;  Doyle  v.  PluKnix  Ins.  Co.,  44  Cal  264  (1872) ;  Home  Ins.  Co.  v.  Lindsey, 
26  Ohio  St.  348"  (1875)  ;  Baker  v.  German  F.  Ins.  Co.,  124  Ind.  490  (1890);  Peabody 
i;.  Satterlee,  166  N.  Y.  174,  179-180  (1901).  —  Ed. 


SECT.  II.]  PKOTECTION   INS.   CO.   V.   PHERSOX.  1007 


PROTECTION   INS.   CO.   v.   PHERSON. 
Supreme  Coukt  of  Indiana,  1854.     o  Ind.  417. 

Error  to  the  Shelby  Circuit  Court. 

Davison.  J.  Assumi)sit  by  George  Pherson,  surviving  partner  of 
the  late  firm  of  J.  and  G.  Pherson,  against  tlie  Protection  Insurance 
Company  of  Hartford,  Conn.,  upon  a  policy  of  insuiance  against  fire  for 
82,500  on  a  stock  of  goods  at  Boggstown,  Shelby  County.  The  policy 
was  issued  to  J.  and  G.  Pherson,  on  the  26th  of  February,  1851,  for 
one  year  from  that  date,  and  on  tlie  31st  of  March,  in  the  same  year, 
the  storehouse,  A\ith  all  the  goods  insured,  was  consumed  by  fire. 
Plea,  the  general  issue.  Verdict  for  the  plaintiff.  New  trial  refused, 
and  judgment  on  the  verdict. 

The  company,  in  her  defence  to  the  action,  sot  up:  1.  That  threats 
bad  been  made  against  George  Pherson,  which  induced  him  to  fear  that 
the  store  would  be  fired  ;  and  to  provide  against  danger  in  that  respect, 
the  insurance  was  effected,  without  notifying  the  company's  agent  that 
such  threats  had  been  made.  2.  That  the  plaintiff  himself  had  burned 
or  connived  at  the  burning  of  his  own  goods.  3^That  tjie_]3laintitf  had 
failed  tojjrocure  the  certificate  of  a  magistrate  or  notary,  as  required  by 
the  eighth  condition  of  the  policy. 

The  first  and  second  points  raised  no  question  of  law.  They  were 
properly  left  to  the  consideration  of  tlie  jury,  and  tlie  verdict,  so  far  as 
it  relates  to  them,  was,  in  our  opinion,  supported  by  the  weight  of 
evidence. 

But  the  policy  contained  a  clause,  designated  as  its  eighth  condition, 
which  provided  that  "  all  persons  insured  by  said  comi)any  and  sustain- 
ing loss  or  damage  by  fire,  shall,  if  the  property  insured  is  situated  one 
mile  from  the  city  of  Cincinnati,  forthwith  procure  a  certificate  under 
the  band  of  a  magistrate  or  notary  public  (most  contiguousJo_thej)lace 
of  the  fire  and  not  concerned  in  thcloss  or  related  to  the  insured)  that 
he~5asliTa(le  due  inquiry  into  the  caTise  of  the  fire,  and  also  lis  to  the 
value  of  the  property  destroyed,  and  is  acquainted  with  tlie  character 
and  circumstances  of  tlie  person  insured,  and  does  believe  that  he  really 
and  by  misfortune,  and  without  fraud  or  evil  practice,  hath  sustained, 
by  such  fire,  loss  and  damage  to  the  amount  claimed,"  etc. 

It  was  proved  that  one  John  McConnell,  at  the  time  of  the  fire,  was 
an  acting  justice  of  the  peace,  who  resided  and  kept  his  office  within 
thirty  rods  of  the  place  where  the  fire  occurred,  and  that  he  was  not 
concerned  in  the  loss,  or  related  to  the  insured  ;  tjmt_Pherson  called 
on  said  justice  and  requested  ofhim  a  certificate,  pursuant  to  tlie  aT)OTg~ 
condition,  but  he  declined  giving  it ;  and  that  afterwards,  on  the  9th 
of  April,  1851,  the  requistte^  certTlicate  was  obtained  from  William  A. 
Stewart,  a  justice  whose  residence  and  oflace  were  at  least  a  mile  and  a 


1008  PROTECTION    INS     CO.    V.    PHERSON.  [CHAP.  X. 

half  from  the  place  of  the  fire  ;  and  that  on  the  1st  of  July  in  the  same 
year,  Phcrson  procured  another  certificate  from  James  Harrison,  a 
notary  public,  who  kept  his  office  and  resided  nine  miles  from  the  place 
where  the  goods  were  consumed. 

The  court,  upon  this  branch  of  the  case,  charged  the  jury  as  fol- 
lows :  — 

"It  may  not  be  so  manifest  that  the  plaintiff  ought  to  fail  if  the 
magistrate  or  notary  most  contiguous  to  the  place  of  the  fire,  not  con- 
cerned in  the  loss,  or  related  to  the  insured,  should  refuse  to  give  the 
certificate  contemplated  by  the  eighth  condition  annexed  to  the  policy  ; 
yet  such  is  the  law.  It  is  more  than  the  law.  It  is  the  express  contract 
of  the  parties.  Consequently,  if  at  the  time  of  the  fire  and  afterwards, 
the  residence  and  usual  place  of  business  of  Justice  McConnell,  who 
declined  giving  the  certificate,  was  materially  nearer  to  the  place  of  the 
fire  than  was  the  residence  and  usual  place  of  official  business  of  Justice 
Stewart  or  Notary  Harrison,  whose  respective  certificates  have  been 
produced,  the  verdict  must  be  for  the  defendant." 

These  instructions  are  not  strictly  correct.  The  word  "  materially," 
in  the  connection  in  which  it  is  used  by  the  court,  produces  a  miscon- 
struction of  the  condition  above  quoted.  That  clause  in  the  policy 
plainly  designates  the  magistrate  or  notary  whose  residence  was  near- 
est the  place  of  the  fire,  and  disinterested  and  not  related  to  the  assured, 
as  the  person  alone  competent  to  make  the  requisite  ceriificate.  The 
condition,  in  that  respect,  is  sufficiently  explicit.  It  shows  the  intent 
of  the  parties,  and  that  intention  must  govern  its  construction.  Any 
difference  in  point  of  distance,  from  the  place  where  the  fire  occurred, 
between  the  residence  of  McConnell  and  Stewart,  was  material.  But  it 
was  made  so  by  express  contract,  and  the  jury  were  bound  to  regard 
such  diflference  in  distance  as  material,  without  any  further  inquiry  on 
their  part.  ,  If  McConnell  was  qualified  to  act  under  the  condition,  and 
resided  "most  contiguous"  to  the  place  where  the  goods  were  con- 
sumed, nothing  short  of  his  certificate  would  authorize  a  recovery  in 
this  case.  It  is  said  in  argument,  that  "  in  determining  the  contiguity 
of  the  magistrate,  distances  will  not  be  nicely  calculated."  25  ^Vend. 
374.'     Suppose  that  position  to  be  correct,  its  force,  when  applied  to 

1  In  Turley  v.  North  American  F.  Ins.  Co.,  25  Wend.  374,  378  (1841),  Nelson, 
C.  J.,  for  the  court,  said.  "It  seems  the  residence  of  a  notary  hai)i)eiis  to  be  a  few 
feet  nearer  the  fire  .  .  .  and  we  are  asked  to  go  into  nice  calculation  of  distances  and 
settle  the  point  upon  the  laws  of  mensuration.  De  nunimis,  etc.,  is  a  sufficient  answer 
to  this  objection.  The  spirit  of  the  condition  requires  no  such  mathematical  precision 
from  the  assured." 

In  American  Central  Ins.  Co.  v.  Rothchild,  82  111.  166  (1876),  Scott,  J  ,  for  the 
court,  said :  "  We  will  enter  into  no  calculations  to  ascertain  whether  the  office  or 
residence  of  the  officer  who  made  the  certificate  .  .  .  was  a  few  feet  nearer  or  more 
distant  from  the  exact  point  where  the  fire  occurred,  than  that  of  another  notary  or 
justice." 

In  Williams  v.  Niagara  F.  Ins.  Co.,  ."iO  la.  561,  565  (1879)  Seevers,  J.,  for  the 
court,  said:  "The  provision  in  the  policy  that  the  certificate  therein  required  must  be 
given  by  the  nearest  magistrate  or  notary  public  was,  without  serious  doubt,  inserted 


SECT.  II.]  PROTECTION   INS.   CO.   V.    PHERSON.  1009 

the  case  before  us,  is  not  perceivable.  Theevidence  proves  beyond  a 
doubt^iat  McConncll  resided  thirty,  anTTStewart  at  least  four  hundred 
and  elgiitVj^rods  from  tlie  place  of  the  fij^e.  It  therefore  required  no  nice 
calculation  to  determine  who  was  the  magistrate  "  most  contiguous." 
If,  in  relation  to  tliat  point,  there  was  an}  conflict  of  evidence,  tlie  verdict 
might  be  regarded  as  conclusive  ;  but  the  proof  that  McConnell  was 
the  nearest  magistrate  and  fully  qualified  to  act  under  the  condition,  is 
too  clear  to  admit  of  controversy.^  .  .   . 

We  are  of  opinion  that,  in  the  case  at  bar,  the  company  was  not  held 
to  pav,  unless  the  specified  certificate  had  been  obtained  by  the  assured 
from  the  nearest  magistrate.  This  has  not  been  done,  and  the  judgment 
must  therefore  be  reversed. 

Per  curiam.  The  judgment  is  reversed  with  costs.^  Cause  re- 
manded, etc, 

J.  Morrison  and  S.  3Iajor,  for  the  plaintiffs. 

W.  J.  Peaslee  and  M.  31.  Ray,  for  the  defendant. 

for  the  purpose  of  preventing  the  insured  from  selecting  the  officer  to  perform  such 
duty.  VVliile  this  is  so,  the  provision  must  have  a  reasonable  instead  of  a  literal  con- 
struction. It  does  not,  we  think,  require  that  the  distance  should  be  determined  by 
the  extension  of  a  straight  Hue,  or  that  a  surveyor  should  be  called  in  and  an  exact 
measurement  taken.  Turley  ;.'.  North  American  F.  Ins.  Co.,  25  Wend.  374.  Nor  is  it 
required  that  the  assured  sliould  cross  lots.  In  the  absence  of  bad  faith  on  the  part  of 
the  assured  in  selecting  the  officer  nice  distinctions  as  to  distance  should  not  be  in- 
dulged.    A  few  feet  more  or  less  cannot  be  material." 

See  Smith  v.  Home  Ins.  Co.,  47  Hun,  30,  40-41  (1888).—  Ed. 

*  A  passage  on  the  authorities  has  been  omitted.  —  Ed. 

2  In  Cornell  o.  Hope  Ins.  Co.,  3  Mart.  n.  s.  223  (1825),  the  provision  requiring  a 
magistrate's  certificate  was  recognized  as  creating  a  condition  precedent  to  the  right 
of  recovery. 

In  Koumage  v.  Mechanics  F.  Ins.  Co.,  13  N.  J.  L.  (1  J.  S.  Green)  110  (1832),  the 
nearest  officer  certified  to  fair  character  and  accidental  loss,  but  also  certified  that  be- 
cause of  lack  of  knowledge  he  was  not  justified  in  naming  the  amount;  and  this  was 
held  fatal. 

In  Leadbetter  y  Etna,  Ins.  Co.,  13  Me.  265  (1836),  the  two  nearest  magistrates  re- 
fused a  certificate,  for  a  reason  not  known,  but  the  next  nearest  magistrate  gave  a 
certificate ;  and  this  was  held  fatal. 

In  Johnson  v.  Phanix  Ins.  Co.,  112  Mass.  49  (1873),  two  magistrates  were  appealed 
to  for  a  certificate,  but  it  was  not  obtained ;  and  this  was  held  fatal. 

In  Gilligan  v.  Commercial  F.  Ins.  Co.,  20  Hun,  93  (1880),  s.  c.  affirmed,  without 
opinion,  87  N.  Y  626  (1881),  the  certificate  was  from  an  officer  whose  office  was  about 
twenty-five  rods  from  the  fire,  although  other  officers  had  places  of  business  at  least 
ten  rods  nearer,  and  the  insurance  company  pointed  out  that  the  certificate  was  not 
from  the  nearest  office ;  and  this  defect  was  held  fatal. 

In  Logan  v.  Commercial  Union  Ins.  Co.,  13  Can.  S.  C.  270  (1886),  the  policy  required 
a  certificate  from  two  magistrates  most  contiguous  to  the  place  of  the  fire.  The  two 
mo.st  contiguous  magi.strates  refused  a  certificate,  but  a  certificate  was  obtained  from 
two  others :  but  this  was  held  fatal. 

In  Agricultural  Ins.  Co.  v.  Bemiller,  70  Md  400  (1889),  the  officer  living  nearest  the 
fire  gave  a  certificate  containing  all  essential  facts,  except  the  amount  of  loss,  and 
stating  ignorance  of  the  amount,  but  the  officer  having  an  office  nearest  the  fire  gave 
a  complete  certificate;  and  it  was  held  that  there  was  a  fulfilment  of  the  requirement 
of  a  certificate  from  the  officer  ''  living  nearest  the  place  of  fire." 

In  Kelly  v.  Sun  Fire  Office,  141  Pa.  10,  19-21  (1891),  it  was  held  that  the  provision 

64 


1010 


KNICKERBOCKER   INS.   CO.  V.   GOULD.  [CHAP.  X. 


KNICKERBOCKER  INS.  CO.  v.  GOULD  et  al. 
Supreme  Court  of  Illinois,  1875.     80  111.  388. 

Writ  of  error  to  the  Circuit  Court  of  DuPage  County ;  the  Hon. 
SiLVANUs  Wilcox,  Judge,  presiding. 

Mr.  A.  C.  Story,  for  the  plaintiffs  in  error. 

Mr.  B.  D.  31agruder,  for  the  defendant  in  error. 

Mr.  Justice  Craig  delivered  the  opinion  of  the  court. 

This  was  an  action  of  assumpsit,  brought  by  John  S.  and  William 
Gould,  in  the  Superior  Court  of  Cook  County,  against  the  Knicker- 
bocker Insurance  Company  of  Chicago,  on  a  policy  of  insurance  of 
$2,500,  on  certain  goods  contained  in  the  mill  of  the  plaintiffs,  located 
at  'the  corner  of  Beach  and  Polk  Streets,  in  Chicago,  which  was  de- 
stroyed by  the  Chicago  fire  of  October,  1871. 

On  the  motion  of  the  defendant,  the  venue  of  the  cause  was  changed 
to  DuPage  County,  where  a  trial  was  had  before  a  jury,  resulting  in  a 
verdict  and  judgment  in  favor  of  the  plaintiffs  for  $2,905.41. 

It  is  first  urged,  that  the  judgment  cannot  be  sustained  because 
timely  notice  of  the  loss  was  not  given  by  the  insured  to  the  company. 

The  policy  provides,  that  '■'m  case  of  loss,  the  assured_shall  give 
immediate  notice  thereof  in  writing,  and  shall  render  to  the  company^a 
p^CIciiTaraccount  of  said  loss^jnjvTiMllg^""*^^^'  ^^^^^•'  statingThe  tim£^_ 
origin,  etc."  The  goods  mentioned  in  the  policy  were  burned  on  the 
8th  or  9th  of  October,  1871.  After  the  fire,  an  inventory  of  the  goods 
destroyed  was  made  out  and  delivered  to  the  secretary  of  the  company 
on  the  13th  day  of  November  following.  No  objection  whatever  was 
made  by  the  company  in  regard  to  the  form  of  the  proof,  nor  was  any 

as  to  the  magistrate's  certificate  is  valid ;  and  the  court's  earlier  views  to  the  contrary 
were  disapproved. 

In  Lane  v.  St.  Paul  F.  &  M.  Ins.  Co.,  50  Minn.  227  (1892),  the  plaintiff  alleged  that 
the  nearest  magistrates  on  account  of  groundless  prejudice  refused  to  give  the  certifi- 
cate; and  it  was  held  that  nevertheless  the  failure  to  furnish  the  certificate  was  fatal. 

In  ^tna  Ins.  Co.  v.  People's  Bank,  8  U.  S.  App.  554  (C.  C  A.  Fourth  Circuit, 
1894),  s.  c.  10  C.  C.  A.  342,  tlie  policy  contained  a  provision  that,  if  required,  the  in- 
sured should  "  furnish  a  certificate  of  the  magistrate  or  notary  public  (not  interested 
in  the  claim  as  a  creditor  or  otherwise,  nor  related  to  the  insured)  living  nearest  the 
place  of  the  fire."  Without  being  requested  to  do  so,  the  insured  attempted  to  get  tlie 
certificate  of  one  official,  and  finally  filed  a  certificate  from  a  notary  who  was  related 
to  himself,  though  having  married  his  cousin.  The  company  notified  the  insured  that 
the  certificate  was  defective ;  but  no  other  certificate  was  furnished.  It  was  held  that 
this  was  fatal. 

In  Home  F.  Ins.  Co.  v.  Hammang,  44  Neb.  566,  576-578  (1895),  and  German- 
American  Ins.  Co.  V.  Norris,  100  Ky.  29,  33-34  (1896),  the  provision  requiring  an 
official's  certificate  was  held  to  be  invalid;  and  in  Lang  v.  Eagle  F.  Co.,  12  N.  Y. 
App.  Div.  39,  46  (1896),  it  was  held  that  the  provision  is  satisfied  by  obtaining  the 
certificate  of  the  nearest  official  who  is  willing  to  act.  —  Ed. 


SECT.  II.]  KNICKERBOCKER   INS.   CO.   V.    GOULD.  1011 

objection  interposed  that  previous  notice  of  the  loss  had  not  been 
given,  but  the  proofs  of  loss  were  retained.  Nothing  was  paid  on 
the  polic)',  nor  did  the  company  take  any  action  in  regard  to  the 
claim. 

It  will  be  observed,  tliat  the  language  employed  in  the  policy  in  re- 
gar(.l  to  notice  and  proof  of  loss  is  peculiar:  ''  In  case  of  loss,  the  as- 
sured shall  give  immediate  notice  thereof,  in  writing,  and  shall  render 
to  the  company  a  particular  account  of  said  loss,  in  writing."  The 
language  used  would  seem  to  indicate  that  it  was  the  intention  that 
notice  of  loss  and  proofs  of  loss  should  be  furnished  the  company  at 
the  same  time,  unless  the  two  portions  of  the  sentence  are  closely 
connected  hy  the  word  "  and."  It  is  not  indicated  in  the  first  clause  to 
whom  the  notice  shall  be  given,  nor  is  there  any  time  specified  in  the 
last  clause  when  proof  of  loss  shall  be  rendered. 

If  this  construction  be  the  correct  one,  then  the  word  "immediate" 
must  receive  a  liberal  construction,  in  order  to  carry  out  the  manifest 
intent  of  the  parties,  as  it  is  apparent  that  it  was  impossible  imme- 
diately to  furnish  proofs  of  loss.  This  view  seems  more  reasonable  by 
referring  to  another  provision  in  the  polic\-,  which  is  as  follows  :  "•  Do 
insure,  etc.,  to  the  amount  of  $2,500,  against  all  such  immediate  loss  or 
damage  as  may  occur  by  fire,  etc.,  to  be  paid  sixty  days  after  due 
notice  and  proofs  of  the  same,  made  b}*  the  assured,  are  received  at 
the  office  of  this  company." 

Here  the  words  "due  notice,"  not  "immediate  notice,"  are  used, 
and  the  loss  that  may  occur  is  to  be  paid  sixty  days  after  notice  and 
proofs  are  received.  If  it  had  been  within  the  contemplation  of  the 
contracting  parties  not  to  require,  notice  and  proofs  of  loss  to  be  given 
at  the  same  time,  it  is  but  reasonable  to  presume  the  payment  of  loss 
would  have  been  specified  to  be  made  sixty  days  after  notice  of  loss 
given  or  sixty  days  after  proof  of  loss.  When  all  the  provisions  of 
the  policy  are  considered  together^^we  feePwarralvtecl  in~gtytng__tlre 
wrn-d  "immpdinte"  a  liberal  construction.  This,  too,  is  in  harmony 
with  the  authorities. 

In  the  Peoria  ISIarine  and  Fire  Ins.  Co.  v.  Lewis,  18  111.  5.53,  where 
the  question  arose  whether  the  notice  of  loss  had  been  given  within  the 
time  required  by  the  conditions  of  the  policy,  it  was  said  :  "  The  pro- 
visions in  the  conditions  that  notice  is  forthwith  to  be  given  of  the 
loss,  means  witliin  a  reasonable  time  under  the  circumstances  —  the  use 
of  due  diligence." 

Ma3%  in  his  work  on  Insurance,  states  the  rule  in  regard  to  notice  of 
loss  thus :  "  If  the  notice  be  required  to  be  forthwith,  or  as  soon  as 
possible,  or  immediately',  it  will  meet  the  requirements  if  given  with 
due  diligence  under  the  circumstances  of  the  case,  and  without  un- 
necessary and  unreasonable  delay,  of  which  the  jury  are  ordinarily  to 
be  the  judges." 

Under  the  rule  here  announced,  which  is  substantially  the  same  as 
held  by  this  court  in  the  case  cited  szcpra,  the  question  presented  is, 


3^()12  KNICKERBOCKER    INS.    CO.    V.    GOULD.  [CHAP.  X. 

whether  the  notice  given  under  tlie   circumstances  was  a  substantial 
compliance  with  the  provision  of  the  polic}'. 

The  fire  wliicii  consumed  plaintiffs'  property  was  a  general  con- 
flao-ration.  It  spread  over  and  consumed  more  then  one  hundred  acres 
of^the  principal  business  portion  of  the  city  of  Chicago.  Business  of 
all  kinds  was  demoralized,  and,  to  great  extent,  suspended.  The 
office  of  the  defendant,  together  with  its  books  and  papers,  was 
destroyed. 

The'  plaintiffs,  who  had  been  engaged  in  a  large  manufacturing  busi- 
ness, held  a  large  number  of  policies  of  insurance  on  their  property. 
Time  was  absolutely  necessary  for  them  to  arrange  their  papers,  pro- 
cure the  necessary  blanks,  and  learn  the  location  of  the  offices  of  the 
insurance  companies,  before  they  could  give  notice  of  loss  and  furnish 
proofs. 

Under  all  the  circumstances  of  the  case,  we  cannot  say  there  was 
an  unreasonable  delay. 

To  give  the  word  "  immediate  "  a  literal  interpretation  would  defeat 
the  ends  of  justice,  and,  in  a  case  of  this  kind,  require  of  the 
insured  an  impossibility,  as  the  office  of  the  company  had  been  de- 
stroved,  and  the  plaintiffs  had  no  information  as  to  the  location  of  the 
officers  or  agents  of  the  company,  and  hence  it  was  impossible,  forth- 
with, to  give  the  notice  and  furnish  proof  of  loss. 

It  is  also  urged  that  the  averments  of  the  declaration  were  not  suf- 
ficient, as  to  the  value  of  the  property  destroyed  and  the  amount  of 
other  insurance  on  the  same. 

Whether  the  declaration  would  have  been  regarded  sufficient  on 
demurrer,  is  a  question  that  does  not  arise,  as  no  demurrer  was  inter- 
posed. 

We  perceive  no  variance  between  the  proof  introduced  and  the 
declaration,  and  we  are  aware  of  no  ground  upon  which  the  court 
could  have  sustained  the  motion  of  the  defendants  to  exclude  the 
evidence  from  the  jury. 

Had  the  defendants  regarded  the  declaration  insufficient,  the  proper 
mode  to  reach  the  defect  was  by  demurrer. 

It  is  also  claimed,  that  the  court  erred  in  permitting  the  proofs 
of  loss  to  be  introduced  as  evidence  of  the  kind,  value,  and  amount 
of  property  destroyed. 

Upon  an  examination  of  the  record,  we  do  not  find  the  proofs  were 
introduced  for  the  purpose  indicated. 

The  record  discloses  the  fact,  that  the  proofs  were  offered  in  evidence  ; 
for  what  purpose,  however,  the  record  is  silent.  They  were  objected  to, 
but  upon  what  grounds  does  not  appear.  The  objection  was  overruled 
and  the  evidence  was  admitted  to  the  jur}'. 

It  was  proper  to  introduce,  in  evidence,  the  proofs  of  loss,  for  the 
purpose  of  establishing  the  fact  that  such  proofs  were  made  and  de- 
livered to  the  company  as  was  required  by  the  terms  of  the  polic3',  and 
such,  no  doubt,  was  the  object  and  purpose  of  the  evidence. 


SECT.  II.]  KNICKERBOCKER   INS.    CO.    V.    GOULD.  101.3 

The  amount- of  actual  loss  seems  to  have  been  fully  established  by 
testimony  entirely  independent  of  the  proofs  of  loss. 

In  Lycoming  Ins.  Co.  v.  Rubin,  79  111.  402,  a  contrary  doctrine 
seems  to  have  been  impliedly  approved.  But  in  that  case  the  insur- 
ance compan}'  insisted  it  was  error  to  allow  such  proofs  to  go  to  tlie 
jury.  The  party  insured  conceded,  in  the  argument,  that  this  was 
error ;  but  insisted  that  the  supposed  error  was  cured  by  instructions. 
The  court,  assuming  that  it  was  error,  held  it  was  not  cured  by  in- 
structions, and  reversed  the  judgment  upon  the  ground  that,  aside 
from  the  proofs  referred  to,  the  amount  of  the  damages  in  the  case 
could  not  be  supported  by  the  other  evidence.  The  true  rule  is,  that 
the  proofs  of  loss  are  proper  to  show  a  compliance  with  the  terms  of 
the  policy,  but  are  not  to  be  considered  in  ascertaining  the  amount  of 
damages. 

Nor  do  we  see  any  force  in  the  objection,  that  parol  proof  was 
admitted  of  the  amount  of  insurance  held  by  the  plaintiff's  on  the 
property  in  other  companies. 

It  was  certainly  competent  to  establish,  by  parol  proof,  the  fact  that 
plaintiffs  were  insured  in  other  companies,  and  the  evidence  of  the 
amount  of  such  insurance  cannot  be  said  to  be  proving  the  contents 
of  a  writing  b}'  parol. 

There  was  no  issue  involved  which  required  the  production  of  the 
policies  held  in  other  companies.  Their  terms  and  conditions  were  of 
no  importance,  and  it  was  not  necessary  to  establish  their  contents. 

It  is  next  urged  that  the  court  erred  in  giving  plaintiffs'  third  and 
fourth  instructions,  which  were  as  follows  :  — 

' '  3.  If  the  jury  believe,  from  the  evidence,  that  there  was  such  a 
loss  ofthe  property  described  in  the  declaration  herein  aVis  thereui  ' 
set^ut,  then  the}'  are  authorized  in  determining  for  themsclves^roni' 
all  tl'p^JVi£lg_jLQ£L-f'''^"mst.qnces  of  this  case,  as  developed  by  the 
eTIdence,  whether  or  not,  after  said  loss,  the  plaintiffs  gave  immediate 
notice  thereof  iiV  writing  To  defendant. 


"4.  If  the  jury  believe,  from  the  evidence,  that  there  was  a  loss  of 
the  property  described  in  the  declaration,  as  therein  stated,  and  ihat 
after  said  loss  the  plaintiffs  did  not  give  immediate  notice  thereof  in 
writing,  yet  if  they  at  the  same  time,  find,  from  tiie  evidence,  that  on 
or  about  November  13,  1871,  the  plaintiffs  submitted  to  defendant 
proofs  of  said  loss,  as  required  by  the  policy  of  insurance  herein 
introduced,  and  defendant  accepted  the  same,  and  retained  the  pos- 
session thereof  from  thence  thereafter,  and  made  no  objection  to  the 
plaintiffs  not  having  given  immediate  notice  of  said  loss  in  writing, 
either  at  the  time  said  proofs  were  submitted,  or  at  an}-  time  thereafter, 
then  the  jury  are  authorized  in  finding  that  defendant  waived  such 
immediate  notice  in  writing,  as  is  ahove  mentioned." 

Whether  due  diligence  has  been  used,  in  giving  the  required  notice, 
may  be  regarded  as  a  question  of  fact,  which  is  ordinarily  left  to  the 
jury,  to  be  determined  from  all  the  circumstances  in  the  case  bearing 


1014  KNICKERBOCKER   INS.    CO.    V.   GOULD.  [CHAP.  X. 

upon  the  question.    May  on  Insurance,  sec.  462  ;  Edwards  v.  Baltimore 
Ins.  Co.,  3  Gill  (Md.),  176. 

But  where  there  is  no  dispute  in  relation  to  the  facts  and  circum- 
stances bearing  upon  the  question  of  diligence  in  giving  the  notice, 
then  the  question  may  be  regarded  one  of  law  for  the  court.  May  on 
Insurance,  sec.  462  ;  Kimble  v.  Howard  Fire  Ins.  Co.,  8  Gray,  33. 

The  facts  in  regard  to  the  diligence  used  in  this  case  were  not  con- 
ceded, but  were  controverted  before  the  jury,  and  therefore  we  see  no 
error  in  the  third  instruction. 

As  to  the  fourth  instruction,  we  are  satisfied  it  is  erroneus. 

If  a  notice  of  loss  was  given,  defective  in  form,  and  the  company 
received  it,  and  pointed  out  no  defect,  and  made  no  objection  thereto, 
such  would,  no  doubt,  be  regarded  as  a  waiver  of  a  sufficient  .notice ; 
but  a  failure  to  give  notice  in  time,  rests  entirely  upon  a  different  ground 
from  a  failure  to  give  notice  in  due  form. 

The  reason  is  obvious.  Where  a  defective  notice  is  given,  if  the 
company  points  out  the  defects,  the  insured  can  supply  them  by  a  new 
notice,  and  if  the  company  fails  to  point  out  the  objections,  they  may 
very  properly  be  regarded  as  waived.  But  a  notice  not  served  in  time, 
rests  on  a  different  principle.  If  the  company  makes  o\)jection,  the 
insured  cannot  remedy  the  defect.  It  is  too  late,  and  hence  there  is 
neither  reason  nor  necessity  for  the  company  to  speak  or  be  concluded 
by  its  silence. 

We  do  not  think  that  an  insurance  company  is  concluded  by  a  notice 
of  loss  not  served  in  time,  for  the  reason  that  no  objection  is  interposed 
at  the  time  service  is  made  ;  and  therefore  the  instruction,  as  given,  was 
not  correct. 

But  while  the  instruction  failed  to  lay  down  the  rule  correctly,  it 
could  do  no  injury  to  the  defendant,  as  notice  of  loss  was,  under  all 
the  circumstances,  given  within  the  time  required  by  the  policy.  We 
cannot,  therefore,  reverse  on  account  of  the  error  contained  in  the 
instruction. 

The  first  instruction  of  plaintiffs  is  objected  to  because  it  authorized 
the  recovery  of  interest,  in  case  the  verdict  should  be  in  favor  of  the 
plaintiffs.  After  the  amount  of  money  named  in  the  policy  became 
due,  we  are  aware  of  no  reason  why  it  would  not  draw  six  per  cent 
interest.  The  policy  was  a  contract,  providing  for  the  payment  of 
money  at  a  certain  time,  and  as  such,  it  was  proper  for  the  jury,  in 
fixing  the  amount  of  the  verdict,  to  allow  interest.  This  point  was  ex- 
pressly decided  in  the  Peoria  Marine  and  Fire  Ins.  Co.  v.  Lewis,  18 
111.  553,  and  we  observe  no  reason  to  change  the  rule  there  announced. 

The  last  point  relied  upon  by  the  defendant  is,  that  the  court  erred 
in  refusing  a  new  trial  on  the  ground  of  newly  discovered  evidence. 
Upon  an  examination  of  the  affidavits  presented  on  the  motion,  we  are 
satisfied  the  testimony  newly  discovered  is,  in  part,  in  the  nature  of 
impeaching  evidence,  and  the  rest  is  merely  cumulative. 

We  understand  the  rule  to  be  well  settled,  that  a  new  trial  will  not 
be  granted  where  the  evidence  is  of  that  character. 


SECT.  II.]    "  DOLLOFF   V.   PHCENIX   INS.   CO.  1015 

After  a  careful  examination  of  the  whole  record,  we  are  satisfied 
it  contains  no  substantial  error.  The  judgment  will,  therefore,  be 
affirmed.  Judgment  affirmed} 


DOLLOFF  V.   PHCENIX   INS.    CO. 
DOLLOFF   V.   GERMAN-AMERICAN  INS.   CO. 

Supreme  Court  of  Maine,   1890.     82  Me.  266. 

On  exceptions. 

These  were  actions  of  assumpsit  on  two  policies  of  fire  insurance 
brought  to  recover  the  aggregate  sum  of  $4,00(K  The  plaintiff  had  one 
jTolifj  of  insnrnnce  for  $2,000  in  each  of  the  defendant  companies,  each 
policy  covering  both  buildings  and  personal  property. 

Plea,  general  issue  with  a  brief  statement  of  forfeiture  of  the  polic}^ 
through  fraud,  attempted  fraud,  and  false  swearing  by  the  plaintiff  in 
his  proof  of  loss,  and  examination  thereunder.  This  defence  was  relied 
on  at  the  trial,  in  the  Superior  Court  for  Kennebec  County,  especially 
fraud  and  false  swearing  as  to  the  personal  property  set  forth  in  the 
proof  of  loss.  On  this  point  the  defendants  offered  evidence  to  prove 
(1)  the  false  and  fraudulent  insertion  of  articles  which  the  plaintiff 
knew  were  not  in  the  house  at  the  time  of  the  fire ;  (2)  false  and 
fraudulent  exaggeration  of  quantities  of  such  classes  of  articles  as 
were  in  the  house  ;  (3)  false  and  fraudulent  exaggeration  of  the  value 
of  the  articles  destroyed. 

The  plaintiflT's  proof  of  loss  contained  564  distinct  items  or  classes 
of  items,  and  aggregating  S6,800.  He  claimed  the  value  of  the  build- 
ings was  $3,200,  and  that  their  contents  —  the  household  goods  and 
farming  implements  —  was  S3, 600. 

Upon  these  issues  of  fraud,  attempted  fraud,  and  false  swearing  by 
the  plaintiff,  the  presiding  justice  instructed  the  jury  as  follows :  — 

1.  "  That  if  the  plaintiff  knowingly  put  a  false  and  excessive  valua- 
tion on  any  single  article,  or  put  such  false  and  excessive  valuation  on 
the  whole  as  displays  a  reckless  and  dishonest  disregard  of  the  truth 
in  regard  to  the  extent  of  the  loss,  such  knowing  over-valuation  is 
itself  fraudulent  and  the  plaintiff  cannot  recover  at  all." 

2.  "  That  if  the  plaintiff  falsely  and  knowingly  inserted  in  his  sworn 
schedule  of  loss,  as  burned,  any  single  article  which  in  fact  was  not  in 
the  house,  or  was  not  burned,  this  would  constitute  a  fraud  on  the 
compan}-,  and  the  plaintiff  cannot  recover  anything  on  his  policy." 

1  Ace.:  Niagara  F.  Ins.  Co.  v.  Scammon,  100  111.  644  (1881) ;  Solomon  v.  Continental 
F.  Ins.  Co.,  160  N.  Y.  595  (1899). 

See  Inman  o.  Western  F.  Ins.  Co.,  12  Wend.  452,  460-461  (1834);  Edwards  v.  Balti- 
more  F.  Ins.  Co.,  3  Gill,  176,  186-189  (1845) ;  St.  Louis  Ins.  Co.  t;.  Kyle,  11  Mo.  278, 
289-291  (1848);  Harnden  v.  Milwaukee  Mechanics'  Ins.  Co.,  164  Mass.  382  (1895). 

Compare  Matthews  v.  American  Central  Ins.  Co.,  154  N.  Y.  449  (1897).  —Ed. 


2016  DOLLOFF  V.   PHCENIX   INS.   CO.  *  [CHAP.  X. 

3.  "  That  an}'  wilfully  false  or  fraudulent  statement  in  regard  to  the 
loss  of  its  amount,  would  avoid  the  policy  whether  the  actual  loss  was 
greater  or  less  than  the  amount  claimed  by  the  insured." 

4.  "  That  if  the  jury  find  that  the  plaintiff  knowingly  claimed  in  his 
sworn  proof  of  loss  more  goods  than  were  actually  destroyed  by  fire, 
that  would  constitute  the  fraud,  —  I  should  rather  say  constitute   the. 
attempt  at  fraud,  —  and  false  swearing  mentioned  in  the  contract." 

5.  "That  it  is  not  necessary  that  the  fraud  should  be  to  the  full 
extent  of  the  proof  of  loss,  but  that  if  in  any  respect  the  plaintiff  pur- 
posely and  designedly  made  a  false  statement  in  regard  to  the  proof  of 
loss,  of  what  his  loss  was,  although  it  might  have  been  one  of  small 
amount,  it  defeats  the  policy  for  the  full  amount,  both  as  to  personal 
property  and  the  buildings." 

The  jury  returned  a  verdict  for  the  defendants,  and  the  plaintiff 
excepted  to  these  instructions. 

Each  policy  of  insurance  contained  the  following  provision  :  — 

' '  Am-fraM  or  attempt  at  fraud,  or  false  swearing  on  the  part  of 
fi.P^^nvpd  shall  cause  a  forfeiture  of  all  claim  under  this  policy." 

^.  W.  Whitehouse,  for  plaintiff. 

Baker,  Baker  and  Cornish,  for  defendants. 

Emery,  J.  The  plaintiff  procured  of  the  defendant  insurance  com- 
pany a  policy  of  fire  insurance  for  $2,000  upon  his  home  buildings  and 
contents,  each  building  being  separately  valued,  and  the  contents  also 
having  a  separate  valuation.  The  policy  of  insurance  contained  the 
following  stipulation  :  "  Any  fraud,  or  attempt  at  fraud,  or  false  swear- 
ing on  the  part  of  the  assured  shall  cause  a  forfeiture  of  all  claims  under 
this  polic}'."  The  buildings  and  contents  were  consumed  by  fire,  and 
the  plaintiff,  as  required  by  the  policy  and  also  by  statute  (R.  S.,  c.  49, 
§  21),  notified  the  company  of  the  loss,  and  delivered  to  them  a  written 
statement  on  oath,  purporting  to  be  a  particular  account  of  the  loss  and 
damage.  In  this  instrnmpnt  called  "  proof  of  loss."  the  plaintiff,_a3 
the  jury  have  found,  knowingly  and  purposely  majejalse  statements  on 
oath  of  some  pretended  losses  which  he  did  not  in  fact  susjain. 

Hecoii  tended,  However,  that  his  actual  losses,  throwing  out  his  pre- 
tended losses,  exceeded  the  whole  amount  of  the  polic}',  and  that  con- 
sequently the  defendant  company  were  not  and  could  not  be  harmed 
by  bis  false  statement  of  additional  losses,  and  should  pay  him  his 
actual  loss,^ 

His  argument  was,  that  these  false  statements  of  additional  losses 
did  not  increase  the  risk  or  the  liability  of  the  company, — that  the 
true  statements  showed  a  loss  of  over  $2,000,  and  hence  the  false 
statements  did  no  fraud,  nor  harm.  The  presiding  justice  overruled 
this  contention,  and  instructed  the  jury  to  the  opposite  effect.  The 
verdict  being  against  him,  the  plaintiff  excepted,  and  his  exceptions 
present  substantially  this  question  :  "When  the  actual  losses,  truly  stated 
in  a  proof  of  loss,  exceed  the  whole  amount  of  the  insurance,  will  a 
knowingly  and  purposely  false  statement  on  oath  iu  the  proof  of  loss, 


SECT.  II.]  DOLLOFF    V.    PHCENIX    INS.    CO.  1017 

of  other  pretended  losses,  destro}'  the  plaintiff's  claim  for  his  actual 
losses  under  such  a  policy  as  this? 

We  cannot  doubt  that  it  will.  The  parties  stipulated  that  it  should. 
It  is  so  provided  in  the  contract,  and  it  is  a  lawful  provision.  The 
contract  of  insurance  is  one  of  indemnity  onl}'.  The  sole  lawful  object 
of  obtaining  a  policy  of  insurance  is  to  secure  simple  reimbursement 
for  actual  loss.  Any  purpose  of  making  a  proflt  on  the  part  of  the 
assured  is  unlawful,  and  will  vitiate  the  contract.  Such  being  the 
nature  of  the  contract,  it  requires  good  faith  on  tlie  part  of  the  assured 
toward  the  insurers.  Especiall}'  is  this  so  in  the  adjustment  of  a  loss 
after  a  fire.  It  is  impracticable  for  the  insurers  to  ascertain  for  them- 
selves the  extent  of  the  losses,  particularly  wiiere  the  contents  of  a 
dwelling-liouse  and  barn  are  insured,  as  in  this  case.  The  assured  and 
his  family  or  servants  are  usually  the  only  persons  who  can  give  a  true 
account  of  the  losses.  The  insurers  therefore  usually,  as  in  this  policv, 
required  from  the  assured  a  detailed  statement  on  oath  of  such  losses, 
as  a  necessar}'  preliminary  to  the  payment  of  the  indemnity.  The 
statute  also  requires  this  (R.  S.,  c.  49,  §  21).  The  statute  and  the 
policy  both  make  this  statement  a  necessary  preliminar}'  to  a  right  of 
action  on  the  policy,  and  they  both  contemplate  of  course  a  true  state- 
ment. The  demand  of  the  statute  and  of  the  policy  for  such  a  state- 
ment is  addressed  to  his  conscience,  like  a  bill  for  discovery.  When, 
therefore,  he  meets  this  demand  with  knowingly  false  statements  of 
losses  he  did  not  sustain,  in  addition  to  those  he  did  sustain,  he  ought 
to  lose  all  standing  in  a  court  of  justice  as  to  any  claim  under  that 
policy. 

The  court  will  not  undertake  for  him  the  offensive  task  of  separating 
his  tnie  frono^iis  fajse  assertions.  Fraud  in  any  part  of  his  formal 
statement  ofjoss  taints  the  whole.  Thus  corrupted,  it  should  be  wholly 
rpjAotPfj^  nnd  tlfQ-Pw4'^^^4^^  t^  roppnt  jLhat^e  destroyed  his  actual 
claim  by  the  poison  of  his  false  claim.  Clatlin  v.  Insurance  Co.,  110 
UT'SrSl  ;  Sleeper  v.  insurance  Co.,  56  N.  II.  401  ;  Wall  v.  Insurance 
Co.,  61  Maine,  32. 

We  have  not  overlooked  the  case  of  Shaw  v.  Insurance  Co.,  1  Fed. 
Rep.  761,  where  Judge  Lowell  makes  the  distinction  contended  for  hy 
the  plaintiff  here.  There  the  stipulation  in  the  policy  was  :  "  All  fraud 
or  attempt  at  fraud  by  false  swearing,  etc."  Here  the  words  are, 
"  Any  fraud,  or  attempt  at  fraud,  or  false  swearing,  etc."  It  might  be 
that  there,  harmful  fraud  should  appear,  while  here,  false  swearing  by 
itself  is  made  a  cause  for  forfeiture.  But  it  will  be  seen  that  the  U.  S. 
Supreme  Court  in  Claflin  v.  Insurance  Co.,  supra,  three  years  after 
Judge  Lowell's  opinion,  considered  the  same  question,  and  decided  it 
the  other  wa}',  holding  that  false  swearing  alone,  without  its  operating 
as  a  fraud  upon  the  company,  forfeited  the  policy. 

Tlie  plaintiff  invokes  section  20  of  chapter  49  (the  Insurance  Law) 
R.  S.,  but  that  does  not  rescue  him.  It  does  not  purport  to  save  the 
assured  from  the  consequences  of  his  own  fraud.     It  simply  provides 


1018  HART   V.   citizens'   INS.   CO.  [CHAP.  X. 

that  immaterial  and  innocent  misstatements  shall  not  avoid  the  policy. 
If  the  statements  called  for  in  that  section  are  material  or  fraudulent, 
the}-  are  fatal.  But  that  section  has  reference  only  to  statements  made 
in  procuring  the  policy  of  insurance.  It  does  not  apply  to  statements 
made  after  the  loss,  in  the  proof  of  loss.  No  allusion  was  made  to  this 
statute  in  Wall  r.  Insurance  Co.,  supra,  but  it  is  uncertain  whether  the 
decision  was  before  or  after  the  enactment  of  the  statute.  It  was  in- 
timated in  Ballatty  v.  Ins.  Co.,  61  Maine,  414,  some  timeafter  the 
passage  of  the  statute,  that  fraud  in  the  proof  of  loss,  if  established, 
would  bar  the  suit.  While  in  Williams  v.  Insurance  Co.,  61  Maine, 
67,  the  jury  negatived  any  fraud  or  false  swearing,  in  the  over-valua- 
tion of  the  goods,  it  was  assumed  that  fraud  or  false  swearing,  if 
established,  would  forfeit  all  claim  under  the  policy. 

It  is  further  suggested  by  the  plaintiff,  that  the  buildings  having 
been  separately  valued  in  the  policy,  the  insurance  on  them  is  not 
affected  by  any  false  swearing  as  to  the  personal  property.  The  policy 
of  insurance,  however,  is  an  entire,  single  contract,  to  stand  or  fall  as 
a  whole,  so  far  as  fraud  or  false  swearing  is  concerned.  Barnes  v.  In- 
surance Co.,  51  Maine,  110.  Exceptions  overridecU 

Peters,  C.  J.,  Walton,  Virgin,  Foster,  and  Haskell,  JJ.,  con- 
curred. 


HART,  Appellant,  v.  CITIZENS'  INS.  CO.,  Respondent. 
Supreme  Court  of  Wisconsin,  1893.     86  Wis.  77. 

Appeal  from  the  Circuit  Court  for  Douglas  County. 

Action  upon  a  policy  of  insurance  against  fire.  The  facts  are  stated 
in  the  opinion.  The  plaintiff  appeals  from  a  judgment  in  favor  of  the 
defendant. 

For  the  appellant  there  was  a  brief  by  Reed,  Grace,  Rock  <b  Reed, 
and  oral  argument  by  H.  H.  Grace. 

J.  B.  Douglas,  for  the  respondent. 

1  Ace. :  Sleeper  v.  New  Hampshire  F.  Ins.  Co.,  56  N.  H.  401  (1876). 

Contra:  Springfield  F.  &  M.  Ins.  Co.  v.  Winn,  27  Neb.  649  (1889). 

Other  cases  on  wliat  constitutes  fraud  or  false  swearing  are  :  Ilelbing  v.  Svea  Ins. 
Co.,  54  Cal.  156  (1880) ;  Carson  v.  Jersey  City  Ins.  Co.,  43  N.  J.  L.  (14  Vroom)  300. 
310-311  (1881);  Claflin  v.  Commonwealth  Ins.  Co.,  110  U.  S.  81,  94-97  (1884) ;  Lion 
F.  Ins.  Co.  V.  Starr,  71  Tex.  7-33  (1888) ;  Deitz  v.  Providence  Washington  Ins.  Co., 
33  W.  Va.  526  (1890) ;  Pencil  v.  Home  Ins.  Co.,  3  Wash.  485  (1892);  Obersteller  v. 
Commercial  Asi?ur.  Co.,  96  Cal.  645  (1892)  ;  Commercial  Bank  i-.  Firemen's  Ins.  Co., 
87  Wis.  297  (1894)  ;  Home  Ins.  Co.  i-.  Winn,  42  Neb.  331  (1894);  Commercial  Ins. 
Co.  V.  Friedlander,  156  111.  595  (1895)  ;  Linscott  v.  Orient  Ins.  Co.,  88  Me.  49  (1896)  ; 
Dohmen  Co.  v.  Niagara  F.  Ins.  Co.,  96  Wis.  38,  53-57  (1897)  ;  Davis  v.  Guardian 
Assur.  Co.,  155  N.  Y.  682  (1898),  affirming,  without  opinion,  87  Hun,  414  (1895)  ; 
Worachek  v.  New  Denmark  Mut.  Home  F.  Ins.  Co.,  102  Wis.  88  (1899) ;  Fowler  i-. 
Phccnix  Ins.  Co.,  35  Ore.  559  (1899).— Ed. 


SECT.  II.J  HART   V.    CITIZENS'    INS.   CO.  1019 

WiNSLOW,  J.  The  action  is  upon  a  policy  of  insurance  issued  by 
defendant,  November  11,  1890,  upon  plaintiff's  dwelling-house.  There 
is  no  dispute  as  to  the  facts.  The  house  was  burned  March  5,  1891. 
Proofs  of  loss  were  served  May  1,  1891,  being  within  the  time  required 
by  the  policy.  The  defendant  refused  payment  May  9,  1891,  and 
plaintiff  commenced  this  action  May  3,  1892,  nearly  fourteen  months 
after  the  fire. 

The  policy  contained  provisions  requiring  immediate  notice  of  loss, 
proofs  within  sixty  days  after  the  fire,  examination  of  the  assured 
under  oath  if  desired,  and  appraisal  in  case  of  disagreement  as  to 
amount  of  loss  ;  also  the  following:  "  This  company  shall  not  be  held 
to  have  waived  any  provision  or  condition  of  this  policy,  or  any  forfeit- 
ure thereof  by  any  requirement,  act,  or  proceeding  on  its  part  relating 
to  the  appraisal,  or  to  any  examination  herein  provided  for;  and  the 
loss  shall  not  become  payal)le  until  sixty  days  after  the  notice,  ascer- 
tainment, estimate,  and  satisfactory  proof  of  the  loss  herein  required 
have  been  received  by  this  company,  including  an  award  by  appraisers 
when  appraisal  has  been  required.  No  suit  or  action  on  this  policy  for 
the  recovery  of  any  claim  shall  be  sustained  in  any  court  of  law  or  equity 
until  after  full  compliance  by  the  insured  with  all  the  foregoing  require- 
ments, nor  unless  commenced  within  twelve  months  next  after  the  fire." 

It  was  held  by  the  Circuit  Court  that  the  action  was  barred  because 
not  commenced  within  twelve  months  next  after  the  date  of  the  fire, 
and  plaintiff  appeals. 

It  is  well  settled  tliat  a  clause  in  a  contract  limiting  the  time  within 
which  an  action  may  be  commenced  thereon  to  a  time  shorter  than  that 
allowed  by  the  statute  of  limitations  is  valid.  The  question  here  is 
whether  the  expression  "  twelve  months  after  the  fire"  means  what  it 
says,  or  something  else.  It  is  to  be  noticed  that  the  parties  here  have 
not  used  the  expression  "after  the  loss  occurs."  Had  this  been  the 
language  used,  it  might  reasonably  be  claimed,  upon  authority,  that 
the  "  loss  occurs,"  not  at  the  date  of  the  fire,  but  when  the  loss  is  as- 
certained and  established  and  the  right  to  bring  an  action  exists.  The 
decisions  in  favor  of  this  doctrine  are  numerous.  Steen  v.  Ningara 
F.  Ins.  Co.,  89  N.  Y.  315  ;  Spare  v.  Home  Mut.  Ins.  Co.,  17  Fed.  Rep. 
568;  Chandler  v.  St.  Paul  F.  &  M.  Ins.  Co.,  21  Minn.  85;  ElHs  v. 
Council  BluflTs  Ins.  Co.,  64  Iowa,  507;  Miller  v.  Hartford  F.  Ins.  Co., 
70  Iowa,  704  ;  German  Ins.  Co.  v.  Fairbank,  32  Neb.  750  ;  Barber  v. 
Fire  &  M.  Ins.  Co.,  16  W.  Va.  658. 

There  are,  however,  many  decisions  to  the  contrary :  Chambers  v. 
Atlas  Ins.  Co.,  51  Conn.  17  ;  Johnson  v.  Humboldt  Ins.  Co.,  91  111.  92  ; 
FuUam  v.  New  York  Union  Ins.  Co.,  7  Gray,  61  ;  Glass  v.  Walker,  66 
Mo.  32  ;  Bradley  v.  Phoenix  Ins.  Co.,  28  Mo.  App.  7  ;  Virginia  F.  &  M. 
Ins.  Co.  V.  Wells,  83  Va.  736  ;  Peoria  Sugar  Refining  Co.  v.  Canada  F. 
&  M.  Ins.  Co.,  12  Ont.  App.  418  ;  Blair  v.  Sovereign  Ins.  Co.,  19  N.  S. 
372  ;  Travelers'  Ins.  Co.  v.  California  Ins.  Co.,  1  N.  Dak.  151 ;  Schroe- 
der  V.  Keystone  Ins.  Co.,  2  Phila.  286. 


1020  HART    V.    citizens'    INS.    CO.  [CHAP.  X. 

Other  cases,  bearing  more  or  less  directly  on  the  question,  might  be 
cited  upon  eitlier  side  of  the  proposition.  It  seems  apparent  that  it 
can  hardly  be  said  that  the  great  weight  of  authority  is  on  either  side. 
It  is  a  case  where  there  are  two  directly  opposing  lines  of  authorities, 
both  very  respectable  in  numbers  and  weight.  It  was  claimed  by  ap- 
pellant that  this  court  had  substantially  approved  of  the  attirmative 
view  of  the  proposition  in  Killips  ik  Putnam  F.  Ins.  Co.,  28  Wis.  472, 
and  Black  v.  Winneshiek  Ins.  Co.,  31  Wis.  74.  Examination  of  these 
cases  shows  that  this  court  expressly  declined  to  pass  upon  this  ques- 
tion. The  principle  laid  down  in  them  is  simply  that  if  the  insurance 
company,  by  its  acts,  i::duces  the  insured  to  suspend  his  proceedings 
and  delay  action  on  the  policy,  the  time  elapsing  during  such  delay  so 
caused  should  not  be  reckoned  as  a  part  of  the  time  limited  for  the 
bringing  of  the  action.  It  is  an  application  of  the  familiar  principle  of 
estoppel. 

Doubtless  the  tendency  of  so  many  courts  to  construe  the  term 
"loss"  as  meaning  the  time  when  liability  was  fixed,  induced  many 
insurance  companies  to  substitute  the  word  "  fire,"  as  in  the  policy 
before  us.  It  would  seem  as  if  the  phrase  "  twelve  months  next  after 
the  fire  "  was  susceptible  of  but  one  meaning ;  yet  the  courts  have  dis- 
agreed upon  this  question  also.  In  the  following  cases  it  has  been 
held  that  the  word  "  fire  "  is  to  be  construed  as  meaning,  not  the  date 
of  the  fire,  but  the  time  when  liability  is  fixed  and  an  action  accrues 
to  the  insured.  Friezen  v.  Allemania  F.  Ins.  Co.,  30  Fed.  Rep.  352  ; 
Hong  Sling  v.  Royal  Ins.  Co.,  7  Utah,  441  ;  Case  v.  Sun  Ins.  Co.,  83 
Cal.  473. 

On  the  other  hand,  the  following  cases  hold  that  the  limitation  be- 
gins to  run  from  the  date  of  the  fire.  Steel  v.  Phenix  Ins.  Co.,  47 
Fed.  Rep.  863  ;  State  Ins.  Co.  v.  Meesman,  2  Wash.  459  ;  McElroy  v. 
Continental  Ins.  Co.,  48  Kan.  200  ;  Slate  Ins.  Co.  v.  Stoffels,  48  Kan. 
205  ;  King  v.  Watcrtown  Ins.  Co.,  47  Hun,  1. 

It  is  noticeable  that  all  of  the  three  cases  above  cited  which  hold 
that  "  fire  "  means  the  time  when  liability  is  fixed  rely  for,  authority 
upon  the  cases  which  construe  the  word  "  loss"  as  having  such  mean- 
ing. No  attention  seems  to  have  been  given  to  the  fact  that  the  word 
"  fire"  has  been  substituted  for  the  word  "  loss."  It  is  also  noticeable 
that  In  the  case  of  Case  v.  Sun  Ins.  Co.,  83  Cal.  473,  the  facts  were 
that  the  insui'ed  was  compelled  to  submit  to  examination  b}'  the  com- 
pany, and  to  produce  books,  bills,  and  invoices,  and  that  he  complied 
with  these  requirements  as  rapidly  as  he  was  able,  but  was  unable  to 
fully  comply  therewith  until  more  than  thirteen  months  after  the  fire, 
or  a  month  after  the  expiration  of  the  time  limited  for  bringing  suit. 
•Here,  certainly,  was  a  clear  case  of  estoppel.  The  company,  b}'  its 
own  acts,  had  postponed  the  time  when  a  cause  of  action  accrued  until 
after  the  limitation  had  run,  and  should  clearly  be  denied  the  right  to 
rely  upon  the  limitation.  See,  to  this  eflTect,  Thompson  v.  Phenix  Ins. 
Co.,  136  U.  S.  287.     The  cases  of  Friezen  v.  Allemania  F.  Ins.  Co.,  30 


SECT.  II.]  HART   V,   CITIZENS'   INS.   CO.  1021 

Fed.  Rep.  352,  and  Hong  Sling  v.  Royal  Ins.  Co.,  7  Utah,  441,  are, 
however,  direct  authorities  to  the  effect  that  "  twelve  months  after  the 
fii*e  "  means  twelve  months  after  the  liability  is  fixed.  The  argument 
in  support  of  this  view  is  briefl\'  that  all  clauses  of  the-  polic}-  must  be 
construed  together;  that  there  are  clauses  which  necessitate  the  mak- 
ing of  proofs,  the  submission  of  the  assured  to  examination  if  required, 
the  production  of  books  and  papers,  and  the  submission  of  the  question 
of  the  amount  of  loss  to  appraisers,  all  of  which  things  will  consume 
time  ;  and,  furthermore,  the  loss  not  being  payable  until  sixty  days 
after  the  amount  is  fixed,  it  may  happen  that  more  than  twelve  months 
may  elapse  after  the  date  of  the  fire  before  the  company  can  be  sued  ; 
and  thus  the  plaintiff's  action  may  be  cut  off  entirely  if  a  literal  mean- 
ing is  to  be  given  to  the  words.  The  deduction  is  that  the  parties  can- 
not have  meant  what  they  said  in  the  clause  under  consideration,  but 
must  have  meant  something  else,  which  they  did  not  saj-. 

We  cannot  assent  to  this  line  of  reasoning.  It  does  violence  to  plain 
words.  It  smacks  too  strongly  of  making  a  contract  which  the  parties 
did  not  make.  It  construes  where  there  is  no  room  for  construction. 
Plain,  unaml)iguous  words  which  can  have  but  one  meaning  are  not 
subject  to  construction.  "  Twelve  months  next  after  the  fire  "  has  one 
certain  meaning  and  but  one.  It  can  have  no  otiier.  It  ma}'  well  be 
that  the  insurer  ma}'  b\'  his  acts  waive  the  limitation,  or  estop  himself 
from  insisting  on  it,  as  held  in  the  cases  of  Killips  v.  Putnam  F.  Ins. 
Co.,  28  Wis.  472,  Black  v.  Winneshiek  Ins.  Co.,  31  Wis.  74,  and 
Thompson  v.  Phenix  Ins.  Co.,  136  U.  S.  287  ;  but  the  invocation  of  this 
principle  docs  no  violence  to  the  contract  of  the  parties.  There  is  no 
element  of  estoppel  present  here,  however.  The  defendant  compan}' 
have  done  nothing  which  has  induced  the  insured  to  sus})end  proceed- 
ings or  delay  his  action.  Thev  notified  him  at  once  on  the  receipt  of 
his  proofs  that  they  denied  liability.  They  did  not  require  him  to  do 
anything.  He  had  nearl}'  ten  months  in  which  to  bring  his  suit.  By 
failing  to  do  so  he  must  be  held  to  be  barred  b}'  his  contract. 

The  provision  of  section  197.5,  R.  S.,  to  the  efl^ect  that  no  insurance 
polic\'  shall  contain  a  provision  that  no  action  or  suit  shall  be  brought 
thereon,  is  not  applicable,  because  the  clause  under  consideration  is 
plainly  not  such  a  provision. 

Judgment  affirmed.^ 

1  Contra:  Sample  i-.  London  and  Lancashire  F.  Lis.  Co.,  46  S.  Car.  491  (1895) > 
Insurance  Companies  o.  Scales,  101  Teiin.  628,  640-642  (1898). 

On  the  effect  uf  war,  see  Semmes  v.  Hartford  Ins.  Co.,  1.3  Wall.  158  (1871). 
On  ^s■hat  constitutes  the  commencing  of  an  action,  see  Peck  v.  German  F.  ^is.  Co., 
102  Mich.  52  (1894) ;  Rogers  v.  Home  Ins.  Co.,  35  C.  C.  A.  402  (Second  Circuit,  1899) ; 
Farrell  v.  German-American  Ins.  Co.,  175  Ma.ss.  340  (1899). 
On  the  topic  of  this  section,  see  also :  — 

Norton  v.  Rensselaer  and  Saratoga  Ins.  Co.,  7  Cow.  645  (1827) ; 
Cornell  v.  Le  Roy,  9  Wend.  163  (1832) ; 

Mechanic's  F.  Ins.  Co.  v.  Nichols,  16  N.  J.  L.  (1  Harr.)  410  (1838); 
Lycoming  Ins.  Co.  v.  Schreffler,  42  Pa.  188,  191  (1862)  ; 


1022  HART   V.   citizens'   INS.   CO.  [CHAP.  X. 

JEtna  lus.  Co.  v.  Stevens,  48  111.  31,  34  (1868) ; 

Insurance  Companies  v.  Boykin,  12  Wall.  433  (1870); 

Parmelee  v.  Hoffman  F.  Ins.  Co.,  54  N.  Y.  193  (1873) ; 

Smith  V.  Commonwealth  Ins.  Co.,  49  Wis.  322,  326-327  (1880); 

Waldeck  v.  Springfield  F.  &  M.  Ins.  Co.,  53  Wis.  129  (1881) ; 

Central  City  Ins.  Co.  v.  Gates,  86  Ala.  558  (1888) ; 

Hamilton  v.  Liverpool,  London,  and  Globe  Ins.  Co.,  136  U.  S.  242  (1890); 

Hamilton  v.  Home  Ins.  Co.,  137  U.  S.  370,  385  (1890); 

Quinlan  v.  Providence  Washington  Ins.  Co.,  133  N.  Y.  356,  362  (1892)  ; 

Steele  v.  German  Ins.  Co.,  93  Mich.  81  (1892) ; 

McNally  v.  Phoeni.x  Ins.  Co.,  137  N.  Y.  389,  397-398  (1893) ; 

White  V.  Roval  Ins.  Co.,  149  N.  Y.  485  (1896) ; 

Hicks  V.  British  America  Assur.  Co.,  162  N.  Y.  284  (1900).  —  Ed. 


SECT.  III.]  TAYLOK   V.  iKTNA   LIFE    INS.   CO.  1023 

* 

SECTION  III. 

Life  Insurance. 

TAYLOR  V.   .ETNA  LIFE   INS.   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1859.     13  Gray,  434. 

Action  of  contract  on  a  polic}'  of  insurance  on  the  life  of  Andrew- 
Taylor,  for  seven  years  from  the  llth  of  April,  1855,  in  the  sura  of 
$700,  payable  "within  ninety  days  after  due  notice  and  proof  of  the 
death  of  said  Andrew  Taylor,  if  within  the  term  of  this  policy."  ^  .   .   . 

Answer,  1st.  That  the  plaintiffs  never  "  furnished  to  the  defendant 
sufficient,  due,  and  proper  preliminar}'  proofs  of  the  death  of  the  said 
Andrew  Taylor,  and  of  the  time,  circumstances,  and  occasion  of  his 
said  deatli,  if  the  same  occurred,  nor  any  such  as  by  law  and  usage  in 
such  case  are  Reasonably  required  and  by  the  terms  of  said  policy  pro- 
vided for."  .  .  . 

The  parties  submitted  the  case  to  the  court  upon  the  following 
agreed  statement :  — 

"Upon  the  first  ground  of  defence  stated  in  the  answer,  it  is  ad- 
mitted by  the  plaintiff  that  no  affidavit  or  certificate  of  the  attending 
physician,  as  to  the  circumstances  and  occasion  of  the  death  of  Andrew 
Taylor,  was  ever  furnished  to  the  defendants  ;  although  the  plaintiff 
was  informed,  at  the  time  he  gave  the  notice  and  furnished  certain 
other  proofs  of  such  death,  that  the  defendants  held  such  certificate  or 
affidavit  to  be  essential,  and  that,  until  furnished,  the  proof  would  not 
be  considered  complete,  nor  the  loss  payable.  It  is  admitted  that  the 
ship's  physician  was  present  and  attending  during  the  sickness  and  at 
the  time  of  the  death  of  said  Ta3-lor  ;  and  the  plaintiff  offers  no  excuse 
for  not  furnishing  such  certificate,  except  the  inconvenience  and  expense 
of  sending  to  the  Pacific  coast  to  obtain  it. 

"  The  defendants  admit  that  notice  and  proofs  of  the  fact  of  the 
death  of  said  Andrew  Taylor  were  furnished  to  them  b^-  the  plaintiff 
on  the  lOtli  of  February,  1856,  which  were  deficient  only  by  reason  of 
the  absence  of  such  certificate  or  affidavit  of  the  attending  physician  ; 
and  the  defendants  claim  that  by  the  terms  and  reasonable  intendment 
of  the  contract,  and  by  the  usage  and  understanding  of  this  and  other 
life  insurance  companies,  such  affidavit  or  certificate  is  a  requisite  and 
essential  part  of  the  preliminary  proof,  to  be  supplied  by  parties  de- 
manding the  amount  of  the  policy,  under  the  circumstances  aforesaid, 
and  without  which  no  recovery  can  be  had  by  suit  at  law.  .   .  . 

"  Upon  the  foregoing  statement,   it  is  agreed,  that  the  court  shall 

1  In  reprinting  the  statement  and  the  opinion,  matter  foreign  to  proof  of  death  has 
been  omitted.  —  Ed. 


1024  TAYLOR  V.   .ETNA   LIFE   INS.   CO.  [CHAP.  X. 

enter  such  judgment  as  either  party  ma}-  be  entitled  to,  and  as  law  and 
justice  require  ;  it  being  understood  and  provided,  however,  that  if  the 
court  shall  be  of  opinion  that  proof  of  such  understanding  and  usage 
as  the  defendants  allege  would  be  competent  and  material  to  the 
proper  decision  of  the  controvers}-,  the  case  shall  be  remitted  to 
the  proper  court  for  trial  of  such  questions  by  a  jury  ;  and  furthev, 
that  if  the  court  shall  be  of  opinion  that  the  plaintiff  ought  not  to 
recover  without  furnishing  the  affidavit  or  certificate  of  the  physician, 
he  shall  be  allowed  the  opportunity  to  obtain  and  supply  the  same,  or  a 
sufficient  excuse  for  its  absence,  with  the  same  effect  upon  this  suit  as 
if  furnished  originally,  except  tliat  such  equitable  adjustment  of  the 
costs  or  interest  shall  be  made  upon  the  final  result,  as  the  court  may 
direct." 

J.  Wells,  for  the  plaintiff. 

F.  Chamberlin,  for  the  defendants. 

Metcalf,  J.  1.  By  the  terms  of  the  policy,  the  sum  insured  was 
payable  in  ninety  days  "  after  due  notice  and  proof  of  the  death"  of 
Andrew  Taylor.  Such  notice  and  proof  were  therefore  prerequisite  to 
the  maintenance  of  this  action.  The  defendants,  in  their  answer,  deny 
that  they  were  furnished  by  the  plaintiff  with  such  proof.  Tliey  admit, 
however,  in  the  statement  of  facts,  that  there  was  no  defect  in  the  proof 
of  said  Taylor's  death,  unless,  in  order  to  constitute  due  proof  thereof, 
it  was  necessary  to  produce  a  sworn  certificate,  such  as  is  liereinafter 
mentioned,  of  the  physician  who  attended  tlie  deceased  in  his  last  sick- 
ness. The  ground  taken  by  the  defendants  is,  that  such  certificate  is  a 
requisite  and  essential  part  of  the  preliminary  proof  of  the  death,  and 
made  so,  not  only  by  the  terms  and  reasonable  intendment  of  the  con- 
tract contained  in  the  policy,  but  also  by  their  own  usage  and  under- 
standing, and  the  usage  and  understanding  of  other  life  insurance 
companies. 

To  support  this  ground  of  defence,  the  defendants  have  introduced 
(the  plaintiff's  counsel  consenting)  a  pamphlet  issued  by  them,  which 
they  were  accustomed  to  give  to  claimants  on  tlieir  policies,  and  whioh, 
it  is  admitted  by  the  plaintiff,  was  given  to  him  by  the  defendants  at 
the  time  when  he  presented  to  them  his  proof  of  Andrew  Taylor's 
death.  Under  the  head  of  "  Proofs  of  Death  Required,"  that  pamphlet 
contained,  among  other  required  proofs,  the  following:  "  1st.  A  cer- 
tificate from  the  physician  who  attended  the  party  during  his  last  sick- 
ness, stating  particularly  the  nature  of  the  disease,  its  duration,  and 
the  time  of  death."  It  was  also  a  part  of  said  required  proof  that  the 
certificate  "  should  be  sworn  to  before  a  magistrate  or  otlrer  officer 
qualified  to  administer  an  oath  or  affirmation."  As  this  matter  is  not 
contained  in  the  statement  of  facts,  we  have  taken  it  into  consideration 
solely  upon  the  consent  of  the  plaintiff's  counsel  that  we  might.  But, 
after  adding  this  to  the  facts  regularly  agreed  upon,  we  find  no  defence 
to  the  action.  The  policy  does  not  embody  nor  i-efer  to  any  by-law, 
requisition,  usage,  or  understanding  of  the  defendants  as  to  the  kind 


SECT.  Iir.]  TAYLOR    V.   JET^A   LIFE   INS.    CO.  1025 

of  proof,  which  thc}'  should  require,  of  the  death  of  Andrew  Taylor. 
Whatever,  therefore,  might  be  such  by-law,  requisition,  usage,  or  under- 
standing, the  plaintiff  would  not  be  bound  thereby.  He  is  boinid  only  by 
the  policy  itself;  that  is,  to  furnish  "due  proof"  of  the  death.  If  the 
defendants  would  have  bound  the  plaintiff  by  their  bj'-laws,  etc.,  they 
should  iuive  made  the  policy,  in  terms,  subject  to  those  by-laws,  etc., 
or  in  some  way  have  made  them  a  part  of  the  contract  contained  in  the 
policy.  Kingsley  v.  New  England  Mutual  Fire  Ins.  Co.,  8  Cush.  393, 
403. 

The  question,  what  is  due  proof,  is  to  be  determined  by  the  court, 
according  to  the  rules  of  evidence,  and  not  by  the  defendants  nor  by 
any  otlicr  life  insurance  companies.  We  are  not  informed  what  proof 
of  death  was  presented  to  the  defendants,  and  it  is  not  necessar}'  that 
we  should  know  ;  for  it  is  conceded  by  them  that  the  proof  was  suffi- 
cient, if  the  physician's  certificate  was  not  a  requisite  part  of  it. 

The  usage  of  the  defendants  to  require  certain  specified  proof  of 
death  has  been  relied  on  in  argument.  In  the  first  place,  no  such  usage 
is  dul}-  shown.  In  the  next  place,  if  it  were  so  shown,  there  is  no  pre- 
tence that  the  plaintiff  had  any  notice  of  it  when  he  took  the  polic}'. 
He  therefore,  for  that  reason,  if  for  no  other,  could  not  be  bound 
by  it.  .  .  .  Judgment  for  the  plaintiff .^ 

1  In  Braunsteiii  v.  Accidental  Death  Ins.  Co.j  1  B.  &  S.  782  (1861),  Wightman,  J., 
said  :  — 

"  The  question  in  this  case  is,  What  effect  is  to  be  given  to  a  clause  in  a  deed  of 
settlement,  which  is  incorporated  by  one  of  the  terms  of  tlie  policy  in  the  policy  itself, 
'that  before  payment  of  the  sum  insured  by  any  policy,  proof  satisfactory  to  the  direc- 
tors of  the  company  should  be  furnished  by  tiie  claimant  of  the  deatli  or  accident.' 
And  then  there  is  this  addition,  '  together  with  such  further  evidence  or  information, 
if  any,  as  tiie  said  directors  shall  think  necessary  to  establish  that  claim.' 

"  Now  it  is  said  that,  by  virtue  of  this  clause,  the  directors  have  the  power,  if  they 
please,  wholly  to  withhold  payment  by  capriciously,  as  asserted  in  the  replication,  and 
without  any  reasonable  ground  whatsoever,  requiring  further  evidence  perfectly  imma- 
terial to  tlie  matter  in  dispute.  Tlie  question  is,  wliether,  giving  a  reasonable  construc- 
tion to  the  intention  of  the  parties  when  the  clause  was  introduced  by  reference  into  the 
policy,  it  can  be  understood  that  the  assured  did  agree  that,  upon  any  ground  whatso- 
ever, capriciously  or  otherwise,  which  the  directors,  who  are  the  parties  to  the  suit, 
might  think  fit  to  urge,  their  decision  should  be  binding  ?  The  clause  must  receive  a 
reasonable  construction,  and  the  parties  must  be  taken  to  have  had  in  view  any  further 
evidence  which  the  directors  might  reasonably  require ;  such  a  construction  would 
fulfil  all  the  terms  of  tliat  clause." 

And  Crompton,  J.,  said  :  — 

"  The  real  question  in  all  cases  of  this  nature  is  that  stated  by  Ashhurst,  J.,  in 
Hotham  v.  East  India  Co.,  1  T.  R.  638,  645,  —  what  was  the  intention  of  the 
parties  ?  Now  I  cannot  conceive  that  any  company  would  put  before  a  person  desir- 
ous of  effecting  an  insurance  with  them  a  stipulation  tliat,  in  order  to  estal)lish  the 
occurrence  of  an  accident  insured  against,  their  own  directors  might  require  any  evi- 
dence, however  chimerical,  capricious,  and  unjust  the  asking  for  it  niigiit  be.  The 
putting  such  a  construction  on  a  stipulation  like  this  is  opposed  to  the  general  rule, 
tiiat  when  it  is  agreed  that  an  act  is  to  be  done  to  the  satisfaction  of  a  part}'  it  must 
be  understood  to  mean  reasonably  to  his  satisfaction.  The  cases  where  it  is  agreed 
between  two  parties  that  a  disputed  matter  shall  be  determined  by  the  certificate  of  a 
third  person  differ  from  the  present,  for  there  the  act  is  to  be  done  by  a  third  person. 

65 


1026  TAYLOR   V.   iETNA   LIFE   INS.    CO.  [CHAP.  X. 

whereas  here  it  is  to  he  done  by  one  of  the  parties.     Tlie  language  of  Tindal,  C.  J., 
in  Dallman  v.  King,  4  Bing.  N.  C.  105,  is  very  important  where  he  says  that  stipula- 
tions in  a  contract  going  to  the  destruction  of  the  contract  are  inoperative." 
And  Blackburn,  J.,  said  :  — 

"I  quite  admit  that  parties  may  make  what  they  please  a  condition  precedent,  but 
it  must  be  shown  that  they  so  intended.  Here  the  stipulation  is  tlie  language  of  one 
party,  the  company,  and  '  verba  fortius  accipiuntur  contra  proferentem.'  No  doubt 
they  might  have  stipulated  that  no  money  should  be  payable  under  a  policy  unless  the 
directors  obtained  any  evidence  they  chose  to  ask  for,  but  it  would  require  very  dis- 
tinct language,  and  much  stronger  than  any  used  here,  to  show  that  the  parties  so 
intended." 

And  see  Cluff  v.  Mutual  Benefit  L.  Ins.  Co.,  99  Mass.  317,  32.3-324  (1868)  ;  O'Reilly 
V.  Guardian  I\Iut.  L.  Ins.  Co.,  60  N.  Y.  169  (1875)  ;  Insurance  Co.  v.  Rodel,  95  U.  S. 
232  (1877)  ;  Supreme  Council  v.  Forsinger,  125  Ind.  52  (1890)  ;  Buffalo  L.  T.  &  S. 
Co.  V.  Knights  Templar  and  Masonic  Mut.  Aid  Assn.,  126  N.  Y.  450  (1891)  ;  Jarvis  v. 
Northwestern  Mut.  Relief  Assn.,  102  Wis.  546  (1899) ;  Potter  v.  Union  Central  L.  Ins. 
Co.,  195  Pa.  557  (1900). 

On  the  topic  of  tliis  section,  see  also :  — 

Jackson  v.  Southern  Mut.  L.  Ins  Co.,  36  Ga.  429  (1867)  ; 

Semmes  v.  Hartford  In.s.  Co.,  13  Wall.  158  (1871)  ; 

Connecticut  Mut.  L.  Ins.  Co.  v.  Siegel,  9  Bush,  450  (1872) ; 

McFarland  v.  United  States  Mut.  Ace.  Assn.,  124  Mo.  204  (1894) ; 

McFarland  v.  Railway  O.  &  E.  Ace.  Assn.,  5  Wyo.  126  (1894) ; 

Hanna  v.  Connecticut  Mut.  L.  Ins.  Co.,  150  N.  Y.  526  (1896)  ; 

Harrison  v.  Masonic  Mut.  Ben.  Soc,  59  Kans.  29  (1898) ; 

Kettenring  v.  Northwestern  Masonic  Aid  Assn.,  96  Fed.  R.  177  (C.  C,  N.  D. 
111.,  1899); 

Lewis  V.  Metropolitan  L.  Ins.  Co.,  178  Mass.  52  (1902).  —Ed. 


SECT.  I.J  ATHERTON  V.    BROWN.  1027 


CHAPTER   XI. 
WAIVER   AND  ESTOPPEL. 


SECTION   I. 

Marine  Insurance. 

ATHERTON   V.    BROWN. 
Supreme  Judicial  Court  of  Massachusetts,  1817.     14  Mass.  152. 

Assumpsit  on  a  policy  of  insurance,  whereb}-  tlie  defendant  insured 
for  tlie  plaintiff,  on  "property  on  board  the  Spanish  brig  'New 
Constitution,'  from  the  Havana  to  her  port  of  discharge  in  the 
United  States." 

In  a  case  stated  for  the  consideration  of  the  court,  it  was  agreed  that 
the  plaintiff  was  interested  to  the  amount  insured  by  the  policy  in 
property  on  board  the  American  brig  "  Stranger,"  of  Portland,  which 
was  at  the  Havana  when  news  of  the  war  between  the  United  States 
and  Great  Britain  was  received  here  ;  that,  for  the  purpose  of  eluding 
capture  by  the  enemy,  the  agent  of  the  owners  of  the  vessel  and  cargo, 
through  the  intervention  of  a  Spanish  house,  procured  papers  for  said 
vessel  and  cargo  from  the  custom-house  at  the  Havana,  making  the 
vessel  ostensibly  Spanish,  although  still  the  property,  in  fact,  of  her 
original  owners  in  the  United  States  ;  and  altered  her  name  to  the 
"New  Constitution,"  and  put  on  board  her  a  Spanish  captain  and 
crew.  On  her  passage  for  the  United  States,  she  was  captured  and 
condemned,  with  the  cargo  on  board. 

It  was  admitted  by  the  defendant  that  the  plaintiff's  agent,  who  pro- 
cured the  insurance,  a  credible  witness,  whose  testimony  could  not  be 
disproved,  would  testify,  if  admissible,  that,  at  the  time  of  effecting  the 
insurance,  he  informed  the  defendant  that  the  vessel  on  board  of  which 
the  property  was  to  be  shipped  was  the  brig  "Stranger"  aforesaid, 
and  that  her  real  American  character  was  not  to  be  changed  ;  but  that 
she  was  to  be  rendered  ostensibly  Spanish,  for  the  sole  purpose  of 
avoiding  capture  by  the  enera}'. 

Judgment  by  default  or  nonsuit  was  to  be  rendered  in  the  action, 
as  the  opinion  of  the  court  should  be  on  the  foregoing  statement. 

Whitinan,  for  the  defendant. 

Todd,  for  the  plaintiff. 

Per  Curiam.  The  question  is,  whether  the  words  in  the  policy,  viz., 
the  Spanish  brig  "New  Constitution,"  amount  to  a  warranty  that  the 


1028  SILLOWAY   V.   NEPTUNE   INS.    CO.  [CHAP.  XI. 

vessel  was  Spanish ;  or  whether  they  may  be  considered  as  merely 
descriptive  of  the  vessel,  or  as  the  name  of  the  vessel.  We  are  of 
opinion  tliat  the  description  of  the  vessel,  as  contained  in  this  policy, 
includes  her  national  character,  and  that  it  amounts  to  a  warrant}'  that 
she  was,  in  fact,  a  Spanish  vessel. 

Parol  evidence  of  what  was  within  the  knowledge  of  the  underwriters 
was  not  admissible. 

It  being  agreed  that  the  vessel  was  not  Spanish,  but  American,  the 
warranty  was  not  complied  with  ;  and  the  defendant  is  not  liable  in 
this  action.  Plaintiff  nonsuit} 


SILLOWAY   AND   Others    v.    NEPTUNE    INS.    CO. 

Supreme  Judicial  Court  of  Massachusetts,    1858.     12  Graj',  73. 

Action  of  contract  upon  a  policy  of  insurance,  dated  March  6, 
1852,  insuring  "  Daniel  Silloway  &  Co.  for  whom  it  concerns,  payable 
to  D.  S.  &  Co.,"  $2,500  on  one  half  of  the  schooner  Atlantic,  $2,300  on 
one  half  of  her  cargo,  and  $350  on  one  half  of  "  the  freight  on  board 
said  schooner,"  at  and  from  Portsmouth,  N.  H.,  to  Guayama,  Porto 
Rico,  and  thence  to  port  of  discharge  in  the  United  States."'^  .  .  . 
Trial  at  November  Term,  1854,  before  Metcalf,  J.,  who  reported  to 
the  full  court  the  following  case :  — 

1   Contra:  Bidwell  v.  North  Western  Ins.  Co.,  24  N.  Y.  302  (1862). 

See  Weston  v.  Emes,  1  Taunt.  1 15  (1808)  ;  Cole.s  v.  Marine  Ins.  Co.,  3  Wash.  C.  C. 
159,  163  (1812);  Redman  v.  Lowdon,  5  Taunt.  462  (1814),  s.  c.  sub  nom.  Kedman  v. 
Loudon,  1  Marsh  136. 

In  Odiorne  v.  New  England  Mut.  M.  Ins.  Co  ,  101  INIass  551  (1869),  a  policy  on  a 
vessel  for  one  year  from  Feb.  26,  1867,  said  :  "  Prohiliited  from  .  .  .  Cape  Breton  .  .  . 
between  October  1  and  May  1."  Within  the  prohibited  montlis  the  vessel  used  a  port  in 
Cape  Breton  and  departed  in  safety.  An  action  was  brought  because  of  a  subsequent 
loss.  It  was  held  that  tliere  could  be  no  recovery  and  tbat  oral  testimony  on  the  part 
of  ti>e  plaintiff  would  not  be  admi.ssible  to  prove  "  tliat,  when  tlie  policy  was  delivered 
to  the  plaintiff's  agent,  he  objected  to  the  clause  al)ove  given,  and  stated  to  tlie  presi- 
dent of  the  defendants  that  the  vessel  would  jjrobably  want  to  use  some  of  tlie  prohib- 
ited ports,  and  the  president  replied  that  the  effect  of  the  clause  was  to  exclude  risks 
ill  such  ports  only,  but  not  to  vitiate  the  policy,  and  in  that  case  he  could  come  in  and 
make  an  agreement  for  an  additional  premium,  or  take  the  risk  liimself  while  in  such 
ports  ;  that  a  custom  exists  with  the  underwriters  of  Boston  to  construe  said  clause  as 
excluding  any  risks  in  the  prohibited  ports,  but  not  that  such  use  vitiates  tiie  pob'cy  ; 
that  for  the  year  previous  to  Feb.  26,  1867,  tlie  plaintiff  insured  the  same  vessel  with 
the  defendants,  by  a  policy  containing  the  same  clause  as  the  one  quoted,  and,  when 
the  insurance  was  effected,  the  vessel  was  in  Sydney,  a  prohibited  port,  and  it  was  so 
stated  in  the  application  for  insurance,  and  the  defendants  issued  their  policy,  and  at 
the  end  of  the  year  demanded  and  collected  of  the  plaintiff  the  premium  for  such 
year."  —  Ed. 

^  In  reprinting  the  statement,  passages  foreign  to  deviation  have  been  omitted. 
—  Ed. 


SECT.  I.]  SILLOWAY   V.   NEPTUNE   INS.   CO.  1029 

The  plaintiffs  were  permitted  ...  to  introduce  a  charter-party  of 
the  vessel  to  them  from  David  S.  Poor,  the  owner.  .  .  . 

The  vessel  was  laden  in  February,  1852,  at  Newburyport,  where  the 
owners  resided.  .  .  .  She  met  with  an  accident  in  loading  at  Newbury- 
port, and  was  despatched  thence  to  Portsmouth,  for  the  purpose  of 
being  .  .  .  repaired.  The  shipwrights  who  made  the  repairs  testified 
that  a  small  portion  of  her  sheathing  only  was  taken  off;  that  her  butts 
and  seams  were  found  very  open  ;  and  that  in  their  opinion,  in  order 
to  make  her  seaworthy-,  her  whole  sheathing  should  have  been  removed 
and  all  her  butts  and  seams  tried  and  recaulked  ;  that  they  so  informed 
Currier,  one  of  the  plaintiffs.  .  .  .  But  this  evidence  was  contradicted 
by  witnesses  who  examined  her  at  Newburyport  ten  days  afterwards, 
and  by  her  officers  and  some  of  her  crew,  who  testified  that  she  was 
seaworthy  when  she  left  Portsmouth.  This  question  was  submitted  to 
the  jury,  who  returned  a  verdict  for  the  plaintiffs. 

The  vessel  sailed  from  Portsmouth  for  Guayama  on  the  morning  of 
the  oth  of  March.  The  next  day  Currier  applied  to  the  defendants  for 
a  policy.  .  .  . 

The  vessel  about  nine  o'clock  in  the  evening  after  her  departure 
from  Portsmouth  encountered  strong  gales  with  a  dense  fog  and  heavy 
sea ;  about  midnight  she  sprung  a  leak,  and  half  an  hour  afterwards 
the  master  tacked  ship,  and  put  into  Gloucester  in  distress,  arriving 
there  early  the  next  morning.  The  master  went  to  Newburyport  for 
orders,  and  by  direction  of  the  owners  returned  to  Gloucester,  and 
sailed  on  the  7th  for  Newburyport,  arrived  there  on  the  8th,  and  re- 
ceived some  damage  in  coming  to  the  wharf.  A  claim  was  made  on 
the  defendants  for  this  loss,  which  was  adjusted  by  an  agent  sent  by 
the  defendants  to  Newburyport  to  investigate  the  matter,  and  the 
amount  paid  by  the  defendants ;  and  by  indorsement  on  the  polic}-, 
"  liberty  is  given  for  the  schooner  '  Atlantic '  to  make  her  present  voyage 
on  a  single  bottom."  The  defendants  introduced  evidence,  which  was 
not  contradicted,  that  the  vessel  could  have  been  repaired  at  Gloucester 
as  well  as  at  Newburyport. 

On  the  1st  of  April,  after  the  vessel  had  been  repaired  and  her  cargo 
reladen,  she  again  sailed  on  her  voyage.  She  encountered  severe 
gales,  and  arrived  at  Guayama  on  the  24th  of  April,  much  damaged. 
The  cargo,  excepting  a  part  of  the  deck  load,  which  had  been  lost 
overboard,  was  delivered  to  the  consignees ;  and  both  the  vessel  and 
the  cargo,  after  being  surveyed,  were  sold  at  auction.  .  .  . 

The  defendants  stated  the  following  points  of  defence,  which  were 
reserved  for  the  determination  of  the  whole  court :  .  .   . 

2d  "  That  the  removal  of  the  schooner  from  Gloucester  to  Newburj'- 
port  was  a  deviation  which  discharged  the  underwriters."  .  .  . 

It  was  agreed  that  the  whole  court  might  draw  such  inferences  as  a 
jury  would  be  warranted  in  drawing,  or  submit  the  case  to  a  jury  upon 
any  point,  if  they  should  see  fit ;  and  that  the  verdict,  if  sustained  at 
all;  should  be  reformed,  if  necessary,  by  an  assessor,  upon  principles 
to  be  settled  by  the  court. 


1030  SILLOWAY    V.    NEPTUNE   INS.    CO.  [CHAP.  XI. 

E.  Mericin^  for  the  plaintiffs. 

S.  Bartlett^  for  the  defendants. 

BiGELOw,  J.^  .  .  .  We  doubt  ver}'  much  whether  these  facts  do 
constitute  even  a  technical  deviation  sufficient  to  discharge  the  policj'. 
The  master  was  fully  justified  in  seeking  a  port  in  consequence  of  sea 
damage,  but  he  was  not  absolutel}'  obliged  to  remain  there  and  make 
the  needful  repairs.  If,  in  the  exercise  of  good  judgment  and  sound 
discretion,  and  acting  in  good  faith,  he  deemed  it  expedient  for  the  in- 
terest of  all  concerned  to  go  to  an  adjoining  port,  the  home  of  the 
owners,  where  the  vessel  could  be  refitted  with  greater  convenience  and 
less  expense,  and  without  incurring  any  actual  increase  of  risk,  wo  are 
strongl}'  inclined  to  the  opinion  that  he  might  do  so  without  discharg- 
ing the  underwriters  on  the  ground  of  an  unlawful  or  unjustifiable 
variance  from  the  course  of  the  voyage  ;  and  under  similar  circum- 
stances that  the  owners  might  direct  the  master  to  take  the  vessel  into 
her  home  port. 

But  however  this  may  be,  we  are  clearl}'  of  opinion  that  the  defend- 
ants are  estopped  in  the  present  case  from  alleging  the  supposed  devi- 
ation as  a  ground  of  defence  to  this  polic}'.  It  appears  b}'  the  evidence, 
that  the  fact  of  her  having  put  into  Gloucester  before  she  went  into 
Newburyport  was  full3'  known  to  the  defendants'  agent,  who  went  to 
the  latter  place  for  the  purpose  of  examining  the  vessel  and  adjusting 
the  loss  which  had  then  happened ;  and  that  subsequently  to  this  they 
not  onl}-  paid  the  amount  of  the  loss,  but  also  gave  liberty  to  the 
owners,  b}'  an  indorsement  in  writing  on  the  policy,  to  proceed  to  sea 
with  the  vessel  on  a  single  bottom.  The  defendants  thus  recognized  the 
validity  of  the  policy  as  a  subsisting  contract,  with  a  full  knowledge  of 
the  alleged  deviation,  and  they  allowed  the  plaintiffs  to  send  the  vessel 
to  sea,  not  onl^'  without  any  suggestion  that  they  had  forfeited  their 
right  to  hold  the  insurers  liable,  but  in  the  belief  that  she  was  covered 
by  a  policy  the  validity  of  which  was  not  denied  or  doubted  by  the  de- 
fendants by  reason  of  any  preexisting  fact.  The  plaintiffs,  under  these 
circumstances,  had  a  right  to  regard  any  objection  on  the  ground  of  the 
supposed  technical  deviation  to  have  been  waived.  Certainly  it  can- 
not be  allowed  as  a  defence  to  this  action,  without  operating  as  in  the 
nature  of  a  fraud  on  the  plaintiffs,  who  have  acted  on  the  belief  that 
the  policy  was  in  force  during  the  prosecution  of  the  residue  of  the 
voyage.  ... 

Unless  the  parties  agree  on  the  sum  due  under  the  policies,  the  case 
must  be  sent  to  an  assessor  to  determine  the  amount  according  to  the 
rules  and  principles  hereinbefore  stated. 

Judgment  on  the  verdict."^ 

^  In  reprinting  the  opinion,  passages  stating  the  facts,  or  dealing  with  matters  for- 
eign to  waiver  of  deviation,  have  been  omitted.  One  of  the  omitted  passages  may  be 
found  ante,  p.  60,  n.  —  Ed. 

'^  Otlier  cases  on  waiver  of  deviation  are:  Crowninshield  v.  New  York  Ins.  Co., 
3  Johns.  Cas.  142  (1802) ;  Coles  v.  Marine  Ins.  Co.,  3  Wash,  C.  C.  159,  163  (1812), 


SECT.  I.]  THEBAUD    V.   GREAT   WESTERN    INS.    CO.  lO'M 


THEBAUD    ET   AL.,    Respondents,   v.    GREAT   WESTERN   INS. 

CO.,    Appellant. 

Court  of  Appeals  op  New  York,   1898.     155  N.  Y.  516. 

Appeal  from  a  judgment  of  the  late  General  Term  of  the  Supreme 
Court  in  the  first  judicial  department,^  entered  February  20,  1895,  upon 
an  order  overruling  defendant's  exceptions,  ordered  to  be  heard  in  the 
first  instance  at  General  Term,  and  directing  judgments  upon  a  verdict 
in  favor  of  plaint! tf. 

The  nature  of  tlie  action  and  the  facts,  so  far  as  material,  are  stated 
in  the  opinion. 

Frescott  Hall  Butler,  for  appellant. 

Esek  Coiceu  and  Everett  Masten,  for  respondents. 

O'Brien,  J.  This  was  an  action  by  the  owners  of  a  steamboat  upon 
a  policy  of  marine  insurance.  The  issues  in  tlie  case  were  tried  before 
a  jury,  and  the  plaintiff  recovered. 

On  the  28th  of  June,  1884,  the  steamer  "Dos  Hermanos"  was  in 
process  of  construction  at  the  port  of  Philadelphia  for  use  as  a  river 
steamer  at  or  near  Frontera,  Mexico.  She  was  not  constructed  or  in- 
tended for  use  upon  the  open  sea,  but  for  service  upon  the  rivers  or 
other  inland  waters  of  the  country  where  she  was  destined  for  use.  On 
the  day  mentioned,  the  defendant  issued  to  the  plaintiff  its  policy  of 
marine  insurance  upon  this  steamer  to  cover  the  voyage  from  Philadel- 
phia, the  place  where  it  was  built,  to  Frontera,  jNIexico,  the  place  where 
it  was  intended  for  use.  The  policy  related  only  to  this  voyage,  part 
of  which  was,  as  all  parties  knew,  upon  the  sea.  The  defendant,  by 
the  terms  of  the  policy,  undertook  to  pay  to  the  plaintiffs  the  sum  of 
$5,000  in  case  of  loss  upon  this  voyage,  including  what  is  known 
as  the  mechanic's  risk  while  in  port,  meaning  that  at  the  time  of  the 
execution  of  the  contract  the  steamer  had  not  been  completed,  and, 
in  fact,  the  voyage  did  not  commence  until  the  27th  of  August 
thereafter.  The  policy",  by  its  terms,  indemnified  the  owners  against 
loss  from  the  usual  perils  of  the  sea  covered  by  policies  of  marine 
insurance.  The  steamer,  while  on  the  vo3'age,  was  lost  at  sea,  near 
the  coast  of  North  Carolina,  on  the  night  of  the  13th  of  September, 
1884. 

The  defence  to  the  action  may  be  arranged  under  three  general  heads  : 
(1)  That  the  steamer  was  not  seaworthy,  and,  hence,  that  the  implied 
warranty  of  seaworthiness,  which  it  is  insisted  enters  into  and  forms  a 

Redman  v.  Lowdon,  5  Taunt.  462  (1814),  s.  c.  suh  now..  Redman  v.  London,  1  Marsh, 
136;  Wiggiu  y.  Board  man,  14  Mass.  12  (1817);  Glidden  v.  Manufacturers' Ins.  Co., 
1    Sumner,   232  (1832);    Warren    v.   Ocean  Ins.    Co.,   16    Me.   439  (1840);   Keed   v. 
McLaughlin,  2  Hannay,  N.  B.  128  (1870).— Ed. 
1  Reported  84  Hun,  1  (1895).  — Ed. 


1032  THEBAUD    V.    GKEAT   WESTERN   INS.    CO.  [CHAP.  Xf. 

part  of  every  marine  insurance  upon  a  ship  or  vessel,  was  broken,  and 
for  that  reason  the  plaintiff  is  not  entitled  to  recover.  (2)  That  in 
making  the  vo3age  there  was  a  voluntary  deviation  from  the  usual 
course  of  tlie  voyage  from  Philadelphia  to  Frontera.  (3)  That  the 
steamer  was  not  lost  b3'  the  perils  of  the  sea,  or  In-  anj-  casualty  covered 
by  the  terms  of  the  policy,  but  in  consequence  of  the  unseaworthi- 
ness and  unfitness  of  the  vessel  to  make  the  voyage  covered  by  the 
contract. 

It  is  no  doubt  the  general  rule  that  in  all  contracts  of  marine  insur- 
ance upon  vessels  there  is  an  implied  warranty  that  the  subject  of  the 
insurance  was  at  the  time  seaworthy,  or,  in  other  words,  reasonabl}'  fit 
and  capable  of  making  the  voyage.  But  in  this  case  both  parties  knew 
that  the  vessel  was  not  intended  for  service  upon  the  open  sea.  She 
was  not  built  or  constructed  for  any  such  purpose,  but,  on  the  contrarj-, 
for  the  river  service.  Before  the  defendant  entered  into  the  contract 
the  plans  and  specifications  with  reference  to  the  construction  of  the 
"  Dos  Hermanos  "  had  been  submitted  to  its  agents.  They  put  the  de- 
fendant in  i^ossessiou  of  all  information  concerning  the  character  and 
construction  of  the  craft.  The  defendant's  marine  engineer,  who  had 
had  considerable  experience,  assured  the  broker  who  took  the  risk 
"  that  she  was  built  for  the  river  trade,  and  he  did  not  consider  that 
she  was  just  the  thing  to  attempt  all  weathers  on  the  coast  going  around 
there,  but  if  properly  handled  she  might  get  there,  provided  she  took 
the  inland  course  as  far  as  possible."  The  defendant  thereupon  con- 
cluded to  write  the  risk,  but  exacted  therefor  double  the  usual  premium 
for  marine  insurance  on  ordinary  seagoing  vessels.  The  steamer  was 
not  then  completed,  and  hence  the  provision  in  the  policj'  covering 
the  mechanic's  risk  while  in  port,  including  the  privilege  of  mechanics 
to  work  upon  the  vessel.  Before  starting  on  her  voyage  for  Frontera 
two  trial  trips  were  taken  by  direction  of  the  engineer,  one  up  and  one 
down  the  Delaware  River.  Neither  of  these  trips,  however,  extended 
beyond  the  limits  of  the  port  of  Philadelphia,  and  we  do  not  understand 
that  it  is  seriously  claimed  that  these  trips  constituted  a  deviation  from 
the  usual  vo3'age.  They  were  merely  jirelirainary  in  order  to  test  the 
cai)acity  of  the  vessel  to  make  the  voyage. 

It  was  competent  for  the  jur}-  to  find  upon  the  evidence  that  tlie 
vessel  was  sufficiently  provided  with  a  crew  and  proper  equipments. 
There  is  evidence  tending  to  show  that  suitable  precautions  were  taken 
before  leaving  Philadelphia  fur  the  ocean  voj^age  to  make  her  as  sea- 
worth}'  as  a  vessel  of  her  class  could  be  made  ;  that  her  machinery  was 
tried  and  the  boilers  inspected  in  the  usual  manner.  The  voyage  was 
commenced,  after  leaving  Philadelphia,  by  taking  what  is  known  as  the 
inside  course  through  the  canals  and  bays,  and  the  sea  voyage  was  not 
actually  commenced  until  she  reached  Fort  Macon.  Before  reaching 
that  point,  however,  it  seems  that  an  accident  occurred  to  the  vessel  by 
a  collision  with  a  submerged  stump  in  one  of  the  canals,  and,  hence, 
there  was  a  stop  at  Baltimore  *for  repairs,  where  some  further  precau- 


SECT.  I.]  THEBAUD    V.    GREAT   WESTERN    INS.   CO,  1033 

tions  were  taken  in  order  to  protect  the  steamer  from  the  perils  of  the 
sea  voyage.  Another  stop  was  made  at  Norfolk,  in  order  to  procure  a 
pilot  to  take  her  through  the  Chesapeake  and  Albemarle  canal  and  other 
waters  to  Fort  Macon.  This  was  all  inside  navigation,  and  on  reach- 
ing the  point  last  mentioned  it  became  necessary  to  go  outside  upoa 
the  open  sea,  and  shortly  afterwards  the  steamer  was  lost. 

That  the  "  Dos  Hermanos  "  was  not  a  seaworthy  vessel,  in  the  sense 
in  which  these  terms  are  applied  to  seagoing  vessels,  is  made  quite 
clear  by  the  evidence.  It  was  undoubtedly  competent  for  the  jury  to 
so  find  and  for  the  court  below  to  so  decide,  but  in  this  court  the  ques- 
tion always  is,  upon  an  issue  of  this  character,  not  upon  which  side  the 
evidence  preponderates,  but  whether  there  is  any  evidence  to  support 
the  verdict.  The  parties  knew  perfectly  well  that  the  subject  of  the 
insurance  was  not  a  seagoing  vessel,  but,  for  the  purposes  of  the  trip 
the  defendant  was  evidently  willing  to  take  the  risk,  in  consideration 
of  tlie  payment  of  a  double  premium,  and  after  inspecting  the  vessel 
and  acquiring  full  knowledge  as  to  her  construction  and  capacity.  In 
view  of  the  proof  in  the  case  tending  to  show  what  was  done  in  order 
to  fit  the  steamer  for  her  voyage,  we  do  not  think  it  can  be  said  in  this 
court  that  the  verdict  of  the  jury  is  without  any  evidence  to  sustain  it. 
Generally,  the  question  as  to  whether  a  vessel,  covered  by  a  policy  of 
marine  insurance,  was,  or  was  not,  at  the  time  seaworthy,  is  one  of 
fact  for  the  jury.  Burges  v.  Wickham,  3  Best  &,  Smith,  669  ;  Clap- 
ham  V.  Langton,  5  Best  &  Smith,  729  ;  TurnbuU  v.  Janson,  36  L.  T.  R. 
635;  Bouillon  r.  Lupton,  15  C.  B.  (n.  s.)  113.  It  is  difficult  to  see 
how  such  a  question,  from  its  very  nature,  can,  in  practice,  be  deter- 
mined otherwise,  except,  possibly,  in  a  yevy  clear  case.  But  we  do 
not  regard  that  question  as  controlling,  since,  as  already  stated,  both 
parties  to  the  contract  knew  that  the  vessel  was  not  a  seagoing  craft, 
or  suitable  for  the  navigation  of  the  high  seas,  and,  under  the  circum- 
stances, the  implied  warranty  upon  which  the  defendant  relies  should 
not  be  construed  in  such  a  way  as  to  be  repugnant  to  the  general  pur- 
pose which  the  parties  had  in  view  at  the  time  of  the  execution  of  the 
contract.  We  can  discover  no  reason  why  the  general  rule  applicable 
to  risks  in  fire  insurance  policies  does  not  appl}'  to  this  case.  As  was 
said  by  this  court  in  the  case  of  Bid  well  v.  North  Western  Ins.  Co. 
(24  N.  Y.  302) :  "  Indeed  it  is  not  easy  to  perceive  why  an  insurance 
company,  by  reason  of  the  formal  words  or  clauses  (of  a  general  and 
comprehensive  nature),  inserted  in  a  policy  intended  to  meet  broad 
classes  of  contingencies,  should  ever  be  allowed  to  avoid  liabilit}'  on 
the  ground  that  facts,  of  which  the  compan}-  had  full  knowledge  at  the 
time  of  issuing  the  policy,  were  then  not  in  accordance  with  the  formal 
words  of  the  contract,  or  some  of  its  multifarious  conditions.  If  such 
facts  are  to  be  held  a  breach  of  such  a  clause,  they  are  a  breach  eo  in- 
stanti  of  the  making  of  the  contract,  and  are  so  known  to  be  b}'  the 
company  as  well  as  the  insured.  And  to  allow  the  company  to  take 
the  premium  without  taking  the  risk  would  be  to  encourage  a  fraud." 


1034         THEBAUD  V.    GREAT  WESTERN  INS.  CO.     [CHAP.  XL 

This  rule,  which  is  clearly'  applicable  to  express  warranties  in  contracts 
of  insurance,  should,  in  reason  and  justice,  be  applicable  to  the  implied 
warranty  of  seaworthiness  in  policies  of  marine  insurance.  Tliat  such 
is  the  well-settled  rule  in  this  court,  with  reference  to  express  war- 
ranties in  contracts  of  fire  insurance,  covering  conditions  with  respect 
to  which  the  underwriter  had  full  knowledge,  cannot  now  be  questioned. 
Van  Schoick  v.  Niagara  Ins.  Co.,  68  N.  Y.  434;  Bennett  v.  Buchan, 
76  N.  Y.  386  ;  McNally  v.  P.  Ins.  Co.,  137  N.  Y.  389;  Forward  v.  C. 
Ins.  Co.,  142  N.  Y.  382  ;  Robbins  v.  Springfield  Ins.  Co.,  149  N.  Y. 
477. 

So  we  think  the  defendant  must  fail  in  defeating  the  recovery  on 
the  ground  that  there  was  a  breach  of  the  implied  warranty  of  sea- 
worthiness. 

Whether  the  vessel  was  unseaworthy  or  not  b}'  reason  of  insufficient 
crew,  or  insufficient  machiner}',  or  the  absence  of  a  pilot  during  certain 
parts  of  the  voyage  was,  under  the  circumstances,  a  question  for  the 
jur}'.  The  master  of  tlie  vessel  was  himself  a  competent  navigator, 
and  whether,  after  reaching  Fort  Macon  and  going  into  the  open  sea  a 
pilot  was  usual  and  necessary  for  the  rest  of  the  voyage,  is  not  a  matter 
of  law,  but  of  fact,  and  the  burden  of  proof  showing  negligence  on  the 
part  of  the  plaintiff  in  this  respect  was,  we  think,  upon  the  defendant. 
1  Phil,  on  Ins.  (5th  ed.),  §§  712,  713. 

Nor  do  we  think  it  can  be  said,  as  matter  of  law,  that  there  was  such 
a  deviation  fi-ora  the  usual  course  of  the  vo3'age  as  to  absolve  the  de- 
fendant from  the  obligations  of  the  contract.  A  deviation  is  a  volun- 
tar}'  and  inexcusable  departure  from  the  usual  course,  and  whether  the 
departure  amounts  to  a  deviation  must  be  determined  by  the  motive, 
consequences,  and  circumstances  of  the  act.  Hence,  in  its  nature  it  is 
a  questiou  of  fact.  Where  the  circumstances  are  such  as  to  leave  no 
alternative  to  a  reasonable  and  prudent  man,  exercising  a  sound  judg- 
ment, and  acting  for  the  best  interests  of  all  concerned,  it  is  not  a 
deviation.  1  Arnold  on  Ins.,  §§  151,  152.  This  proposition  covers 
the  argument  in  behalf  of  the  defendant  with  respect  to  the  inside  voy- 
age through  canals  and  the  stops  made  at  the  various  points  already 
referred  to.  We  have  alread}'  intimated  that  the  trial  trips  cannot,  in 
an}'  just  sense,  be  considered  a  deviation.  Moreover,  where  a  vessel 
is  insured  for  a  vo3"age  "  at  and  from"  a  port  a  reasonal)le  time  will 
be  allowed  while  there  engaged  in  the  business  of  preparing  for  her 
voyage.  Snyder  v.  Atlantic  Mut.  Ins.  Co.,  95  N.  Y.  196;  Fernandez 
V.  Great  Western  Ins.  Co.,  48  N.  Y.  571. 

The  subject  of  the  insurance  in  this  case  was  a  new  craft,  and  the 
trial  trips  were  reasonably  necessary  in  order  to  determine,  before 
undertaking  the  vo^'age,  whether  the  vessel  was  suitable  for  that  pur- 
pose. Hence  these  trips  may  reasonabl}'  be  regarded  as  a  part  of  the 
preparation  for  the  voN'age. 

The  delay  in  commencing  the  V03'age  ma}'  also  be  imputed  to  the 
same  cause,  viz.,  the  preparation  necessary  previous  to  sailing.     The 


SECT.  I.]  THEBAUD    V.    GEEAT   WESTER:!^   INS.    CO.  1035 

vessel  was  not  completed  when  insured.  The  underwriter  is  not  dis- 
charged b}'  a  delay  incurred  for  the  purposes  of  the  voyage,  though  its 
absokite  duration  be  very  considerable.  There  must  be  a  clear  imputa- 
tion of  waste  of  time,  and  whether  the  delay  be  reasonable  or  not  must 
be  determined,  not  by  an}'  positive  or  arbitrary  rule,  but  by  the  circum- 
stances existing  at  the  time.  Arnold  v.  Pacific  Mut.  Ins.  Co.,  78  N.  Y. 
16,  17.  The  defendant  knew  the  condition  of  the  vessel,  and  could 
form  a  judgment  for  itself  as  to  the  time  when  she  would  be  ready  to 
sail,  and  the  insurance  covered  the  chances  of  delay.  On  all  the  facts 
the  jury  had  the  right  to  find  that  the  delay  was  not  unreasonable. 

The  subject  of  the  insui-ance  was  a  non-seagoing  vessel.  It  is  rea- 
sonable to  suppose  that  the  parties  intended  that  in  making  the  voyage 
the  open  sea  should  be  avoided  as  much  as  possible ;  hence,  what  was 
called  the  inside  course  was  taken.  Considering  the  character  of  the 
steamer  and  the  purpose  for  which  she  was  built,  it  cannot  be  said,  as 
matter  of  law,  that  avoiding  the  sea  until  Fort  Macon  was  reached,  b\- 
the  inside  course,  was  a  deviation  from  the  usual  course  for  vessels-  of 
that  chai-acter.  The  ruling  of  the  trial  court  submitting  the  question  to 
the  jury  was  quite  as  favorable  to  the  defendant  as  it  was  entitled  to. 
It  was  for  the  jury  to  saj-  whether,  under  all  the  circumstances,  tlie 
dela}-  in  the  canal  at  night,  the  stop  at  Baltimore  and  Norfolk,  the  dela}- 
at  Fort  Macon  and  the  anchoring  off  Smithville  was  a  deviation. 

The  defence  that  the  loss  was  not  from  the  perils  of  the  sea,  but 
through  inherent  weakness,  or  defects,  or  faulty  construction,  presented 
upon  the  proofs  a  question  of  fact.  On  the  part  of  the  defendant  it  was 
claimed  that  the  steamer  foundered  in  a  calm  sea  ;  while  the  plaintiffs 
insisted  that  she  was  lost  in  a  northeast  gale.  The  jury  having  sus- 
tained the  plaintiff's  contention,  we  cannot  sa\'  that  the  verdict  in  that 
respect  is  unsupported  by  evidence.  The  question  was  for  the  jury, 
and  the  finding  is  not  open  for  review  here.  It  appears  from  the  evi- 
dence that  this  vessel  was  ninety  feet  long,  twenty-two  feet  beam,  with 
from  twelve  to  eighteen  inches  of  freeboard,  flat  bottom,  drawing  about 
three  feet  of  water.  It  is  obvious  that  it  would  not  require  tlie  severest 
tempest  to  sink  such  a  craft.  The  risk  was  doubtless  an  unusual  one, 
and  for  that  reason  an  unusual  premium  was  asked  and  obtained.  It 
ma}'  be  that  the  regular  seagoing  vessel  would  have  weathered  the 
gale.  But  the  real  question  presented  to  the  defendant,  when  the  ap- 
plication for  insurance  was  made,  was  whether  this  boat,  as  she  was 
known  by  both  parties  to  be,  could  make  the  transit  from  the  port  of 
departure  to  her  destination.  The  defendant  concluded  to  take  that 
risk  in  consideration  of  a  double  premium,  and  to  permit  it  now,  after 
receiving  the  premium,  to  defeat  a  recovery,  on  the  ground  that  she 
was  not  seaworthy  in  consequence  of  alleged  defects  of  construction, 
known  to  it  at  the  time  of  taking  the  risk,  would  scarcely  be  consistent 
with  commercial  morality. 

It  seems  to  us  that  the  question  was  properly  submitted  to  the  jury, 
and  upon  a  careful  examination  of  the  exceptions  taken  during   the 


1036         THEBAUD  V.   GREAT  WESTERN  INS.  CO.     [CHAP.  XI. 

trial,  and  to  the  charge,  we  are  of  opinion  that  none  of  them  present 
anv  question  of  law  that  would  warrant  us  in  disturbing  the  verdict. 

The  judgment  should,  therefore,  be  affirmed. 

All  concur,  except  Parker,  C.  J.,  not  sitting. 

Judgment  affirmed} 

1  Other  cases  on  waiver  of  unseaworthiness  are :  Weir  v.  Aberdein,  2  B.  &  Aid.  320 
(1819) ;  Farfitti'.  Thompson,  13  M.  &  W.  392  (1844) ;  Hoxie  v.  Home  Ins.  Co.,  32  Conn. 
21,  39-41  (1864) ;  Marine  F.  Ins.  Co.  v.  Burnett,  29  Tex.  433,  445-447  (1867) ;  Western 
Assur.  Co.  V.  Southern  Cotton  Oil  Co.,  30  U.  S.  App.  376  (Fifth  Circuit,  1895),  s.  c. 
16  C.  C.  A.  67. 

In  Quebec  M.  Ins.  Co.  v.  Commercial  Bank,  L.  R.  3  P.  C.  234.  244  (1870),  Lord 
Penzance,  for  the  Judicial  Committee,  said  :  — 

"  The  case  of  Weir  v.  Aberdein  did  not  proceed  upon  the  language  that  is  attributed 
to  Lord  Tenterden  —  whether  he  was  fully  and  rightly  reported  or  not  —  but  the  judg- 
ment proceeded,  as  it  appears  to  their  Lordships,  distinctly  upon  the  principle  that 
tlie  underwriters  had  been  aware  of  the  unseaworthiness,  and  had  assented  to  the 
vessel  putting  back  to  the  port  to  cure  herself  of  the  defect,  and  therefore  they  were 
held  responsible." 

Ou  the  topic  of  this  section  see  also :  — 
Vos  V.  Robinson,  9  Johns.  192  (1812) ; 

Morrison  v.  Universal  M.  Ins.  Co.,  L.  R.  8  Ex.  197  (Ex.  Ch.  1873) ; 
Enterprise  Ins.  Co.  v.  Parisot,  35  Ohio  St.  35  (1878)  ; 
Keck  V.  Phenix  Ins.  Co.,  130  N.  Y.  160,  165  (1891).  — Ed. 


SECT.  II.]       McMASTERS  &  BRUCE  V.  WESTCHESTER  CO.  INS.  CO.         1037 

SECTION   11. 

Fire  Insurance. 
(A)  As  TO  Conditions  applicable  after  Loss. 

McMASTERS   ajjd   BRUCE   v.  WESTCHESTER   COUNTY 
MUTUAL   INS.   CO. 

Supreme  Court  of  Neav  York,  1841.     25  Wend.  379. 

This  was  an  action  on  a  policy  of  insurance,  tried  at  tlie  Westcliester 
Circuit,  in  April,  1840,  before  tlie  Hon.  Charles  H.  Ruggles,  one  of 
tlie  circuit  judges. 

Tlie  plaintiffs  were  insured  against  loss  by  fire  to  the  amount  of 
$4,000,  upon  a  stock  of  joiner's  tools  and  other  property,  in  a  work- 
shop attached  to  the  state-prison  at  Sing  Sing  for  the  period  of  one 
year  from  the  12th  December,  1837.  On  the  1st  July,  1838,  the  shop 
took  fire,  and  property  insured,  to  a  large  amount,  was  destro3'ed.  On 
the  13th  Jul}',  the  plaintiffs  gave  notice  of  the  loss  to  the  defendants. 
Repeated  interviews  were  had  between  McMasters,  one  of  the  plaintiffs, 
and  certain  agents  of  the  defendants,  from  the  time  of  the  fire  down  to 
the  26th  day  of  Jul}',  when  the  latter,  believing  that  the  ownership  in 
the  propcrt}'  had  been  changed  since  the  policy  was  effected,  by  Bruce 
selling  out  his  interest  to  McMasters,  and  the  latter  transferring  the 
share  so  acquired  to  one  of  his  sons,  ceased  farther  intercourse  with 
McMasters,  and  recommended  to  him  to  take  such  course  in  the  prem- 
ises as  should  be  advised  by  counsel.  On  the  27th  July,  McMasters 
served  upon  the  secretar}'  of  the  company  an  account  of  the  loss,  an 
affidavit  made  by  him  verifying  the  account,  and  stating  the  amount  of 
the  loss,  and  a  certificate  of  the  justice  of  tlie  peace  that  he  was  ac- 
quainted with  the  character  and  circumstances  of  McMasters  (saying 
nothing  as  to  Bruce),  and  certifying  the  loss  at  14,000.  A  seal  was 
not  attached  to  this  certificate,  which  was  given  under  a  condition  in 
the  policy  in  the  usual  form,  requiring  an  account  of  loss  and  a  certifi- 
cate of  a  magistrate,  and  that  the  latter  should  be  under  tlie  hand  and 
seal  of  the  magistrate.  On  the  trial  of  the  cause,  the  above  facts  were 
shown,  and  the  plaintiffs  also  produced  a  letter  from  the  president  of 
the  compan}',  dated  21st  December,  1838,  addressed  to  McMasters,  in 
these  words :  "To  yours  of  the  10th  inst.,  received  yesterda}',  I  reply 
that  your  letter  of  the  29th  July  last,  stating  that  you  had  sustained 
damage  by  fire,  was  laid  before  the  committee  for  advisement,  and  that 
committee  reported  that  in  its  opinion  your  claim  was  invalid,  and 
ought  not  to  be  paid.  You  are  therefore  left  to  pursue  such  course  in 
the  premises  as  3'ou  may  be  advised."  Upon  this  evidence  the  plain- 
tiffs rested,  and  the  defendants  moved  for  a  nonsuit,  on  the  ground  of 


1038      McMASTERS  &  BRUCE  V.  WESTCHESTER  CO.  INS.  CO.       [CHAP.  XI. 

the  insufficiency  of  the  preliminary  proofs ;  which  motion  was  denied. 
Evidence  was  then  given  on  both  sides  in  respect  to  the  transfer  of  the 
interest  of  Bruce  to  McMasters,  and  of  the  assignment  of  the  same  by 
the  latter  to  his  son.     The  questions  arising  upon  the  preliminary  proofs 
were  submitted  by  tlie  counsel  of  both  parties  to  the  jury.     The  judge 
charged  tlie  jury  that  the  plaintiffs  were  bound  to  use  due  diligence  in  ' 
criviirg  notice  of  the  loss,  and  submitted  to  them  to  determine  whether, 
under  the  circumstances  of  the  case,  there  had  been  an  unreasonable 
delay  ;  as  to  the  want  of  a  seal  to  the  certificate  of  the  magistrate,  he 
deemed  the  defect  fatal,  could  it  not  be  considered  as  waived,  and  he 
submitted  the  question  to  the  jury  whether  this  and  all  other  defects  in 
the  preliminary  proofs  might  not  be  so  considered.     In  relation  to  the 
transfer  to  McMasters,  of  Bruce's  interest  in  the  property  insured,  he 
expressed  the  opinion  that  if  made,  it  was  not  such  a  change  of  interest 
as  to  affect  the  plaintiffs'  right  to  recover  ;  but  if  the  property  had  been 
subsequently  transferred  to  McMasters'  son,  the  defendants  were  en- 
titled to  the  verdict.    The  judge  also  submitted  the  following  questions 
to  the  jury,  and  requested  that  they  might  be  answered  separately  in 
the  verdict  which  they  should  render,  viz :  1.  Was  the  notice  of  loss 
triven  in  due  time  ?     2.  Was  there  a  waiver  by  the  company  of  any 
Trregularity  in  the  preliminary  proofs  ?     3.   Was  the  partnership  be- 
tween the   plaintiffs   dissolved    before   the   fire  ?     4.  Did   McMasters 
purchase  the  whole  interest  of  Bruce  ?     5.  Did  the  son  of  McMasters 
become  a  partner  with  his  father  ?     The  jury,  on  their  return  into 
court,  answered  the  two  first  interrogatories  in  the  affirmative,  and  the 
others  in  the  negative,  and  found  a  verdict  in  favor  of  the  plaintiffs  for 
$4,355.53  damages,  including  interest.    The  defendants  having  excepted 
to  the  charge  and  objected  to  the  questions  being  submitted  to  the  jury, 
which  had  been  answered  by  them,  moved  for  a  new  trial. 
31.  T.  Reynolds,  for  the  defendants. 
T.  H.  Lee,  for  the  plaintiffs. 

By  the  Court,  Nelson,  C.  J.  Whether  the  learned  judge  was  correct 
or  not,  in  charging  that  the  plaintiff,  McMasters,  was  entitled  to  recover 
for  the  whole  Toss  in  the  names  of  the  plaintiffs,  if  he  had  purchased 
the  share  of  his  co-partner  before  the  fire,  is  a  question  not  material  to 
decide;  because  he  submitted  the  distinct  fact  to  the  jury,  upon  which 
the  point  of  law  rested,  and  they  have  found  that  no  such  purchase 
was  made.  This  finding  renders  the  opinion  expressed  wholly  unim- 
portant in  the  case. 

The  course  the  judge  took  on  the  trial  in  submitting  certain  questions 
to  the  jury,  with  a  view  to  avoid  the  necessity  of  a  second  trial,  was 
objected  to :  but  such  course  is  not  uncommon  at  the  circuits  where  a 
doubt  is  entertained  upon  the  law ;  it  cannot  operate  to  the  prejudice 
of  either  party,  and  frequently  avoids  the  trouble  and  expense  of  a  new 
trial.  It  is  in  the  nature  of  a  special  verdict,  which  the  jury  may 
always  find.     2  R.  S.  421. 

I  think  the  judge  was  right,  also,  in  submitting  to  the  jury  whether 


SECT.  II.]       McMASTERS  &  BRUCE  V.  WESTCHESTER  CO.  INS.  CO.         1039 

the  company  were  not  concluded  from  taking  exceptions  to  tlie  prelimi- 
nary proofs.  AllhoLigli  repeated  communications  liad  taken  place  with 
the  officers  and  agents  of  the  company,  and  in  some  instances,  in  pur- 
suance of  directions  from  tlie  board,  after  the  preliminary'  proofs  M'ere 
delivered,  no  such  ground  was  taken.  On  the  contrary,  the  fair  infer- 
ence from  all  the  proof  in  the  case  is,  that  other  grounds  were  put  forth 
and  mainly  relied  upon  to  defeat  the  recover}-.  Tlie  law  is  well  settled, 
that  if  there  be  a  formal  defect  in  the  preliminary  proofs,  which  coul3^ 
have  been  suppliedjiad_an  obiection  been  made  by  the  underwriters  to 
payment  on  tbatgromid,  if  they  do  not  call  for  a  document,  for  instance. 
or  make  objection  onthe  ground  of  its  absence  or  imperfection,  but  put 
their  refusal  upon  Other^-nnnds,  thp  prndnntion  of  such  further  prRlimi- 
niai'v  proofs  vvHl  be  considered  as  waived.  16  Wend.  401  ;  10  Pet. 
50/.  There  are  few  cases  that  come  before  us  presenting  stronger 
claims  to  the  application  of  this  rule  than  the  present  one,  or  that  bet- 
ter exemplify  its  propriety  and  justice.  The  agents  were  neighbors  of 
the  assured,  in  daily  communication  with  him  on  the  subject  of  his 
claim  ;  some  of  them  obviously  seeking  for  the  means  of  defeating  it 
bj-  inquiries  into  the  situation  and  title  of  the  property  destroyed,  and 
by  interrogation  of  the  parties,  and  yet  no  distinct  objection  taken  as 
to  the  preliminary  steps,  that  might  now  be  regarded  as  fatal.  Had  the 
objection  been  made  in  the  course  of  these  interviews,  the  defects  might 
at  once  have  been  remedied,  as  is  obvious  from  the  authorities  already 
referred  to.  JVeiv  trial  denied.^ 

^  Ace. :  As  to  the  effect  of  stating  other  grounds  for  refusing  to  pay  :  Tayloe  v. 
Merchants'  F.  Ins.  Co.,  9  How.  390,  403  (1850);  Phillips  v.  Protection  Ins.  Co.,  U 
Mo.  220  (18.51)  ;  Bumstead  v.  Dividend  Mut.  Ins.  Co.,  12  N.  Y.  81  (1854)  ;  Firemen's 
Ins.  Co.  I'.  Crandall,  33  Ala.  9  (1858) ;  Noyes  v.  Washington  County  Mut.  Ins.  Co.,  30 
Vt.  659  (1858)  ;  Franklin  F.  Ins.  Co.  v.  Coate.s,  14  Md.  286  (1859) ;  Peoria  M.  &  F. 
Ins.  Co.  V.  Whitehill,  25  111.  466,  470  (1861);  Cohb  i'.  Insurance  Co.,  post,  p.  1064 
(1873)  ;  State  Ins.  Co.  v.  Maackens,  38  N.  J.  L.  (9  Vroom)  564  (1876) ;  Walsh  v.  Ver- 
mont Mut.  F.  Ins.  Co.,  54  Vt.  351,  358  (1882)  ;  Hahn  v.  Guardian  Assur.  Co.,  23 
Oregon,  576  (1893);  Home  F.  Ins.  Co.  v.  Fallon,  45  Xeb.  554  (1895). 

Compare  -Edwards  v.  Baltimore  F.  Ins.  Co.,  3  Gill,  176,  180-181,  186-187  (1845); 
Spooner  v.  Vermont  Mut.  F.  Ins.  Co.,  53  Vt.  156  (1880) ;  Hicks  v.  British  American 
Assur.  Co.,  162  N.  Y.  284  (1900). 

Ace. :  As  to  the  effect  of  silence  after  receipt  of  proofs  :  Great  Western  Ins.  Co.  v. 
Staaden,  26  111.  360  (1861) ;  Works  v.  Farmers'  Mut.  F.  Ins.  Co.,  57  Me.  281  (1869) ; 
Home  Ins.  Co.  v.  Cohen,  20  Grat.  312  (1871) ;  Taylor  v.  Roger  Williams  Ins.  Co.,  51 
N.  H.  50  (1871)  ;  Jones  v.  Mechanics  F.  Ins.  Co.,  36  N.  J.  L.  (7  Vroom)  29,  36-40 
(1872) ;  Hibernia  Mut.  F.  Ins.  Co.  i-.  Meyer,  39  N.  J.  L.  (10  Vroom)  482  (1877) ;  Kee- 
ney  v.  Home  Ins.  Co.,  71  N.  Y.  396,  403-404  (1877) ;  Susquehanna  Mut.  F.  Ins.  Co.  v. 
Cusick,  109  Pa.  157  (1885);  Cayon  v.  Dwelling  House  Ins.  Co.,  68  Wis.  510  (1887); 
Vangindertaelen  v.  Piieuix  Ins.  Co.,  82  Wis.  112  (1892);  Alston  v.  Phenix  Ins.  Co., 
100  Ga.  (1897). 

See  Patrick  v.  Farmers'  Ins.  Co.,  43  N.  H.  62  (1862)  ;  Madsden  v.  Phoenix  F.  Ins. 
Co.,  1  S.  Car.  24  (1868) ;  Myers  v.  Council  Bluffs  Ins.  Co.,  72  Iowa,  176  (1887) ;  Davis 
Shoe  Co.  V.  Kittanning  Ins.  Co.,  138  Pa.  73  (1890). 

In  Citizens'  F.  Ins.,  S.  &  L.  Co.  v.  Doll,  35  Md.  89  (1871),  it  was  held  that  defects 
in  the  proofs  of  loss  were  not  waived  by  the  insurance  company's  letter,  worded  thus  : 
"  The  proofs  of  loss  furnished  by  you  to  this  company  are  wholly  unsatisfactory,  as  to 


1040  BLAKE   V.   EXCHANGE   MUTUAL   INS.   CO.  [CHAP.  XL 

BLAKE  V.   EXCHANGE  MUTUAL  INS.    CO. 
Supreme  Judicial  Court  of  Massachusetts,  1858.     12  Gray,  265. 

Action  of  contract  upon  a  policy  of  insurance  against  fire,^  .  .  .  any 
loss  or  damage  "  to  be  paid  within  ninety  days  after  notice,  proof  and 
adjustment  thereof  in  conformity  to  the  conditions  annexed  to  tliis 
policy."  ..."  It  is  also  declared  that  tliis  policy  is  made  and  ac- 
cepted in  reference  to  the  written  and  printed  application  whereon  it  is 
issued,  and  also  to  the  conditions  hereto  annexed,  whicii  are  hereby 
made  a  part  of  this  policy,  and  to  be  used  and  resorted  to  in  order  to 
explain  the  rights  and  obligations  of  the  parties  hereto,  in  all  cases  not 
herein  otherwise  specially  provided  for.  Andjtjsjilso^  agreed  and^ 
declared  by  the  parties  aforesaid,  that  no  condition,  stipulation,  cov^ 
pnant.  oi^"cjause_liereinbefore  contained  shaU  Jbe  altered,  annulled,  or 
^iF^rr^^FlTor^aiu^ause  added  to  these  presents  except  by^writjng  in- 
dorsed hereon  or  annexed  hereto  Jby  the  president_o^ secretary,  with 
theiFsignatures^a|Bxed_thereto/' 

On  the  third  Dage~of  the  policy  w^'-f  printpd  ^'  eonditions  of  insur- 
ance," .  .  .  and  thetwelfth  condition  required  persons  sustaining  loss 
bTlire^and  claimingTndemnity  under  this  policy  to  give  notice  and 
proofs  of  loss  asjherein. particularly  directed_^ 

At  the  trial  in  the  Superior  Court  of  Suffolk,  .  .  .  before  Nash,  J-, 
the  plaintiff  .  .  .  proved  that  the  property  was  destroyed  by  fire  on 
the  21st  of  Jamiary,  1856,  and  put  in  evidence  certain  notices  and  pre- 
hminary  proofs  sent  by  him  to  the  defendants,  which  the  judge  ruled 
were  insufficient  to  comply  with  the  terms  of  the  policy.  After  the 
introduction  of  evidence  tending  to  prove  the  facts  assumed  in  the  fol- 
lowini,'  instructions,  the  judge  instructed  the  jury,  that  the  preliminary 
proofs  could  be  waived  or  the  defendants  estopped  to  avail  themselves 
of  defects  in  them  otherwise  than  in  writing  indorsed  on  or  annexed  to 
the  policy;  that  if  the  by-laws  and  conditions  of  insurance  required 

the  amount  of  the  claim,  even  if  the  company  he  responsible  at  all.  The  company, 
however,  denies  any  responsibility  hy  reason  of  material  misrepresentations  as  to  tlie 
title  and  property  being  untrue,  and  for  other  reasons.  With  a  reservation  of  all  ob- 
jections to  your  recovering  in  any  form,  and  witliout  waiving  any  of  the  rights  of  the 
company  under  the  policv,  we  leave  you  to  pursue  such  a  course  as  you  may  deem 
expedient."     Contra,  Sun"  Mut.  Ins.  Co.  v.  Mattiugly,  77  Tex.  162  (1890)-. 

Other  cases  on  the  effect  of  certain  forms  of  letters  are :  Edwards  v.  Baltimore  F. 
Ins.  Co.,  supra  (184.')) ;  Blossom  f.  Lycoming  F.  Ins.  Co.,  64  N.  Y.  162  (1876) ;  Deitz 
V.  Providence  Washington  Ins.  Co.,  33  W.  Va.  526,  532,  536,  544  (1890) ;  Schmurr  v. 
State  Ins.  Co.,  30  Oregon,  29  (1896). 

See  Robinson  v.  Pennsylvania  F.  In.s.  Co.,  90  Me.  385  (1897) ;  Phceuix  Ins.  Co.  v. 
Minner,  64  Ark.  590  (1898)  ;  Merchants'  Ins.  Co.  v.  Nowlin,  56  S.  W.  Rep.  198  (Tex. 
Civ.  App.,  1900).  — Ed. 

1  In  reprinting  the  statement  and  the  opinion,  passages  foreign  to  the  proofs  of  loss 
have  been  omitted-  —  Ed. 


SECT.  II.]  BLAKE    V.    EXCHANGE    MUTUAL    IXS.    CO.  1041 

certain  preliminary  proofs  and  notices  to  be  given  in  a  certain  manner, 
and  with  certain  particulars  and  details,  and  certain  preliminary  proofs 
and  notices  were  given,  not  containing  all  the  formal  requisites,  and, 
after  receiving  such  proofs  and  notices,  the  defendants'  president  and 
secretar}'  examined  the  premises,  and  had  interviews  with  the  plaintiff 
before  the  expiration  of  the  time  for  giving  said  notices,  and  neither 
they  then,  nor  the  defendants  afterwards,  made  any  objection  to  the 
form  or  sufBciency  of  the  preliminar}'  proofs  while  any  defects  therein 
might  have  been  remedied,  and  put  their  refusal  to  pa}'  on  other  and 
distinct  grounds,  then  such  conduct  might  be  considered  a  waiver  of 
any  defects  in  the  preliminary  proofs,  or  so  far  an  estoppel  that  the 
defendants  should  not  be  allowed  to  avail  themselves  thereof,  notwith- 
standing  the  provisions  of  the  policy.   .   .   . 

The  jury  returned  a  verdict  for  the  plaintiff  accordingly,  and  the 
defendants  alleged  exceptions. 

C.  T.  Jiicssell,  for  the  defendants. 

i?.  JI.  Dana,  Jr.,  and  //  ^Y.  Muzzey,  for  the  plaintiff. 

Thomas,  J.  ...  3.  The  question  as  to  the  waiver  of  any  defects 
In  the  plaintiff's  notice  and  proofs  of  loss  is  one  of  more  difficulty. 
There  can  bo  no  doubt  that  the  conduct  of  the  defendants  would 
amount  to  a  waiver,  except  for  the  last  clause  in  the  policy,  by  which 
it  is  '•  agreed  and  declared  b}-  the  parties  aforesaid,  that  no  condition, 
stipulation,  covenant,  or  clause  hereinbefore  contained  shall  be  altered, 
annulled,  or  waived,  or  any  clause  added  to  these  presents,  except  by 
writing  indorsed  hereon  or  annexed  hereto  by  the  president  or  sec- 
retary, witli  their  signatures  affixed  thereto."  There  is  a  previous  pro- 
vision that  in  case  of  loss  the  money  is  "  to  be  paid  within  ninety  days 
after  notice,  proof,  and  adjustment  thereof  in  conformity  to  the  con- 
ditions annexed  to  the  policy."  The  provisions  for  notice  and  proofs 
of  loss  are  contained  in  the  twelfth  of  the  by-laws.  The  entire  b^-laws 
are  printed  under  the  heading  "conditions  of  insurance."  The  policy 
is  declared  to  be  made  and  accepted  in  reterence  to  the  conditions 
thereto  annexed,  which  are  made  part  of  the  policy.  How  far  the  pro- 
visions as  to  the  form  of  the  notice  and  proofs  of  loss,  after  a  valid 
contract  has  been  made  and  a  loss  taken  place  under  it,  can  be  regarded 
as  conditions  of  the  contract  itself,  it  is  not  necessary  to  determine, 
nor  whether  their  being  classed  under  the  designation  of  conditions  of 
insurance  could  change  the  nature  and  purpose  of  the  stipulations 
themselves ;  for  it  seems  to  us  thtit  the  question  is  not  as  to  the  pro- 
visions of  the  contract,  but  as  to  the  performance  of  the  provisions. 
The  plaintiff  is  not  seeking  to  set  up  a  contract  from  which  a  material 
provision  has  been  omitted  by  the  oral  consent  of  the  officers  of  the 
company.  The  policy  contained  the  usual  provisions  as  to  notice  and 
proofs  of  loss.  Upon  tlie  happening  of  the  loss,  the  plaintiff  sent  to 
the  defendants  certain  notices  and  proofs  in  pursuance  of  the  requisi- 
tion of  the  by-laws  upon  the  subject.  If  the  notices  were  defective, 
good  faith  on  the  part  of  the  underwriters  required  them  to  give  notice 

66 


1042  BLAKE    V.   EXCHANGE   MUTUAL   INS.   CO.  [CHAP.  XL 

to  the  insured.  If  they  failed  to  do  so,  if  they  proceeded  to  negotiate 
with  the  plaintiff  without  adverting  to  the  defects,  if,  still  further,  they 
put  their  refusal  to  pay  on  other  and  distinct  grounds,  tiiey  are,  upon 
familiar  principles  of  law,  estopped  to  set  up  and  rely  upon  the  defec- 
tive notices  ;  the  law  assumes  that  the  notices  were  correct,  and  will 
not  listen  to  the  defendant  when  he  seeks  to  show  the  contrary.  Vos 
V.  Robinson,  9  Johns.  192  ;  ^Etna  Fire  Ins.  Co.  v.  Tyler,  16  Wend. 
401 ;  Heath  v.  Franklin  Ins.  Co.,  1  Cush.  257  :  Clark  v.  New  England 
Mutual  Fire  Ins.  Co.,  6  Cush.  342.  If  the  defendant  relied  upon  any 
exemption_from  the  obligations  of  the  policy,  or  any  modification  of 
them  by  the^]agents  or  officers  of  the  company,  or  any  addition,  bo 
must  show  such  exemption,  modification,  or  addition,  by  indorsement 
upon  thel5oIic3\  But  the  question  whether  a  stipulation  as  to  notice 
and^p^-oofa_ofjoss  has  been  fulfilled,  or  whether  the  defendant  is  in  ~a 
condTtlon  to  bejieanjjLijjon  that  question,  must  be  tested  by  the  ordi- 
naryT-ules  of  law.  There  is  a  time  when  objections  in  matters  of  form 
musTbe  taken.  If  they  are  not  then  made,  they  never  can  be  made. 
The  law  does  not  say  the  procedure  was  perfect,  but  that  the  question 
is  not  open.  The  adherence  to  and  liberal  application  of  this  princii)le 
are  necessary  to  the  maintenance  of  good  faith  and  fair  dealing  in 
judicial  proceedings.  .  .  . 

The  court  erred  in  instructing  the  jury  that  no  abatement  of  the 
amount  to  be  recovered  of  the  defendants  could  be  niade.^   .  .  . 

If  the  parties  cannot  agree  upon  the  amount,  or  upon  an  assessor  to 
fix  it,  the  C£^se  must  go  to  a  new  trial,  limited  to  the  question  of  dam- 
ages only. 

Exceptions  sustained.^ 

1  The  omitted  passage  dealt  with  the  apportionment  of  the  loss  among  several  pol- 
icies. —  Ed. 

2  On  estoppel  and  waiver  as  to  conditions  applicable  after  loss,  see  also  :  — 

Atlantic  Ins.  Co.  v.  Wright,  22  111.  462,  47;i-473  (1859) ; 

Patrick  v.  Farmers'  Ins.  Co.,  43  N.  H.  621  (1862) ; 

Cornell  v.  Milwaukee  Mat.  F.  Ins.  Co  ,  18  Wis  387  (1864)  ; 

Davis  V.  Western  Massachusetts  Ins.  Co.,  8  R.  I.  277  (1866) ; 

Daniels  v.  Equitable  F.  Ins.  Co.,  50  Conn.  551  (1883)  ; 

Carroll  v.  Girard  F.  Ins.  Co.,  72  Cal.  297  (1887) ; 

Central  Citv  Ins.  Co.  v.  Gates,  86  Ala.  558  (1888)  ; 

Wainer  v.  Milford  Mut.  F.  Ins.  Co.,  153  Mass.  335  (1891)  ; 

Warshawky  v.  Anchor  Mut.  F.  Ins.  Co.,  98  Iowa,  221,  224  (1896) ; 

Euthven  u.  Americau  F.  Ins.  Co.,  102  Iowa,  550  (1897).  — Ed. 


SECT.  II.]  FROST   V.    SARATOGA   MUTUAL   INS.    CO.  1043 


SECTION   II.  (continued). 

(B)   As  TO  Defences  arising  before  Loss. 

(a)    The  insurer'' s  conduct  after  the  isstiing  of  the  policy  and  after  the 
arising  of  the  defence. 

FROST  V.   SARATOGA   MUTUAL   INS.   CO. 
Supreme  Court  of  New  York,  18-18.     5  Denio,  154. 

Assumpsit  on  a  polic}-  of  insurance,  against  loss  bj-  fire,  tried  in 
February,  1847,  at  the  Tompkins  Circuit,  before  Gra}-,  Cir.  J.  Tlie 
plaintiff  was  nonsuited  on  the  trial.  The  facts  are  sufficiently  stated  in 
the  opinion  of  the  court.  The  plaintiff  moves  for  a  new  trial  on  a  bill 
of  exceptions. 

G.  D.  Beers.,  for  the  plaintiff. 

N.  Hill,  Jr.,  for  the  defendants. 

By  the  Court,  Beardsley,  C.  J.  A  new  question  is  presented  in 
this  case,  and  one,  it  must  be  admitted,  of  some  novelty  in  its  applica- 
tion to  a  case  like  this,  and  which  has  therefore  been  examined  and 
considered  with  more  than  ordinary  care  and  attention. 

The  contract  of  insurance  between  these  parties  was  entered  into  in 
September,  1838,  and  I  assume  that  the  plaintiff,  by  his  application  for 
insurance,  vyhich  was  made  a  part  of  the  contract,  engaged  that  there 
was  no  building  within  less  than  ten  rods  of  the  store  insured,  exce2t 
thosejnentioned  in  said  ap[)lication.  This  was  in  law  an  express  war- 
ranty to  tliat  effect  by  the  plaintiff,  and  which  is  shown  to  have  been 
untrue  in  point  of  fact,  for  there  was  at  least  one  building,  and  it  would 
seem  more  than  one,  within  the  distance  stated,  of  which  no  mention 
was  made  in  the  application.  If  this  fact,  which  constitutes  a  breach 
of  the  warranty,  is  to  be  taken  as  a  part  of  the  case,  the  plaintiff  can- 
not recover.  Of  this  no  doubt  can  be  entertained.  But  the  plaintiff 
insists  that  the  defendants,  by  certain  acts  on  their  part,  acquiesced  in 
and  acted  on  by  him,  have  precluded  themselves  from  setting  up  this 
breach  of  warranty  as  a  ground  for  holding  the  contract  of  insurance 
void  ab  initio.  The  fire  occurred  in  the  spring  of  1840.  In  the  course 
of  that  year,  the  defendants  were  fully  apprized  that  the  application  for 
insurance  did  not  truly  describe  all  the  buildings  within  the  prescribed 
distance,  but  had  omitted  to  make  mention  of  one  or  more  such  build- 
ings ;  yet  subsequently,  and  in  eighteen  hundred  forty-one,  two  and 
three,  the  defendants  made  assessments  on  the  premium  note  of  the 
plaijitiff,  given  when  the  policy  was  issued,  and  which  several  assess- 
mentg^  were  thereupon  paid  by  the  plaintiff.  This,  he  insists,  should 
estop  the  defendants  from  showing  the  facts  constituting  this  breach  of 
the  warranty  on  his  part,  and  if  they  appear  by  the  evidence  given  in 


1044  FROST   V.   SARATOGA   MUTUAL   INS.    CO.  [CHAP.  XI. 

the  case,  the  defendants  should  not  be  allowed  to  set  them  up  as  a 
defence  to  an  action  on  the  policj'. 

I  regard  it  is  clear  that  if  the  policy  was  originally  void,  on  the 
ground  now  taken  by  the  defendants,  that  is,  a  breach  of  the  plaintifTs 
contract  of  warranty,  the  premium  note  was  also  invalid.  The  only 
consideration  for  the  note,  as  is  expressed  on  its  face,  was  this  policy, 
and  if  that  was  void  there  remained  not  a  scintilla  of  consideration,  and 
the  note,  consequently,  could  not  be  enforced. 

The  plaintiff  was  only  liable  on  this  note  as  a  member  of  the  corpora- 
tion—  the  Saratoga  County  INIutual  Fire  Insurance  Company;  he  not 
being  one  of  the  persons  named  in  the  charter,  nor  the  heir,  executor, 
administrator,  or  assignee  of  any  person  who  had  been  a  corporator, 
and  he  could  only  become  such  member  "  by  effecting  insurance  "  in 
the  company.  (Laws  of  1834,  530,  act  of  incorporation.)  For  this 
purpose  a  valid  contract  of  insurance,  including  both  policy  and  note, 
one  being  the  consideration  for  the  other,  was  indispensable.  If,  for 
any  cause,  one  was  invalid  in  its  inception,  so  was  the  other,  and  no 
membership  could  be  acquired.  But  if  both  were  valid,  membership 
was  secured,  and  the  party  insured  not  only  was  bound  to  make  pay- 
ment of  his  premium  note  as  the  directors  might  deem  requisite  (§  4), 
but  the  property  insured  also  became  thereby  pledged  to  the  company 
for  the  payment  of  all  losses  as  specified  in  the  act  of  incorporation 
(§§  5,  8).  These  are  burdens  to  which  the  member  subjects  himself; 
in  return  for  which  he  has  the  policy  of  insurance  on  his  property  and 
the  right  to  his  proportion  of  whatever  profits  may  be  made  by  the 
company.  But  the  policy  being  originally  void,  no  membership  could 
be  thereby  created,  and  no  right  to  profits  could  arise.  It  would  seem 
to  follow  that  in  such  a  case,  the  premium  note  must  be  held  invalid  for 
the  want  of  a  legal  consideration  to  uphold  the  promise.  The  charter 
of  the  company  contemplates,  and  good  faith  and  fair  dealing  require, 
that  the  entire  contract  of  insurance,  including  the  premium  note  on 
the  one  hand  and  the  policy  of  insurance  on  the  other,  with  all  their 
necessary  concomitants  and  consequences,  should  exist  or  fall  together. 
The  note  cannot  be  valid  unless  the  policy  also  was  so  in  its  inception  ; 
and  unless  both  were"  so  originally  in  tliis  case,  no  membership  was 
acquired  by  the  plaintiff".  All  this  I  hold  to  be  clear  upon  the  terms 
and  spirit  of  the  charter  of  incorporation,  and  the  true  nature  of  the 
contract  between  the  parties. 

The  defendants,  with  full  knowledge  of  the  facts  invalidating  the 
policy,  have  chosen  to  act  upon  the  premium  note  of  the  plaintiff,  as 
an  available  security  in  their  favor  and  which  he  was  bound  to  pay. 
Several  sums  have  accordingly  been  assessed  by  the  directors  of  the 
company,  and  payment  thereof  required  on  said  note.  These  payments 
have  been  made  by  the  plaintiff,  and  the  question  is  presented,  can  the 
defendants,  who  have  thus  affirmed  the  original  and  continuing  validity 
of  the  premium  note,  in  which  the  plaintiff  has  fully  acquiesced,  be 
allowed  to  set  up  that  this  policy,  which  formed  the  only  consideration 


SECT.  II.]  FROST   V.   SARATOGA   MUTUAL   INS.   CO.  1045 

for  the  note,  was  never  valid  ;  and  that,  on  the  sole  ground  of  a  breach 
of  warranty  on  the  part  of  the  plaintiff,  the  facts  constituting  such 
breach  of  warranty  being  as  well  known  to  the  defendants  when  they 
exacted  and  received  payments  on  the  note,  as  tliey  are  at  the  present 
time?  This  is  the  point  to  be  determined,  and  I  sliould  certainl}'  with 
great  reluctance  come  to  the  conclusion  that  the  defendants  can  be 
allowed  to  occupy  the  position  they  now  assume.  It  is  wholly  incon- 
sistent with  the  ground  taken  by  them  when  they  called  for  payments 
on  the  premium  note,  and  I  think  common  justice  forbids  any  change 
of  position  in  this  respect.  "It  is  a  question  of  ethics,"  as  was  said 
in  Dezell  v.  Odell,  3  Hill,  225,  and  morality-  requires  that  these  defend- 
ants should  be  held  strictly  to  the  ground  they  have  chosen  to  assume 
for  themselves.  An  estoppel,  according  to  Lord  Coke,  is  where  "  a 
man's  own  act  or  acceptance  stoppeth  or  closeth  up  his  mouth  to  allege. 
or  plead  the  truth."  Co.  Lit.  352,  a.  Estoppels  are  of  three  kinds, 
viz.,  by  matter  of  record,  by  deed,  and  in  pais ;  but  our  present  con- 
cern is  with  the  latter  class  onl}'.  Such  an  estoppel  arises  where  one 
person  is  induced  by  the  assertion  of  another,  to  do  that  which  would 
be  prejudicial  to  his  own  interest,  if  the  person  by  whom  he  had  been 
induced  to  act  in  this  manner  was  allowed  to  contradict  and  disprove 
what  he  had  before  affirmed.  In  the  case  of  Pickard  v.  Sears,  6  A.  &  E. 
469,  the  principle  is  thus  stated  by  Lord  Denman  :  "  The  rule  of  law  is 
clear,  that  where  one  by  his  words  or  conduct  wilfully  causes  another 
to  believe  the  existence  of  a  certain  state  of  tilings,  and  induces  him  to 
act  on  that  belief,  so  as  to  alter  his  own  previous  position,  the  former 
is  concluded  from  averring  against  the  latter  a  different  state  of  things 
as  existing  at  the  same  time."  In  the  case  of  Dezell  v.  Odell,  supra^ 
Cowcn,  J.,  said  :  '•  We  then  have  a  clear  case  of  an  admission  by  the 
defendant  intended  to  influence  the  conduct  of  the  man  with  whom  he 
was  dealing,  and  actuall}-  leading  him  into  a  line  of  conduct  which 
must  be  prejudicial  to  his  interest,  unless  the  defendant  be  cut  off  from 
the  power  of  retraction.  This  I  understand  to  be  the  very  definition  of 
an  estoppel  in  jjaisJ'  The  estoppel  is  allowed  to  prevent  fraud  and 
injustice,  and  exists  wherever  a  part}'  cannot  in  good  conscience  gain- 
say his  own  acts  or  assertions.  The  authorities  upon  this  point  are 
numerous  and  all  speak  the  same  language.  Gregg  v.  Wells,  10  A.  &  E. 
90  ;  Coles  v.  The  Bank  of  England,  10  A.  &  E.  437  ;  Sandys  v.  Hodgson, 
10  A.  &  E.  472;  Stephens  v.  Baird,  9  Cow.  274  ;  The  Welland  Canal 
Co.  V.  Hathaway,  8  Wend.  480  ;  2  Smith's  Lead.  Cas.,  458,  467,  notes  ; 
1  Greenlf.  Ev.  '§§  22,  27,  204,  207.  ''It  makes  no  difference  in  the 
operation  of  this  rule  whether  the  thing  admitted  was  true  or  false :  it 
being  the  fact,  that  it  has  been  acted  upon,  that  renders  it  conclusive." 
1  Greenlf.  Ev.  §§  208,  209.  Here  the  defendants  in  affirming  the 
validity  of  the  premium  note,  necessarily  flttir-mpd  that  tlie  policy  vsas 
also  originally  valid.  This  affirmation  was  actedupon  by  the  plaintiff, 
for  he  advanced  money  in  consequence  of_its  being  made,  and  the 
defendants  shall  not  now  be  allowed  to  set  up  any  fact  dehors  the 


1046  VIELE    V.    GERMANIA    INS.    CO.  [CHAP.  XL 

policy,  in  order  to  impeach  the  original  validity  of  the  contract  of 
insuLaace.  Qui  sentit  commodum,  sentire  debet  et  onus.  The  defend- 
ants have  derived  advantage  from  this  contract  and  they  should  now 
bear  its  burden.  I  think  the  nonsuit  should  be  set  aside  and  a  new 
trial  ordered. 

No  objection  is  made  in  the  points  submitted  on  behalf  of  the 
defendants  that  the  declaration  was  not  adapted  to  the  case  as  proved, 
although  a  suggestion  to  that  effect  was  made  at  the  circuit.  I  have 
not  examined  that  question.  Looking  only  at  what  appears  on  the 
face  of  this  policy  it  is  unobjectionable,  for  notliing  there  appears  to 
impeach  it.  The  conclusion  at  which  I  have  arrived  does  not,  however, 
rest  on  the  idea  that  the  policy  was  certainly  valid  in  its  inception,  but 
on  the  ground  tliat  these  defendants  have  precluded  themselves  from 
setting  up  any  fact  out  of  the  policy  to  show  that  it  was  originally  void. 

New  trial  ordered} 


VIELE  V.  GERMANIA   INSURANCE   CO. 
Supreme  Court  of  Iowa,  1868.     26  Iowa,  9. 

Appeal  from  Scott  District  Court. 

Action  upon  a  polic}'  of  insurance,  which,  so  far  as  it  is  material  to 
an  understanding  of  the  case,  and  is  not  set  out  in  the  opinion  of  the 
court,  is  in  the  following  words :  — 

"  The  Germania  Fire  Insurance  Company,  the  Hanover  Fire  Insur- 
ance Company,  the  Niagara  Fire  Insurance  Company,  and  the  Republic 
Fire  Insurance  Company,  all  of  the  city  of  New  York,  each  acting  and 
contracting  for  itself,  and  not  one  for  the  other  or  others,  in  considera- 
tion of  one-fourth  part  of  the  sum  of  eight  hundred  and  twenty-five 
dollars,  to  each  of  them  paid  by  the  assured  hereinafter  named,  do  each 
insure  Charles  Viele,  of  Evansville,  Indiana,  against  loss  or  damage  by 
fire,  to  the  amount  of  one-fourth  part  of  the  sum  of  fift\--five  thousand 
dollars,  for  the  term  of  one  year,  upon  tlie  '  Le  Claire  row  '  and  '  Post- 
Office  block.'  .  .  .  Each  of  said  companies  agrees  to  make  good  to  tlie 
assured,  his  executors,  administrators,  and  assigns,  all  such  immediate 
loss  or  damage,  not  exceeding  in  amount  the  sum  insured  by  such  com- 
pany as  aforesaid,  as  shall  happen  by  fire  to  the  property  above  speci- 
fied, from  the  first  day  of  January,  1865,  at  noon,  to  the  first  day  of 
Januarj',  1866,  at  noon.  ...  In  witness  whereof,  the  said  companies 
have  respectively  caused  these  presents  to  be  signed  by  their  respective 

1  Ace:  Keenan  n.  Dubuque  Mut.  F.  Ins.  Co.,  13  Iowa,  37.5  (1862). 
Compare  Allen  v.  Vermont  Mut.  F.  Ins.  Co.,  12  Vt.  366  (1840) ;  Neely  v.  Onondaga 
Mut.  lus.  Co.,  7  Hill,  49  (1844). 

See  North  Berwick  Co.  v.  New  England  F.  &  M  Ins.  Co.,  52  Me.  336  (1864).  —  Ed. 


SECT.  II.]  VIELE    V.    GEKMANIA    INS.    CO.  1047 

presidents   and  attested  by  their  respective  secretaries,  in  the  city  of 
New  York. 

"  Countersigned  by   the  agent  of  the  above  named  companies,   at 
Davenport,   Iowa,  this  first  da}-  of  Janiiarv,  1865. 
"  R.  Simpson  &  Co.,  Agents. 

"  JNI.  HiLGER,  President, 
"John  Edw.  Pahl,  Secretary, 

"  The  Germania  Fire  Insurance  Co. 
''Doras  L.  Stoxe,  President, 
"  li.  S.  Walcott,  Secretary, 

"  The  Hanover  Fire  Insurance  Co. 
"  Jonathan  D.  Steele,  President, 
*'  Peter  Notmax,  Secretary, 

"  2'he  Niagara  Fire  Insuraithe  Co. 
"  RoBT.  S.  Howe,  President, 
"  D.  F.  CoRRY,  Secretary, 

"  The  Republic  Fire  lasiirayice  Co." 

The  answer  of  the  defendant  admits  tlie  issuing  of  the  policy,  the  loss 
by  fire,  notice  of  loss  to  defendant,  ownership  of  propertj'  in  plaintiff, 
and  that  there  was  no  further  insurance,  but  sets  up  the  following 
special  defence  :  That,  at  the  time  the  policy  was  issued,  the  building 
lost  by  the  fire  was  used  for  mercantile  purposes,  and  for  "manufal> 
ture  of  materials  which  were  not  of  an  extra  combustible  nature  :  "  that, 
gfWjJhp^  nnnfi-nft.  nf  ingnrnnop  Tyas  entered  Juto.  aud  before  the  fire. 
IhejjlnjntifP  Innspd  portions  of  the  building,  to  be  used  for  the  manu- 
facturing therein  of  ^'rustic  window-shades,''  without  having  obtained 
the  written  consent  of  defendant,  and  contrary  to  the  terms  of  the 
policy  ;  that,  in  the  manufacturing  of  said  rustic  window-shades,  pine 
slats  and  splinters  of  wood,  benzole,  benzine  or  naptha,  A'arnish,  paints, 
etc.,  are  used,  and  large  quantities  of  shavings  were  constantly  being 
made,  and  other  combustible  substances  created,  greatly  increasing  the 
risk  and  hazard  of  the  building  insured  in  said  policy  ;  that  such  risk 
and  hazard  was  not  covered  by  the  policy,  and  continued  to  the  time 
of  the  fire  ;  that  plaintiff  paid  no  additional  premium  on  said  policy  on 
account  of  said  increased  risk,  and  defendant  waivetl  no  rights  accruing 
on  account  of  the  same ;  that,  contrar}'  to  the  terms  of  the  polic}', 
plaintiflJ"  permitted  benzine  to  be  kept  upon  the  premises  ;  whereby 
plaintiff  lost  all  right  to  recover  under  said  polic}',  and  it  has  become 
void,  etc. 

The  defendant  filed  an  admission  that  the  burden  of  proof  is  ou 
defendant,  and  that  without  any  proof  plaintifl!"  would  be  entitled  to 
judgment  on  the  pleadings.^  .  .  . 

Before  the  trial,  plaintiff  filed  an  admission  to  the  eflTect  that;,  after 
the  execution  of  the  polic}-,  and  before  the  loss,  the  plaintiff,  without 
the  consent  of  defendants  in  writing  on  the  polic}',  leased  a  part  of  one 

1  A  passage  on  practice  has  been  omitted.  — Ed. 


1048  VIELE   V.   GERMANIA   INS.   CO.  [CIIAP.  XI. 

of  the  buildings  to  be  used  for  the  manufacture  of  rustic  window-shades, 
and  that  it  was  so  used  and  occupied  at  the  time  of  the  loss,  and  the 
risk  was  tliereby  increased.  This  admission  closes  with  an  averment 
that  plaintiffs  will  rely  upon  proving  matter  in  avoidance  of  the  defence 
therein  admitted,  which  will  estop  defendants  setting  up  the  same. 
This  admission,  in  the  body  thereof,  sets  out  that  it  is  "  for  the  pur- 
poses only  of  the  trial  of  the  cause  at  the  present  term,  and  for  no  other 
purpose."  Defendant  moved  to  strike  from  the  files  this  admission, 
and  for  judgment  thereon,  and  that  parts  thereof  be  stricken  out.  These 
motions  were  severally  overruled  and  exceptions  taken  thereto. 

The  instructions  given  and  refused  are  sufficiently  referred  to  in  the 
opinion  of  the  court. 

Upon  motion  of  plaintiff,  the  following  question  was  submitted  to 
the  jury,  and  they  were  instructed  to  answer  the  same  as  a  special  find- 
ing, viz.  :  — 

"  Did  the  defendant,  by  its  agent  Verder,  with  knowledge  of  all  the 
facts  claimed  by  defendant  to  constitute  breaches  of  the  conditions  of 
the  policy  sued  on,  by  its  conduct  and  language  to  the  plaintiff,  or  his 
agent,  recognize  and  treat  said  polic}'  and  the  insurance  thereby  made, 
as  still  continuing  and  in  force,  and  induce  the  plaintiff,  or  his  said 
agent,  so  to  regard  it?"     To  which  the  jury  answered:  "Yes." 

The  defendant  asked  the  following  questions  to  be  submitted  to  the 

jury  for  special  findings,  and  tiie}'  were  answered  aecordingl}',  viz.  :  — 

"  1.    Was  benzine  kept  on  the  premises  in  question,  after  the  policy 

was  made,  and   without  the  written  consent  of  defendant  in  cans  for 

use?"     To  which  the  jurv  answered:  "Yes." 

"  2.  Was  any  additional  consideration  paid  or  agreed  to  be  paid  l)y 
the  plaintiff  to  the  defendant  on  account  of  the  increase  of  the  risk  to 
the  building  in  question?"     Answer:  "No." 

"  3.  Was  an}'  additional  premium  paid  or  agreed  to  be  paid  by  the 
])laintiff  to  the  defendant  for  the  privilege  of  keeping  benzine  on  the 
said  premises  after  the  issuing  of  the  policy?"     Answer:   "No." 

"  4.  Did  the  defendant,  after  the  increase  of  the  risk  as  admitted  by 
the  plaintiff,  conditionall}'  consent  to  the  continuance  of  the  insurance 
on  the  building  in  question?  and,  if  so,  was  one  of  such  conditions  that 
a  new  stove  and  zinc  under  it  should  be  put  in  the  room,  in  said  build- 
ing used  as  a  tobacco  factory  ?"     Answer:   "Yes." 

''  5.  If  such  was  one  of  the  conditions,  was  such  condition  complied 
with  by  tlie  plaintiff,  before  the  fire  in  question?  "     Answer  :   "  Yes." 

"  6.  Did  the  defendant,  after  the  increase  of  the  risk  as  admitted  by 
the  plaintiff,  conditionalh*  consent  to  the  continuance  of  the  insurance 
on  the  building  in  question?  and,  if  so,  was  one  of  such  conditions  that 
an  iron  door  should  be  put  in  a  room  occupied  by  one  of  the  rustic  win- 
dow-shade factories,  in  the  fourth  story  of  the  building  in  question? 
Answer ;  "  Yes." 

"7.  If  such  was  one  of  the  conditions,  was  it  ever  complied  with  by 
the  plaintiff  before  the  fire?  "     Answer  :  "  No." 


SECT.  II.]  VIELE   V.    GERMANIA   INS.    CO.  1049 

The  court,  upon  its  own  motion,  required  of  the  jury  answers  to  the 
following  questions,  viz. :  — 

"1.  If  30U  answer  tlie  first  question  in  relation  to  keeping  benzine 
on  the  premises  'yes,'  then  you  will  also  answer  the  following  ques- 
tions :  — 

"  2.  Was  benzine  a  necessar}*  or  usual  article  in  the  manufacture  of 
rustic  window-shades?"     Answer:  "Yes." 

"  3.  Was  it  kept  in  small  quantities  for  daily  use,  or  was  it  kept  in 
large  quantities?  State  the  quantities  usually  kept  on  hand."  Answer: 
"  In  small  quantities,  from  one  to  two  gallons." 

"  4.  Did  the  agent  of  the  insurance  company  give  any  directions  as 
to  the  manner  of  keeping  benzine,  and,  if  so,  was  it  kept  as  he  directed  ?  " 
Answer:   "Yes." 

"  5.  If  you  answer  the  seventh  and  last  question  submitted  b}-  the 
defendant  '  no,'  you  will  then  answer  the  following  question  :  Had  said 
iron  door  been  ordered,  and  had  all  reasonable  efforts  been  made  to 
have  it  put  up  before  the  fire?  "     Answer  :   "  Yes." 

Plaintiff  moved  the  court  to  set  aside  the  special  verdict  of  the  jury 
upon  question  No.  6,  because  the  finding  is  contrar}'  to  the  evidence, 
and  also  moved  for  judgment  on  the  general  verdict.  Defendant  moved 
the  court  to  set  aside  the  special  findings  upon  questions  asked  by  plain- 
tiff numbered  one,  two,  four,  and  five,  and  upon  question  five  submitted 
by  defendant,  and  also  the  general  verdi(;t ;  because,  first,  such  findings 
are  contrary  to  the  evidence  ;  second,  because  of  errors  of  law  in  the 
instructions  of  the  court ;  third,  the  verdict  and  special  findings  are 
contrary  to  law  ;  fourth,  because  of  error  in  refusing  to  submit  to  the 
jury  other  questions  requested  hy  defendant ;  fifth,  because  of  error  in 
refusing  certain  instructions  requested  h\  defendant.  The  defendant 
also  moved  for  judgment  upon  the  special  findings.  The  motions  of  de- 
fendant were  overruled  and  exceptions  taken  thereto.  The  motion  of 
plaintiff  to  set  aside  the  special  finding  was  also  overruled  and  excep- 
tions taken,  and  judgment  rendered  upon  the  general  verdict  against 
defendant  for  the  sum  of  S3, 421. 80. 

Plaintiff  appeals  from  the  decision  of  the  court  upon  his  motion  to 
set  aside  the  special  verdict  of  the  jurj-  in  response  to  question  six  of 
defendant. 

Defendant  appeals  from  the  rulings,  orders,  and  final  judgment  of  the 
court. 

Davison  &  True,  James  T.  Lane,  and  S.  B.  Paul,  for  the  appel- 
lant. 

Putnam  <t  Rogers,  for  the  appellee. 

Beck,  J.^  .  .  .  III.  The  solution  of  one  question  will  dispose  of 
many  points  made  by  defendant  relating  to  the  admission  and  exclu- 
sion of  evidence,  and  the  giving  and  refusing  of  instructions  to  the 
}xxvy.  The  question  is  this  :  Can  the  breach  of  the .  conditions  of  the 
policy  against  the  increase  of  the  risk,  without  the  written  consent  of 

^  Passages  on  pleading  and  practice  have  been  omitted.  —  Ed. 


1050  VIELE   V.    GERMANIA   INS.    CO.  [CHAP.  XL 

the  insurers,  whereby  the  instrument  became  forfeited,  be  waived  by 
parol  or  by  the  acts  of  defendant? 

The  plaintiff  admitted  the  increase  of  the  risk  by  the  use  of  a  part  of 
the  building  insured  for  the  manufacture  of  rustic  window-shades,  but 
sought  to  avoid  the  forfeiture,  which  otherwise  would  have  resulted,  by 
evidence  tending  to  sliow  the  consent  of  the  agent  of  defendant  to  such 
use,  his  acts  and  declarations  recognizing  the  contract  of  insurance, 
after  the  increase  of  the  rislc,  and  his  admission  that  the  building  con- 
tinued to  be  covered  by  the  policy.  This  evidence  was  given  to  the 
jury  against  the  objection  of  defendant,  and  the  court  held,  in  the  in- 
structions to  the  jury,  tiiat  such  facts,  if  proved,  would  operate  as  a 
waiver  of  tlie  forfeiture  and  entitle  [)laintitr  to  recover.  The  following 
are  among  the  conditions  of  the  policy  :  — 

"  If  the  above  mentioned  premises  shall  be  used  or  occupied  so  as 
to  increase  the  risk,  or  become  vacant  and  unoccupied,  or  the  risk  be 
increased  by  the  erection  of  adjacent  buildings,  or  by  any  other  means 
whatever,  witliin  the  control  of  the  assured,  without  the  assent  of  the 
companies  indorsed  hereon  ;  ...  or  if  the  assured  shall  keep  upon 
the  said  premises  gunpowder  or  phosphorus,  or  petroleum,  or  rock  or 
earth  oils,  or  benzole,  benzine  or  naptlia,  or  any  explosive  substance, 
or  shall  keep  or  use  upon  the  said  premises  camphene,  spirits,  gas  or 
chemical  oils,  without  written  permission  on  this  policy,  then,  and  in 
every  such  case,  this  policy  shall  be  void." 

The  question  above  stated  is  fairly  presented  by  the  record,  and  is 
of  very  great  importance,  not  only  in  its  relation  to  this  case,  but  to 
tiie  business  of  insurance  generally.  "We  have  endeavored  to  give  it 
the  careful  and  patient  consideration,  aided  b}-  the  able  argument  of  the 
counsel  for  the  respective  parties,  which  its  importance  demands. 

The  polij^wliich  is  the  foundation  of  this  action,  though  a  unilateral 
contract  in  form,  contains  covenants  of  the  assured  as  well  as  of  the 
underwriters,  and  mutual  agreements  of  tlie  parties.  Some  of  these 
covenants  on  the  part  of  the  assured  are  in  the  nature  of  warranties, 
and  conditions  precedent ;  others  are  in  the  nature  of  obligations  im- 
posed by  the  conditions  limiting  or  measuring  the  liability  of  the  under- 
writers. The  covenants  of  the  insurers  are  mostlv,  if  not  all,  dependent 
upon  the  obligations  or  covenants  of  tlie  insured,  expressed  or  implied 
in  the  policy.  The  policy,  though  subscribed  only  by  the  underwriters, 
is  evidence  of  the  contract  entered  into  by  both  parties,  and  binds 
both.  2  Parsons'  ^Maritime  Law,  27  ;  Parsons'  Mercantile  Law,  404. 
Contracts  of  this  character,  binding  the  obligor  upon  conditions  to  be 
performed  by  the  obligee,  but  subscribed  only  by  the  obligor,  are  not 
uncommon.  Those  for  the  sale  of  real  estate  are  often  in  this  form. 
The  language  used  to  express  the  idea  that  the  obligor  is  not  bound  to 
perform  his  covenant,  until  the  conditions  imposed  upon  the  other  party 
are  performed,  or,  in  other  words,  that  the  obligor's  covenants  are  de- 
pendent, is  usually  a  recital  of  the  conditions  v/hich  are  to  be  performed 
by  the  obligee,  following  with  the  declaration  that  if  they  are  not  per- 


SECT.  II.]  VIELE    V.   GERMAXIA   INS.    CO.  1051 

formed,  the  instrument  sliall  become  void,  or  forfeited.  The  policy 
under  consideration  is  in  this  form.  It  declares,  that  if  the  risk  is  in- 
creased by  means  within  the  control  of  the  assured,  witliout  the  assent 
of  the  underwriters,  it  "  shall  be  void."'  By  the  conditions  expressed, 
the  assured  is  prohibited  from  increasing  the  risk,  and  he  obligates 
himself  that  it  shall  not  be  increased  in  the  manner  proliil>ited.  This  tXA  X^^d^<^ 
is  his  undertaking,  and,  as  we  have  seen,  he  is  bound  thereby  as  though 
he  had  subscribed  the  policy.  This  is  obvious  ;  but  a  woid  or  two  more 
may  express  the  idea  more  clearly-.  The  underwriters  obligate  themselves 
to  pay  a  certain  sura  in  case  of  the  loss  of  the  building  liy  fire,  with  the 
condition,  however,  that  the  risk  shall  not  be  increased  in  the  manner 
l)rohibited.  To  this  condition  tlie  assured  assents  by  the  acceptance  of 
the  contract,  and  he  thus  obligates  himself  and  becomes  bound  b^-  the 
policy,  that  the  risk  shall  not  be  increased.  If  he  permits  it  to  be  in- 
creased, his  covenants  are  broken.  The  condition  which  he  is  bound 
to  perform  is  precedent  to  the  underwriters'  covenant.  The  under- 
writers are,  therefore,  not  liable  on  the  policy,  which  ceases  to  bind 
them,  and  to  that  extent  the  policy  becomes  void. 

Unsound  conclusions  in  the  argument  of  defendant's  counsel  result 
from  an  improper  understanding  of  the  expression  "shall  be  void," 
used  in  the  condition  above  quoted  from  the  policy.  It  is  insisted,  that 
the  instrument,  by  force  of  tli'ese  words,  upon  the  increase  of  the  risk, 
became  absolutely  null  and  void.  The  phrases  and  words  used  to  con- 
vey the  idea  are,  ''ipso  facto  void;"  "dead;"  "extinct;"  "de- 
funct ;  ■■  "  of  no  effect,"  etc.,  etc.  ;  meaning  thereby  that  the  instrument 
has  no  force  or  effect,  in  the  sense  of  these  terms  when  applied  to  in- 
struments void  in  law,  as  the  deeds  of  parties  having  no  legal  capacity 
to  contract,  or  contracts  against  public  policy,  etc.  But  the  term 
"  void,"  as  used  in  the  policy,  has  no  such  meaning.  It  simply  means 
that  the  underwriters,  upon  the  violation  of  his  covenants  by  the  as- 
sured, shall  cease  to  be  bound  by  their  covenants  in  the  policy ;  and 
this  is  in  accordance  with  the  true  definition  of  the  word,  and  its  com- 
mon  use  in  like  connections.  The  policy  does  not  cease  to  have  a  legal 
existence,  it  is  the  only  competent  evidence  of  the  contract  it  em- 
bodies, and  in  truth  is  not  void  except  so  far  that  the  underwriters  are 
no  longer  bound  thereby.  Neither  will  they  be  discharged  therefrom 
unless  they  plead  the  fact  that  the  insured  failed  to  perform  his  cove- 
nants contained  in  the  policy.  Their  silence  would  waive  the  default 
of  the  opposite  party. 

The  position  of  defendant's  counsel,  which  is  supported  by  several 
authorities,  is  to  the  effect  that  upon  a  breach  of  the  conditions  of  the 
policy  by  the  assured,  which  would  defeat  recovery  thereon,  it  becomes 
absolutely  void  —  as  it  were,  dead  —  and  that  nothing  short  of  a  new 
creation  could  impart  vitality  to  it.  This  doctrine  is  certainly  unsound 
when  applied  to  other  contracts ;  for,  on  the  contrary,  after  default  in 
the  conditions  by  one  party,  the  other  may  waive  the  forfeiture  and 
treat  the  instrument  as  of  binding  force  upon  himself.     No  reasons  can 


X052  VIELE   V.   GERMANIA   INS.    CO.  [CHAP.  XI. 

^  ^jypn  J^v_gynoJ;^f  pnjinjps  of  insurfinoe  from  the  onftration  of  this  rule. 
ThTparty  in  default  r..mj^ntj1pfpnf,  t.hp  oontrant ;  the  party  for  whose 
bcncfirtTic'coii(TitTqn°jirgL^  "^-^y  waive  tlie  forfeiture.     It  fol- 

lows,  thereToreTlIiat  the  instrument  is  forfeited  at  the  option  of  the 
innocent  party ;  and  if  he  waives  the  forfeiture,  the  contract  stands  as 
if  uo  breach  had  occurred.  In  Williams  v.  Bank  of  the  United  States, 
2  Pet.  102,  the  doctrine  is  announced  in  these  words:  "If  a  party 
to  a  contract,  who  is  entitled  to  the  benefit  of  a  condition,  upon  the 
performance  of  which  his  responsibility  is  to  arise,  dispenses  with,  or 
by  any  act  of  his  own  prevents,  the  performance,  the  opposite  party  is 
excused  from  proving  a  strict  compliance  with  the  condition." 

We  conclude,  therefore,  that  the  forfeiture  of  the  policy  on  account 
of  the  breaches  of  the  conditions  thereof,  could  have  been  waived  by 
the  defendant,  and  if  waived,  the  policy  continued  of  the  same  binding 
force  which  it  originally  possessed.  This  view  is  sustained  by  the  fol- 
lowing authorities:  Keeuan  v.  Mo.  State  Mut.  Ins.  Co.,  12  Iowa,  126; 
David  v.  The  Hartford  Ins.  Co.,  13  Iowa,  69  ;  Carpenter  v.  The  Prov. 
Wash.  Ins.  Co.,  16  Pet.  509  ;  Coursen  v.  Penn.  Ins.  Co.,  46  Penn.  St. 
323  ;  Atlantic  Ins.  Co.  v.  Goodale,  35  N.  H.  328  ;  Frost  v.  Saratoga 
Ins.  Co.,  5  Den.  154;  Clark  v.  Jones,  1  Den.  516;  Cartwright  v.  Gard- 
ner, 5  Cush.  281  ;  North  Berwick  Co.  v.  Ins.  Co.,  52  Maine,  336  ;  War- 
ner V.  Peoria  Ins.  Co.,  14  Wis.  323  ;  Smith  v.  Gugerty,  4  Barb.  S.  C. 
614  ;  N.  E.  F.  &  M.  Ins.  Co.  v.  Schettler,  38  111.  166  ;  Viall  v.  Ins.  Co., 
19  Barb.  440;  Ins.  Co.  v.  Stockbower,  26  Penn.  St.  199  ;  Buckbee  r. 
Life  Ins.  Co.,  18  Barb.  541;  Beal  v.  Park  Ins.  Co.,  16  Wis.  241 ; 
W^ing  V.  Harvey,  27  Eng.  Law  &  Eq.  140  ;  Peoria  F.  &  M.  Ins.  Co.  v. 
Haliri2  Mich.*'202. 

IV.  We  are  next  led  to  inquire  as  to  the  manner  of  the  waiver  of 
the  forfeiture,  whether  it  must  be  in  writing  or  may  be  by  parol,  and 
what  acts  of  the  defendant  will  amount  to  a  waiver. 

y/-f~~. p  Parol  evidence  is  not  admissible  to^cpntradict  or  alter  a  writtenJii- 

i  '^<^^^>^^^^*gX>^gty„nient,  but  this  rule  doesjiot^clude  such  evidence  when  adduced, 
^  to  prove  that  a  written  contract  is  discharged,  orlhaTthejlamagesjQr 

non-performance  were  waive(^l^j)iLthat  performaiTce  oTajiart^pf  the_con- 
tract  was  dlspens^ed  with.  1  Greenleaf's  Ev.  §§  302-304  ;  2  Pliil.  Ev. 
(Cowen  &  HiHVancT"R(Twards'  Notes)  692  and  note  505  ;  2  Starkie's 
Ev.  574;  Fleming  v.  Gilbert,  3  Johns.  528  ;  Merrill  v.  Ithaca  &  Oswego 
R.  R.  Co.,  16  Wend.  586. 

These  exceptions  to  the  rule,  or  rather  the  rule  admitting  parol  evi- 
dence for  these  purposes,  may  not  apply  to  specialities  ;  but  a  contract 
of  insurance  need  not  be  by  specialty,  or  even  in  writing.  It  seems  to 
be  the  better  opinion  that  it  may  be  oral  only.  Parsons'  Mercantile 
Law,  403  and  notes ;  2  Parsons'  Maritime  Law,  19  and  notes  ;  City  of 
Davenport  V.  Peoria  Ins.  Co.,  17  Iowa,  276;  Commercial  Ins.  Co.  v. 
Union  Ins.  Co.,  19  How.  321  ;  Baptist  Church  v.  Brooklyn  Ins.  Co., 
19  N.  Y.  305.  We  need  not,  then,  inquire  whether  a  policy  executed 
by  an  incorporation  and  attested  by  its  corporate  seal  is  a  specialty,  for 


SECT.  II.]  VIELE   V.   GERMANIA  INS.   CO.  1053 

the  policy  sued  ou  is  not  sealed  by  the  companies,  and  is  therefore  a 
simple  contract  and  not  a  specialty.  The  rule  therefore  will  not  in 
this  suit  exclude  parol  evidence  for  the  purposes  above  mentioned. 
The  cases  which  we  will  hereafter  cite,  in  considering  what  acts  may 
amount  to  a  waiver  of  conditions  or  forfeiture  on  account  of  breaches 
of  conditions,  support  this  doctrine  and  will  illustrate  its  application. 

It  is  argued  that  the  condition  in  the  policy,  to  the  effect  that  an 
increase  in  the  risk  avoids  the  contract  on  the  part  of  the  underwriters, 
unless  consent  thereto  be  had  in  writing,  implies  that  such  consent  can 
be  given  in  no  other  way.  It  will  be  at  once  remarked,  that  this  re- 
striction is  itself  a  condition,  and  is  just  as  capable  of  being  waived  or 
dispensed  with  as  any  other  condition  of  the  instrument  and  in  the 
same  way.  There  is  nothing  in  the  terms  of  this  condition  prohibiting 
its  waiver.  But  the  conditions  of  the  policy  became  broken  by  an 
increase  of  the  risk,  without  written  consent,  and  there  at  once  hap- 
pened a  forfeiture  whereby  defendant  was  discharged  from  the  con- 
tract. Now,  as  a  matter  of  fact,  the  waiver  was  not  of  the  written 
consent,~but  of  the  Jbrfeiturel 

V.  What  will  amount  to  or  have  the  effect  of  a  waiver  of  a  forfeiture 
of  the  policy,  or  a  dispensation  of  the  performance  of  its  conditions? 
The  party  for  whose  benefit  a  condition  is  introduced  in  a  contract  mQ.y 
determine  whether  it  shall  or  shall  not  be  enforced,  and,  as  we  have 
seen,  may  waive  or  dispense  with  its  performance.  It  see^ms  reason- 
able  that  the  same  character  of  evidenc^^mlLjestabiiak-a-Jvaiver  or  dis- 
pensation of  conditions  that  is  sufficient  to  prove  the  existence  of  a 
contract.  An  express  agreement  to  that  effect  will  of  course  be  suffi- 
cient. Circumstances  proving  that  the  party  treated  the  contract  as 
subsisting  and  not  forfeited,  a  course  of  dealing  consistent  only  with 
that  hypothesis,  and  acts  and  declarations  whereby  the  other  party  was 
induced  to  believe  that  the  condition  was  dispensed  with  or  forfeiture 
■waived,  will  be  sufficient  to  preclude  the  setting  up  of  the  breaches  of 
the  condition  as  a  defence  to  the  conti-act  of  the  part}-  bound  thereby. 
Thus  the  receipt  of  premium  upon  a  policy  after  forfeiture  is  a  waiver 
thereof.  North  Berwick  Co.  v.  Insurance  Co.,  52  Maine,  336;  New 
York  Insurance  Co.  v.  National  Prot.  Ins.  Co.,  20  Barb.  468  ;  Liddle  v. 
Market  Fire  Insurance  Co.,  29  N.  Y.  184  ;  Ames  v.  New  York  Union 
Ins.  Co. ,  26  N.  Y.  263  ;  Bochen  v.  Williamsburgh  Ins.  Co.,  35  N.  Y. 
131;  Goit  V.  National  Prot.  Ins.  Co.,  25  Barb.  189  ;  Viall  v.  Genesee 
Mutual  Ins.  Co.,  19  Barb.  446;  Frost  v.  Saratoga  Mutual  Ins.  Co., 
5  Den.  154  ;  Lycoming  Ins.  Co.  v.  Stockbower,  26  Penn.  St.  199  ;  Wing 
V.  Harvey,  27  Eng.  Law  &  Eq.  140. 

So  the  taking  of  an  additional  risk  on  the  same  policy  will  waive  a  for- 
feiture, existing  at  the  time,  for  breach  of  condition.  Rathborn  v.  City 
Ins.  Co.,  31  Conn.  193.^  .  .  . 

It  will  be  observed  that  the  waiver  of  the  condition  or  forfeiture, 
under  these  authorities,  is  not  required  to  be  supported  by  a  considera- 

1  A  passage  presenting  other  authorities  has  been  omitted.  —  Ed. 


1054  VIELE    V.   GEKMANIA   INS.    CO.  [CHAP.  XI. 

tion.  In  the  cases  where  it  is  held  that  the  payment  of  premium  upon 
a  polic3'  forfeited  for  breaches  of  condition  is  a  waiver  of  forfeiture, 
the  pa3ment  was  not  made  in  consideration  of  the  waiver,  but  for  the 
renewal  or  continuance  of  the  insurance.  The  waiver  or  dispensation 
is  not  in  the  nature  of  a  contract  which  requires  the  support  of  a  con- 
sideration, but  rather  of  an  estoppel,  whereby  the  underwriter  is  pre- 
cluded from  denying  tlie  validity  of  the  contract,  on  account  of  acts  or 
admissions  either  recognizing  it  as  of  binding  force  after  the  forfeiture, 
or  holding  out  to  the  assured  that  the  performance  of  the  condition  is 
dispensed  with. 

It  is  not  an  accurate  use  of  terms  to  say  that  the  condition  of  a  con- 
tract must  be  supported  by  a  consideration.  The  contract  itself  must 
be,  but  the  condition  is  a  mere  incident  thereto,  and  its  sufficiency, 
validity,  or  force  is  in  no  way  affected  or  dependent  upon  the  considera- 
tion. It  is  true  the  condition  may  influence  the  parties  in  fixing  the 
amount  of  the  consideration,  but  the  law  will  not,  in  the  absence  of 
fraud,  inquire  into  its  sufficiency,  nor  hold  a  contract  invalid  because  a 
full  or  just  value  has  not  been  received  by  tlie  obligor.  Tlie  case  of 
a  policy  of  insurance  illustrates  the  point.  Tlie  underwriter  is  bound 
thereby  to  pay  the  assured  the  amount  of  any  loss  by  fire  which  may 
happen  to  his  property  within  a  certain  time.  The  consideration  of  this 
contract  is  the  premium  received  by  the  underwriter.  The  assured  is 
bound  not  to  permit  the  risk  to  be  increased  ;  this  obligation  is  the 
condition  of  the  polic}',  and  with  it  we  can  associate  no  idea  of  consid- 
eration. It  may  enter  into  the  contemplation  of  the  underwriter  when 
fixing  the  value  of  the  risk  which  may  be  worth  a  greater  premium 
without  the  condition  in  the  policj-,  but  the  adequacy  of  the  considera- 
tion, as  we  have  remarked,  is  not  a  matter  of  inquiry,  and  the  consid- 
eration itself  no  element  of  the  condition.  We  conclude,  therefore, 
that,  as  the  condition  is  not  dependent  upon  nor  supported  by  the  con- 
sideration, it  may  be  waived  or  dispensed  with  even  by  an  agreement 
without  consideration. 

VI.  We  approach  the  consideration  of  the  questions  involving  the 
power  of  the  agent  of  the  defendant  to  dispense  with  the  conditions  of 
the  policy  or  to  waive  the  forfeiture  resulting  from  the  breach  thereof. 
Defendant's  counsel  contend  that,  as  shown  by  the  policy,  the  agent 
possessed  no  power  to  assent  to  an  increase  of  risk  except  in  writing, 
and  that,  in  order  to  bind  the  company  by  his  acts,  declaration,  or 
agreenjent,  dispensing  with  the  conditions  or  waiving  the  forfeiture,  his 
authority  so  to  do  must  be  expressly  pioved. 

There  was  evidence  tending  to  prove  that  the  agent  had  full  power 
to  eflTect  contracts  of  insurance,  to  fix  rates  of  premium,  to  give  con- 
sent to  the  increase  of  risk  and  change  of  occupation  of  buildings  in- 
sured, to  cancel  policies  in  his  discretion,  and  that  in  the  prosecution 
of  their  l)nsiness  it  was  the  custom  of  agents  of  insurance  companies  to 
exercise  supervision  over  property  covered  by  policies  issued  at  their 
respective  agencies  during  the  term  of  insurance. 


SECT.  II.]  VIELE   V.   GERMANIA   INS.   CO.  1055 

The  instructions  to  the  jury,  and  the  rulings  upon  objections  to  evi- 
dence, in  effect,  liold,  that  the  authority  of  tlie  agent  to  waive  forfeitures 
and  dispense  with  conditions  may  be  sufficiently  shown  by  proof  of  the 
possession  and  exercise  of  tlie  powers  above  stated,  and  tliat  express 
authorit}"  need  not  be  shown  in  order  to  bind  the  defendant  thereby. 
Tiiis  we  conceive  to  be  the  law. 

By  proof  of  the  possession  of  the  powers  aforesaid,  the  authority  of 
tlae  agent  is  sliown  to  be  in  fact  of  the  broadest  and  most  plenary  char- 
acter. It  is  difficult  to  conceive  of  an  act  in  the  prosecution  of  the 
business  of  insurance  which  the  officers  of  the  companies  can  do  that 
cannot  be  done  by  the  agent.  He  is  provided  with  blank  policies 
whereb}'  he  is  enabled  to  enter  into  the  contract  of  insurance.  These 
blank  instruments  are  in  no  sense  contracts  until  signed  b}'  him,  for  it 
is  expressly  provided  therein  that  they  "  shall  not  be  valid  unless 
countersigned  by  the  duly  authorized  agent  of  said  companies  at  Dav- 
enport, Iowa." 

Such  is  the  express  provision  of  the  policy  upon  which  this  suit  is 
brouglit,  and  there  is  not  one  word  of  limitation  upon  the  authority  of 
the  agent  contained  in  it.  No  attempt  was  made  to  prove  knowledge 
on  the  part  of  the  assured  of  any  limitation  of  the  power  of  the  agent, 
further  than  by  the  policy  itself,  and  a  general  custom  or  rule  of  insur- 
ance companies  and  agents  that  no  change  can  be  made  b}-  agents  in 
the  printed  conditions  of  the  policy.  The  effect  of  such  limitation  will 
be  hereafter  noticed.  The  powers  of  the  agent,  then,  are  those  of  a 
general  agent,  and  the  companies  are  bouncTtry  his  acts  which  are  within 
the  scope  of  the  general  authority  he  possesses,  even  though  he  violates 
limitations  upon  that  authority  which  are  not  brought  home  to  the 
knowledge  of  the  part^'  with  whom  he  deals.  Stor}-  on  Agency,  §§  126, 
134  ;  Keenan  v.  Mo.  State  Mut.  Ins.  Co.,  12  Iowa,  131  ;  City  of  Daven- 
port V.  Peoria  Ins.  Co.,  17  Iowa,  276  ;  Warner  v.  Peoria  Ins.  Co.,  14 
Wis.  318,  323  ;  North  Berwick  Co.  v.  N.  E.  F.  &  M.  Ins.  Co.,  52  Maine, 
336;  Post  V.  Miwo,  Ins.  Co.,  43  Barb.  351  ;  Sheldon  u.  Atlantic  Ins. 
Co.,  26  N.  Y.  460. 

VII.  This  brings  us  to  inquire  what  powers  may  be  exercised  by  the 
agent  within  the  scope  of  his  general  authority.  Under  this  general 
authority  he  has  power  to  conduct  the  business  of  insurance  of  his 
principals  at  the  city  of  Davenport.  This  is  the  aggregation  of  all  his 
powers,  and  he  possesses  implied  authority  to  do  all  things  proper  and 
necessary  in  the  prosecution  of  that  business,  subject  of  course  to  limi-  1^  l\Jijo  Ji 
tations   imposed  by  his  principals   and  known  to  those  with  whom  he  D 

deals.  These  incidental  powers  may  be  numerous,  and  their  enumera- 
tion is  not  necessary.  Among  others  he  has  the  power  to  assent  to  the 
increase  of  the  risk,  and  to  a  change  of  occupancy  of  property  insured, 
and  to  cancel  policies  on  account  of  increase  of  risks  or  for  any  other 
reason.  In  the  exercise  of  these  powers  he  is  guided  by  his  own  dis- 
cretion, which  it  is  presumed  will  be  exercised  for  the  best  interests  of 
his  principals.     He  has,  also,  all  the  powers  which  by  the  usages  of  the 


1056  VIELE   V.   GERMANIA    INS.    CO.  [CHAP.  XI. 

business  are  properly  and  ordinaril}'  exercised  by  agents  engaged 
therein.     Story  on  Agency,   §§    77,   106. 

It  appears  that  insurance  agents  usually  exercise  supervision  over 
tlie  propert}'  insured  b}'  them,  and  this  necessarily  results  from  the 
character  of  the  business  and  their  authority-  to  cancel  policies  on  ac- 
count of  increase  of  risk.  The  agent  is  charged,  In-  the  terms  of  the 
policy  on  which  this  suit  is  based,  with  the  power  to  determine  whether 
the  risk  is  increased.  If  he  so  determines,  he  ma}'  cancel  the  policj' 
and  put  an  end  to  the  contract.  This  involves  the  necessit}'  of  exami- 
nation of  the  condition  of  the  insured  property  during  the  life  of  the 
policy,  and  constant  vvatclifulness  to  protect  the  interest  of  the  under- 
writers. If  he  determines  that  tlie  risk  is  increased,  such  determination 
is  final,  for  it  seems  the  assured  has  no  appeal  therefrom  and  no  redress 
for  loss  that  may  be  sustained  thereby.  Such  being  the  great,  and  in 
some  respects  extraordinary,  powers  of  the  agent,  it  follows  that  he  is 
clothed  with  the  power  to  dispense  with  conditions  and  waive  the  effects 
of  breaches  thereof,  in  contracts  of  insurance  made  by  him.  These 
powers  are  necessary  incidents  of  his  general  authorit}',  and  without 
their  exercise  he  could  not  act  to  its  full  extent.  If  he  can  determine 
that  the  conditions  of  the  contract  have  been  broken,  surely  he  can  also 
determine  that  they  have  not  been  broken.  If  he  can  put  an  end  to  the 
contract  because  of  the  increase  of  the  risk,  and  the  consequent  forfei- 
ture, certainly  he  can  waive  that  forfeiture.  If,  possessing  such  full  au- 
thority- to  make  the  contract,  determine  that  it  is  performed,  and  to  put 
an  end  to  it,  he  can  not  dispense  with  its  conditions  after  it  is  executed, 
the  rules  of  law  controlling  agents  generall}-,  and  all  kinds  of  contracts, 
must  be  held  not  applicable  to  insurance  policies  and  insurance  agents. 
These  companies  have  no  way  of  dealing  with  their  customers  and  the 
public,  except  through  their  agents.  They  are  incorporations  existing 
under  the  laws  of  another  State.  Practically  those  powers  can  only  be 
exercised  by  agents.  The^-  are  inherent  in  the  corporations,  whose  in- 
terest as  well  as  fair  dealing  toward  others  (as  it  did  in  the  case  before 
us),  may  require  their  exercise.  The  agents,  therefore,  must  be  held 
to  have  full  authority-  to  dispense  with  the  conditions  of  policies,  after 
their  execution,  and  to  waive  forfeitures  for  breaches  thereof. 

As  we  have  alread}-  intimated,  the  law,  in  its  application  to  other 
kinds  of  contracts,  and  to  agents  transacting  other  kinds  of  business, 
fully  sustains  the  doctrines  we  have  announced.  This  may  readih*  be 
illustrated  by  facts  disclosed  by  the  record.  The  owner  of  the  property 
upon  which  the  policy  in  question  was  issued  was  a  non  resident  of  the 
State,  and  the  business  was  transacted  for  him  by  an  agent,  who,  it 
seems,  exercised  general  powers  in  all  matters  pertaining  to  the  prop- 
erty. Now,  suppose  this  agent  had  executed  a  contract  for  the  rebuild- 
ing of  the  property  burned,  or  his  principal  had  executed  it,  and  it  was 
delivered  by  the  agent,  blanks  being  filled  bj-  him  under  proper  author- 
ity, with  the  name  of  the  other  contracting  part}-,  sums  to  be  paid,  etc. 
This  contract  contained  many  conditions,  as  we  may  suppose,  for  the 


SECT,  II.]  VIELE    V.    GERMANIA   INS.    CO.  1057 

benefit  of  the  property  owner,  and  the  agent  was  authorized  to  assent 
in  writing  to  the  dispensation  of  certain  of  them,  and  the  power  to  put 
an  end  to  the  contract  in  case  of  the  failure  of  the  other  party  to  com- 
ply with  its  conditions.  During  the  progress  of  the  work,  questions 
arose  whether  certain  things  done,  or  omitted  to  be  done,  by  the  builder, 
.  were  in  violation  of  the  conditions  of  the  contract.  The  agent,  as  to 
whose  power  not  one  word  of  limitation  existed  in  the  contract,  or  was 
otherwise  known  to  the  builder,  asserts  that  the  matters  in  question 
are  not  in  violation  of  the  contract,  and  treats  it  as  complied  with,  or 
verbally  assents  to  the  dispensation  of  certain  conditions.  When  the 
building  is  completed,  in  accordance  with  the  contract  as  thus  modified, 
the  principal  refuses  to  pay  the  sum  agreed  on,  because  of  non-compli- 
ance  on  the  part  of  the  builder  with  the  conditions  thus  waived  by  the 
agent.  Upon  no  recognized  rules  of  law  could  this  defence  be  sus- 
tained, and  we  would  have  no  difficulty  in  finding  ample  authorities  in 
support  of  the  doctrine  that  the  waiver  of  forfeitures  by  veason  of  the 
breaches  of  the  conditions,  and  the  dispensation  of  the  conditions 
by  the  agent,  were  binding  on  the  principal.  This  supposed  case  is 
not  distinguishable  upon  principle  from  the  case  disclosed  by  the 
record.^  .  .  . 

While  it  is  true  that  these  companies  transact  business  only  through 
their  agents  at  distant  points,  it  is  also  true  that  much  of  their  busi- 
ness is  acquired  through  the  diligence,  skill,  and  capacity  of  these 
agents,  and  that  parties  effecting  insurance  rely  in  a  great  measure 
upon  the  representations  made  by  them  as  to  the  rights  and  obligations 
of  the  respective  parties  to  the  policies,  and  afe  controlled  in  the  care 
of  the  insured  property  by  their  directions.  The  acts  of  these  agents, 
in  all  matters  pertaining  to  the  proper  business  they  are  appointed  to 
transact,  should  bind  their  principals,  unless  contrary  to  restrictions 
of  their  powers,  brought  to  the  knowledge  of  those  with  whom  they 
deal. 

It  is  argued  that,  inasmuch  as  by  the  restrictions  imposed  on  the 
power  of  the  agent  by  custom,  as  well  as  by  the  rules  of  the  company, 
he  can  make  no  change  in  the  printed  conditions  of  the  policy,  there- 
fore he  had  no  authority  to  waive  a  forfeiture  of  such  terras,  or  dis- 
pense with  their  performance.  "Without  determining  whether  this  could 
be  done  by  agreement  at  the  time  the  policy  was  issued,  we  are  clearly 
of  the  opinion  that  such  restriction  of  authority  ia  no  way  affects  his 
power  6o  to  do  after  the  policy  is  issued,  in  a  proijer  case,  and  without 
fraud  on  his  part,  or  by  the  assured. 

The  distinctions  between  omitting  a  condition  required  by  the  terras 
of  his  authority  and  by  custom,  to  be  introduced  into  tiie  policy,  and 
the  waiver  of  such  condition  for  a  proper  cause,  after  the  policy  had 
been  executed,   are  obvious. 

It  has  been   held  that  an  agent  intrusted  with  blank  policies,  to  be 

1  Passages  presenting  authorities  have  been  omitted.  —  Ed. 
67 


1058  VIELE    V.    GERMANIA    INS.    CO.  [CHAP.  XI. 

filled  up  and  countersigned  b}-  him,  maj'  bind  the  underwriter  by  new 
clauses  or  conditions  inserted  b}-  the  agent  before  issuing  the  policy. 
2  Phillips'  Ins.  528,  §  1877  ;  Gloucester  Manufacturing  Co.  v.  Howard, 
5  Gray,  497. 

VIII.  By  the  terms  of  the  policy  the  underwriters  reserved  the  right 
to  cancel  it  upon  the  risk  being  increased,  or  for  any  other  cause,  "  by 
pacing  to  the  assured  the  unexpired  premium  p?-o  rata."  The  point  is 
made  by  the  plaintiff,  that  if  the  risk  be  increased,  of  which  the  under- 
writers have  notice,  and  the  right  to  cancel  is  not  exercised,  this  amounts 
to  a  waiver  of  the  forfeiture  incident  to  a  breach  of  the  condition  against 
increase  of  risk.  The  decision  of  this  question  is  not  necessary,  as  the 
case  is  determined  without  it.  But,  for  myself,  I  am  free  to  admit  the 
force  of  the  position,  in  view  of  the  peculiar  facts  of  the  case,  and  that 
I  believe  it  Is  supported  by  sound  reason.^  .  .  . 

IX.  It  Is  argued  by  the  defendant's  counsel,  that  the  waiver  of  the 
breach  of  the  condition  of  the  policy,  on  account  of  the  rustic  window- 
shade  manufactory,  extended  only  to  the  acts  in  violalion  of  the  terms 
of  the  policy  done  before  such  alleged  waiver,  and  that  the  condition 
continued  to  be  daily  violated  by  the  continuance  of  the  cause  of  the 
increase  of  risk  ;  and  that,  as  it  is  not  pretended  that  there  was  any 
waiver  of  the  breaciies  resulting  therefrom,  the  policy  is  tliereby 
avoided.  The  error  of  this  argument  is  apparent.  The  waiver  ex- 
tended to  all  breaches  resulting  from  the  manufacture  of  rustic  window- 
shades  in  the  building  insured,  and  the  parties  in  all  their  intercourse 
concerning  the  increase  of  the  risk,  and  by  their  acts  touching  the  same, 
had  reference  to  the  continuation  of  the  manufactory,  and  of  course 
contemplated  the  waiver  of  the  breaches  resulting  therefrom,  and  the 
dispensation  of  the  conditions  of  the  policy  prohibiting  it. 

X.  The  policy  expressly  prohibited  the  keeping  of  benzine  upon  the 
premises  insured.  There  was  evidence  tending  to  prove  that  this  fluid 
was  necessary  in  the  preparation  of  the  paints  and  varnishes  used  in 
the  manufacture  of  rustic  window-shades,  and  that,  at  the  time  of  the 
fii-e,  it  was  kept  for  that  purpose  upon  the  premises,  in  tin  cans,  in 
quantities  not  exceeding  two  gallons.  The  evidence  also  tended  to 
prove  that  the  agent  gave  permission  for  keeping  benzine  for  the  pur- 
poses and  in  the  manner  and  quantities  aforesaid.  This  permission  was 
given,  as  it  is  claimed,  at  the  time  the  alleged  consent  was  given  to  the 
continuation  of  the  window-shade  manufactory.  The  court  instructed 
the  jury,  substantially,  that  a  consent  to  the  occupation  of  the  building 
for  the  manufactory  implied  a  consent  to  the  use  of  such  articles  as 
were  necessary  to  be  used  in  the  business.  This  instruction  was  clearly 
correct.  The  consent  to  the  manufacture  of  the  window-shades  im- 
plied a  consent  to  the  use  of  benzine  if  it  was  necessary  or  commonly 
used  in  making  those  articles  ;  otherwise  a  direct  permission  to  con- 
tinue the  manufactory  would  be  defeated  by  the  prohibition  in  the 
policy. 

1  The  discussion  of  this  question  has  b.een  omitted.  —  Ed. 


SECT.  II.]  VIELI£    V.    GERMAMA    1X3.    CO.  1059 

This  permission  operated  to  (lisi)on.so  with  the  prohibition.^  .  .  . 
XI.  The  evidence  tended  to  prove  tliat  the  agent  of  tlie  underwriters, 
at  the  time  he  made  an  examination  of  the  building,  directed  a  certain 
iron  door  to  be  put  up,  and  that  either  the  tenants  or  the  agent  of  tlie 
plaintiff  agreed  to  comply  with  this  requirement.  It  seems  that  no  time 
was  specified  in  which  it  should  be  done.  An  order  was  given  for  the 
door,  but  it  was  not  completed  and  put  up  at  the  time  of  the  fire.  Upon 
this  evidence  are  based  the  sixth  and  seventh  interrogatories  to  the  jurv 
by  the  defendant,  and  the  fiilh  propounded  by  the  court. 

The  special  finding  in  response  to  the  sixth  question  of  defendant, 
while  it  makes  the  continuance  of  the  insurance  conditional  upon  the 
door  being  put  in,  fixes  no  time  when  it  was  to  be  done.  It  simplv 
shows  that  the  agent  agreed  to  carry  the  risk  if  an  iron  door  should  be 
put  in.  The  agreement  to  put  in  the  door  was  not  a  condition  prece- 
dent to  the  continuance  of  the  insurance.  Of  course  the  plainliflT  had  a 
reasonable  time  in  which  to  comply  witii  his  agreement,  and  the  re- 
sponse to  the  fifth  question  shows  that  he  had  used  all  reasonable  efforts 
to  do  so  before  the  fire,  and  had,  therefore,  sufficiently  complied  with 
his  part  of  the  agreement.  These  findings  are  consistent  witii  each 
other,  and  not  inconsistent  with  the  general  verdict.  Plaintifl^'s  motion 
to  set  aside  the  finding  upon  the  sixth  question  of  defendant  was  prop- 
erly overruled. 

In  the  light  of  the  doctrines  above  announced,  we  find  no  error  in 
the  rulings  of  the  court  upon  the  admission  of  evidence  and  the  sub- 
mission of  questions  to  the  jury  for  special  findings.  It  is  not  neces- 
sary to  state  the  special  questions  raised,  or  evidence  admitted  or 
excluded.  Neither  do  we  find  error  in  the  giving  or  refusal  to  give  in- 
structions asked  by  the  parties.  Those  given  are  in  harmony  with  the 
principles  of  this  opinion  ;  those  refused  are  not.  It  would  answer  no 
useful  purpose  to  refer  to  them  more  fully.  The  verdict,  as  well  as  the 
special  findings,  are  well  supported  by  the  evidence.  The  motions  to 
set  them  aside  were  properly  overruled. 

Affirmed.^ 

1  A  passage  presenting  authorities  on  this  point  has  been  omitted.  See  Harper  v. 
Albany  Mut.  Ins.  Co.,  ante,  p.  530  (1858);  and  Faust  v.  American  F.  Ins.  Co.  ante 
p.  540  (1895).  — Ed. 

2  See  Bersche  v.  Globe  Mut.  Ins.  Co.,  31  Mo.  546  (1862) ;  Pratt  i:  New  York  Cen- 
tral Ins.  Co.,  55  N.  Y.  505  (1874);  Titus  v.  Glens  Falls  Ins.  Co.,  81  N.  Y.  410,  418-419 
(1880);  Oakes  v.  Manufacturers'  F.  &  M.  Ins.  Co.,  135  Mass.  248  (1883J.  — Ed. 

U). 


1060  PENNSYLVANIA   FIRE   INS.    CO.   V.    KITTLE..        [CIIAP.  XI. 


PENNSYLVANIA  FIRE  INS.  CO.  v.  KITTLE. 
Supreme  Court  of  Michigan,  1878.      39  Mich.  51. 

Error  to  Superior  Court  of  Detroit.  Assumpsit.  Defendant  brings 
error. 

D.  C.  Ilolhrook,  for  plaintiff  in  error. 

Julian  G.  Dickinson  and  Theodore  Romeyn^  for  defendant  in  error. 

CooLEY,  4»  No  question  is  made  in  tliis  case  upon  the  policy  issued 
by  the  plaintiff  in  error  to  Mrs.  Kittle,  or  upon  the  loss  by  fire  of  the 
property  insured.  It  is  claimed,  however,  that  the  policy  became  void 
by  the  taking  out  of  another  insurance  on  the  same  property  without 
the  consent  of  or  notice  to  the  plaintiff  in  error,  and  also  that  the 
proofs  of  loss  are  insufficient.  Some  errors  in  the  admission  of  evi- 
dence are  also  assigned. 

I.  The  date  of  thepolicy  in  suit  was  February  4,  187G,  and  it_.eiilt. 
tained  a  provision  that  it  sh"ould  beconre"voi(l  in  case  of  subsequent_ 
insurance  not  assented  to.    Th^  plaintiff  below  put  in  evidence  a  policy 
fVTA^nngJjje  same  property,  issued_by  the  Citizens'   Fire  Insurance 
Company^LNew^Terse'v.  dated  November  1,  1876.^  .  .  . 

III.  The  court  instructed  the  jury  that  the  taking  out  of  the  second 
policy  avoided  the  first  unless  the  breach  of  the  condition  on  that  sub- 
ject was  waived  by  the  Pennsylvania  company  afterwards.  .  .  . 

IV.  The  question  of  waiver  was  submitted  to  the  jury  as  one  of  fact, 
and  they  appear  to  have  found  that  there  was  a  waiver.  The  facts 
submitted  were  that  after  the  loss  the  adjusting  agent  of  the  defendant 
called  upon  the  plaintiff,  and  after  investigation  made  an  offer  to  pay, 
by  way  of  compromise,  8375,  at  the  same  time  objecting  to  the  taking 
out  of  the  second  insurance  ;  that  this  offer  was  declined,  and  the  agent 
went  away,  and  soon  after  wrote  the  plaintiff  that  she  might  go  on  and 
make  out  her  proofs,  and  the  matter  would  then  be  taken  into  con- 
sideration ;  that  subsequent  correspondence  took  place  between  the 
agent  and  the  plaintiff  respecting  the  proofs,  the  former  demanding 
more  particularity  in  what  was  furnished ;  and  it  was  not  until  six 
months  after  the  offer  for  a  settlement  was  made  that  the  agent  notified 
the  plaintiff,  who  in  the  meantime  had  been  endeavoring  to  make  the 
proofs  satisfactory,  and  to  overcome  the  objections  he  was  making 
thereto,  that  ''in  addition  to  the  objections  heretofore  made,"  the 
defendant  would  insist  upon  the  forfeiture  because  of  the  second 
insurance. 

We  think  the  jury  were  warranted  in  finding  that  the  defendant,  by 
calling  upon  the  plaintiff  to  go  on  and  make  out  her  proofs,  and  by 
requiring  her  to  be  at  the  trouble  and  expense  of  correcting  these  to 

1  In  reprinting  the  opinion,  several  passages  foreign  to  waiverhave  been  omitted. 
—  Ed. 


SECT.  II.]  JOHNSON   V.   AMERICAN   INS.    CO.  1061 

satisf}"  the  criticism  made  by  the  agent,  without  giving  her  to  under- 
stand the  companj-  would  rely  upon  the  forfeiture,  should  be  held  to 
have  waived  it ;  and  that  if  it  was  the  purpose  all  the  while  to  insist 
upon  it,  tlie  agent  did  not  act  towards  her  in  good  faith.  We  also  think 
the  jury  would  have  a  right  to  infer  from  the  final  letter  of  the  agent 
that  he  understood  the  objection  of  forfeiture  had  not  been  insisted 
upon  previously.     Gans  v.  Insurance  Company,  43  Wis.  108.  ..   . 

We  think  the  case  was  fairly  tried  and  no  harmful  errors  committed, 
and  the  judgment  must  be  affirmed  with  costs. ^ 

The  other  justices  concurred. 


JOHNSON  V.    AMERICAN   INS.   CO. 
Supreme  Court  of  Minnesota,  1889.     41  Minn.  396. 

Action  on  a  fire  insurance  policy,  brought  in  the  District  Court  for 
Rock  Count}',  to  recover  §2,975.66,  the  amount  of  loss  as  fixed  by  ap- 
praisers chosen  by  the  parties  in  accordance  with  the  policy.  De- 
fence (among  others)  that  the  contract  was  void  because  (1)  when  the 
policy  was  procured  the  plaintiff  was  not  sole  owner  but  only  part 
owner  of  the  propert}',  which  fact  was  material  to  the  risk  and  was 
concealed  from  defendant ;  and  (2)  that  after  the  issue  of  the  policy 
the  defendant  procured  other  insurance  on  the  property  without  notice 
to  and  consent  of  defendant.  At  the  trial  before  Perkins,  J.,  the  plain- 
tiff had  a  verdict.  The  defendant  appeals  from  an  order  refusing  a 
new  trial.  The  second  assignment  of  error  was  based  on  an  instruction 
(duly  excepted  to)  to  the  effect  that  if  one  Joles  had  an  interest  in 
the  insured  property,  yet,  if  defendant,  with  full  knowledge  of  the 
facts  in  relation  thereto,  required  plaintiff  to  submit  to  an  exami- 
nation on  oath,  under  the  polic}',  and  to  enter  into  an  appraisal,  the 
defendant  thereby  waived  an}-  right  to  claim  that  the  policy  was  void 
on  account  of  Joles's  interest. 

Lusk  &  Bunn^  for  appellant. 

P.  E.  Broxcn^  for  respondent. 

Dickinson,  J.  The  appellant  must  be  sustained  in  its  first  assign- 
ment of  error.  B3'  the  terms  of  the  contract  of  insurance  it  was  pro- 
vided that  "  if  differences  shall  arise  between  the  parties  hereto 
touching  any  loss  or  damage,  .  .  .  the  matter  shall,  at  the  written 
request  of  either  party,  be  submitted  to  impartial  arbitrators,  mutually* 
chosen,  whose  award  in  writing  shall  be  binding  on  the  parties  as  to 

1  Ace:  Cannon  v.  Home  Ins.  Co.,  53  Wis.  585,  593-596  (1881);  Silverberg  v. 
Phenix  Ins.  Co.,  67  Cal.  36  (1883). 

See  Webster  v.  Phoenix  Ins.  Co.,  36  Wis.  67  (1874);  Northwestern  Mut.  L.  Ins. 
Co.  V.  Germania  F.  Ins.  Co.,  40  Wis.  446  (1876);  Titus  v.  Glens  Falls  Ins.  Co.,  81 
N.y.  410,  418-419  (1880).  — Ed. 


10*62  JOHNSON    V.    AMERICAN   INS.   CO.  [CHAP.  XL 

ginount  of  such  loss  or  damage,  hjit_shall_noi  decide  the,  ImMlity^ 
the  company  under  this  2)oUci/"  The  cliavge  of  the  court  was,  in  sub- 
stance,  that  an  arbitratioTrpursuaiit  to  the  contract  and  at  the  request 
of  tlie  defendant,  solely  as  to  the  amount  of  the  loss,  the  plaintiff  being 
tliereby  subjected  to  some  necessary  expense,  was  effectual  as  a  waiver 
on  the  part  of  tlie  defendant  of  all  right  to  claim  that  the  policy  was 
void  V)y  reason  of  any  facts  of  which  it  then  had  knowledge.  This  is 
opposed  to  the  express  agreement  of  the  parties,  as  we  construe  that 
part  of  the  policy  above  referred  to.  Tlie  contract  contemplates  and 
gives  to  either  party  the  right  to  demand  an  arbitration  and  final  ad- 
justment of  the  amount  of  the  loss  mei-ely,  distinct  from  any  question 
which  may  arise  as  to  the  legal  liability  of  the  insurer,  leaving  that  to 
be  determined  in  some  other  manner.  The  language  which  we  have 
italicized  was  employed  with  obvious  reference  to  an  arbitration  and 
award  as  to  the  amount  of  loss  or  damage,  and  was  intended  to  have 
some  practical  effect  in  such  a  case.  Yet  it  would  be  practically  nulli- 
fied if  it  were  held  that  the  mere  fact  of  submitting  the  question  of  the 
amount  of  the  loss  to  arbitration  would  be  effectual  to  preclude  the 
insurer  from  thereafter  bringing  in  question  its  legal  liability  under 
the  policy.  It  is  apparent  from  the  terms  of  the  contract  that  such 
was  not  the  intention  of  the  parties.  There  is  no  natural  or  necessary 
relation  between  the  amount  of  the  loss  suffered  from  a  fire  and  the 
legal  construction  or  the  validity  of  a  contract  of  insurance  upon  which 
the  sufferer  may  rely  for  indemnity;  nor  is  there  any  reason  in  the 
nature  of  the  subject  why,  if  the  parties  so  agree,  a  disputed  claim  as 
to  the  extent  of  the  damage  may  not  be  adjusted  by  arbitration  or 
otherwise,  without  either  party  being  thereby  precluded  from  question- 
ing the  legal  effect  or  validity  of  the  alleged  contract.  On  the  con- 
trary, considerations  of  expediency  might  well  prompt  the  parties  to 
agree  upon  a  s[)eedy  examination  and  appraisal  b}'  arbitrators  as  to 
the  amount  of  the  loss  merely,  at  a  time  and  under  circumstances 
which  might  be  most  favorable  for  such  purposes,  without  waiting 
until  a  determination  could  be  secured  as  to  the  legal  rights  and  obli- 
gations of  the  parties  under  the  contract.  The  error  involved  in  this 
instruction  may  have  affected  the  result,  and  a  new  trial  must  be 
allowed. 

The  second  assignment  of  error  raises  the  question  of  the  sufficienc}' 
of  evidence  to  justify  a  finding  that,  at  the  time  when  the  defendant 
required  the  plaintiff  to  submit  to  an  examination  under  oath  respect- 
ing the  loss,  the  defendant  had  notice  of  the  fact,  now  relied  upon  to 
avoid  the  contract,  that  another  person  than  the  assured  had  a  pro- 
l)rietary  interest  in  the  property.  In  view  of  our  decision  upon  the 
first  assignment  of  error,  we  need  not  saj-  more  upon  this  point  than 
that  we  think  there  was  evidence  proper  for  the  consideration  of  the 
jury. 

The  policy  contained  a  provision  that  it  should  be  void  if  other  in- 
surance should  be  secured  "  without  notice  to  and  consent  of  this  com- 


SECT.  II.]         JOHNSON  V.    AMERICAN  INS.  CO.  1063 

l)any,  in  writing  hereon."  It  also  contained  a  clause  authorizing  the 
defendant  to  terminate  the  contract  at  any  time,  at  its  option,  by  giv- 
ing notice  and  refunding  a  ratable  proportion  of  the  premium  for  the 
unexpired  term.  Other  insurance  was  effected,  and  there  was  evi- 
dence that  notice  of  this  was  communicated  orally  to  the  defendant's 
agent  long  before  the  fire.  The  court  charged  the  jury,  in  substance, 
that  if  such  were  the  case  it  became  the  duty  of  the  defendant  to  elect 
whether  it  would  cancel  the  polic}'  or  continue  it  in  force,  and  that,  if 
it  failed  to  cancel  the  policy  after  such  notice,  it  must  be  held  to  have 
elected  to  retain  the  contract  in  force,  and  to  have  waived  compliance 
with  the  specified  condition.  This,  we  think,  was  not  an  accurate  state- 
ment of  the  law,  and  ma}'  have  been  misleading.  The  provision  ia 
the  [)olicy  authorizing  the  company  to  terminate  the  contract  at  any 
time,  at  its  option,  bore  no  special  relation  to  that  concerning  other 
insurance.  By  the  plain  terms  of  the  policy-,  other  insurance  without 
the  consent  of  this  corapan}'  would  ipso  facto  avoid  the  contract ;  and 
in  the  case  of  a  contract  thus  avoided,  it  would  not  be  obligatory  upon 
the  insurer  to  repay  any  of  the  unearned  premium  ;  nor  would  he  be 
required  to  give  notice  that  he  should  insist  upon  and  avail  himself  of 
tlie  proper  legal  effect  of  the  agreement.  It  required  no  affirmative 
act  of  election  on  the  part  of  the  company  to  make  operative  the 
clause  avoiding  the  contract  whenever  the  specified  conditions  should 
occur. ^  Its  obligations  ceased  unless,  being  informed  of  the  fact,  it 
consented  to  the  additional  insurance,  or  in  some  manner  waived  the 
forfeiture.  It  is  not,  however,  contended  that  consent  may  not  be 
shown  in  some  other  manner  than  that  specified  in  the  policy.  The 
fault  in  the  charge  is  in  the  proposition  that  the  failure  to  cancel  the 
policy  by  the  affirmative  action  of  the  company  after  it  had  notice  of 
additional  insurance,  would  of  iiself  be  effectual  as  an  election  to  con- 
tinue the  policy  in  force.  Robinson  v.  Fire  Association,  63  Mich.  90, 
29  N.  W.  Rep.  521.  Order  reversed. 

1  Ace:  Robinson  i'.  Fire  Assn.,  63  Mich,  90  (1886) ;  Goldin  v.  Nortliei-n  Assur.  Co., 
46  Minn.  471  (1891)  ;  Carey  v.  German  American  Ins.  Co.,  84  Wis.  80  (1893) ;  Home 
lus.  Co.  V.  Scales,  71  Miss.  975,  980  (1894).  — Ed. 


1064  COBB    V.    INSUKANCE    CO.    OF   NORTH    AMERICA.       [CHAP.  XI. 


(b)   The  ifisurer's  conduct  after  the  isstdng  of  the  policy  and  at  or 
before  the  arising  of  the  defence. 

COBB   ET  AL.    y.   INSURANCE   COMPANY   OF   NORTH 
AMERICA. 

Supreme  Court  of  Kansas,  1873.     11  Kan.  93. 

Error  from  Shawnee  District  Court. 

On  the  27th  of  May,  1867,  the  defendant  in  error,  The  President  and 
Directors  of  the  Insurance  Company  of  North  America,  issued  its  policy 
of  insurance  to  one  G.  F.  Bernstein  to  insure  him  on  his  stock  of  goods 
in  Council  Grove  to  the  amount  of  S6,000.  Afterward  the  policy  was 
reduced  by  tlie  agent  of  the  defendant  to  $3,000.  On  the  12th  of 
March,  1868,  and  during  the  lifetime  of  the  policy,  tlie  goods  of  Bern- 
stein covered  by  the  policy  were  entirely  destroyed  by  fire.  Bernstein 
assigned  the  policy,  and  his  claim  thereon,  to  Cobb,  Stribling  &  Co., 
on  the  27th  of  June,  1868.  This  action  was  commenced  in  the  District 
Court  for  Shawnee  County  on  the  10th  of  March,  18G9.  The  pleadings 
consisted  of  the  petition,  the  answer,  a  reply,  and  a  general  demurrer 
to  the  reply.  The  averments  of  the  pleadings  sufficiently  appear  in  the 
opinion  of  the  court.  The  action  was  heard  upon  the  denuirrer  at  the 
June  Term,  1870,  of  the  District  Court,  and  judgment  upon  the  plead- 
ings was  given  in  favor  of  the  Insurance  Company,  and  plaintiffs  bring 
the  case  here  on  error. 

W.  P.  Douthitt,  and  C.  M.  Foster,  for  plaintiffs. 

A.  L.  Williams  and  Lewis  Hanhack,  for  defendant. 

The  opinion  of  the  court  was  delivered  by 

Brewer,  J.  The  plaintiffs  brought  their  action  on  a  policy  of  fire 
insurance 'issued  by  defendant.  Judgment  was  entered  in  favor  of  the 
defendant  on  the  pleadings,  and  of  this  judgment  plaintiffs  now  com- 
plain. Two  questions  are  presented  for  our  consideration.  First,  Was 
the  action  prematurely  brought?  The  policy  provided  that  the  loss 
should  "  be  paid  sixty  days  after  due  notice  and  proofs  of  the  same, 
made  by  the  assured  and  received  at  this  office."  The  petition  was 
filed  March  10,  1869.  The  answer  alleged  that  proofs  of  loss  were  not 
received  at  the  company's  office  until  January  26,  1869,  less  than  sixty 
days  prior  to  the  commencement  of  the  suit.  The  reply  admitted  this, 
but  averred  that  subsequently,  and  on  the  19th  of  February,  1869,  the 
defendant,  after  consulting  with  its  western  agent,  denied  all  liability 
under  the  policy,  and  "refused  to  pay  the  loss  or  any  part  of  it  on  the 
ground  that  the  circumstances  attending  the  fire  were  such  as  to  justify 
their  refusal  to  pay  the  same,"  and  also  requested  that  suit  be  brought 
in  Kansas  instead  of  Philadelphia.     That  a  stipulation  like  the  one  in 


SECT.  IT.]       COBB    V.   IN'SUR.A.NCE    CO.    OF   NOKTH    AMERICA.  1065 

question  is  valid,  and  tlmt,  when  the  company  recognizes  or  does  not 
den}'  its  liability  under  tlie  policy  for  the  loss,  an  action  before  the  ex- 
l)iration  of  the  stipulated  lime  is  prematurely  brought,  is  well  settled. 
It  is  simph"  a  contract  for  so  much  credit,  and  is  no  more  to  be  ques- 
tioned than  a  contract  for  like  credit  in  the  sale  of  goods.     It  is  equall}' 
well  settled  that  the  right  to  notice  and  proofs  of  loss  is  a  right  which 
the  company  may  waive,  and  that  wlien  the  company  denies  all  liability 
for  the  loss,  and  refuses  to  pay  for  the  same,  and  places  that  denial  and 
refusal  upon  grounds  other  than  the  failure  to  give  notice  or  to  furnish 
proofs,  such  denial  and  refusal  avoid  the  necessity  of  notice  and  proofs, 
and  are  a  waiver  of  them.     Vas  v.  Robinson,  9  Johns.  192  ;  Thomas  v. 
The  Ocean  Ins.  Co.,  6  Cow.  404  ;   McMasters  v.  The  Westchester  Co. 
Mutual  Ins.  Co.,  25  Wend.  379  ;    O'Neal  c.  The  Buffalo  Fire  Ins.  Co., 
3  Comst.  122  ;    Peoria  M.  &  F.  Ins.  Co.  v.  AVhitehill,  25  111.  466  ;    The 
President  and  Directors  of  the  Ins.  Co.  of  N.  A.  v.  McDowell,  50  111. 
120  ;  Schenck  v.  The  Mercer  Co.  M.  &  F.  Ins.  Co.,  4  Zabr.  447  ;  Graves 
V.  The  Washington  M.  Ins.  Co.,  12  Allen,  391  ;  Allyn  v.  The  Maryland 
Ins.  Co.,  6  Har.  &  .Johns.  408  ;    Taylor  r.  Merchants  Fire  Ins.  Co., 
9  How.  390.     It  would  seem  to  follow  that  when  the  company  by  denial 
of  its  liabilitj'  relieves  the  assured  from  the  necessity  of  giving  notice 
and  proofs,  it  also  waives  the  right  to  claim  sixty  days  from  notice  and 
proofs  for  payment.     Shall  it  be  permitted  to  deny  all  liability  under 
the  contract  for  the  loss,  and  at  the  same  time  have  all  the  benefits  of 
the  stipulations  of  the  contract  as  to  time  and  mode  of  payment?     A 
distinction  should  perhaps  be  noticed  to  guard  against  misapprehension. 
A  mere  waiver  by  the  company  of  one  provision  of  the  policy  intended 
for  its  benefit  is  not  a  waiver  of  the  others.     It  may  for  instance  for- 
mally waive  notice  of  proofs,  and  still  be  entitled  to  the  sixty  days  after 
such  waiver  for  payment.     In  such  case  the  waiver  stands  simply  in 
lieu  of  the  notice  and  proofs,  and  the  time  begins  to  run  from  the  waiver. 
In  all  this  the  company  recognizes  its  ultimate  liability  for  the  loss,  and 
simply  relieves  the  assured  from  some  one  or  more  of  the  steps  neces- 
sary to  fix  that  liability.     But  a  denial  of  all  liability  places  the  parties 
in  a  different  attitude.     In  effect  the  company  says  to  the  assured,  Not- 
withstanding you  give  us  notice  and  furnish  proofs,  and  wait  the  sixty 
days,  and  comply  with  all  the  provisions  inserted  in  the  policy  for  our 
benefit,  still  we  shall  not  recognize  your  claim,  nor  pay  for  the  loss. 
Why  compel  a  party  to  do  that  for  the  company,  which  when  done  the 
company  wholly  disregards?     After  having  done  all,   he  is  no  nearer 
payment  than  before,  and  must  still  appeal  to  the  courts.     Counsel 
seeks  to  parallel  this  with  the  case  of  a  promissory  note,  and  asks  if, 
in  case  the  company  had  given  a  note  payable  in  sixty  days,  an  action 
thereon  in  thirty  days  would  not  have  been  premature,  even  tliough  the 
company,  subsequently  to  the  execution  of  the  note,  denied  all  liability 
thereon.     The  parallel  is  not  good.     The  latter  is  wholly  a  unilateral 
contract,  with  rights  and  liabilities  fixed  and  determined,  and  without 
anything  for  adjustment,  and  without  occasion  for  act  or  waiver  by 


1066  COBB   V.   INSURANCE    CO.   OF   NORTH   AMERICA.      [CHAP.  XI. 

either  part}-.  To  change  the  liability  requires  a  new  promise,  not  a 
denial  or  waiver.  Tiie  decisions  have  all  been  in  liarmony  with  the 
views  herein  expressed.  Columbia  Ins.  Co.  v.  Catlett,  12  Wheat.  383  ; 
^Etna  Ins.  Co.  v.  McGuire,  51  111.  312  ;  Phillips  v.  Protection  Ins.  Co., 
14  Mo.  220;  Allyn  v.  Maryland  Ins.  Co.,  6  Harris  and  Johns.  408  ; 
The  N.  &  N.  Y.  Trans.  Co.  v.  Western  Mass.  Ins.  Co.,  34  Conn.  561, 
or  6  Blatchf.  C.  C.  241.  Counsel  contends  that  tliere  is  a  distinc- 
tion to  be  drawn  between  some  at  least  of  these  cases  and  the  present, 
in  tliis,  that  in  them  the  language  of  the  stipulation  was  "sixt}'  days 
after  proof  and  adjustment,"  while  in  this  it  is  ''after  due  notice  and 
proofs  made  by  the  assured  and  received  at  the  office  "  —  as  thougli  tiie 
former  required  mutual  actiou,  and  the  latter  onl}-  action  on  the  part  of 
the  assured.  Some  of  the  cases  cited  are  exactly  parallel.  In  the  Illi- 
nois case  the  language  is,  "  after  the  loss  sliall  have  been  ascertained 
ami  proved."  In  the  Missouri  case,  "after  the  loss  shall  have  been 
ascertained  and  proved,  and  the  proof  received  at  the  office."  And  in 
the  Connecticut  ease,  "after  sixt}'  days  from  notice,  and  the  furnishing 
of  preliminary  proofs  of  loss  to  the  underwriters."  But  even  under  the 
polic}'  in  this  case  there  is  to  be  mutuality  of  action.  The  [)roofs  are 
for  the  purpose  of  an  adjustment.  The  mere  production  of  these  proofs 
does  not  determine  the  amount  of  the  loss.  It  furnishes  a  basis  for  the 
action  of  the  parties  in  adjusting  this  amount  as  well  as  the  extent  of 
the  liability  of  the  company.  We  conclude,  then,  that  tlie  action  was 
not  prematurel}'  brought.^ 

Was  the  liability  of  the  defendant  destroj'ed  bj'  the  additional  insur- 
ance taken  out  oa  the  stock  of  goods  covered  by  this  policy?  The 
policy  stipulated  that  it  should  be  avoided  if  the  assured  made  an\-  other 
insurance  on  the  property  "  without  notice  to  and  consent  of  this  com- 
pany in  writing."  The  answer  alleged  a  subsequent  insurance  without 
such  notice  and  consent.  The  reply  admits  a  subsequent  insurance, 
and  then  alleges  that  tliis  policy  was  originall3"  for  $6,000,  but  was  re- 
duced by  defendant  to  $3,000  ;  that  at  the  time  of  such  reduction  the 
defendant  in  consideration  thereof  requested  the  assured  to  take  out  a 
policy  of  $3,000  in  the  Home  Ins.  Co. ;  that  in  pursuance  thereof  the 
assured  took  out  such  polic}',  which  was  the  additional  insurance  ;  that 
the  defendant  had  due  notice  thereof,  and  that  this  policy'  was  delivered 
to  the  defendant's  agents  for  the  purpose  of  having  this  consent  indorsed 
in  writing,  and  the  assured  being  ignorant  of  the  mode  of  transacting 
such  business  relied  wholly'  upon  defendant  and  its  agents  to  have  the 
business  correctly  done ;  and  that  the  defendant  and  its  agents,  con- 
triving and  intending  to  cheat  and  defraud  the  assured,  negligently  and 
fraudulent!}'  omitted  to  indorse  the  consent  in  writing.  Upon  these 
facts  was  the  policy  rendered  null  and  void?  It  will  be  noticed  that 
the  reply  alleges  notice,  and  that  the  additional  insurance  was  at  the 
request,  which  implies  the  consent,  of  the  defendant ;  so  that  to  this 

1  Ace:  Home  F.  Ins.  Co.  v.  P'allon,  45  Neb.  554  (1895) ;  Insurance  Co.  v.  Hancock, 
lOG  Teuu.  513  (1901).  — Ed. 


SECT.  II.]       COBB   V.    INSURANCE   CO.    OF   NORTH   AMERICA.  1067 

extent  the  requirements  of  the  policy  were  comph'ed  with.  The  only 
thing  lacldng  is  the  written  evidence  of  tlie  consent.  The  clause  re- 
quiring consent  in  writing  is  a  condition  for  the  benefit  of  the  insurer. 
Like  any  other  condition  of  a  contract  it  may  be  waived  by  tlie  party 
in  whose  favor  it  exists.  By  what  kind  of  testimony  such  waiver  must 
be  pioved,  is  a  question  we  need  not  consider.  Certain  facts  are  alleged, 
and  for  the  purpose  of  the  case,  as  it  now  stands  before  us,  must  be 
taken  as  iiroved  and  true.  Do  these  facts  amount  to  a  waiver?  or  per- 
haps more  correctly,  is  the  insurance  company  estopped  by  its  conduct 
from  insisting  on  a  breach  of  this  condition  as  a  ground  of  forfeiture? 
The  defendant  reduced  its  policy  from  $6,000  to  $3,000,  and  requested 
t!ie  insured  to  take  out  a  policy  of  $3,000  in  a  particular  company  ;  and 
when  in  obedience  to  this  request  he  had  taken  out  such  policy,  intend- 
ing \o  cheat  and  defraud  him,  fraudulently  omitted  to  indorse  its  consent 
ii  writing  upon  the  policy  when  presented  for  that  purpose.  The  ques- 
tion of  the  power  of  au  agent  does  not  come  in  here,  fur  though  some 
of  the  acts  are  alleged  to  have  been  done  by  and  tlu-ough  an  agent,  yet 
the  acts  arc  all  charged  to  have  been  the  acts  of  the  defendant.  The 
case  stands  as  though  the  transactions  were  wholly  between  two  indi- 
vidual principals.  The  company,  when  it  requested  the  insured  to  take 
out  the  additional  insurance,  placed  itself  under  obligations  to  give  its 
consent  in  writing,  and  to  do  all  other  acts  which  might  l)e  necessary  to 
prevent  such  additional  insurance  from  injuriously  affecting  the  rights 
of  the  insured  in  its  own  policy.  It  could  not  subject  him  to  the  labor, 
annoyance,  and  expense  of  taking  out  a  new  policy,  and  then  refusing 
its  consent  insist  that  its  policy  was  avoided,  and  the  premium  forfeited. 
Tlie  law  will  not  tolerate  such  unconscionable  dealing ;  and  tliat  which 
it  cannot  do  directly,  by  refusal,  it  cannot  do  indirectly  by  fraud.  Upon 
this  question  therefore  we  hold  against  the  defendant.^ 

These  being  the  only  questions  presented  for  our  consideration  we 
sliali  be  compelled  to  order  a  reversal  of  the  judgment  of  the  District 
Court,  and  remand  the  case  for  further  proceedings.  It  is  perhaps  fit- 
ting to  say  that  there  is  another  question  upon  which  counsel  informs 
us  tlie  decision  of  the  District  Court  was  placed,  but  Avhich  somehow 
docs  not  appear  in  the  record  as  it  comes  to  us.  Of  course,  therefore, 
it  would  be  improper  for  us  to  express  any  opinion  concerning  it. 

The  judgment  will  he  reversed. 
All  the  justices  concurring. 

1  Seo  Maryland  F.  Ins.  Co.  v.  Gusdorf,  43  Md.  .506  (1875);  Westchester  F.  Ins.  Co. 
V   Earle.  .33  Mich   143  (1876) ;  Allemania  F.  Ins.  Co.  v.  Hurd,  37  Mich.  11  (1877). 

Compare  Cleaver  v.  Traders'  Ins.  Co.  65  Mich.  527  (1887) ;  Moore  v.  Hanover  F 
Ins.  Co.,  141  N.  Y.  219  (1894).  — Ed. 


10G8  HOME    PKOTECTION    V.   AVERY.  [CHAP.  XI.  , 

HOME  PROTECTION  v.  AVERY. 
Supreme  Court  of  Alabama.,  1888.     85  Ala.  348. 

Appeal  from  the  Circuit  Court  of  Tallapoosa. 

Tried  before  the  Hon.  James  W.  Lapsley. 

Action  on  polic}'  of  insurance  against  fire,  commenced  October  1, 
1886  ;  plea  of  general  issue,  and  special  plea  of  forfeiture  ;  verdict  and 
judgment  for  plaintiff,  under  charges  of  court,  which  arc  now  assigned 
as  error,  with  rulings  in  admission  of  evidence.  The  opinion  states 
the  material  facts,  and  makes  it  unnecessary  to  set  out  the  numerous 
rulings  to  which  exceptions  were  reserved. 

JI^A.  Garrett,  with  wliom  was  Jas.  E.  Cobb,  for  appellant. 

J/io.  M.  Chilton,  contra. 

Stone,  C.  J.  It  is  shown  in  the  record  before  us  that  the  appellee, 
a  married  woman,  took  out  three  i)olicies  in  the  appellant  corporation, 
a  fire  insurance  company.  Two  of  them  were  against  losses  by  fire  or 
lightning,  and  the  third  one  against  losses  by  storms.  Only  one  of  the 
policies  is  before  us,  and  it  is  the  foundation  of  the  present  action.  It 
bears  date  November  27,  1883,  was  to  run  five  years  from  date,  and 
was  based  on  a  gross  premium  of  forty-four  dollars,  one-fiftii  of  which 
—  $8.80-100  dollars  — was  paid  in  advance,  and  the  remaining  four- 
fifths  were  to  be  paid  in  instalments  of  the  same  amount,  on  the  15th 
day  of  March,  severally,  in  the  years  1885-6-7-8.  This  policy  insures 
two  separate  barns,  with  their  contents  of  hay  and  grain,  each  sepa- 
rately valued.  The  number  of  this  policy  is  50,835.  The  barns  and 
their  contents  were  destroyed  by  fire,  December  4,  1885.  Tlie  defence 
was  rested  alone  on  the  fact,  not  disputed,  tliat  the  assured  had  failed 
to  pay  the  instalment  of  premium  — $8.80-100  — due  March  15,  1885. 

One  clause  of  the  policy  of  insurance  is  in  this  language:  "This 
company  shall  not  be  lial)le  for  any  loss  or  damage  under  this  policy, 
if  default  sliall  have  been  made  in  the  payment  of  any  instalment  of 
premium  due  by  the  terms  of  the  instalment  note.  On  payment  by  the 
assured  of  all  instalments  of  premiums  due  under  this  policy,  and  the 
instalment  note  given  thereon,  the  liability  of  this  company  on  this 
policy  shall  again  attach,  provided  written  consent  of  the  secretary  of 
this  company  be  first  obtained ;  and  the  policy  [sliall]  be  in  force  from 
and  after  such  payment,  unless  this  policy  shall  be  void  and  inoperative 
from  some  other  cause.  But  this  company  shall  not  be  liable  for  any 
loss  happening  during  the  continuance  of  such  default  of  payment.  .  .  . 
It  is  further  provided  that  no  attempt  by  law  or  otherwise  to  collect 
any  note  given  for  the  cash  premium,  or  any  instalment  of  premium 
due  upon  any  instalment  note,  shall  be  deemed  a  waiver  of  any  of  the 
conditions  of  this  policy,  or  shall  be  deemed  in  any  manner  to  revive 
the  policy  ;  but  upon  payment  by  the  assured  or  his  assignee  of  the  full 
amount  due  upon  such  note,  and  costs,  if  any  there  be,  this  policy  shall 


SECT.  II.]  HOME   PROTECTION   V.   AVERY.  1069 

thereupon  be  in  full  force,  unless  the  same  be  inoperative  or  void  from 
some  other  cause  than  the  non-payment  of  note." 

The  application  for  the  policv,  and  which  is  made  a  part  of  the  con- 
tract of  insurance,  contains  a  sti[)ulation  similar  to  that  above. 

It  is  contended  for  appellee,  that  the  insurance  compan}-  waived  all 
ground  of  forfeiture  in  this  case,  and  several  grounds  are  urged  in  sup- 
port of  this  contention :  First,  it  is  claimed  that  it  was  the  custom  of 
the  insurance  company  to  notify  its  customers  when  their  premium 
notes  fell  due,  and  that  it  failed  to  do  so  in  this  case  ;  second,  that  the 
company  never  gave  notice  of  any  claim  that  the  polic}'  was  forfeited 
until  after  the  destruction  of  the  propert}'  by  fire  ;  third,  tliat  after  the 
company-  had  notice  of  the  loss,  it  informed  the  assured,  by  letter  from 
its  secretarv,  that  its  adjuster  would  be  around  soon  and  adjust  the 
amount  of  the  dan)age. 

Testimony  was  offered  tending  to  show  it  was  the  custom  of  the 
appellant  insurance  company  to  give  notice  to  its  customers  when  their 
instalments  of  premium  would  mature.  There  was  testimony  that  such 
had  been  the  practice  of  this  compan\'  in  prior  dealings  with  the  ap- 
pellee and  with  other  persons  who  held  its  policies.  And  there  was 
testimony,  not  denied,  that  the  Home  Protection  Company  had  given 
notice  of  the  time  when  premiums  would  mature  on  the  otlier  two  poli- 
cies held  by  the  appellee,  and  that  such  maturing  premiums  had  been 
prompth'  paid.  It  was  testified  that  no  such  notice  had  been  given  as 
to  this  policy,  and  if  notified  tlic  assured  was  able  and  would  have  paid 
it.  This  testimon}-  was  not  controverted,  and  no  explanation  was 
offered  why  notice  was  given  in  the  one  case  and  not  in  the  other. 
Almost  the  only  questions  presented  for  revision  in  this  case  grow  out 
of  the  admission  of  the  foregoing  testimonv  against  appellant's  objec- 
tion and  charges  of  the  court  based  upon  it,  to  which  exceptions  were 
also  reserved.  There  were  man\'  charges.  The  substance  of  them  was, 
that  ''  If,  by  the  statements  of  its  authorized  agent  after  the  making 
of  the  policy,  and  by  its  course  of  business  with  plaintiff  and  others, 
her  neighbors,  she  was  induced  to  believe  that  defendant  would  notify 
her  of  the  time  of  payment,  and  would  not  insist  on  a  forfeiture  in  case 
of  an  unintentional  failure  to  pay  the  premium  note,  and  she  did  unin- 
tentionally fail  to  pay  the  note,  then  the  defendant  cannot  in  good 
conscience  be  allowed  to  set  up  the  non-payment  as  a  defence." 

The  rule  and  its  exception  are  correctly  stated  in  May  on  Insurance, 
§  3.)6,  as  follows:  "No  notice  is  required  from  the  insurer  to  the 
insured  that  the  premium  or  note  given  for  premium  is  about  to  be- 
come due  unless  the  custom  and  course  of  dealing  between  them  has 
been  such  ^s  to  justify  the  insured  in  the  belief  that  such  notice  would 
be  given,  and  induce  him  to  rely  upon  it  to  his  prejudice."  Helm  w. 
Phila.  Life  Ins.  Co.,  31  Penn.  St.  107;  Union  Ccn.  Life  Tns.  Co.  v. 
Bernard,  33  Ohio  St.  459.  See  also,  as  to  waiver  of  forfeiture,  Boulton 
V.  Amer.  Mut.  Life  Ins.  Co.,  25  Conn.  542;  McAllister  v.  N.  E.  Mut. 
Life  Ins.  Co.,  101  Mass.  558;   Buckbee  v.  U.  S.  Ins.  An.  &  Tr.  Co., 


1070  HOME    PROTECTION    V.    AVERY.  [CHAP.  XT. 

18  Barb.  541 ;  Mut.  Life  Ins.  Co.  v.  French,  30  Ohio  St.  240  ;  Brook. 
\\n  Life  Ins.  -Co.  v.  Bledsoe,  52  Ala.  538  ;  P.  &  A.  Life  Ins.  Co.  r. 
Young,  58  Ala.  476. 

It  is  not  our  intention  to  deny  that,  if  a  policy  stipulate  that  it  shall 
be  void  on  non-payment  of  premium,  and  there  is  nothing  else  in  the 
transaction,  such  forfeiture  will  be  enforced.  What  we  do  decide  is, 
that  if  an  insurance  compau}-,  b}-  its  habits  of  business,  create  in  the 
mind  of  a  policy-holder  the  belief  that  payment  may  be  delayed  until 
demanded,  or  otherwise  waive  the  right  to  demand  a  forfeiture,  this  is 
binding  on  the  company,  notwithstanding  the  express  letter  of  the 
policy  may  not  have  been  conformed  to.  Mut.  Ben.  Life  Ins.  Co.  v. 
Jarvis,  22  Conn.  133;  Amer.  Ins.  Co.  v.  Henly,  40  Ind.  515;  Williams 
V.  AUtany  Ins.  Co.,  19  Mich.  451  ;  Amer.  Ins.  Co.  v.  Stoy,  41  Mich. 
385;  Howell  v.  Knickerbocker  Life  Ins.  Co.,  44  N.  Y.  276;  Schmidt 
V.  Peoria  Mar.  &  Fire  Ins.  Co.,  41  111.  295  ;  Garlick  v.  Miss.  Val.  Ins. 
Co.,  44  Iowa,  553;  Taylor  v.  Mer.  Fire  Ins.  Co.,  9  How.  U.  S.  390. 
See  also,  as  to  waiver  of  written  tewns  of  contract,  Liddell  v.  Chidester, 
84  Ala.  508. 

The  rulings  in  this  case  are  in  substantial  conformity  with  the  prin- 
ciples declared  above,  and  we  find  no  error  of  which  appellant  can 
complain.  Affirmed.'^ 

i  In  Alexander  v.  Continental  Ins.  Co.,  67  Wis.  422,  427-428  (1886),  Taylor,  J., 
for  the  court,  said :  — 

"  Tlie  insured  had  taken  a  policy  in  which  there  is  a  condition  that  the  policy  shall 
terminate  if  any  instalment  on  the  premium  note  is  not  paid  ])V<jnij)tly  on  or  before 
the  day  it  becomes  due.  The  company  has  no  phice  in  the  vicinity  of  the  insured 
where  the  money  can  be  paid.  The  agent  says  to  the  insured  :  '  True,  the  policy  says 
the  liability  of  the  company  shall  cease  immediately  if  the  money  be  not  paid  on  the 
day,  but  I  say  to  you,  as  agent  of  the  company,  that  I  will  give  you  notice  when  pay- 
ment is  required.'  The  insured,  relying  upon  this  promise  of  tlie  agent,  does  not  pay 
on  the  day.  Two  months  or  more  after  the  day,  the  agent  appears  and  demands 
payment,  and  payment  is  made.  No  claim  is  made  that  there  lias  been  a  forfeiture  of 
the  policy,  or  that  it  is  necessary  to  have  the  policy  renewed  by  procuring  the  written 
consent  of  the  company  in  the  manner  prescribed  in  the  contract,  and  the  agent  re- 
news his  promise  to  give  notice  when  the  next  and  subsequent  instalments  should 
become  due,  and  says  he  will  call  upon  her  personally  for  payment.  No  notice  is 
afterwards  given,  and  no  one  calls  for  the  money.  The  note  is  retained  by  the  com- 
pany, and  not  presented  for  payment,  nor  payment  thereof  demanded  in  any  way,  and 
in  the  meantime  a  loss  occurs. 

"  The  condition  or  forfeiture  in  the  policy  having  been  once  waived,  and  the  in- 
sured having  been  led  to  believe  that  it  would  not  be  thereafter  enforced,  the  company 
cannot  enforce  it  except  by  an  actual  demand  of  payment  of  the  money  due  on  ilie 
note  and  a  neglect  or  refusal  to  pay  the  same,  or  by  a  return  of  the  note  to  the  insured 
with  notice  that  the  company  insists  upon  the  condition  in  the  policy.  See  Marcus  '». 
St.  L.  Mut.  L.  Ins.  Co.,  68  n!  Y.  62.5  ;  Dilleber  v.  K.  L.  Ins.  Co.,  76  N.  Y.  567 ;  Sheldon 
V.  A.  F.  &  M.  Ins.  Co.,  26  N.  Y.  460,  465;  Goit  v.  Nat.  P.  Ins.  Co.,  25  Barb.  J  89; 
Devine  v.  Home  Ina.  Co.,  32  Wis.  471,  477;  Howell  v.  K.  L.  Ins.  Co.,  44  N.  Y.  276, 
283." 

Compare  Garlick  v.  Mississippi  Valley  Ins.  Co.,  44  Iowa,  553  (1876).  —  Ed. 


SECT.  II-l  BARRETT    V.    UNION    MUTUAL   FIRE    INS.    CO.  1071 


(c)    27ie  insurer's  conduct  at  or  before  the  issidng  of  the  policy  and 
at  or  before  the  arising  of  the  defence. 

BARRETT  and  Others  v.   UNION   MUTUAL  FIRE 
INSURANCE  CO. 

Supreme  Judicial  Court  of  Massachusetts,  1851.     7  Cusb.  175. 

This  was  an  action  of  assumpsit  by  the  plaintiffs,  as  the  commis- 
sioners of  the  sinking  fund  of  the  "Western  Raih'oad  Corporation, 
against  the  defendants,  a  mutual  fire  insurance  compan}',  established 
in  Boston,  on  a  policy  of  insurauce  against  fire,  originally  issued  in 
favor  of  Henry  W.  Nelson,  and  payable,  in  ease  of  loss,  to  Josiah 
Quinc}",  Jr. 

The  policy  witnessed  that,  in  consideration  that  said  Nelson,  a 
member  of  the  corporation,  "  agreeably  to  the  by-laws  of  said  com- 
pany, hereunto  annexed,"  had  paid  a  certain  sum  and  had  bound  and 
obliged  himself  to  pay  all  suras  assessed  upon  him,  pursuant  to  tlie 
by-laws,  he  was  insured  on  certain  buildings  therein  described,  against 
loss  or  damage  by  fire,  under  the  conditions  and  limitations  expressed 
in  the  by-laws,  and  subject  to  the  lien  given  by  the  thirty-seventh 
chapter  of  the  revised  statutes  upon  the  buildings  and  the  land  under 
and  belonging  to  the  same,  the  sum  of  82,600.  ^  In  the  margin  of  the 
policy  was  a  memorandum  that  $2,600  on  the  same  premises  was 
insured  with  the  State  Mutual  Fire  Insurance  Company. 

The  charter  and  by-laws  of  the  defendants  were  annexed  to  the 
policy.  The  fourteenth  article  of  the  by-laws  provided,  in  conformity 
with  the  Rev.  Sts.  c.  38,  §  28,  that  "  not  more  than  three- fourths  of 
the  value  of  any  building  shall  be  insured  by  this  company,  and  as 
much  less  as  may  be  agreed  upon."  The  fifteenth  aiticle  provided  as 
follows:  "All  policies  which  may  issue  from  this  company,  to  cover 
property  previously  insured,  shall  be  void,  unless  such  previous 
insurance  be  expressed  in  the  policy  at  the  time  it  be  issued." 

On  the  policy  was  indorsed  a  relinquishment,  by  Josiah  Quincy,  Jr., 
of  his  interest  therein,  and  also  the  following  :  "Pay  the  within,  in  case 
of  loss,  to  the  commissioners  of  the  sinking  fund  of  the  Westera  Rail- 
road Corporation,  as  mortgagees.  H.  W.  Nelson.  Consent,  Enoch 
HoBART,  President." 

At  the  trial  before  the  jury,  on  the  opening  of  the  plaintiffs'  case,  it 
appeared  that  at  the  time  of  the  execution  and  delivery  of  the  policy  in 
suit,  there  was  a  prior  insurance  in  f;\vnr  of  Henry  W.  Nelson,  then 
existing  and  in  force,  and  intended  tobc  kept  in  force,  to  the  amount 

Upon  this  fact  appearing,  the  defendants  insisted  that  as  it  was  not 


1072  BARRETT   V.    UNION   MUTUAL   FIRE   INS.    CO.         [CHAP.  XI. 

mentioned   in  this   polic}',  tlie  polic}'   was   void  by  the  terms  of  it, 
according  to  the  b3--laws  of  the  defendants  referred  to  tlierein. 

In  ansj\er  to  tliis  ground  of  defence,  tlie  plaintiffs  offered  to  prove 
by  parol,  tliat  tlie  fact  of  the  existence  of  such  prior  insurance  and  its 
a m o uivU_and  the  understanding  of  the  party  insured,  that  such  prior 
insurance  was  to  stand  and  remain  in  force  upon  the  propertj-^  were 
made  knowntoJLhe  defendants,  and  jvsseiited  to  by  them,  prior  to  the 
maIang~of  this  policy,  and  pending  the  negotiation  thfirpfor,~flnd  dn^yn 
to  the  time  of  the  execution  and  delivpry  thftrnof ;  thnt  this  policy 
was  prepared  by  the  defendants,  and  delivered  to  the  assured,  as  he 
supposed,  in  execution  of  and  according  to  the  intention  aforesaid  ; 
that  he  did  not  read  the  polic}'  at  the  time  of  taking  it,  nor  afterwards  ; 
that  nothing  was  said  to  him  about  the  fact  of  such  prior  insurance  not 
being  stated  in  it,  and  that  neither  he  nor  the  plaintiffs  knew  that  such 
fact  was  not  stated  in  the  polic}',  until  after  the  loss  ;  and  that  the 
amount  agreed  to  be  insured  bv  the  defendants  and  by  the  State  Mutual 
Company,  mentioned  on  the  margin  of  the  policy  sued  upon,  together 
with  the  amount  of  such  prior  insurance  so  notified  to  the  defendants, 
did  not  exceed  the  value  of  the  property  insured.  The  defendants 
objected  that  such  testimon\"  was  incompetent  and  inadmissible. 

It  was  agreed  that  after  the  application  for  insurance  in  the  present 
case,  the  president  of  the  defendants,  and  the  president  of  the  State 
Mutual  Fire  Insurance  Compau}*  (which  gave  a  similar  policy),  exam- 
ined the  buildings  to  be  insured,  and  informed  the  applicant  that  the 
amount  of  65,200,  hisured  by  both  policies,  was  the  highest  valuation 
which  they  could  put  upon  three-fourth  parts  thereof,  and  was  therefore 
all  tiie  risk  which  they  could  take  upon  the  same. 

The  case  was  submitted  upon  the  foregoing  statement,  with  the 
agreement  that  if  the  court  should  be  of  opinion,  that  the  foregoing 
evidence  would  be  competent,  the  case  was  to  be  sent  to  a  jurv  upon 
the  facts  ;  but  if  the  court  should  be  of  a  different  opinion,  or  that  the 
plaintiffs  could  not  maintain  any  action  on  this  policy,  by  reason  of 
their  not  being  in  law  members  of  the  company,  or  insured  by  the 
policy  declared  on,  or  otherwise,  then  the  plaintiffs  were  to  become 
nonsuit,  and  judgment  be  rendered  for  the  defendants. 

a.  Choate  and  Ellis  G.  Loring,  for  the  plaintiffs. 

C.  G.  Xoring,  for  the  defendants. 

Fletcher,  J.     It  is  maintained  b}'  the  defendant,  that  this  policy  is 
void,  because  there  is  no  mention  in  it  of  the  prior  policy  of  $2,000^3 
IS  expressly  required  by  the  fifteenth  article  of  the  b3'-laws  to  which 
reference  was  made  in  thej)olicv^   ThaFthe  existence  of~this~pnor~~ 
policylvaFa  very  material  fact,  there  can  be  no  doubt. 

The  defendants  are  restrained  by  their  own  by-laws,  as  also  bj'  the 
statute,  from  insuring  more  than  three-fourths  of  the  value  of  any 
building;  for  the  purpose,  and  with  the  design,  of  leaving  the  insured 
his  own  insurer  for  the  remaining  quarter  part.  It  is  manifestly  im- 
port:uit  to  the  insurers,  that  the  insured  should  thus  have  a  common 


SECT.  II.]  BARRETT   V.   UNION   MUTUAL   FIRE    INS.    CO.  1073 

interest  with  them  in  the  preservation  of  the  property.     It  is  tlierefore 
expressly  provided,  by  the  fifteenth  article  of  the  by-laws  of  the  defend- 
ants, that  all  policies  issued  by  them  upon  property  previously  insured 
shall  be  void,  unless  such  previous  insurance  is  mentioned  in  the  policy 
at  the  time  it  is  issued.     These  by-laws  of  the  defendants  are  annexed 
to  the  policy,  and  are  expressly  referred  to  as  proving  the  conditions 
and  limitations  upon  which  the  insurance  is  made,  and  thus  expresslv 
form  a  part  of  the  contract  of  insurance.     Now,  in  point  of  fact,  at  the 
time  when  this  policy  was  issued,  there  was  a  previous  insurance  which 
was  not  expressed,  nor  in  any  way  mentioned  or  referred  to  in  the 
polic}-.     By  its  own  express  terms,  therefore,  this  policy  is  void.     The 
position,  that  the  policy  is  thus  void,  upon  the  facts  stated,  is  sustained 
by  numerous  and  decisive    authorities.     Jackson  v.  Mass.  Mut.  Fire 
Ins.  Co.,  23  Pick.  418  ;  Liscom  v.  Boston  Mut.  Fire  Ins.  Co.,  9  Met. 
205  ;  Holmes  v.  Charlestown  Mut.  Fire  Ins.  Co.,  10  Met.  211 ;  Roberts 
V.   Chenango  County  Mut.  Ins.  Co.,  3  Hill,  501 ;  Carpenter  v.  Provi- 
dence Washington  Ins.  Co.,  16  Pet.  495 ;  Jennings  v.  Chenango  County 
Mut.  Ins.  Co.,  2  Denio,  75.     In  truth,  the  counsel  for  the  plaintiffs  do 
not  den}-,  but  admit,  that  the  policy  is  void,  unless  the  omission  to  state 
the  previous  insurance  in  the  policy  can  be  supplied  or  remedied  by 
parol  evidence.      The  principal  question,   therefore,   in   this  case  is, 
whether  or  not   the  parol  evidence  offered  by  the  plaintiffs  for  this 
purpose  was  admissible.     The  decision  of  this  question  depends  upon 
a  very  familiar  and  well-settled  principle  of  law.     It  is  a  general  rule, 
that  parol  evidence  can  never  be  received  to  contradict  or  materially 
vary  the  terms  of  a  written  agreement.     This  is  undoubtedly  a  wise 
and  salutary  rule,  though  if  it  be  understood  in  too  literal  and  broad  a 
sense,   it  may  exclude  the  admission  of  parol  evidence,  in  cases  in 
which  it  is  usually  received,  to  justify  a  construction  which  could  not 
otherwise  have  been  adopted.     In  all  cases,  where  a  sensible  interpre- 
tation can  be  put  upon  the  policy  without  the  aid  of  parol  evidence,  the 
effect  of  such  evidence  is  materially  to  vary  the  legal  construction  of 
the  contract  of  the  parties. 

The  true  meaning  of  the  rule  excluding  parol  evidence  is,  that  such 
evidence  shall  never  be  used  to  show  that  the  intention  of  the  parties 
was  directly  opposite  to  that  which  their  language  expresses,  or  sub- 
stantially different  from  any  meaning  that  the  words  they  have  used, 
upon  any  construction,  will  admit  or  convey.  In  the  present  case,  it  is 
quite  clear  that  the  parol  evidence  is  offered  to  show  that  the  intention 
of  the  parties  was  substantially  different  from  any  meaning  that  the 
words  they  have  used,  upon  any  construction,  will  admit  or  convey. 
The  manifest  effect  was  to  substitute  an  oral  contract  for  that  which  is 
contained  in  the  written  instrument.  The  evidence  was  not  offered  for 
the  purpose  of  aiding  in  putting  a  construction  upon  the  policy,  as  it  is, 
according  to  its  true  intent  and  meaning ;  but  to  show  that  the  inten- 
tion of  the  parties  was  materially  different  from  any  meaning  that  the 
words  which  they  have  used,  upon  any  construction,  will  admit  of  or 

68 


1074  BAKKETT   V.   UNION   MUTUAL   FIllE    INS.    CO.         [CHAP.  XI. 

import.  This  would  in  fact  be  substituting  an  unwritten  in  the  place 
of  the  written  contract ;  the  unwritten  ditlering  essentially  from  the 
written  one. 

It  was  said  in  the  argument,  that  there  was  a  mistake  or  fault,  on 
the  part  of  the  defendants  ;  that  the  policy  was  prepared  by  the  defend- 
ants ;  and  that  they  should  have  expressed  it  in  tiie  prior  policy,  and 
omitted  to  do  so  by  design  or  by  wilful  negligence  ;  and  that  the  assured 
did  not  read  it,  but  supposed  that  the  prior  policy  was  exi)ressed.  The 
assured  certainly  had  abundant  opportunity  to  read  the  policy,  and 
need  not  have  accepted  it,  if  it  was  not  satisfactoiy  to  him,  according 
to  the  agreement  of  the  parties.  If  the  assured  accepted  the  policy, 
without  looking  at  it,  or  knowing  what  it  was,  he  would  seem  himself 
to  be  liable  to  the  charge  of  culpable  negligence  made  against  the 
defendants.  Butjfjrom  mistake  or  fraud  an  agrecmenUs  so  defective, 
that  instead  of  conveying  the  meaning  of  the  parties,  it  expresses  a 
different  or  opposite  intent,  if  relief  can  be  ^iven  at  all,  it  must  be 
son^ exclusively  in  a  court  of  equity.  A  court  of  law  must  act  on 
tlie  agreement  as  it  is ;  it  cannot  strike  out  or  change  any  part  or  add 
anything  to  it,  so  as  to  contradict  or  vary  the  agreement  contained  in 
the  written  instrument.  The  parol  evidence  offered  in  this  case  was 
therefore  clearly  not  admissible;  and  taking  the  policy  as  it  is,  the 
plaintiffs  cannot  recover.  The  plaintiffs,  being  assignees  of  the  policy, 
can  have  no  better  right  to  recover  than  the  original  party  insured. 

It  is  unnecessary  to  decide  the  question  whether  the  plaintiffs  can 
maintain  this  action  in  their  own  name.  But  as  the  [)laintit1s  had  an 
insurable  interest  in  the  property,  and  took  the  policy  with  the  consent 
of  the  defendants  to  pay  the  loss  to  them,  there  would  not  seem  to  be 
any  reason  why  they  should  not  recover  the  loss,  in  this  form  of  action. 
But  if  they  could  not  recover  in  this  form  of  action  on  the  policy,  it 
would  seem  that  they  might  recover  in  their  own  names  ui)on  a  proper 
count  upon  the  express  promise  of  the  defendants  to  pay  the  loss  to 
them,  if  the  defendants  were  liable  to  pay  the  loss  to  any  one. 

Plaintiffs  7ionsidt} 

1  Arx:  Jennings  v.  Chenango  County  Mut.  Ins.  Co.,  2  Denio,  7.5  (1846),  (but,  for 
the  present  doctrine  in  New  York,  see  the  later  cases  in  this  subdivision)  ;  Dewees  v. 
Manhattan  In.s.  Co.,  35  N.  J.  L.  (6  Vroom)  366,  371-376  (1872)  ;  Franklin  Ins.  Co.  v. 
Martin,  40  N.  J.  L.  (11  Vroom)  568,  573-581  (1878)  ;  Batclielder  v.  Queen  Ins.  Co., 
1 5.-)  Mass.  449  (1883) ;  Bennett  v.  St.  Paul  F.  &  M.  Ins.  Co  ,  55  N.  J.  L.  (26  Vroom) 
377  (1893) ;  Thomas  v.  Commercial  Union  Assur.  Co.,  162  Mass.  29  (1894) ;  Northera 
Assur.  Co.  .;.  Grand  View  Building  Assn.,  22  S.  C.  Rep.  133  (1902). 

Conii)are  Carson  v.  Jersey  City  Ins.  Co.,  43  N.  J.  L.  (14  Vroom)  300  (1881). 

In  Batchelder  v.  Queen  Ins.  Co.,  supra  (1883),  Holmes,  J.,  for  the  court  said  :  — 

"The  policy  sued  upon  was  conditioned  to  be  void  in  case  of  otlier  insurance,  and 
the  plaintiff's  "evidence  showed  that  there  was  other  insurance  outstanding  when  the 
policy  was  delivered.  But  there  was  also  evidence  tending  to  show  that  the  breach 
of  condition  was  known  to  the  defendant  at  the  same  time ;  and  the  plaintiff  arguea 
tli.at  he  was  at  least  entitled  to  ask  the  jury  to  find  that  the  breach  had  been  waived. 
However  the  law  may  be  elsewhere,  it  is  settled  the  other  way  in  Massachusetts.  A 
breach  of  condition,  happening  after  a  policy  is  issued,  may  be  waived,  no  doubt;  but 


SECT.  II.]       PLUMB    V.    CATTARAUGUS    CO.    MUTUAL   IXS.    CO.  1075 

PLUMB   V.   CATTARAUGUS    COUNTY   MUTUAL   INS.    CO. 

Court  of  Appeals  of  New  York,  1858.     18  N.  Y.  392.^ 

Appeal  from  the  Supreme  Court.  The  plaintiff  was  the  assignee  of 
one  Henry,  to  whom  a  policy  had  been  issued  upon  an  application 
filled  out  by  Ide,  the  surve3'or  and  agent  of  the  defendant.  The  policy 
referred  to  the  application  as  forming  a  part  of  the  contract.  The 
application  was  a  printed  form.  It  contained  this  interrogatory : 
"5.  Relative  situation  as  to  other  buildings;  distance  from  each 
within  ten  rods;  for  what  purpose  occupied?"  The  answer  to  this 
interrogatory  enumerated  and  described  several  buildings,  and  said  : 
"All  of  the  exposures  wiihin  ten  rods  are  mentioned."  Upon  the 
trial,  which  was  before  Mr.  Justice  Johnson,  the  defendant  proved 

when  the  breach  exists  at  the  momeut  when,  if  ever,  the  contract  comes  into  existence, 
it  umst  be  waived  at  that  moraeut,  if  ever,  and  at  that  very  instant  the  writing  purports 
to  establish  and  insist  upon  the  condition. 

In  Bennett  v.  St.  Paul  F.  &  M.  Ins.  Co.,  supra  (1893),  Beaslet,  C.  J.,  for  tlie  court, 
said  :  — 

"  The  suit  is  on  a  policy  of  fire  insurance,  the  declaration  being  in  the  usual  form. 
To  the  cause  of  action  thus  laid  tlie  defendant,  in  its  second  plea,  defends  on  the 
ground  that  the  policy  declared  on  was  subject  to  a  certain  condition,  to  wit,  that  "  this 
entire  policy,  unless  otherwise  provided  by  agreement  indorsed  thereon,  or  added 
hereto,  shall  be  void  if  the  insured  now  has,  or  shall  hereafter  make  or  procure  any 
otlier  contract  of  insurance,  whether  valid  or  not,  on  the  property,"  &c.  This  state- 
ment is  followed  by  an  averment  "that  at  the  time  said  ])ulicy  was  made"  the  plaintiff 
held  another  policy  on  the  property.  In  answer  to  this  the  plaintiff,  in  .substance, 
stated  that  at  the  time  the  policy  was  made  and  the  premium  paid  the  defendant  had 
notice  and  knew  of  the  antecedent  insurance  indicated  in  the  plea,  and  with  this 
knowledge  i-ssued  the  policy  sued  on.     Tlie  demurrer  before  us  is  to  this  replication. 

"  In  looking  over  the  arguments  urged  in  the  brief  of  the  counsel  of  the  plaintiff  in 
support  of  the  replication  here  challenged,  it  is  obvious  that  they  all  proceed  on  the 
theory  that  the  written  contract  embodied  in  this  policy  can  "be  altered  by  parol 
testimony  coincident  with  its  inception.  The  written  agreement  declares  that  the 
policy  shall  be  void  in  case  the  assured  has  any  existing  insurance  on  the  propertv. 
This  stipulation  is  neither  obscure  nor  uncertain,  and  yet  it  is  now  urged  that  the 
court  should  circumscribe  its  expressed  force.  This  contention  is  based  ou  the  idea 
that  neither  of  the  parties  could  have  intended  that  tlie  policy  should  be  void  by 
reason  of  the  existence  of  an  insurance  that  was  then  known  to  both  of  them.  But 
the  conclusive  answer  to  this  is  that  such  is  their  agreement  so  plainly  expressed  that 
a  doubt  upon  the  subject  would  be  absurd.  It  is  true  that  the  stipulation  is  so  unrea- 
sou.able  that  if  the  language  were  at  all  ambiguous  or  uncertain,  or  were  it  inconsist- 
ent with  any  part  of  the  context,  a  court  might  well  struggle  to  eliminate  it  by 
construction.  But  a  contract  clearly  expressed  in  writing  must  be  enforced  in  a  court 
of  law  according  to  its  terms,  and  this  without  reference  to  the  real  but  unexpressed 
intentions  of  the  parties  to  it.  If  it  is,  in  any  respect,  to  be  modified,  resort  must  be 
had  to  a  court  of  equity."  —  Ed. 

1  The  statement  has  been  partly  rewritten.  For  some  facts  the  original  statement 
referred  to  Chaffee  v.  Cattaraugus  County  Mut.  Ins.  Co.,  18  N.  Y.  375  (1838),  and 
Brown  v.  Cattaraugus  County  Mut.  Ins.  Co.,  18  N.  Y.  385  (1858).  Those  facts  have 
been  inserted  in  the  statement  given  here.  —  Ed. 


1076  PLUMB   V.   CATTAEAUGUS   CO,   MUTUAL   INS.   CO.       [CHAP.  XL 

that  there  were  several  buildings  situated  within  less  than  ten  rods 
of'the  property  insured,  and  which  exposed  it  to  injury  and  loss  by 
file,  which  were  not  mentioned  in  the  application  for  insurance,  and 
also  that  one  of  the  buildings  therein  described  as  distant  eight  rods 
was  in  fact  but  six  rods  distant ;  and  tliat  another,  a  planing  mill  and 
turning-shop,  described  as  two  rods  distant,  was  in  fact  distant  but 
eicrhteen  feet.     The  plaintiff,  under  exception  by  the  defendant,  was 
permitted  to  prove  the  following  facts  :  Ide  was  the  agent  and  sur- 
veyor of  the  defendant,  and  he  resided  at  Gowanda,  where  the  build- 
ings were  situate  ;  and  it  was  Ide's  business,  as  such  agent,  to  solicit 
insurances,  to  sign  applications,  and  to  forward  them  to  the  office  of 
the  defendant  in  Ellicottville,  receive  policies  from  the  defendant  and 
deliver  them  to  the  applicants,  and  take  their  premium  notes  and  the 
cash  per  cent  thereon,  and  as  such  surveyor  to  survey  the  property 
and  premises  proposed  to  be  insured,  to  take  the  measurement  of  the 
distances   from   all   other   buildings  contiguous  and  within  ten  rods 
therefrom,  to  take  the  size  of  the  buildings  proposed  to  be  insured, 
the  number  of  chimneys,  etc.,  and  ascertain  the  relative  situation  of 
the  buildings  insured  'to  any  other  buildings,  for  what  purpose  occu- 
pied, and  generally  to  ascertain  all  about  the  property  to  be  insured, 
material  to  the  risk.    The  plaintiff  also  gave  evidence  tending  to  prove 
that  in  making  out  the  application  Ide  acted  as  the  agent  and  surveyor 
of  the  company  ;  that  he  called  upon  Henry,  with  a  printed  blank  ap- 
plication, and  solicited  him  to  effect  insurance  with  the  defendant's 
company ;  told  him  that  he  was  going  to  the  office  of  the  company 
that  day  and  that  it  was  necessary  to  make  out  the  application  that 
day  ;  Henry  replied  that  his  clerks  were  all  absent  and  he  was  alone 
in  the  store  and  could  not  attend  to  the  business;  that  if  Ide  insisted 
on  taking  the  application  that  day  he  must  got  along  alone  and  act  on 
his  own°responsibility.     Ide   replied  that  that  was  wliat  he  was  ap- 
pointed agent  and  surveyor  for,  and  that  all  Henry  had  to  do  was  to 
say  what  property  he  wanted  insured,  and  he  (Ide)  would  take  care  of 
the  rest  and  fill  out  the  blank.     Henry  suggested  that  some   measure- 
ments ought  to  be  taken,  and  furnished  a  tape   line  for  that  purpose, 
wliich  Ide  took  and  went  out  of  the  store.     He  soon  returned,  filled 
out  the  application,  and  stated  to  Henry  that  it  was  all  right  and  just 
as  it  should  be.     Henry  looked  over  it  hastily  and  without  any  par- 
ticular examination  as  to  the  statement  of  the  distance  and  relative 
situation  of  other  buildings  ;  told  Ide   that  upon  his  representations 
and  statements  he  should  sign  it,  and  thereupon  did  sign  and  paid  the 
premium  required.     To  the  admission  of  all  this  evidence  the  defend- 
ant's counsel  took  an  exception.     Neither  party  desired  that  any  ques- 
tion of  fact  should  be  submitted  to  the  jury,  and  the  judge  directed  a 
verdict  for  the  plaintiff,  to  which  direction  the  defendant  took  an  ex- 
ception.    The  judgment  thereupon  entered   having  been  affirmed  at 
general  term   in  the  eighth  district,   the  defendant  appealed   to   this 
couit.     The  cause  was  submitted  on  printed  arguments. 


SECT.  II.]      PLUMB   V.   CATTARAUGUS   CO.    MUTUAL   INS.   CO.  1077 

A.  G.  Mice,  for  the  appellant. 

O.  C.  Torrence,  for  the  rospoudent. 

Pkatt,  J.  As  no  point  was  made  upon  the  trial  or  upon  this  appeal 
that  the  agent  Ide  was  not  clothed  with  all  the  power  which  he  pro 
fessed  to  have,  it  may  be  assumed  that  what  he  did  in  making  the  sur- 
vey and  measurements  and  in  filling  out  the  application  was  strictly 
within  the  line  of  his'dut}'  as  surveyor  and  agent  of  the  company.  If, 
therefore,  he  acted  within  the  sco[)e  of  his  authority  in  making  these 
survey's  and  measurements  and  in  preparing  the  a[)plicatious,  I  do  not 
see  why  the  question  is  not  the  same  in  principle  as  if  the  same  thing 
had  been  done  by  the  company  itself.  Suppose  an  individual  insurer 
had  himself  assumed  to  make  the  survey  and  measurements,  ami,  as 
in  this  case,  had  filled  up  a  blank  application  and  had  represented  to 
the  applicants  that  his  surve}*  and  measurements  were  correct,  and  that 
upon  the  faith  of  such  representations,  and  with  no  knowledge  of  the 
facts  themselves,  the  insured  had  signed  the  application  and  thus  made 
the  statements  their  own.  Although  they  had  thus  been  led  into  a 
warranty  of  what  was  not  true,  they  could  not,  undoubtedly,  change  the 
contract  by  parol  testimony.  The  writing  must  still  be  held  to  express 
the  contract  between  the  parties.  And  neither  party  can  insist  that 
the  contract  is  other  than  what  the  writing  expresses. 

But  when  the  |3arty  through  whose  acts  and  representations  the 
other  party  was  induced  to  enter  into  the  contract  claims  the  right  to 
show  that  the  facts  were  different  from  what  he  had  represented  them 
to  be,  for  the  purpose  of  siiowing  a  breach  of  the  warranty,  and  thus 
a V oiding  what  would  otherwise  be  a  binding  contract,  and  escaping  its 
oBIigations,  I  cannot  discoj'jer^why  tiie  doctrine  of  estoijpel  may  not 
justly  be~applled  to  him,  and  he  be  precluded  from  denying  what  he 
once  asserted.  It  presents,  I  think,  the  precise  case  for  the  appli- 
cation of  the  doctrine  of  estoppel  in  jyais,  as  defined  in  the  cases.  Lord 
Denman,  in  Pickard  v.  Sears,  6  Ad.  &  E,  469,  4:7-1,  says:  "The  rule 
of  law  is  clear,  that,  where  one  by  his  words  or  conduct  wilfull}-  causes 
another  to  believe  the  existence  of  a  certain  state  of  things,  and 
induces  him  to  act  on  that  behalf,  so  as  to  alter  his  own  previous 
position,  the  former  is  concluded  from  averring  agaiast  the  latter  a 
different  state  of  things  as  existing  at  the  same  time." 

Substantially  the  same  rule,  but  in  still  more  explicit  terms,  was 
laid  down  by  Bronson,  J.,  in  Dezell  v.  Odell,  3  Hill,  215,  222:  '-It 
must  appear,  (1)  That  he  has  made  an  admission  which  is  clearly  in- 
consistent with  the  evidence  he  proposes  to  set  up  ;  (2)  That  the  other 
party  has  acted  upon  the  admission  ;  and  (3)  That  he  will  be  injured 
by  allowing  the  truth  of  the  admission  to  be  disproved."  The  same  ' 
rule  was  laid  down  by  Nelson,  J. ,  in  Welland  Canal  Co.  v.  Hathaway, 
8  Wend.  480,  483.  The  rule  tlius  laid  down  precisely  fits  this  case, 
and  surely  the  equities  of  a  cause  never  called  more  persuasively  for 
the  application  of  the  rule  than  they  did  in  this  case.  I  think,  there- 
fore, the  court  were  right  in  ordering  a  verdict  for  the  plaintiffs  upon 


107S  WHITE    V.    CONNECTICUT   FIRE    INS.    CO.  [CIIAP.  XI. 

the    evidence,    and  the  judgment   of  the  Supreme    Court  should   be 
affirmed. 

JoH.ssON,  C.  J.,  Denio  and  Strong,  JJ.,  dissented  for  reasons 
stated  in  the  opinion  of  the  latter  in  Brown  v.  Cattaraugus  County 
Mut.  Ins.  Co.,  18  N.  Y.  385.  Judgment  affirmed. 


WHITE    V.   CONNECTICUT   FIRE  INSURANCE   CO. 
Supreme  Judicial  Court  of  Massachusetts,  1876.     120  Mass.  330. 

Contract  upon  a  policy  of  insurance  against  fire.  At  the  trial  in  the 
Superior  Court,  Pitman,  J.,  by  agreement  of  the  parties,  after  verdict 
for  the  plaintiff,  reported  tlie  case  to  this  court,  the  verdict  to  stand,  if 
upon  tlie  evidence  reported  the  jury  would  be  authorized  to  return  such 
verdict ;  otherwise,  judgment  for  the  defendant.  The  evidence  suffi- 
ciently appears  in  the  opinion. 

S.  Hoar^  for  the  defendant. 

A.  Wellington^  for  the  plaintiff. 

Colt,  J.  Tlie  policy  in  this  case  was  obtained  for  the  plaintiff  by 
Hunt,  an  insurance  broker,  through  the  defendant's  general  agent, 
Darling.  It  contained  provisions,  among  others:  1st,  That  the  com- 
pany sliould  not  be  liable  by  virtue  of  the  policy  untUjLhe  premium 
therefor  was  actually  paid  ;  2d,  That  the  insurance  might  be  terminated 
ByThe  company  on  notice  to  tliat  effect,  and  on  refunding  a  ratable 
proportion  of  the  premium  for  the  unexpired  term  of  the  policy;  3d, 
Tliat  any  person  who  had  procured  the  insurance,  other  than  tlie  as- 
sured, should  be  deemed  to  be  the  agent  of  the  assured,  and  not  of  the 
company,  "in  any  transaction  relating  to  this  insurance;"  and  4th, 
That  nothing  less  than  a  distinct  agreement,  indorsed  on  the  policy, 
should  be  construed  as  a  waiver  of  any  restriction  or  condition  con- 
tained in  it. 

The  defence  is  that  there  had  been  no  actual  payment  of  the  premium, 
made  necessary  by  the  terms  of  the  policy  as  a  condition  precedent  to 
its  validity  ;  and  that  the  risk  was  terminated  before  the  fire  by  notice 
from  the  company. 

Tlie  defendant  offered  no  evidence,  and  tlie  only  question  is  whether 
the  [)laintiff's  evidence,  as  reported,  would  justify  a  jury  in  finding  a 
verdict  in  tlic  plaintiffs  favor.  If  so,  as  agreed  at  the  trial,  judgment 
must  be  entered  for  him. 

We  are  of  opinion  that  there  is  evidence  derived  from  the  relations 
of  the  several  parties,  the  transactions  between  them,  the  course  of 
business  and  the  delivery  of  tlie  policy,  which  would  justify  a  finding 
that  the  company  accepted  the  credit  given  to  tlie  broker.  Hunt,  indi- 
vidually, as  a  payment  of  the  premium,  within  the  meaning  of  the 


SECT.  II.]  WHITE    V.    CONNECTICUT   FIRE    INS.    CO.  1079 

terms  of  the  polic}'.  It  was  according  to  their  course  of  business  for 
the  general  agent  of  the  compan}-  to  deliver  policies  to  Hunt  without 
requiring  cash  payment  of  premiums.  Instead  of  that,  he  charged 
Hunt  in  account  individual!}-,  and  rendered  to  him  monthly  bills,  de- 
ducting an  agreed  commission  allowed  him  for  obtaining  risks  for  this 
compauj'.  The  policy  in  this  ease  was  so  delivered,  without  demand 
for  payment  of  money.  A  large  number  of  the  defendant's  policies 
containing  these  same  clauses  had,  with  tlie  defendant's  knowledge, 
been  issued  by  Darling  to  insurance  brokers  in  the  same  wa}',  witliout 
objection  on  the  part  of  the  defendant,  and  losses  had  been  paid  on 
many  of  them,  but  no  cases  were  shown  where  the  loss  happened  before 
an  actual  payment  of  premium.  Tliere  was  evidence  from  Hunt,  that, 
in  liis  monthlv  settlements  with  Darling,  lie  paid  the  premiums  cliarged 
to  him,  whether  he  had  collected  them  or  not,  and  offered  to  paj'  this 
premium  at  his  settlement  in  January,  next  after  the  date  of  tlie  policy, 
and  after  the  fire  ;  that  he  had  been  in  the  habit  of  obtaining  insurance 
for  tlie  plaintiff  and  keeping  his  policies  for  him,  and  frequently  had 
funds  of  the  plaintiff  in  his  hands,  and  had  never  demanded  of  him  the 
payment  of  this  premium,  although  the  evidence  was  that  he  had  in- 
formed the  plaintiff,  before  the  fire,  that  his  insurance  had  been  pro- 
cured, and  he  would  call  on  him  the  first  of  the  following  month,  with 
the  assurance  that  he  need  have  no  uneasiness  aliout  the  matter.  The 
company  notified  Darling,  before  the  fire,  that  it  did  not  wish  the  risk 
at  the  rate  taken,  but  said  nothing  as  to  payment  of  premium. 

It  is  a  fair  inference  from  all  this,  that  the  dul}'  authorized  agent  of 
the  company  had  accepted  the  individual  credit  of  Hunt  as  a  payment 
of  the  required  premium.  It  is  not  a  question  of  waiver,  by  parol  agree- 
mehtTof  an  express  stipulation  in  a  written  contract  within  the  cases 
cited  by  the  defendant.  It  is  rather  a  compliance  with  tlie  condition 
required  to  give  validit}'  to  the  policy,  within  a  large  class  of  cases  in 
■which  it  is  held  sufficient.  Ta^loe  v.  Merchants'  Ins.  Co.,  9  How.  390, 
402;  Miller  v.  Life  Ins.  Co.,V2  Wall.  285,  303;  Sheldon  V.Atlantic 
Ins.  Co.,  26  N.  Y.  460  ;  Sheldon  v.  Connecticut  Life  Ins.  Co.,  25  Conn. 
207  ;  Bouton  v.  American  Life  Ins.  Co.,  25  Conn.  542.^ 

Assuming  that  the  contract  of  insurance  was  pei'fected,  so  tliat  the 
risk  attached,  the  defendant  fails  to  show  a  termination  of  the  insurance 
before  the  fire,  in  accordance  with  the  terms  of  the  policy.  The  pro- 
vision is  that  "the  insurance  may  be  terminated  at  any  time  at  the 
option  of  the  company,  on  giving  notice  to  that  effect,  and  refunding  a 
ratable  proportion  of  the  premium  for  the  unexpired  term  of  the  policy." 
The  letter  of  the  general  agent  to  Hunt,  giving  him  notice  that  the 
company  did  not  wish  the  risk  at  the  rate  named,  and  demanding  a 

1  Ace:  Sheldon  v.  Atlantic  F.  &  M.  Ins.  Co.,  26  N.  Y.  460  (186.3)  ;  Washoe  Tool 
Mfg.  Co.  V.  Hibernia  F.  Ins.  Co.,  66  N.  Y.  613  (1876) ;  Farnum  i'.  Phoenix  Ins.  Co.,  83 
Cal.  246  (1890). 

Compare  Wood  v.  Poughkeepsie  Mut.  Ins.  Co.,  32  N.  Y.  619  (1865). 

For  life  insurance  cases,  see  post,  p.  1109,  u.  —  Ed. 


1080  VAN   SCHOICK   V.    NIAGARA   FIRE    INS.    CO.  [CHAP.  XI. 

return  of  the  policy-,  without  an  offer  to  return  any  part  of  the  premium, 
was  not  sufficient.  The  facts  do  not  conclusively  show  that  Hunt  was 
the  agent  of  the  plaintiff  to  receive  notice  of  a  termination  of  the  risk, 
and  the  provision  in  tlie  policy  making  the  person  who  procures  the 
insurance  '•  tlie  agent  of  tlie  assured  in  all  transactions  relating  to  tlie 
insurance,"  cannot  l>e  construed  to  mean  that  such  person  shall  be  agent 
to  receive  notice  of  the  termination  of  the  insurance  at  any  time  during 
the  life  of  the  policy  ;  it  plainl}'  refers  to  the  original  transactions  con- 
nected with  obtaining  it.  Judytnent  on  the  verdict. 


VAN   SCHOICK,   Respondent,    v.    NIAGARA   FIRE 
INSURANCE  CO.,   Appellant. 

Court  of  Appeals  of  New  York,   1877.     68  N.  Y.  434. 

Appeal  from  judgment  of  the  General  Term  of  tlie  Supreme  Court, 
in  the  third  judicial  department,  in  favor  of  plaintiff,  entered  upon  an 
order  denying  a  motion  for  a  new  trial  and  directing  judgment  upon  a 
verdict. 

The  nature  of  the  action  and  the  facts  appear  sufficiently  in  the 
opinion. 

Wm.  C.  Buger,  for  the  appellant. 

T.  F.  Bush,  for  the  respondent. 

Folger,  J.  This  was  an  action  upon  a  polic}'  of  fire  insurance.  It^ 
contained  this  condition  :  "Any  interest  in  property  insured  not  abso- 
lute, or  that  is  less  than  a  perfect  title^  or  if  a  building  is  insured  tlmt 
is  on  leased  ground,  the  same  must  he  specifically  represented  to  the 
COm^anyTlind  expressed  in  Miis  poljcy  in  wn'tino;.,  nttierwi.t^^  t.lie  insnr- 
ance  shall  be  void."  The  fact  is,  that  part  of  the  property  described  in 
the  policy,  as  subject  of  the  insurance,  was  a  building  on  leased  ground. 
That  fact  was  not  expressed  in  writing  in  the  polic3\  The  defendant 
claims  that  thereb}'  the  insurance  was  void,  and  puts  itself  thereon  as  a 
defence  to  the  action.  It  is  to  be  observed  of  this  condition,  that  it  is 
not  one  of  those  which  are  subsequent  to  the  formation  of  the  contract, 
a  breach  of  which  may  occur  after  there  has  been  a  valid  contract  made 
and  entered  into,  and  continued  in  existence  for  a  part  of  its  prescribed 
term.  It  is  a  condition  precedent,  lying  at  the  threshold  of  the  making 
of  the  contract,  and  which  if  not  then  performed,  or  not  then  obviated, 
prevents  the  formation  of  an  enforceable  contract.  It  is  obvious,  that 
this  building  being  on  leased  ground,  the  ver^^  moment  that  the  policy 
passed  from  the  defendant  to  the  plaintiff,  the  insurance  on  it  was  void, 
if  the  condition  holds.  They  were  concurrent  acts,  the  delivery  of  the 
contract,  and  a  breach  of  this  condition ;  so  that  at  the  same  instant 


SECT.  II.]  VAN    SCHOICK   V.    NIAGARA   FIRE    INS.    CO.  1081 

that  the  defendant  said  we  insure  this  building,  at  the  same  instant  the 
condition  was  broken  and  the  insurance  was  void.  So  that  if  nothing 
is  shown  to  break  the  rigid  effect  of  this  condition,  there  never  was  any 
insurance  by  this  defendant  upon  that  building.  We  would  scarce  ex- 
pect two  parties  to  go  through  so  senseless  and  trifling  an  act,  if  the 
facts  were  known  to  each  at  the  time,  but  would  rather  conclude  that 
they  had  b3'  words  or  act  agreed  that  the  condition  should  not  be  con- 
sidered as  binding.  "  If  these  defendants  were  an  entit}",  and  could 
have  stood  near  to  that  building,  when  the  oral  negotiation  for  insur- 
ance was  made  and  completed,  and  have  seen"  and  known  that  it  was 
upon  leased  ground;  "could  it  fairly  be  contended  that  they  would 
have  offered  to  the  plaintiff,  or  that  he  would  knowingl}'  have  received, 
as  the  correctly  written  evidence  of  the  contract,  this  polic}',  with  the 
condition  in  question,  contained  in  it  as  an  operative  and  binding  clause? 
We  cannot  suppose  that  either  plaintiff  or  defendant  would  do  the  ut- 
terly absurd  thing  of  making,  with  deliberation  and  knowledge,  a  con- 
tract that  was  void  from  inception,  and  was  in  contradiction  of  the  facts 
and  statements  of  the  negotiation."  It  is  plain  that  the  plaintiff  and 
the  agent  meant  to  contract  and  did  contract  for  the  insurance  of  that 
building,  as  a  building  on  leased  land.  Cone  v.  Niag.  F.  Ins.  Co.,  60 
N.  Y.  619.  Hence  we  are  not  surprised  ;  that  the  plaintiff  claims  that 
the  fact  that  the  building  was  on  leased  ground,  was  made  known  to 
the  defendant  when  the  policy  was  applied  for  ;  and  that  the  policy  was 
delivered  and  the  premium  accepted  b}'  them,  without  insisting  upon 
tlie  fact  and  the  condition.  He  makes  that  action  of  the  companj',  with 
that  knowledge,  his  reply  to  their  defence  based  on  that  condition  and 
its  breach. 

We  must  first  inquire,  whether  the  plaintiff  is  right  as  to  the  fact  of 
the  prior  knowledge  of  the  defendant  that  the  building  was  upon  leased 
ground.  It  is  shown  that  at  a  time  previous  to  the  issuing  of  this  pol- 
icy, the  facts  in  relation  to  the  title  of  the  propert}-,  just  as  they  were 
(that  the  land  was  owned  by  one  person,  and  the  building  by  another, 
and  the  contract  between  them),  were  told  to  one  Lewis,  an  insurance 
agent.  This  Lewis,  when  the  policy  in  suit  was  issued,  having  this  in- 
formation, and  with  a  view  to  this  insurance,  asked  if  there  was  any 
change  in  the  property,  and  was  told  that  there  was  not.  So  that  at 
the  time  of  the  issuing  of  this  policy,  Lewis  was  informed  of  the  fact, 
that  this  building  was  within  the  scope  of  this  condition.  It  is  now  to 
learn,  if  Lewis  was  the  agent  or  substantiallj*  so  of  the  defendant.  It 
is  shown  that  one  Doolittle  was  the  commissioned  and  ostensible  agent 
of  the  defendant,  but  that  Lewis  and  he  were  in  partnership  in  the  busi- 
ness of  soliciting  and  procuring  insurance  ;  that  Lewis  did  with  assent 
of  Doolittle  so  act  as  to  this  defendant ;  that  such  action  was  known  to 
defendant  and  not  disapproved  of  by  it;  that  a  joint  commission  had 
for  some  time  been  promised  by  the  defendant  to  those  two  as  its  agents, 
which  was  delayed,  but  finally  issued  before  the  delivery  of  this  polic3% 
Bodine  v.  Exchange  F.  Ins.  Co.,  51  N.  Y.  117.     We  think  that  the  facts 


10S2  VAN   SCHOICK   V.   NIAGARA   FIRE   INS.    CO.  [CIIAP.  XI. 

bring  the  case  within  tliat  decision.  So  that,  as  the  information  of  tlie 
agent  is  the  information  of  liis  principal,  the  defendant  when  it  accepted 
this  risk,  had  information  that  this  building  stood  upon  leased  ground. 
Besides  that,  in  stating  these  facts,  as  they  appeared  to  him,  on  the 
motion  of  the  defendant  that  the  court  direct  a  verdict  for  it,  the  learned 
judge  who  held  the  circuit  assumed  or  found  that  Lewis  had  the  relations 
of  an  agent  to  the  defendant.  Xo  objection  was  made  by  the  defendant 
to  this,  nor  any  request  to  go  to  the  jury  upon  it  as  a  question  of  fact. 
So  it  mast  be  taken  as  a  conceded  fact  in  the  case.  Tallman  v.  Atlantic 
Ins.  Co.,  3  Keyes,  87. 

And  so  again  comes  up  the  oft-recurring  and  still  vexed  question, 
between  insurance  companies  and  their  policy-holders  ;  whether  a  fact, 
thoroughl}'  well  known  and  comprehended  by  both  sides  to  the  contraet 
before  it  is  delivered,  may,  by  force  of  some  condition,  crouched  unseen 
in  the  jungle  of  printed  matter  with  which  a  modern  policy  is  overgrown, 
make  a  defence  for  the  company,  after  the  catastrophe  and  damage  has 
happened  against  which  it  professes  to  guard.  It  is  to  be  confessed, 
that  the  decisions  in  this  State  do  not,  upon  a  cursory  perusal  at  least, 
seem  strietly  in  harniou}'  in  regard  to  it.  There  are  cases  wliich  hcjld 
that  where  an  application  is  made  a  part  of  the  policy  by  the  terms  of 
it,  and  some  false  assertion  has  been  inserted  in  the  application  by  the 
agent,  when  the  truth  lias  been  at  the  same  time  well  known  to  him, 
that  the  insured  shall  not  be  prejudiced  therebj-.  Rowley  v.  The  Em- 
pire Ins.  Co.,  3  Keyes,  557  ;  Plumb  v.  Catt.  Ins.  Co.,  18  N.  Y.  392  ; 
Ames  V.  N.  Y.  Ins.  Co.,  14  N.  Y.  253.  There  are  others,  where  the  fact 
fell  within  the  condemnation  of  some  condition  of  the  policy  ;  yet  as 
the  fact  as  it  existed  was  known  to  the  compan}',  it  was  held  to  be 
estopped  from  setting  up  the  condition  against  a  recovery.  1-1  N.  Y. 
supra  ;  Bidwell  o.  N.  W.  Ins.  Co.,  24  N.  Y.  302  ;  Bodine  v.  Exchange  Ins. 
Co.,  51  N.  Y.  117.  There  are  otlicrs,  in  wliich  there  was  a  suit  in  equity, 
seeking  a  reformation  of  the  contract,  and  it  was  held  that  the  facts 
showed  unmistakabl}'  that  the  parties  never  meant  to  enter  into  a  con- 
tract with  such  a  condition  or  description  in  it  as  was  set  up  against  a 
recovery.  Cone  v.  Niagara  Ins.  Co.,  60  N.  Y,  619  ;  Mahar  v.  Ilibernia 
Ins.  Co.,  67  N.  Y.  283.  In  the  latter  case,  the  facts  made  a  clear  estopiM 
en  pais  against  the  compan}'.  It  has  also  been  held,  that  a  warranty, 
part  of  the  printed  matter  of  the  polic3',  has  been  dispensed  with  by  the 
oral  agreement  of  the  parties  made  before  the  delivery  of  the  polic}-. 
McCall  V.  Sun  Mut.  Ins.  Co.,  66  N.  Y.  505.  On  the  other  hand,  in  an 
action  at  law,  it  has  been  held,  that  where  the  terms  of  the  policy  are 
clear  and  unambiguous,  parol  proof  is  inadmissible  to  vary  them,  or  to 
show  that  either  or  both  parties  were  not  aware  that  they  were  exchang- 
ing a  contract  such  as  was  requested,  and  as  agreed  with  the  facts  in 
the  situation  of  the  property.  Pindar  v.  Resolute  Ins.  Co.,  47  N.  Y. 
114  ;  see  also  Rohrback  v.  Germania  Ins.  Co  ,  62  N.  Y.  613.  And  so  it 
has  been  held  that  parol  proof  is  not  admissible  to  show  that  both  par- 
ties knew  that  a  statement  in  an  application  for  a  policy  was  not  true. 


SECT.  II.]  VAN    SCHOICK    V.    NIAGARA   FIRE    INS.   CO.  1083 

Ripley  V.  ^Etna  Ins.  Co.,  30  N.  Y.  13G.     Other  cases  bearing  upon  the 
subject  might  be  cited  —  quantum  suff. 

There  is  no  doubt  but  that,  ordinarily  considered,  this  condition  in 
the  polic}'  was  a  warranty  that  the  building  did  not  stand  upon  leased 
land  ;  and  that  the  truth  of  that  warranty  became  a  condition  [)recedent 
to  an\-  lialjilit}-  on  tlie  part  of  the  defendant.  Yet  there  is  no  doubt, 
too,  that  a  condition  in  a  polic}'  may  be  waived  b\'  the  insurer,  or,  as 
some  cases  put  it,  he  be  estopped  from  setting  it  up,  and  that  such  re- 
sult ma\'  be  worked  b}-  parol,  or  bj-  act  without  words..  It  has  been 
held  over  and  over,  that  the  customarj-  clause  in  a  policy,  that  it  will 
not  be  binding  upon  the  insurer  until  the  premium  is  paid  in  fact,  may 
be  waived  hy  parol,  or  b}-  act,  and  the  polic\'  may  be  delivered  and  be- 
come a  binding  contract  upon  the  insurer,  without  payment  in  hand  of 
the  premium.  Trustees,  etc.  v.  Br.  Ins.  Company-,  19  N.  Y.  305  ;  Sheldon 
V.  Atlantic  F.  Ins.  Co.,  26  X.  Y.  460;  Wood  v.  Po.  Ins.  Co.,  32  N.Y.  619  ; 
Boehen  v.  Wms.  B.  City  Ins.  Co.,  35  N.  Y.  131 ;  Bodine  v.  Ins.  Co.,  51  N.  Y. 
117.  As  to  other  waivers,  see  Ludwig  v.  Jersej'  Citv  Insurance  Company, 
48  N.  Y.  384,  and  cases  there  cited  ;  Shearman  u.  Niagara  Fire  Insur- 
ance Company',  46  N.  Y.  532.  Now,  in  this  first  class  of  cases,  it  has 
been  thought  that  the  fact  that  the  insurer  delivered  to  the  insured  the 
written  contract,  as  the  consummated  agreement  between  them,  and  did 
not  then  exact  present  payment  of  the  premium  as  a  necessary  prece- 
dent to  delivery,  was  too  plainly  in  contradiction  with  the  condition 
for  prepayment,  for  it  to  be  supposed  that  it  was  meant  bv  the  insurer 
or  supposed  by  either  part}-  that  it  was  intended  to  make  that  condition 
a  potent  part  of  the  contract.  >Such  a  provision,  it  is  said,  could  have 
no  effect  upon  the  delivered  and  perfect  contract  in  whicli  it  was  con- 
tained (19  N.  Y.  siqjrci).  It  would  be  imputing  a  fraudulent  intent  to 
the  defendant  in  this  case  to  say  or  to  think  that  the}'  did  not  mean, 
when  they  delivered  this  policy  to  the  plaintiff,  to  give  him  a  valid  and 
binding  contract  of  insurance,  or  that  they  did  not  mean  that  he  should 
believe  that  he  had  one,  or  that  they  did  not  suppose  that  he  did  so  be- 
lieve. And  such  imputation  can  be  avoided  only  by  supposing  that  it 
had  overlooked  this  condition,  and  so  forgotten  to  express  the  fact  as 
to  the  building,  in  writing,  upon  the  policy;  or  that  it  waived  the  con- 
dition, or  held  itself  estopped  from  setting  it  up.  The  condition  of 
prepayment  of  premium  is,  like  this  under  consideration,  one  at  the 
threshold  of  the  making  of  the  contract,  and  if  it  is  not  observed,  no 
valid  contract  is  made  unless  it  is  stepped  over  or  thrust  aside.  It  is 
consistent  with  fair  dealing  and  a  freedom  from  fraudulent  purpose  to 
hold  that  one  or  the  other  was  done ;  that  is,  that  there  was  waiver,  or 
is  estoppel. 

There  are  other  conditions  precedent  which  may  be  waived.  Thus, 
in  Myers  v.  Life  Insurance  Company,  27  Penn.  St.  268,  it  is  said  that 
the  countersigning  b}-  the  agents  is  under  some  circumstances  not  essen- 
tial, though  required  by  condition.  The  ground  there  stated  is,  that 
on  an  ep';ital)lc  intei'[)retation  of  the  whole  contract,  it  may  become  the 


1084  VAN   SCHOICK    V.    NIAGARA    FIRE    INS.    CO.  [CHAP.  XI. 

duty  of  the  court  to  dispense  with  a  portion  of  the  forms  of  tlie  contract, 
if  it  can  find  an}'  reliable  substitute  for  thera  ;  on  the  principle  that 
cures  defective  execution  of  powers,  where  the  intention  to  execute  is 
sufficiently  plain.  The  contract  was  to  be  complete  when  delivered  b}' 
the  agents,  and  countersigning  by  them  was  to  be  the  appointed  evi- 
dence of  its  proper  delivery.  There  may  be  other  evidence,  to  be  re- 
garded as  equivalent.  So  here,  it  was  not  that  the  defendant  would 
not  at  all  insure  a  building  on  leased  lands.  They  did  agree  to  take  a 
risk  upon  it.  But  to  have  it  insured  by  them,  the  fact  of  it  being  on 
leased  land  must  be  expressed  to  them.  This  was  done.  As  evidence 
tliat  it  was  done,  it  must,  they  said  in  the  policy  afterwards  delivered, 
appear  in  writing  on  the  policy.  This  is,  like  coimtersigning  by  agent, 
but  one  of  the  forms  of  making  the  contract.  Tiiat  the  policy  was  de- 
livered, and  the  premium  received,  with  full  purpose  of  insuring  that 
building,  with  full  purpose  of  making  a  valid  and  obligatory  contract, 
is  evidence  that  through  neglect  or  forgetfulness  one  of  the  forms  was 
not  observed  :  or  that  it  was  waived  by  the  parties. 

This  case  is  to  be  distinguished  from  that  of  Pindar  (47  N.  Y.  114). 
There,  Pindar  asked  a  policy  in  a  certain  form  of  words.  The  insurer 
issued  it  to  him  in  a  different  form,  and  in  such  form  as  would  not  cover 
certain  classes  of  goods,  and  as,  by  the  presence  of  those  classes  in  the 
store,  rendered  the  whole  policy  void.  It  was  not  proposed  to  show 
that  the  insurer  knew  that  the  very  class  of  goods  on  which  insurance 
was  sought  was  in  the  store,  and  that  the  policy  was  delivered  with 
the  purpose  to  insure  that  class,  and  with  the  mutual  understanding 
that  by  the  policy  it  was  insured.  Hence  that  case  differs  from  this, 
and  it  was  properly  held  that  Pindar  was  bound  by  his  contract.  In 
Rohrbach's  Case  (supj-a),  the  decision  went  upon  the  effect  of  a  peculiar 
clause  in  the  policy,  and  in  that  fact  is  quite  different:  from  this.  Chase 
7'.  Hamilton  Insurance  Company,  20  N.  Y.  52,  is  put  upon  a  ground 
very  like  that  in  Rohrbach's  Case;  that  it  was  printed  in  the  api)lica- 
tion  that  the  company  would  not  be  bound  by  knowledge  of  the  agent, 
and  that  the  company'  could  not  be  held  thereb}-,  unless  there  was  fraud, 
or  prevention  of  the  application  from  making  a  true  statement.  Ri[)ley 
?'.  The  ^tna  Insurance  Company,  30  N.  Y.  136,  is  to  be  distinguislied 
from  this  in  hand.  There  the  representation  or  warranty  was  promis- 
sory. It  was  an  agreement  by  the  applicant  that  he  would  thereafter 
keep  a  watchman  in  his  mill,  of  nights.  This  looked  to  the  future  con- 
duct on  his  part.  It  was  not  a  part  of  the  form  of  the  contract.  And 
though  the  agent  of  the  insurer  knew  the  custom  of  the  applicant  had 
not  been  to  keep  a  watchman  in  his  mill  from  midnight  on  the  last  day 
of  the  week  till  midnight  of  the  first  day  of  the  next  week,  that  did  not 
affect  his  promise  thereafter  to  do  differently.  It  is  also  said  in  that 
case,  that  there  may  be  a  waiver  of  conditions,  but  only  on  an  agree- 
ment founded  on  a  valuable  consideration,  or  when  the  act  relied  upon 
as  a  waiver  is  such  as  to  estop  a  party  from  insisting  on  the  condition. 
In  the  case  in  hand,  thero  is  a  consideration  in  the  premium  paid,  which 


SECT.  II.]  VAN   SCHOICK   V.   NIAGARA   FIRE   INS.   CO.  1085 

would  not  have  been  done  with  an  understanding  that  the  condition 
should  remain  and  be  enforced,  thus  making  the  payment  futile.  In 
the  purview  of  some  of  the  eases  there  is  also  an  estoppel. 

It  is  diflicult  to  mtxke  all  tlie  cases  upon  tliis  subject  harmonize  ;  but 
b}'  the  force  of  autlioritv,  we  are  constrained  to  hold,  that  such  a  con- 
dition as  this  may  be  waived  by  the  insurer,  by  express  words  to  thiit 
effect,  or  by  acts  done  under  such  circumstances  as  would  otherwise 
impute  a  fraudulent  purpose,  and  as  will  estop  him  from  setting  up  the 
condition  against  the  insured. 

There  is  anotlier  defence  relied  upon  by  the  defendant.  It  arises  in 
this  wise  :  When  the  defendant  decided  upon  taking  the  risk,  it  was 
witli  this  condition,  that  the  plaintiff  would  agree  to  keep  a  certain 
quantity'  of  water  in  the  building  and  under  conditions  to  keep  it  from 
freezing,  and  that  this  was  made  known  to  the  plaintiff"  at  or  before  the 
issuing  of  the  polic}'. 

The  facts  of  the  case  do  not  sustain  this  ground  of  defence.  Though 
the  defendants  put  upon  their  agents  the  duty  of  affixing  to  the  contract 
the  requirement  that  water  should  be  kept  standing  in  the  building,  there 
is  no  proof  that  it  was  made  known  to  the  plaintiff  as  a  requirement. 
It  never  came  to  the  personal  knowledge  of  the  plaintiff.  If  it  ever 
came  to  the  knowledge  "of  Stanton,  and  Stanton  is  to  be  regarded  as 
the  agent  of  the  plaintiff  at  that  time,  it  did  not  come  to  him  as  a  re- 
quirement, conditioned  upon  the  observance  of  which  the  policy  was  to 
be  valid.  It  reached  him  as  a  request,  obedience  to  which  was  not 
obligator}-,  but  gratuitous  or  courteous.  It  is  quite  doubtful,  if  as  such 
even,  it  reached  him  before  the  issuing  of  the  policy  and  the  delivery  of 
it  to  the  plaintiff. 

We,  therefore,  conclude  that  the  judgment  appealed  from  should  be 
affirmed. 

Church,  C.  J.,  Andrews  and  Miller,  JJ.,  concur  ;  Allen,  Uapallo, 
and  Earl,  JJ.,  dissent. 

Judgment  affirmed?- 

1  Ace:  Atlantic  lus.  Co.  v.  Wright,  22  111.  462  (18.59) ;  Peoria  M.  &  F.  Ins.  Co.  v. 
Hall,  12  Mich.  202,  214  (1864) ;  Franklin  v.  Atlantic  F.  Ins.  Co.,  42  Mo.  456  (1868) ; 
Commercial  Ins.  Co.  v.  Spaukneble,  52  111.  53  (1869)  ;  Pitney  v.  Glens  Falls  Ins.  Co., 
65  N.  Y.  6  (1875) ;  Pechuer  v.  Phoenix  Ins.  Co.,  65  N.  Y.  195  (1875) ;  Union  Ins.  Co.  u. 
McGookey,  .33  Ohio  St.  555  (1878)  ;  Bennett  v.  North  British  and  Mercantile  Ins.  Co., 
81  N.  Y.  273  (1880)  ;  Insurance  Co.  v.  William.s,  39  Ohio  St.  584  (1883);  Bennett  v. 
Agricultural  Ins.  Co.,  106  N.  Y.  243  (1887) ;  Germania  F.  Ins.  Co.  v.  Hick,  125  111.  361 
(1888) ;  Crescent  Ins.  Co.  v.  Camp,  71  Tex.  503  (1888) ;  Insurance  Co.  v.  Brodie,  52  Ark. 
11  (1889);  Crouse  v.  Hartford  F.  Ins.  Co.,  79  Mich.  249  (1890) ;  Michigan  Shingle  Co. 
V.  State  Investment  &  Ins.  Co.,  94  Mich.  389  (1892) ;  Mesterman  y.  Home  Mut.  Ins. 
Co.,  5  Wash.  524  (1893) ;  MclNIurray  v.  Capital  Ins.  Co.,  87  Iowa,  453  (1893) ;  Morotock 
Ins.  Co.  V.  Paukey,  91  Va.  259  (1895) ;  Liverpool  and  Loudon  and  Globe  Ins.  Co.  v.  Farns- 
worth,  72  Miss.  555  (1895)  ;  Rhode  Island  Underwriters'  Assn.  v.  Mouarch,  98  Ky.  305 
(1895);  Wood  17.  American  F.  Ins.  Co.,  149  N.  Y.  382,  385-386  (1896),  s.  c.  inpart.an^e, 
p  632  ;  Robbius  v.  Springfield  F.  &  M.  Ins.  Co.,  149  N.  Y.  477  (1896)  ;  Schultz  v.  Cale- 
donian Ins.  Co.,  94  Wis.  42  (1896) ;  Hartford  F.  Ins.  Co.  v.  Keating,  86  Md.  130  (1897) ; 
St.  Clara  Female  Academy  v.  Northwestern  National  Ins.  Co.,  98  Wis.  257  (1898) ;  Riss- 


1086  GRAY    V.    GERMANIA   FIRE    INS.    GO.  [CHAP.  XI. 


GRAY  AND  Another,  Respondents,  v.  GERMANIA  FIRE 
INSURANCE   CO.,  Appellant. 

Court  of  Appeals  of  New  York,  1898.     155  N.  Y.  180. 

Appeal  from  a  judgment  of  the  late  General  Term  of  the  Supreme 
Court  in  the  second  judicial  department,  entered  Februar}'  27,  1895, 
aliirming  a  judgment  in  favor  of  plaintiffs  entered  upon  a  verdict. 

Tiie  action  was  upon  a  policy  of  fire  insurance  for  one  thousand 
dollars,  issued  b}'  the  defendant  October  1,  1892,  insuring  the  goods 
of  the  plaintitt's  in  their  store  at  Haverstraw,  N.  Y.  It  was  a  New 
York  standard  policy,  and  prohibited  other  insurance  unless  the  consent 
of  the  company  was  indorsed  thereon.  It  also  provided  that  none  of 
its  agents  should  have  power  to  waive  anj'  of  its  provisions  except  by 
a  written  indorsement  on  the  policy. 

The  defendant's  agent  applied  to  the  plaintiffs  to  insure  their  goods. 
Tiiey  informed  him  of  their  intention  to  procure  insurance  to  the  amount 
of  three  thousand  dollars  in  three  different  companies,  and  permitted 
him  to  write  a  polic}'  for  one  thousand  dollars  in  the  defendant  com- 
pany. When  the  policy  was  delivered  the  agent,  in  answer  to  an  in- 
quiry of  the  plaintiffs,  stated  that  it  was  correct.  They  subsequently 
obtained  two  other  policies  upon  the  property  insured,  one  for  seven 
hundred  dollars  and  the  other  for  one  thousand  dollars.  The  defend- 
ant's agent  had  power  to  issue  policies  and  to  indorse  permission  for 
other  insurance.  But  no  such  indorsement  was  made  upon  the  policy 
in  suit. 

ler  v.  American  Central  Ins.  Co.,  150  Mo.  366  (1899) ;  Clapp  v.  Farmers'  Mut.  F.  Ins. 
Co.,  126  N.  Car.  388  (1900);  Insurance  C<>.  r.  Hancock,  106  Tenn.  .513  (1901). 

See  Harper  v.  Albany  Mut.  Ins.  Co.  ante,  p.  530  (1858),  and  cases  cited  thereunder ; 
Couch  V.  City  F.  Ins.  Co.,  37  Conn.  248  (1870), 

Compare  North  American  F.  Ins.  Co.  v.  Throop,  22  Mich.  146,  149-152  (1871); 
Blooming  Grove  Mut.  F.  Ins.  Co.,  102  Pa.  335  (1883). 

In  Pitney  v.  Glens  Falls  Ins.  Co.,  supra  (1875),  Dwight,  Com  ,  for  the  majority  of 
the  court,  said  :  — 

"It  has  been  plau«ibly  objected  that  the  view  of  the  subject  herein  taken  ...  is 
opposed  to  the  rule  that  parol  evidence  is  inadmissiVile  to  affect  a  written  instrument. 
The  objection,  however,  proceeds  upon  a  misconception  of  the  effect  of  that  rule.  That_ 
i_s_hut  a  (ranon  of  construction  applied  to  ascertain  tiie  meaning  of  an  instrument  con- 
ceded_toJie_£alid — This  has  no  bearing  up^n  the  point  now  un(Ter  discussion.  TTiat 
concerns  the  validity  or  existence  of  an  instrument.  The  defendant  urges  that  there 
is  a  condition  precedent  in  the  instrument  which,  by  reason  of  non-performance,  makes 
the  contract  utterly  void.  The  plaintiff  says,  in  substance  :  '  That  I  admit,  but  it  Ims 
been  dispensed  with,  and  the  instrument  is  valid.'  The  question  is  accordingly  not 
one  of  construction,  but  of  validity.  Nothing  is  better  settled  than  that  the  existence 
of  a  written  instrument  may  be  established  or  overturned  by  parol  evidence.  There 
is  no  question  of  construction  in  such  a  case.  It  is  a  preliminary  one,  whether  there 
is  any  contract  to  interpret  or  con.strne.  It  is  of  the  nature  of  a  condition  precedent 
to  be  subject  to  waiver,  and  that  may  be  in  general  either  oral  or  written.  When  the 
waiver  is  established,  the  contract  takes  effect  free  from  tlie  condition  "  —  Ed. 


SECT.  II.]  GR.\Y   V.   GERMANIA   FIRE    INS.    CO.  1087 

Ernest  Hall,  for  appellant. 

Sidney  H.  Stuart,  for  respondents. 

Martix,  J.  The  onl}-  question  we  are  called  npon  to  determine  in 
this  case  is  whether  the  knowledge  of  the  defendant's  agent  that  the 
plaintiffs  intended  to  procure  other  insurance  upon  the  propertj-  cov- 
ered by  the  defendant's  policy  constituted  a  waiver  of  the  provision 
therein  prohibiting  other  insurance  without  the  indorsement  npon  the 
policy  of  an  agreement  to  that  effect.  The  courts  below  have  so  held. 
This  conchision  was  based  upon  the  theory  that  as  the  defendant's 
agent  knew  tliat  the  plaintiffs  intended  to  procure  other  insurance 
wlien  the  [)olicy  in  suit  was  issued,  and  delivered  it  with  that  knowl- 
edge, it  constituted  a  waiver  of  its  provision  as  to  otlier  insurance. 
Manifestly,  this  theory  cannot  be  sustained.  It  is  well  settled  in  this 
State  tliat  where  an  insurance  company  issues  a  policy,  with  full  knowl- 
edge of  facts  whicli  would  render  it  void  in  its  inception  if  its  provi- 
sions were  insisted  upon,  it  will  be  presumed  that  it  by  mistake  omitted 
to  express  the  fact  iu  the  policy,  waived  the  provision  or  held  itself 
estopped  from  setting  it  up,  as  a  contrary  inference  would  impute  to  it 
a  fraudulent  intent  to  deliver  and  receive  pay  for  an  invalid  instrument. 
Van  Schoick  v.  Niagara  F.  Ins.  Co.,  68  N.  Y.  434  ;  Whited  v.  Germania 
F.  Ins.  Co.,  76  N.  Y.  415  ;  Richmond  v.  Niagara  F.  Ins.  Co.,  79  N.  Y. 
230;  Woodruff  y.  Imperial  F.  Ins.  Co.,  83  N.  Y.  133;  Short  v.  Home 
Ins.  Co.,  90  N.  Y.  16;  Forward  v.  Continental  Ins.  Co.,  142  X.  Y. 
382  ;  Wood  v.  American  F.  Ins.  Co.,  149  N.  Y.  382  ;  Robbins  v.  Spring- 
field F.  &  M.  Ins.  Co.,  149  N.  Y.  477,  484. 

But  it  is  manifest  that  that  principle  has  no  application  to  the  facts 
in  this  case.  When  the  defendant's  policy  was  delivered  neither  of  the 
other  policies  had  been  issued,  but  were  subsequently  obtained.  Con- 
sequently, the  defendant's  policy  was  valid  in  its  inception.  If  it 
became  invalid  it  was  by  the  act  of  the  plaintiffs  in  subsequently  pro- 
curing additional  insurance,  without  obtaining  an  indorsement  upon 
the  policy  of  the  defendant's  consent.  As  the  defc'iidant  issued  to  the 
plaintiffs  a  policy  wliich  was  valid  when  delivered,  the  fact  that  they 
informed  the  defendant's  agent  of  their  intention  to  subsequently  pro- 
cure other  insurance  was  insufficient  to  justify  the  courts  below  in 
holding  that  there  was  a  waiver  of  that  condition,  or  that  the  defendant 
was  estopped  from  insisting  upon  it.  Baumgartel  v.  Providence- Wash- 
ington Ins.  Co.,  136  N.  Y.  547:  Moore  v.  H  F.  Ins.  Co.,  141  N.  Y. 
219  ;  McNierney  v.  Agricultural  Ins.  Co.,  48  Hun,  239. 

The  distinction  between  the  knowledge  of  an  existing  fact  which 
renders  a  policy  void  when  delivered  and  the  omission  of  the  insured 
to  give  notice  of  and  procure  the  required  consent  to  a  subsequent  act, 
wliich,  by  its  conditions  invalidated  it,  although  previously  consented 
to,  was  clearly  pointed  out  in  the  authorities  cited. 

The  decisions  of  the  courts  below  are  at  variance  with  the  principle 
that  written  contracts  cannot  be  controlled  or  varied  by  oral  evidence, 
and  that  a  written  instrument  must  be  regarded  as  the  receptacle  of  the 


1088  GRAY   V.    GERMANIA   FIRE    INS.    CO.  [CHAP.  XI. 

entire  contract  between  the  parties,  and  merges  all  previous  oral  agree- 
ments in  it. 

Nor  do  we  think  the  contention  of  the  respondents,  that  they  were 
entitled  to  recover  upon  a  parol  contract  of  insurance,  made  with  the 
ao'ent,  can  be  sustained.  There  was  no  proof  that  the  defendant's 
agent  ever  agreed  to  issue  a  policy  different  from  the  one  delivered,  or 
that  he  agreed  that  other  insurance  might  be  procured  without  the  in- 
dorsement required.  It  is  manifest  that  this  action  was  upon  the  policy 
issued  by  the  defendant,  and  was  not  based  upon  any  other  agreement 
between  the  plaintiffs  and  the  agent  of  the  defendant. 

The  judgment  of  the  General  Term  and  of  the  trial  court  should  be 

reversed  and  a  new  trial  granted,  with  costs  to  abide  the  event. 

All  concur,  except  Gray,  J.,  absent. 

Judgment  reversed} 

1  Ace:  Hartford  F.  Ins.  Co.  v.  Davenport,  37  Mich.  609  (1877). 

See  Walton  v.  Agricultural  Ins.  Co.,  116  N.  Y.  317  (1889);  England  v.  West- 
chester F.  Ins.  Co.,  81  Wis.  583  (1892);  Connecticut  F.  Ins.  Co.  v.  Tilley,  88  Va. 
1024  (1892). 

Compare  Harper  v.  Albany  Mut.  Ins.  Co.,  ante,  p.  530  (1858),  and  cases  cited  there- 
under; Michiiran  Shingle  Co.,  v.  State  Investment  and  Ins.  Co.,  94  Mich.  389  (1892)  ; 
Mitchell  V.  Mississippi  Home  Ins.  Co.,  72  xMiss.  53  (189.^) ;  Liverpool  and  London  and 
Globe  Ins.  Co.  v.  Farnswurth,  72  Miss.  555  (1895).  — Ed. 


SECT.  III.]  WING   V.    HARVEY.  1089 

.    SECTION  III. 

Life  Insurance. 

WING  V.  HARVEY. 
Chancery,  1854.     5  De  G.,  M.  &  G.  265. 

This  was  a  claim  which  came  on  to  be  heard  onginally  befoi'e  their 
Lordships  b}"  arrangement.  The  plaintiff  was  the  assignee  of  a  policy 
for  £300,  on  a  life  which  had  determined,  and  he  sought  payment  of 
the  insurance  moneys,  or  a  return  of  his  premiums.  The  policy  was 
effected  in  1829,  b}'  William  Bennett,  of  Rongham,  on  his  own  life, 
with  "The  Norwich  Union  Societ}-,"  which  was  represented  by  the 
defendant. 

On  the  policy  was  indorsed  the  following  condition  :  — 

"  If  the  part}'  upon  whose  life  the  insurance  is  granted  shall  go 
be3'ond  the  limits  of  Europe  without  the  license  of  the  directors,  this 
policy  shall  become  void  :  the  insurance  intended  to  be  hereby  effected 
shall  cease,  and  the  mone}'  paid  to  the  society  become  forfeited  to  its 
use." 

The  polic}'  was  effected  at  a  branch  office  at  Bury  St.  Edmunds,  at 
which  a  Mr.  Lockwood  was  the  agent  of  the  sooiet}',  and  the  premium, 
on  effecting  it,  was  paid  t©  Mr.  Lockwood.  In  October,  1829,  the 
policy  was  assigned  by  Mr.  Bennett  to  the  plaintiff,  as  a  security  for  an 
annuity. 

A  subsequent  grant  of  an  annuity  was  made  b}-  Mr.  Bennett  to  the 
plaintiff,  and  another  policy  effected  and  assigned  to  the  plaintiff,  and 
notice  of  the  assignment  given  at  the  branch  office.  The  annual  pre- 
miums of  £6  6s.  and  £4  5.s.  6r?.,  payable  on  the  policies,  were  regularly 
paid  by  the  plaintiff  or  his  solicitor  to  Mr.  Lockwood,  who  transmitted 
them  to  the  head  office  at  Norwich.  In  June,  1835,  Mr.  Bennett  went 
to  Canada,  where  he  continued  to  reside  till  Jul}',  1849,  when  he  died. 
L'pon  Mr.  Lockwood  applying  for  some  of  the  premiums  upon  the 
policies,  after  June,  1835,  the  plaintiff  informed  him  of  Mr.  Bennett's 
residence  in  Canada,  and  asked  whether  it  would  be  safe  to  pay  the 
premiums.  Mr.  Lockwood  answered  that  the  policies  would  be  per- 
fectly good  provided  the  premiums  were  regularly  paid.  The  premiums 
were  accordingly  paid  and  transmitted  to  the  head  office  at  Norwich, 
whence,  in  the  3-ears  1842  and  1847,  certificates  of  bonuses  declared  in 
respect  of  the  policies  were  forwarded  to  the  plaintiff,  as  the  owner  of 
them,  through  Mr.  Lockwood. 

In  1847,  Mr.  Lockwood  died,  and  Mr.  Jolin  Thompson  was  ap- 
pointed in  his  place  by  the  society,  as  their  agent  at  Bur}*  St.  Edmunds. 
He  also  received  and  transmitted  to  the  head  office  the  premiums  paid 

69 


1090  WING    V.    HARVEY.  [CHAP.  XI. 

bv  the  plaintiff.  Mr.  Bennett's  absence  was  stated  to  Mr,  Thompson, 
on  his  applying  for  the  premiums.  Mr.  Bennett  died  in  1847,  where- 
upon the  plaintiff  demanded  the  insurance  moneys  with  the  bonuses, 
which  had  been  appropriated  to  the  policies.  The  society  refused  pay- 
ment on  the  ground  of  Mr.  Bennett's  residence  in  Canada.  They 
offered,  however,  to  repay  the  premiums  which  had  been  paid  since 
Mr.  Bennett  left  Europe,  witii  interest  at  £4  per  cent. 

Tlie  present  claim  was  then  filed,  seeking  payment  of  the  insurance 
moneys  and  bonuses,  or  in  the  alternative  the  repayment  of  all  the 
premiums  which  had  been  paid  from  the  beginning  upon  the  policies, 
with  interest  at  £5  per  cent. 

The  above  facts  were  verified  by  affidavits,  and  affidavits  were  also 
filed  in  support  of  the  claim,  to  show  that  the  head  office  at  Norwich 
had  notice,  independently  of  the  notice  given  to  their  local  agent,  tliat 
Mr.  Bennett  was  residing  in  Canada.  By  them  it  appeared  that  a  will 
of  a  person  named  Younge,  who  died  in  Canada,  was  produced  at  the 
head  office,  and  appeared  to  have  been  attested  tliere  by  Mr.  Bennett, 
described  as  formerly  of  Rougham  ;  and  further,  that  in  1848,  the 
secretary  of  the  society  at  the  head  office  received  a  letter,  in  which 
Mv.  Bennett  was  referred  to  as  the  only  person  from  Bury  St.  Ed- 
munds whom  the  writer  knew  in  Canada. 

3Ii'.  Glasse  and  3L'.  Fooks,  for  the  plaintiflf. 

31i\  Malins  and  Mr.  Rogers.,  for  the  defendant. 

The  Lord  Justice  Knight  Bruce.  If  the  directors,  represented  by 
the  defendant,  had  themselves  personally  received  the  premiums  which 
Mr.  Lockwood  received,  with  the  same  knowledge  that  he  had,  there 
certainly  would  have  been  a  waiver  of  the  forfeiture,  and  the  defence 
in  this  case  would  have  been  ineffectual.  But  he  was  their  agent  for 
the  purpose  of  receiving  premiums  at  least  on  subsisting  policies.  Tlie 
premiums  in  question  were  paid  to  him  on  the  faith  of  tlie  policies  con- 
tinuing valid  and  effectual  notwithstanding  Mr.  Bennett's  departure  for 
Canada  and  residence  there,  — a  faith  ii  which  Mr.  Lockwood  know- 
ingly acquiesced,  and  to  which  he  ex[)rossly  acceded.  The  premiums 
thus  paid  having  been  transmitted  by  Mr.  Lockwood  from  time  to  time 
to  the  directors,  and  retained  by  tliem  without  objection,  I  think  that 
whether  Mr.  Lockwood  informed  or  did  not  inform  them  in  fact  of 
t'le  true  state  of  circumstances  in  which  the  i)reiniums  were  paid  to 
him,  the  directors  became,  and  that  they  are,  as  between  them  and  the 
plaintiff,  as  much  bound  as  if  he  had  paid  the  premiums  directly  to 
themselves,  they  knowing  at  the  time,  on  each  occasion,  the  place  of 
Mr.  Bennett's  residence.  The  directors,  taking  the  money,  were  and 
are  precluded  from  saying  that  they  received  it  otherwise  than  for  the 
purpose  and  in  the  faith,  for  which  and  in  which  Mr.  Wing  expressly 
paid  it.  See  Story  Agency  (6th  ed.),  §§  140,  451;  2  Lead.  Cas.  in 
Eq.  (3d  Am.  ed.),  146  et  seq.^  163,  164,  and  cases  cited.  If,  how- 
ever, it  were  important  for  any  purpose  of  this  suit  to  determine 
whether  it  ought  to  be  inferred,  that  the  directors  received  from  Mr. 


SECT.  III.]  INSURANCE    GO.   V.   WILKINSON.  1091 

Lockwood  some  at  least  of  the  premiums,  with  actual,  direct,  and 
personal  notice  of  Mr.  Bennett's  foreign  residence,  I  should  liold,  upon 
the  materials  before  the  court,  an  affirmative  answer  to  be  the  correct 
answer  to  that  question. 

It  is  unnecessary  to  refer  to  the  case  of  the  Duke  of  Beaufort  v. 
Necld  (2  CI  &  Fin.  248)  as  decided  by  the  House  of  Lords,  I  tlnnk, 
in  1845,  though  perhaps  tlie  principles  on  which  tliat  decision  proceeded 
are  not  inapplical)le  to  tlie  present  controvers}'. 

The  Lord  Justice  Tukxek.^  .  .  .  The  office  undoubtedly-  received 
the  money  from  their  agents  to  whom  it  had  been  paid  upon  ex- 
press terms  and  conditions,  and  the  office,  having  held  out  Mr. 
Lockwood  and  Mr.  Thompson  to  the  world  as  tlieir  agents  for  tlie  pur- 
pose of  receiving  the  premiums,  I  thinic  it  became  the  duty  of  Mr. 
Lockwood  and  Mr.  Thompson,  and  not  tliat  of  the  plaintiff,  to  com- 
municate to  the  head  office  at  Norwich  the  circumstances  under  which 
those  premiums  had  been  paid  to  and  received  In'  them,  and  the  repre- 
sentations wliieli  were  made  on  tlic  occasions  of  such  payments  and 
receipts.  L'pon  these  grounds  my  opinion  is,  that  these  policies  must 
be  considered  to  have  been  continuing  policies,  and  that  this  claim 
must  therefore  be  allowed.^ 


INSURANCE  COMPANY  v.  WILKINSON. 
Supreme  Court  of  the  United  States,  1871.     13  Wall.  222. 

Ix  error  to  the  Circuit  Court  for  the  District  of  Iowa:  the  case  being 
thus  :  — 

The  Union  Mutual  Insurance  Company-,  of  Maine,  insured  the  life  of 
Mrs.  Malinda  Wilkinson  in  favor  of  her  husband.  Both  husband  and 
wife,  prior  to  the  rebellion,  had  been  slaves,  and  the  husband  came  to 
Keokuk,  Iowa,  from  Missouri.  The  company  did  business  in  Keokuk 
(where  the  application  was  made  and  the  policy  delivered),  through  an 
agent,  one  Ball,  to  whom  it  furnished  blank  applications.  The  mode 
of  doing  business  appeared  to  have  been  that  the  agent  propounded 
certain  printed  questions,  such  as  are  usual  on  applications  for  insur- 
ance on  lives,  contained  in  a  form  of  application,  and  took  down  the 
answers  ;  and  when  the  application  was  signed  by  the  applicant,  the 
friend  and  physician  forwarded  it  to  the  company,  and  if  accepted, 
the  policy  was  returned  to  this  agent,  who  delivered  it  and  collected 
and  transmitted  the  premiums. 

1  After  discussing  the  facts.  — Kd. 

2  See  Armstrong  v.  Turquand,  9  Irish  C.  L.  32,  45-61  (1858)  ;  Hodsdon  v.  Guard- 
ian L.  Ins.  Co.,  97  Mass.  144  (1867) ;  Walsh  v.  JEtna  L.  Ins.  Co.,  30  Iowa,  133  (1870)  ; 
Rice  V.  New  England  Mut.  Aid  Assn.,  146  Mass.  248  (1888) ;  McGurk  v.  Metropolitan 
L.  Ins.  Co.,  56  Conn.  528  (1888).  —  Ed. 


1092  INSURANCE   CO.    V    WILKINSON.  [CHAP.  XI. 

On  this  form  of  application  were  the  usual  questions  to  be  answered 
by  the  person  proposing  to  effect  the  assurance ;  and  by  the  terms  of 
the  policy  it  became  void  if  an}'  of  the  representations  made  proved  to 
be  untrue. 

Among  the  questions  was  this  one  :  — 

*'  Has  the  party  ever  had  any  serious  illness,  local  disease,  or  personal 
injur}' ;  if  so,  of  what  nature,  and  at  what  age?" 

And  the  question  was  answered  : 

"  No." 

So,  too,  after  an  interrogatory  as  to  whether  the  parents  were  alive 
or  dead,  —  tliey  being,  in  the  case  of  Mi's.  Wilkinson,  both  dead,  — 
were  the  questions  and  answers  : 

"  Q.   Mother's  age,  at  her  death? 

"A   40. 

"  Q.   Cause  of  her  death? 

''A.  Fever." 

Mrs.  Wilkinson  having  died,  and  the  company  refusing  to  pay  the 
sum  insured,  Wilkinson,  the  husband,  brought  suit  in  the  court  below 
to  recover  it.  The  defence  was  that  the  answers  as  above  given  to  the 
questions  put  were  false  ;  that  in  regard  to  the  first  one,  Mrs.  Wilkin- 
son, in  the  year  186*2,  had  received  a  serious  personal  injury,  and  that 
in  regard  to  the  others,  the  mother  had  not  died  at  the  age  of  fort}', 
but  at  the  earlier  age  of  twenty -three,  and  had  died  not  of  fevei'  but  of 
consumption.^  ... 

As  to  the  other  matter,  the  age  at  which  the  mother  died  and  the 
disease  which  caused  her  death,  evidence  having  been  given  by  the 
defendant  tending  to  show  that  she  died  at  a  much  younger  age  than 
forty  years,  and  of  consumption,  the  plaintiff,  in  avoidance  of  this,  was 
permitted  (under  the  plaintiff's  objection  and  exception)  to  prove  that 
the  agent  of  tlie  insurance  company,  who  took  down  the  answers  of  the 
applicant  and  his  wife  to  all  the  interroglatoriee,  was  told  by  both  of 
thcin  tliat  they  knew  nothing  about  the  cause  of  the  mother's  death,  or 
of  her  age  at  the  time  ;  that  the  wife  was  too  young  to  know  or  re- 
member anything  about  it,  and  that  the  husband  had  never  known  her  ; 
and  to  pi'ove  that,  there  was  present  at  the  time  the  agent  was  taking 
the  application,  an  old  woman,  who  said  that  she  had  knowledge  on 
that  subject,  and  that  the  agent  questioned  her  for  himself,  and  from 
what  she  told  him  he  filled  in  the  answer  which  was  now  alleged  to  be 
untrue,  without  its  truth  being  aflSrmed  or  assented  to  by  the  plaintiff 
or  the  wife. 

This  tlie  jury  found  in  their  special  verdict,  as  they  had  the  other 
facts,  and  found  that  the  mother  died  at  the  age  of  twenty-three  ;  did 
not  die  of  consumption ;  and  that  the  applicant  did  not  know  when 
the  application  was  signed  how  the  answer  to  the  question  about  the 
mother's  age  and  the  cause  of  her  death  had  been  filled  in.  .  .   . 

1  Passages  on  the  personal  injury  have  been  omitted  in  reprinting  the  statement 
and  the  opinion.  —  Ed. 


SECT.  III.]  INSUKANCE   CO.   V.    WILKINSON.  1093 

On  the  second  branch  —  that  relating  to  the  age  of  the  mother  —  the 
court  said  to  the  jury,  that  if  the  applicant  did  not  know  at  what  age 
her  mother  died,  and  did  not  state  it,  and  declined  to  state  it,  and  that 
her  age  was  inserted  by  the  agent  upon  statements  made-,  to  him  by 
others  in  answer  to  inquiries  he  made  of  them,  and  upon  the  strength 
of  his  own  judgment,  based  upon  data  thus  obtained,  it  was  no  defence 
to  the  action  to  show  that  the  agent  was  mistaken,  and  that  the  mother 
died  at  the  age  of  twenty-three  years. 

Verdict  and  judgment  having  gone  for  the  plaintiff,  the  insurance 
compan}-  brought  the  case  here  on  error. 

Messrs.  G.  G.  Wright,  Gilmore,  and  Anderson,  for  the  plaintiff  in 
error. 

Messrs.  McOrary,  Miller,  and  McCrary,  contra. 

Mr.  Justice  Miller  delivered  the  opinion  of  the  court.   .  .  . 

Passing  then  to  tlie  second  branch  of  the  case.  The  defendant  ex- 
cepted to  the  introduction  of  the  oral  testimony  regarding  the  action  of 
the  agent,  and  to  the  instructions  of  the  court  on  that  subject ;  and 
assigns  the  njling  of  the  court  as  error  on  the  ground  that  it  permitted 
the  written  contract  to  be  contradicted  and  varied  b}'  parol  testimou}'. 

The  great  value  of  the  rule  of  evidence  here  invoked  cannot  be  easily 
overestimated.  As  a  means  of  protecting  those  who  are  honest,  accur- 
ate, and  prudent  in  making  their  contracts,  against  fraud  and  false 
swearing,  against  carelessness  and  inaccurac}',  by  furnishing  evidence 
of  what  was  intended  hs  the  parties,  which  can  alwa^'s  be  produced 
■without  fear  of  change  or  liability  to  misconstruction,  the  rule  mei'its  the 
eulogies  it  has  received.  But  experience  has  shown  that  in  reference 
to  these  ver}-  matters  the  rule  is  not  perfect.  The  written  instrument 
does  not  always  represent  the  intention  of  both  parties,  and  sometimes 
it  fails  to  do  so  as  to  either;  and  where  this  has  been  the  result  of 
accident,  or  mistake,  or  fraud,  the  principle  has  been  long  recognized 
that  under  proper  circumstances,  and  in  an  appropriate  proceeding,  the 
instrument  may  be  set  aside  or  reformed,  as  best  suits  the  purposes  of 
justice.  A  rule  of  evidence  adopted  b\'  the  courts  as  a  protection 
against  fraud  and  false  swearing,  would,  as  was  said  in  regard  to  the 
analogous  rule  known  as  the  statute  of  frauds,  become  the  instrument 
of  the  very  fraud  it  was  intended  to  prevent,  if  there  did  not  exist 
some  authority  to  correct  the  universality  of  its  application.  It  is  upon 
this  principle  that  courts  of  equit}'  proceed  in  giving  the  relief  just 
indicated;  and  though  the  courts,  in  a  common  law  action,  may  be 
more  circumscribed  in  the  freedom  with  which  they  inquire  into  the 
origin  of  written  agreement,  such  an  inquir}'  is  not  always  forbidden  by 
the  mere  fact  that  the  party's  name  has  been  signed  to  the  writing 
offered  in  evidence  against  him. 

In  the  case  before  us  a  paper  is  offered  in  evidence  against  the  plain- 
tiff containing  a  representation  concerning  a  matter  material  to  the 
contract  on  which  the  suit  is  brought,  and  it  is  not  denied  that  he 
signed  the  instrument,  and  that  the  representation  is  untrue.     But  the 


IQ24:  INSURANCE   CO.   V.    WILKINSON.  [CHAP.  XI. 

parol  testimony  makes  it  clear  beyond  a  question,  that  this  party  did 
not  intend  to  make  that  representation  when  he  signed  the  paper,  and 
did  not  know  he  was  doing  so,  and,  in  fact,  had  refused  to  make  any 
statement  on  that  subject.  If  the  writing  containing  this  representa- 
tion had  been  prepared  and  signed  by  the  plaintiff  in  his  application 
for  a  policy  of  insurance  on  the  life  of  his  wife,  and  if  the  representa- 
tion complained  of  had  been  inserted  by  himself,  or  by  some  one  who 
was  liis  agent  alone  in  tlie  matter,  and  forwarded  to  the  principal  office 
of  the  defendant  corporation,  and  acted  upon  as  true,  by  the  officers  of 
the  company,  it  is  easy  to  see  that  justice  would  authorize  them  to  hold 
him  to  the  truth  of  the  statement,  and  that  as  they  had  no  part  in  the 
mistake  which  he  made,  or  in  the  making  of  the  instrument  which  did 
not  truly  represent  what  he  intended,  he  should  not,  after  the  event, 
be  permitted  to  show  his  own  mistake  or  carelessness  to  the  prejudice 
of  the  corporation. 

If,  however,  we  suppose  the  party 'making  the  insurance  to  have 
been  an  individual,  and  to  have  been  present  when  the  application  was 
signed,  and  soliciting  the  assured  to  make  the  contract  of  insurance, 
and  that  the  insurer  himself  wrote  out  all  these  representations,  and 
was  told  by  the  plaintiff  and  his  wife  that  they  knew  nothing  at  all  of 
this  particular  subject  of  inquiry,  and  that  they  refused  to  make  any 
statement  about  it,  and  yet  knowing  all  this,  wrote  the  representation 
to  suit  himself,  it  is  equally  clear  that  for  the  insurer  to  insist  that  the 
policy  is  voi'd  because  it  contains  this  statement,  would  be  an  act  of 
bad  "faith  and  of  the  grossest  injustice  and  dishonesty.  And  the 
reason  for  this  is  that  the  representation  was  not  the  statement  of  the 
plaintiff,  and  that  the  defendant  knew  it  was  not  when  he  made 
the  contract ;  and  that  it  was  made  by  the  defendant,  who  procured 
the  plaintiffs  signature  thereto. 

It  is  in  precisely  such  cases  as  this  that  courts  of  law  in  modern 
times  have  introduced  the  doctrine  of  equitable  estoppels,  or,  as  it  is 
sometimes  called,  estoppels  in  pais.  The  principle  is  that  where  one 
party  has  by  his  representations  or  his  conduct  induced  the  other  party 
to  a  transaction  to  give  him  an  advantage  which  it  would  be  against 
equity  and  good  conscience  for  him  to  assert,  he  would  not  in  a  court 
of  justice  be  permitted  to  avail  himself  of  that  advantage.  And  al- 
though the  cases  to  which  this  principle  is  to  be  applied  are  not  as  well 
defined  as  could  be  wished,  the  general  doctrine  is  well  understood  and 
is  applied  by  courts  of  law  as  well  as  equity  where  the  technical  advan- 
tage thus  obtained  is  set  up  and  relied  on  to  defeat  the  ends  of  justice 
or  establish  a  dishonest  claim.  It  has  been  applied  to  the  precise  class 
of  cases  of  the  one  before  us  in  numerous  well-considered  judgments  by 
the  courts  of  this  country.^  Indeed,  the  doctrine  is  so  well  understood 
and  so  often  enforced  that,  if  in  the  transaction  we  are  now  consider- 

1  riuinh  V.  Cattaraugus  Ins.  Co.,  18  N.  Y.  392  ;  Rowley  v.  Empire  Ins.  Co.,  36  N.  Y. 
.550 ;  Woodliury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  526  ;  Combs  v.  The 
Hannibal  Savings  and  Ins.  Co.,  43  Mo.  148  —  Hep. 


SECT,  III.]  INSURANCE   CO.    V.    WILKINSON.  1095 

ing,  Ball,  the  insurance  agent,  who  made  out  the  application,  had  been 
in  fact  the  underwriter  of  the  policy,  no  one  would  doubt  its  appli- 
cabilit}'  to  the  present  case.  Yet  the  proposition  admits  of  as  little 
doubt  that  if  Ball  was  the  agent  of  the  insurance  company,  and  not  of 
the  plaintiff,  in  what  he  did  in  filling  up  the  application,  the  compao}' 
must  be  held  to  stand  just  as  he  would  if  he  were  the  principal. 

Although  the  very  well-considered  brief  of  counsel  for  plaintiff  in 
error  takes  no  issue  on  this  point,  it  is  obvious  that  the  soundness  of 
the  court's  instructions  must  be  tested  mainly  by  the  answer  to  be 
given  to  the  question,  "Whose  agent  was  Ball  in  filling  up  the 
application?  " 

This  question  has  been  decided  differentl}'  b}'  courts  of  the  highest 
respectability  in  cases  preciselj'  analogous  to  the  present.  It  is  not  to 
be  denied  that  the  application,  logically  considered,  is  the  work  of  the 
assured,  and  if  left  to  himself  or  to  such  assistance  as  he  might  select, 
the  person  so  selected  would  be  his  agent,  and  he  alone  would  be  re- 
sponsible. On  the  other  hand,  it  is  well  known,  so  well  that  no  court 
would  be  justified  in  shutting  its  eyes  to  it,  that  insurance  companies 
organized  under  the  laws  of  one  State,  and  having  in  that  Stale  their 
principal  business  office,  send  these  agents  all  over  the  land,  with 
directions  to  solicit  and  procure  applications  for  policies,  furnishing 
them  with  printed  arguments  in  favor  of  the  value  and  necessity  of  life 
insurance,  and  of  the  special  advantages  of  the  corporation  which  th« 
agent  represents.  They  pa}'  these  agents  large  commissions  on  the 
premiums  thus  obtained,  and  the  policies  are  delivered  at  their  hands 
to  the  assured.  The  agents  are  stimulated  by  letters  and  instructions 
to  activity  in  procuring  contracts,  and  the  party  who  is  in  this  manner 
induced  to  take  out  a  policy,  rarelj'  sees  or  knows  anything  about  the 
compau}'  or  its  officers  to  whom  it  is  issued,  but  looks  to  and  relies 
upon  the  agent  who  has  persuaded  him  to  effect  insurance  as  the  full 
and  complete  representative  of  the  compan}',  in  all  that  is  said  or  done 
in  making  the  contract.  Has  he  not  a  right  to  so  regard  him?  It  is 
quite  true  that  the  reports  of  judicial  decisions  are  filled  with  the  efforts 
of  these  companies,  by  their  counsel,  to  establish  the  doctrine  that  they 
can  do  all  this  and  yet  limit  their  responsibility  for  the  acts  of  these 
agents  to  the  simple  receipt  of  the  premium  and  delivery  of  the  polic}', 
the  argument  being  that,  as  to  all  other  acts  of  the  agent,  he  is  the 
agent  of  the  assured.  This  proposition  is  not  without  support  in  some 
of  the  earlier  decisions  on  the  subject ;  and,  at  a  time  when  insurance 
companies  waited  for  parties  to  come  to  them  to  seek  assurance,  or  to 
forward  applications  on  their  own  motion,  the  doctrine  had  a  reasonable 
foundation  to  rest  upon.  But  to  appl}'  such  a  doctrine,  in  its  full  force, 
to  the  system  of  selling  policies  through  agents,  which  we  have  de- 
scribed, would  be  a  snare  and  a  delusion,  leading,  as  it  has  done  in 
numerous  instances,  to  the  grossest  frauds,  of  which  the  insurance 
corporations  receive  the  benefits,  and  the  parties  supposing  themselves 
insured  are  the  victims.     The  tendency  of  the  modern  decisions  in  this 


1096  INSURANCE   CO.   V.   WILKINSON.  [CHAP.  XI. 

country  is  steadily  in  the  opposite  direction.  Tiie  powers  of  tlic  agent 
are,  ^jnm«  fade,  co-extensive  witli  the  business  intrusted  to  his  care, 
and  will  not  be  narrowed  by  limitations  not  communicated  to  the  per- 
son with  whom  he  deals.^  An  insurance  company,  establishing  a  local 
agency,  must  be  held  responsible  to  the  parties  with  whom  they  trans- 
act business  for  the  acts  and  declarations  of  the  agent,  within  the 
scope  of  his  employment,  as  if  they  proceeded  from  the  principal.- 

lu  the  fifth  edition  of  American  Leading  Cases,^  after  a  full  con- 
sideration of  the  authorities,  it  is  said  :  — 

"  By  the  interested  or  officious  zeal  of  the  agents  employed  by  the 
insurance  companies  in  the  wish  to  outbid  each  other  and  procure 
customers,  they  not  unfrequently  mislead  the  insured,  by  a  false  or 
erroneous  statement,  of  what  the  application  should  contain,  or,  taking 
the  preparation  of  it  into  their  own  hands,  procure  his  signature  by  an 
assurance  that  it  is  properly  drawn,  and  will  meet  the  requirements  of 
the  policy.  The  better  opinion  seems  to  be  that,  when  this  course  is 
pursued,  the  description  of  the  risk  should,  though  nominally  proceed- 
ing from  the  insured,  be  regarded  as  the  act  of  the  insurers."  * 

The  modern  decisions  fully  sustain  this  proposition,  and  they  seem 
to  us  founded  in  reason  and  justice,  and  meet  our  entire  approval. 
This  principle  does  not  admit  oral  testimony  to  vary  or  contradict  that 
which  is  in  writing,  but  it  goes  upon  the  idea  that  the  writing  offered 
in  evidence  was  not  the  instrument  of  the  party  whose  name  is  signed 
to  it ;  that  it  was  procured  under  such  circumstances  by  the  other  side 
as  estops  that  side  from  using  it  or  relying  on  its  contents ;  not  that  it 
may  be  contradicted  by  oral  testimony,  but  that  it  may  be  shown  by 
such  testimony  that  it  cannot  be  lawfully  used  against  the  party  whose 
■  name  is  signed  to  it.  Judgment  affir?ned.' 

1  Bebee  v.  Hartford  lus.  Co.,  25  Conn.  51  ;  The  Lycoming  Ins.  Co.  r.  Scholleuber- 
ger,  8  Wright,  259  ;  Beal  v.  The  Park  Ins.  Co.,  16  Wis.  241  ;  Davenport  v.  Peoria  Ins. 
Co.,  17  Iowa,  276. —Rep. 

2  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  517  ;  Horwitz  r.  Equitable  Ins. 
Co.,  40  Mo.  557  ;  Ayres  v.  Hartford  Ins.  Co.,  17  Iowa,  176;  The  Howard  Ins.  Co.  v. 
Bruuer,  11  Harris,  50.  —Rep. 

3  Published  A.  D.  1872,  vol.  ii.  p.  917.  — Rep. 

4  Rowley  v.  Empire  Ins.  Co.,  36  N.  Y.  550.  —  Rep. 

6  Ace. :  insurance  Co.  v.  Mahone,  21  Wall.  152  (1874)  ;  New  Jersey  Mut-  L.  Ins.  Co. 
V.  Baker,  94  U.  S.  610  (1876)  ;  Miller  v.  Phoenix  Mut.L.  Ins.  Co.,  107  N.  Y.  292  (1887). 

See  Parsons  t'.  Bignold,  13  Sim.  518(1843)  ;  Massachusetts  L.  Ins.  Co.  v.  Eshelman, 
30  Ohio  St.  647  (1876) ;  Schwarzbach  v.  Ohio  Valley  Protective  Union,  25  W.  Va.,  622, 
661-665  (1885);  Follette  v.  United  States  Mut.  Ace.  Assn.,  107  N.  Car.  240  (1890), 
s  c.  at  a  later  stage,  sub  nom.  Follette  v.  Mutual  Ace.  Assn.,  110  N.  Car.  377  (1892)  ; 
Bawdeni'.  London,  Edinburgh  and  Glasgow  Assur.  Co.,  [1892]  2  Q.  B.  534  (C.  A.) ; 
Bennett  r.  Massachusetts  Mut.  L.  Ins.  Co.,  64  S.  W.  Rep.  758  (Tenu.  1901).  —  Ed. 


SECT.  UI.]  EYAN    V.    WORLD    MTJTUAL   LIFE    IXS.    CO.  1(^97 

RYAN   V.  WORLD   MUTUAL   LIFE   INSURANCE   CO. 
Supreme  Court  of  Connecticut,  1874.     41  Conn.  168. 

Assumpsit  on  a  polic}'  of  insurance  on  the  life  of  Patrick  Rj'an,  for 
the  benefit  of  the  plaintiff ;  brought  to  the  Superior  Court  in  New  Lon- 
don County,  and  tried  to  the  juiT  before  Foster,  J.  Verdict  for  the 
plaintiff,  and  motion  for  a  new  trial  b}'  the  defendants  for  error  in  the 
rulings  of  the  court  and  on  the  ground  that  the  verdict  was  against 
the  evidence.     The  case  is  sufficient!}-  stated  in  the  opinion. 

W.  P.  Prentice,  of  New  York,  and  S.  C.  Dunham,  in  support  of 
the  motion. 

Pratt  and  Ripley,  contra. 

Carpenter,  J.  This  is  an  action  on  a  policy  of  life  insurance.  The 
policy  is  expressed  to  be  "  in  consideration  of  the  representations, 
declarations,  and  covenants  contained  in  the  application  therefor,  to 
which  reference  is  here  made  as  a  part  of  this  contract,"  etc.  It  is  fur- 
ther declared  that  "  This  polic}' is  issued  and  accepted  on  the  following 
express  conditions  and  agreements :  First,  That  the  statements  and 
declarations  made  in  the  application  therefor,  and  on  the  faith  of  which 
it  is  issued,  are  in  all  respects  true,"  etc.  The  application  therefore  is 
a  part  of  the  polic\' ;  and  the  plaintiffs  agreements  therein  contained 
are  warranties,  and,  if  not  true,  she  cannot  recover,  unless  there  has 
been  a  waiver  b}-  the  defendants  or  under  the  circumstances  they  are 
estopped  from  denying  their  truth. 

In  the  application  are  the  following  questions  and  answers  : 

"12.  Has  the  party  ever  had  any  of  the  following  diseases"  — 
(naming  a  long  list  of  diseases,  and  among  them,)  "  bronchitis,  con- 
sumption, spitting  of  blood,  or  any  serious  disease  ?  "  —  "  None  of 
these." 

"17.  Has  the  part}-  had  during  the  last  seven  years  any  severe 
sickness  or  disease?  If  so,  state  the  particulars,  and  the  name  of  the 
attending  physician  who  was  consulted  and  prescribed."  —  '-No." 

"  25.  Has  the  party  employed  or  consulted  any  physician?  Please 
answer  this  3'es  or  no.  If  yes,  give  name  or  names  and  residence."  — 
"No." 

"  27.  Has  any  previous  examination  or  application  been  made  for 
assurance  on  the  life  proposed  ?  "  —  "  No." 

'•Has  any  companj-  declined  to  issue  a  policy  for  the  party?"  — 
"No." 

Upon  the  trial  the  plaintiff  offered  to  prove,  not  that  the  above  an- 
swers were  true,  but  that  different  answers  were  in  fact  given,  both  by 
herself  and  the  insured,  and  that  the  answers  were  wrongly  written  by 
the  local  agent  of  the  defendants  without  the  knowledge  or  consent  of 
the  plaintiff  or  her  husband.     Aside  from  the  claim  that  the  defend- 


1098  RYAN   V.   WORLD    MUTUAL    LIFE   INS.    CO.  [CHAP.  XL 

ants  are  responsible  for  the  conduct  of  their  local  agent,  this  is  merely 
an  attempt  to  substitute  for  a  part  of  the  written  contract  declared  on, 
a  different  parol  contract;  for  the  representations  and  warranties  of 
the  plaintiff  contained  iu  the  written  agreement,  oral  representations 
and  warranties  of  an  entirely'ditferent  character.  It  requires  no  argu- 
ment to  show  that  this  cannot  be  done. 

liut  the  plaintiff  claims  that  trutliful  answers  having  been  given  to 
each  interrogatory,  and  tlie  incorrect  answers  contained  in  the  ai)pli- 
cation  being  there  by  the  sole  act  of  the  agent,  the  defendants  are 
bound  by  the  answers  as  written,  and  are  precluded  from  denying 
their  truth.  Whether  this  is  so  or  not  depends  upon  the  extent  of  tlie 
agent's  authority. 

It  must  be  admitted  that  the  express  authority  of  the  agent  was 
limited  to  receiving  the  application,  forwarding  it  to  the  home  office, 
receiving,  countersigning,  and  delivering  the  policy,  and  collecting  the 
premiums.  The  courts  in  this  State  have  construed  the  p  )vvers  of 
these  agents  liberally,  and  extended  them  somewhat  by  implication. 
Thus  it  has  been  held  that  in  writing  the  application,  and  explaining 
the  interrogatories  and  the  meaning  of  the  terms  used,  he  is  to  be  re- 
garded as  the  agent  of  tlie  compan}'.  In  The  Union  Mutual  Ins.  Co. 
V.  Wilkinson,  13  Wall.  222,  it  was  held  where  an  agent  by  mis- 
take, or  acting  upon  information  derived  from  others  which  proved 
to  be  incorrect,  inserted  an  answer  not  true  in  fact,  that  it  was  the  act 
of  the  insurers  and  not  of  the  insured. 

In  tliis  case  we  are  asked  to  go  further  than  any  case  has  yet  gone, 
and  clothe  tlie  agent  with  an  authorit}'  not  given  him  in  fact,  and  to 
hold  the  principal  responsible  for  an  act  which  could  not  l)v  any  pos- 
sibility have  been  contemplated  as  being  within  the  scope  of  tlie 
agency.  In  must,  if  not  iu  all,  of  the  cases  in  which  the  act  of  tlic 
agent  has  been  regarded  as  the  act  of  the  principal,  the  act  lias  been 
the  natural  and  probable  result  of  the  relations  existing  between  the 
parties,  or  so  connected  vvitli  other  acts  expressly  authorized  as  to 
afford  a  reasonable  presum[)tion  that  the  principal  intended  to  au- 
thorize it.  But  it  cannot  be  supposed  that  these  defendants  intended 
to  clothe  this  agent  with  authorit}'  to  perpetrate  a  fraud  upon  them- 
selves. That  he  deliberately  intended  to  defraud  them  is  manifest. 
He  knew  well  that  if  correct  answers  were  given  no  policy  would  issue. 
Prompted  by  some  motive  he  sought  to  obtain  a  policy  1)>'  means  of 
false  answers.  His  dut}'  required  him  not  only  to  write  the  answers 
truly  as  given  by  the  applicant,  but  also  to  communicate  to  his  prin- 
cipal an}'  other  fact  material  to  the  risk  which  might  come  to  his 
knowledge  from  any  other  source.  His  conduct,  in  this  case,  was  a 
gross  violation  of  dut}',  in  fraud  of  his  principal,  and  in  the  interest 
of  the  other  party.  To  hold  the  principal  responsible  for  his  acts,  and 
assist  in  the  consummation  of  the  fraud,  would  be  monstrous  injustice. 
When  an  agent  is  apparently  acting  for  his  principal,  but  is  really  act- 
ing for  himself,  or  third  persons,  and  against  his  principal,  there  is  no 


SECT.  III.]  RYAN    V.    WORLD    MUTUAL   LIFE    INS.    CO.  1099 

agency  in   respect  to  that  transaction,  at  least  as  between  the  agent" 
himself  or  the  person  for  whom  he  is  really  acting  and  the  principal 

The  principal  reason  urgod  for  holding  the  defendants  liable  in  this 
case  is  the  one  suggested  in  the  argument,  that  when  one  of  two  in- 
nocent i)ersons  must  suffer  by  the  fraud,  negligence,  or  unauthorized 
act  of  a  third,  he  wlio  clothed  the  third  with  the  power  to  deceive  or 
injure  must  be  tlie  one. 

Our  answer  is,  in  the  first  place,  that  this  is  not  exactly  a  case  in 
which  one  of  two  innocent  persons  must  necessarily  suffer.  There  is 
no  absolute  loss  for  us  to  determine  on  whom  it  shall  fall.  If  the 
plaintiff  fails  to  recover  she  sustains  no  pecuniary  loss,  except  the 
premium  paid,  nor  that  even  if  slie  is  innocent  and"  the  law  is  so  that 
she  can  recover  it  back  on  the  ground  that  there  was  a  failure  of  con- 
sideration. It  is  unlike  a  case  of  fire  insurance.  Nearly  all  property 
may  be  insured  at  some  rate,  if  not  in  one  office  in  another.  But  in 
tiiis  case  the  plaintiff's  husband  was  not  an  insurable  subject.  His 
situation  was  such  that  one  company  had  rejected  him,  and  but  for  the 
aid  of  fraud  neitlier  this  nor  any  ctlier  company  would  have  accepted 
him.  Had  the  truth  been  stated  no  policy  would  have  issued,  and  as 
she  would  have  had  no  better  success  probably  with  other  companies 
we  cannot  see  that  she  has  been  misled  to  her  prejudice  except  in 
relation  to  the  premium,  which  is  comparatively  a  small  matter. 

In  the  second  place,  if  the  rule  is  t(j  be  applied  to  this  case  it  is  by 
no  means  certain  that  it  will  aid  the  plaintiff.  The  fraud  could  not  be 
perpetrated  by  the  agent  alonj.  The  aid  of  the  plaintiff  or  the  insured, 
either  as  an  accomplice  or  as  an  instrument,  was  essential.  If  she 
was  an  accomplice,  then  she  participated  in  the  fraud,  and  the  case 
falls  within  the  principle  of  Lewis  t:  The  Phoenix  Mutual  Life  Ins. 
Co.,  39  Conn.  100.  If  she  was  an  instrument,  she  was  so  because  of 
her  own  negligence,  and  that  is  equally  a  bar  to  her  right  to  recover. 
She  says  that  she  and  her  husband  signed  the  application  without  read- 
ing it  and  without  its  being  read  to  them.  That  of  itself  was  inex- 
cusable negligence.  The  ap[)lication  contained  her  agreements  and 
representations  in  an  important  contract.  When  she  signed  it  she 
was  bound  to  know  what  she  signed.  The  law  requires  that  the  in- 
sured shall  not  only,  in  good  faith,  answer  all  the  interrogatories  cor- 
rectly, but  shall  use  reasonable  diligence  to  see  that  the  answers  are 
correctly  written.  It  is  for  his  interest  to  do  so,  and  the  insurer  has  a 
right  to  presume  that  he  will  do  it.  He  has  it  in  his  power  to  prevent 
this  species  of  fraud  and  the  insurer  has  not. 

But  more  than  this.  The  conduct  of  the  plaintiff  at  the  time  and 
subsequently,  is  not  entirely  free  from  suspicion.  There  is  some  evi- 
dence tending  to  prove  that  she  knew  of  the  deception.  She  testifies 
that  her  husband,  at  the  time  the  application  was  signed,  told  the  agent 
several  times  that  he  had  been  rejected  by  the  Massachusetts  MuUial, 
but  that  the  doctor  told  him  to  say  nothing  about  it.  After  the  doctor 
l:;id  [)aid  the  i)remium,  she  hesitated  about  repaying  him,  fearing  that 


1100  RYAN    V.    Yv'OKLD    MUTUAL   LIFE    INS.    CO.  [CHAP.  XL 

the  policy  would  not  be  good,  and  even  sent  her  daughter  to  request  him 
to  take  the  policy  aw:iy.  Thereupon  the  doctor  and  the  agent  assured 
her  that  it  was  all  right  in  the  application.  Upon  that  assurance  she 
paid  the  premium.  This,  if  it  falls  short  of  proving  actual  collusion, 
shows  clearl}'  that  she  comprehended  the  importance  of  the  answers, 
and  exhibits  her  negligence  in  a  stronger  light.  On  the  whole  we  think 
that  she,  quite  as  much  as  the  defendants,  clothed  this  agent  with  the 
power  to  perpetrate  the  fraud.  Courts  should  never  extend  by  im- 
plication the  power  of  an  agent  except  to  carry  into  effect  the  probable; 
intention  of  the  parties,  or  to  prevent  third  persons  dealing  with  the 
agent  from  being  misled  to  their  injury.  In  this  case  there  is  no 
ground  for  the  supposition  that  the  defendants  ever  intended  to  au- 
thorize the  agent  to  act  directly  contrary  to  their  interests  ;  and  if  the 
plaintiff  has  been  deceived  her  own  negligence  at  least  materially  con- 
tributed to  it. 

We  need  not  enlarge  upon  the  evils  necessaril}'  resulting  from  hold- 
ing insurance  companies  liable  for  such  acts  of  their  agents.  The 
question  is  vital  to  the  insurance  interests  of  the  country.  The  insured 
no  less  than  the  insurers  are  deepl}'  interested  in  it.  If  this  verdict  is 
sustained  it  will  tend  to  establish  a  principle  fraught  only  with  mis- 
chief. Ever}'  life  insurance  company  in  this  country,  and  to  some  ex- 
tent the  fire  insurance  companies,  will  be  at  the  mere}'  of  their  agents. 
A  door  will  be  open  to  fraud,  collusion,  and  legal  robber^-,  unprece- 
dented in  the  history  of  jurisprudence.  In  view  of  the  probable  con- 
sequences of  such  a  principle — evils  co-<3Xtensive  almost  with  the 
magnitude  of  the  interests  involved —  we  ought  to  pause  and  consider 
well  before  extending  the  doctrine  of  some  of  the  modern  cases  to  a 
case  like  this. 

We  are  constrained  therefore  to  hold  that  a  limited  agenc}-  in  a  case 
of  life  insurance  will  not  be  extended  by  operation  of  law  to  an  act 
done  by  the  agent  in  fraud  of  his  principal,  and  for  the  benefit  of  the 
insured,  especially  where  it  is  in  the  power  of  the  insured  by  the  use 
of  reasonable  diligence  to  defeat  the  fraudulent  intent. 

The  court  ver}'  properly  instructed  the  jurj"  that  "  an  untrue  or 
fraudulent  statement  or  denial  made  by  the  applicant  of  a  fact  material 
to  the  risk  to  induce  the  issuance  of  a  policy  will  prevent  the  polic}- 
from  taking  effect  as  a  valid  contract,  unless  the  insurer  has  in  some 
wa}'  waived  or  estopped  himself  from  relying  upon  such  misstatement 
to  avoid  the  polic}'.  This  waiver,  to  be  effectual,  must  be  made  by 
an  officer  of  the  company  authorized  to  make  it.  If  there  has  been  no 
evidence  of  any  waiver  except  by  a  medical  examiner  of  the  compan}-, 
or  by  a  local  agent,  there  must  be  additional  proof  of  specific  authority 
given  them  or  the  company  will  not  be  bound." 

Some  of  the  cases  cited  by  the  plaintiff  are  eases  of  fire  insurance, 
in  which  the  agents  were  intrusted  with  blank  policies,  signed  bj-  the 
president  and  secretarj',  and  had  full  power  to  fill  up  and  issue  the 
same  without  referring  the  application  to  the  home  office.     In  such 


SECT.  III.]  RYAN   V.   WORLD   MUTUAL   LIFE   INS.   CO.  1101 

cases  the  corporation  contracts  solely  by  its  agent.  The  acts  and 
knowledge  of  the  agent  are  the  acts  and  knowledge  of  the  corporation, 
and  there  is  a  manifest  propriety  in  holding  the  corporation  liable 
according]}'. 

This  court  has  held  that  in  writing  the  answers  to  the  interrogatories 
in  the  application,  the  agent  is  to  be  regarded  as  the  agent  of  the  com- 
pany ratlier  than  the  agent  of  the  insured.  We  do  not  question  the 
propriety  of  those  decisions,  considering  the  circumstances  of  the  cases 
in  which  they  were  made ;  but  we  cannot  regard  them  as  establishing 
an  inflexible  rule  of  law  applicable  to  all  cases. 

A  brief  reference  to  some  of  the  cases  will  illustrate  the  distinction 
which  we  make.  When  the  applicant  stated  fully  and  truthfully  the 
circumstances  relating  to  the  title  to  the  property  insured,  and  the 
agent,  knowing  all  the  facts,  but  for  the  sake  of  convenience,  stated 
the  title  incorrectly  and  issued  a  policy,  it  was  held  that  the  company 
could  not  take  advantage  of  it.  The  court  regarded  the  transaction 
as  equivalent  to  an  agreement  that,  for  the  purpose  of  the  insurance, 
the  title  shonld  be  considered  as  it  was  stated  to  be  by  the  agent. 
Peck  V.  New  London  County  Mutual  Insurance  Company,  22  Conn. 
575.  See  also  Woodbur}-  Savings  Bank  v.  Charter  Oak  Insurance 
Company,  31  Conn.  517. 

When  tlie  applicant  answered  the  interrogatory,  "  Is  a  watch  kept 
on  the  premises  during  the  night?"  by  stating  the  facts,  and  the  agent 
wrote  the  answer,  "Watchman  till  12  o'clock,"  which  answer  was  not 
strictly  true,  it  was  held  that  the  company  was  bound  by  it.  Malleable 
Iron  Works  v.  Phoenix  Ins.  Co.,  25  Conn.  465.  See  also  Beebe  v. 
Hartford  County  Mut.  Fire  Ins.  Co.,  25  Conn.  51  ;  Hough  v.  City  Fire 
Ins.  Co.,  29  Conn.  10. 

The  case  before  us  is  a  case  of  life  Insurance.  The  power  of  the 
agent  was  in  fact  limited.  He  had  no  power  to  issue  policies.  The 
terms  of  his  agency  conferred  no  authority  to  waive  conditions  or  for- 
feitures, or  to  agree  to  false  and  fraudulent  answers  to  any  of  the  in- 
terrogatories, or  to  make  any  other  contract  to  bind  the  company. 
Presumptively  the  insured  and  tlie  plaintiff  knew  all  this  before  paying 
the  premium  ;  for  the  printed  policy,  which  was  in  their  hands  for  sev- 
eral days,  contained  at  the  bottom  this  note :  "  The  president  and 
secretary  are  alone  authorized  to  make,  alter,  or  discharge  contracts,  or 
to  waive  forfeitures."  The  jury  then  were  correctly  told  that  "  there 
must  be  additional  proof  of  special  authority  given  them,"  (the  local 
agent  and  the  medical  examiner,)  "or  the  company  will  not  be 
bound." 

The  jury  found  such  special  authority.  But  we  look  through  the 
record  in  vain  to  find  any  evidence  to  support  such  a  finding. 

The  verdict  was  manifestly  against  the  evidence,  and  justice  requires 
that  it  should  be  set  aside  and  a  new  trial  awarded.^ 

i  Ace. :  New  York  L.  Ins.  Co.  v.  Fletcher,  117  U.  S.  519  (1886). 

See  National  L.  Ins.  Co.  v.  Minch,  53  N.  Y.  144  (1873) ;  McCollum  v.  Mutual  L. 


1102  MA.YER   V.    MUTUAL   LIFE   INS.   CO.  [CHAP.  XT. 

MAYER  V.  MUTUAL  LIFE  INSURANCE  CO. 

Supreme  Court  of  Iowa,  1874.     38  Iowa,  304. 

Appeal  from  Clinton  District  Court. 

Action  for  the  recover}-  of  one  thousand  dollars  upon  a  policy  of 
insurance  on  the  life  of  Michael  Mayer,  who  died  on  the  26th  daj-  of 
August,  1872.  The  premium  upon  the  policy  became  due  on  the  22(1 
of  August,  and  was  unpaid  at  the  time  of  his  death.  Upon  this 
ground  the~defendant  seeks  to  avoid  liability^  Jury  trial."  Verdict  and 
judgment  for  plaintiff  for  one  thousand  dollars.  Defendant  appeals. 
The  material  facts  are  stated  in  the  opinion. 

Walter  I.  Hayes ^  George  B.  Young ^  and  J.  T.  McGuire,  for  ap- 
pellant. 

W.  E.  Leffingwell  &  Bro.^  for  appellee. 

Day,  J.  The  policy  bears  date  of  the  22d  of  November,  1869,  and 
insures  the  life  of  Michael  Mayer  for  the  term  of  fifty-six  years,  in  con- 
sideration of  an  annual  premium  to  be  paid  to  said  company  on  or 
before,  or  within  thirty  days  after  the  22d  of  November.  This  polic}* 
amongst  other  conditions  contains  the  following  :  — 

"  2.  That  this  policy  shall  not  take  effect  until  the  payment  of  the 
premium  hereon  has  been  made  during  the  lifetime  of  the  person  whose 
life  is  hereby  insured,  or  if  any  premium  note  given  on  account  of  this 
l)olicy  be  not  paid,  with  interest,  on  or  before  the  date  when  due,  then 
this  policy  shall  cease  and  determine ;  and  in  every  case  in  whicli  this 
policy  shall  cease  and  detci-mine,  all  payments  thereon  shall  be  forfeited 
to  said  company,  and  the  company  shall  not  be  liable  for  the  payment 
of  the  sum  insured  thereon,  nor  any  part  thereof,  except  as  hereinafter 
provided." 

"5.  That  if,  after  the  payment  of  two  or  more  full  annual  premiums 
on  this  policy,  the  same  shall  cease  and  determine,  by  default  in  the 
pa3'ment  of  any  subsequent  premium  when  due,  vet,  notwithstanding 
such  default,  this  policy  shall  continue  and  hold  good,  subject  to  all  the 
above  conditions  and  agreements,  except  as  to  further  payments  of 
premiums,  for  an  equitable  portion  of  the  amount  originally  insured, 
provided  application  for  the  same  be  made  within  thirty  days  after  said 
premium  was  due  and  not  paid." 

The  policy  contains  a  provision  that  the  annual  premium  may,  by 
permission  of  the  company,  be  paid  semi-annually  in  advance  with 
interest.     Immediately  after  the  policy  was  effected  the  parties,   by 

Ins.  Co.,  5.5  Hun.  103  (1889)  ;  8.  c.  affirmed  without  opinion,  sub  mm.  McCollum  i;. 
New  York  Mut.  L.  Ins.  Co.,  124  N.  Y.  642  (1891). 

Compare  McArthur  v.  Home  L.  Assn.,  73  Iowa,  336  (1887) ;  O'Brien  v.  Home  Ben- 
efit Society,  117  N.  Y.  310  (1889) ;  Bawden  v.  London,  Edinburgh  and  Glasgow  Assur. 
Co.,  [1892]  2  Q.B.  534  (C.  A.).  — Ed. 


SECT.  III.]  MAYER    V.   MUTUAL   LIFE    INS.    CO.  1103 

agreement,  changed  the  time  of  the  payment  of  the  premiums  to 
quarter-annual  payments,  to  be  paid  upon  the  same  terms  and  con- 
ditions, and  with  the  same  force  and  effect  as  the  semi-annual  premiums 
mentioned  in  said  polic}-.  George  Oatraan  was  hired  by  Lcadbetter, 
the  general  agent  of  the  defendant  at  Clinton,  as  book-keeper  and  clerk, 
and  received  his  pay  from  defendant. 

,He  was  instructed  by  Leadbetterto  collect  premiums  and  take  insur- 
ance. He  collected  the  last  five  premiums  which  were  paid  upon  the 
policy  in  suit,  and  delivered  receipts  therefor,  which  he  countersigned 
with  the  name  of  Leadbetter,  the  general  agent.  These  five  payments 
were  made  as  follows:  the  one  due  May  22,  was  paid  on  the  13th  day 
of  June ;  that  due  August  22,  was  p'ald  August  25  ;  that  due  Novem- 
ber 22  was  paid  November  28  ;  and  those  due  February  22  and  May 
22,  1872,  were  paid  when  due.  Two  other  receipts  were  in  evidence, 
showing  that  the  premium  due  22d  of  November,  1870,  was  paid  on 
the  24th  of  November,  and  that  the  one  due  22d  of  Februarj-,  1871, 
was  paid  on  the  13th  of  P'ebruary.  Oatman  testified  substantially  as 
follows:  "At  the  time  I  collected  the  money  expressed  in  receipt 
No.  10,  May  22,  1872,  Mayer  said,  '  I  suppose  my  notices  go  to 
Clinton,  as  my  policy  is  dated  there,  and  I  want  it  changed  to  Lyons.' 
I  told  him  that  was  not  necessary,  as  we  had  a  complete  record  in  the 
office,  and  when  a  policy  holder  changed  his  post-office  address,  we 
noted  it.  I  told  him  not  to  be  uneasy,  as  I  would  be  around  to  collect 
it.  I  did  not  do  so,  as  I  quit  work  the  week  after  collecting  said  pre- 
mium above  mentioned.  " 

The  witness  further  testified  that  he  never  told  any  one  connected 
with  defendant  that  he  had  this  conversation  with  Mayer,  and  that  he 
made  no  note  of  the  change  of  residence  in  the  register,  but  that  the 
fact  of  such  change  was  understood  in  the  office. 

It  was  also  proved  that  the  custom  of  defendant  as  to  notifying 
policy  holders  at  and  around  Clinton  of  the  time  premiums  became  due, 
was  to  send  notices  from  the  general  office  to  Clinton,  and  from  there 
to  the  policy  holders.  The  notice  for  the  August  premium  was  sent  to 
Mayer  at  Clinton,  and  being  uncalled  for,  was  returned. 

The  court  gave  the  following  instructions,  which  were  excepted  to, 
and  the  giving  of  which  is  assigned  as  error :  — 

"2.  The  policy  in  suit  was  delivered  at  the  city  of  Clinton,  and 
thatcit}-,  at  the  time  of  such  delivery,  it  is  admitted,  was  the  residence 
and  post-office  of  the  plaintiff  and  the  deceased,  and  such  residence  was 
then  noted  on  the  books  of  defendant's  agent  at  the  said  city  of  Clinton. 
If  it  was  the  custom  of  the  agent  of  the  defendant  at  Clinton  to  advise 
by  letter  through  the  post-office  or  otherwise,  parties  insured  at  that 
agency,  of  the  time  when  tlicir  premiums  would  become  due,  in  order 
that  they  might  be  paid  in  season,  and  tiie  policy  thus  preserved  from 
forfeiture,  and  such  had  been  the  custom  with  respect  to  this  particular 
policy,  tlien  the  plaintiff,  unless  otherwise  advised  by  the  defendant, 
had  the  right  to  expect  that  the  custom  would  be  observed  in  regard  to 


1104  MAYER   V.   MUTUAL   LIFE   INS.   CO.  [CHAP.  XL 

the  payment  due  August  22,  1872,  and  to  be  advised  of  such  payment 
in  season  to  make  it.  And  if  you  find  that  the  plaintiff  and  the  de- 
ceased, previous  to  the  22d  of  August,  had  removed  to  the  city  of  Lyons, 
in  said  county,  and  the  deceased  about  the  time  of,  or  shortly  after 
such  removal,  informed  a.  clerk  who  was  then  in  the  office  and  in  the 
employment  of  the  agent  at  Clinton,  and  who  previously  collected  pre- 
miums on  tliis  policy  of  the  deceased,  then  this  would  be  notice  to 
defendant  of  this  change  of  residence  ;  and  it  would  be  the  duty  of  the 
defendant  to  either  address  or  send  word  to  the  plaintiff  at  Lyons,  and 
a  letter  addressed  in  Clinton  would  not  be  sufficient ;  and  if  the  failure 
to  pay  the  premium  at  the  time  it  was  due,  was  owing  to  the  fact  that 
defendant  had  failed  to  give  the  deceased  its  usual  and  customary  notice, 
then  the  non-payment  of  the  premium  at  the  time  it  was  due,  would  not 
work  a  forfeiture  of  the  policy',  or  the  right  to  recover  on  it." 

"  3.  If  you  find  that  the  witness  Oatman  was  employed  in  the  office 
of  the  general  agent  at  CUnton,  and  had  been  in  the  habit,  with  the 
knowledge  and  assent  of  such  general  agent,  of  collecting  premiums  on 
this  particular  policy,  and  had,  by  the  said  general  agent,  been  per- 
mitted by  the  said  agent  to  procure  insurance  risks,  &c.,  and  the  said 
Oatman  received  from  the  deceased  premiums  several  days  after  they 
had  become  due,  without  any  objection,  and  as  though  such  payments 
had  been  made  on  the  day  of  their  maturity,  and  the  payments  as  made 
were  authorized  by  the  defendant,  without  any  objection  communicated 
to  the  deceased  or  the  plaintiff,  then  it  may  be  fairly  inferred  that  the 
said  Oatman  was  acting  with  the  concurrence  of  the  defendant,  and  as 
its  agent.  So,  too,  if  before  the  maturity  of  the  premium  payable  on 
the  22d  of  August,  1872,  the  said  Oatman,  while  employed  in  the  office 
of  the  said  general  agent,  had  informed  the  deceased  that  he  would  call 
at  the  residence  or  place  of  business  of  the  deceased  and  collect  such 
premium,  and  deceased  depended  on  such  call  being  personally  made 
on  him,  this  would  excuse  the  deceased  from  going  to  such  office  and 
paying  such  premium  the  day  that  it  was  due,  if,  in  addition  to  this 
promise  on  the  part  of  the  said  Oatman,  you  find  that  he  had  at  various 
times  called  upon  and  collected  from  the  deceased  previous  premuims 
on  said  policy,  with  the  authority  to  collect  such  premiums.  If,  how- 
ever, the  said  Oatman  left  the  employment  of  the  said  general  agent 
previous  to  the  said  22d  day  of  August  aforesaid,  and  this  was  known 
to  the  deceased  or  to  the  plaintiff,  then  the  plaintiff  can  claim  no  ad- 
vantage from  the  promise  or  offer  so  made." 

"5.  If  j-ou  find  that  the  premium  due  August  22  was  offered  to 
and  refused  by  the  defendant  on  the  26th  of  August,  the  defendant 
would  be  justified  in  then  refusing  it,  unless  you  find  from  the  other 
facts  in  the  case  that  the  defendant,  by  the  declaration  and  conduct  of 
its  agent,  had  given  the  deceased  or  the  plaintiff  reasonable  grounds  to 
believe  that  it  waived  a  strict  performance  with  respect  to  time  of  pay- 
ment, and  if  you  find  that  such  declarations  and  conduct  were  such  as 
would  reasonably  lead  the  deceased  or  plaintiff  to  believe  that  these 


SECT.  III.]  MAYER   V.   MUTUAL   LIFE   INS.   CO.  1105 

strict  conditions  would  be  waived  and  not  be  insisted  on,  tlien  the  offer 
to  i)av  would  be  in  time,  although  the  assured  was  then  dead. 

These  instructions,  we  think,  are  right.  The  vast  increase  in  the 
business  of  insurance,  and  the  many  interests  which  it  involves,  have 
demonstrated  that  many  of  the  decisions  lieretofore  made  respecting  it 
are  unwise,  and  have  created  a  necessity  for  innovation.  Ever}'  law 
should  be  reasonable,  and  it  is  reasonable  only  when  it  is  adapted  to 
human  conduct.  Courts  should  not  so  administer  the  law  as  to  require 
of  individuals  a  course  of  conduct  which,  to  a  majority  of  reasonable 
and  right-minded  men,  is  unusual  and  unnatural.  Indeed,  it  would  be 
impossible  long  to  maintain  a  law  which  is  at  variance  with  the  judg- 
ment and  sense  of  justice  of  a  majority  of  those  upon  whom  it  operates. 

Now  it  must  strike  ever}-  reasonable  mind,  that  a  majority  of  ordi- 
narily prudent  persons,  who  had  been  customarih'  notified  of  the  time 
when  premiums  upon  their  policies  became  due,  and  who  had  received 
no  notice  of  an  intention  to  abandon  the  customary  course,  would  in  a 
particular  case  expect  and  await  a  like  notice.  And  if  such  is  the 
reasonable  and  natural  result  of  the  previous  dealings  of  the  company, 
it  must  govern  its  future  conduct  so  as  to  accord  with  the  reasonable 
expectation  thus  created. 

That  is,  having  furnished  a  policy  holder  reasonable  ground  for  ex- 
pecting that  he  will  be  advised  when  his  premium  becomes  due,  the 
company  must  continue  to  give  such  notice  until  it  furnishes  the 
assured  notice  that  he  need  no  longer  expect  it.  Any  other  construc- 
tion would  make  the  law  a  trap  to  ensnare  the  unwar}'. 

For  a  person  thus  accustomed  to  notice  and,  not  accustomed  to 
charge  his  memory  with  the  day  when  his  premium  became  due,  would 
be  very  likeh',  in  the  absence  of  notice,  to  allow  the  day  for  making 
payment  to  pass  by,  in  utter  forgetfulness  of  the  premium,  or  to  suppose 
that  the  local  office  had  received  no  estimate  from  the  general  office  of 
the  amount  due,  and  hence  was  not  ready  to  receive  it.  See  Buckbee 
V.  United  States  Ins.  Co.,  18  Barb.  541  ;  Thompson  v.  St.  Louis  Mutual 
Life  Ins.  Co.,  Ins.  Law  Journal,  1873,  p.  422.^ 

And  the  foregoing  remarks  are  all  applicable  to  so  much  of  the  third 
instruction  as  refers  to  the  habit  of  receiving  premiums  on  this  policy 
after  they  became  due,  as  well  as  to  the  fifth  instruction. 

As  to  the  remainder  of  this  instruction  it  is  conceded  that  the  ten- 
dency of  late  decisions  is  to  hold  insurance  companies  liable  for  the 
acts  of  their  agents.  Viele  v.  Germania  Ins.  Co.,  26  Iowa,  9  ;  Miller  r. 
the  ^Mutual  Ins.  Co.,  31  Iowa,  216.  It  is  claimed,  however,  that  Oatman 
was  not  in  such  sense  an  agent  of  the  company  that  he  could  bind  it  by 
his  acts.  We  think  otherwise.  He  was  employed  in  the  office  of  the 
general  agent  and  paid  by  the  compan}-.  He  called  in  person  upon  the 
deceased  and  collected  from  him  the  last  five  premiums.  Three  of 
these  he  collected  after  the  day  fixed  for  their  payment.     No  question 

1  s.  c.  52  Mo.  469  (1873).  — Ed. 
70 


1106  CLEMENT    V.   INSUKANCE   CO.  [CIIAP.  XI. 

was  ever  made  as  to  his  authority  to  act  in  this  capacity.  The  company 
by  so  holding  him  forth  and  permitting  him  to  act,  has  recognized  liim 
as  its  agent  for  the  collection  of  premiums  at  least.  It  is  clear  that  if 
he  had  appropriated  to  his  own  use  the  premiums  paid,  the  assured 
could  have  claimed  the  benefit  of  the  payments  made.  He  had  the 
receipts  of  the  company,  countersigned  by  the  general  agent,  and  thus 
was,  by  the  direct  act  of  the  company,  clotlied  with  the  insignia  of 
agenc}".  And  wdiilst  engaged  in  the  business  of  tlie  company,  and 
within  the  scope  of_his_cm  ploy  men  t  he  had,  it  seems  tqj\&,  authority 
t'o  bind  the  companTbyTis  agreement  that  he  would  do  respecting  the 
{^T^TmTTl^rininug^gueJ^ugi^^^  had  done  witlij;erercnco 

to~tIie^'\^  preceding  ones,  namely,  call  at  the  residence  or  place  of 

business  oT^he  deceased^ a ndj^lcct  ijL 

~~Dbjectr6n^as' made  tolhe^stimony^of  the  witness  Oatman,  as  to 
the  custom  of  defendant  respecting  notice  to  policy  holders,  also  with 
reference  to  what  passed  between  him  and  Mayer  at  the  time  the  last 
premium  was  paid. 

We  have  already  determined  the  admissibility  of  this  evidence,  in 
what  we  have  said  respecting  the  instructions. 

Afftt'tnecV 


CLEMENT  V.    INSURANCE   CO. 
Supreme  Coukt  of  Tennessee,   1898.     101  Tenn.  22. 

Appeal  from  Chancery  Court  of  Obion  County,  John  S.  Cooper,  C. 

Caldwell  <&  Zowe,  for  Clement. 

Turley  &  Wright  and  31oore  cfc*  Welh,  for  Insurance  Co. 

Wilkes,  J.  This  is  an  action  upon  a  policy  of  insurance  for  88,000 
upon  the  life  of  Mattie  Lee  Wright.  The  policy  was  issued  on  October 
11,  1893,  and  was  payable  to  the  executors,  administrators,  and 
assigns  of  the  insured.  On  October  19,  1893,  it  was  assigned  to  R. 
H.  Clement  and  W.  B.  Kerr  upon  consideration  that  they  pay  the  pre- 

1  Ace,  as  to  the  effect  of  haliitually  giving  notice  of  premiums:  Insurance  Co.  v. 
Eggleston,  96  U.  S.  572  (1877). 

See  Leslie  v.  Kuickerhoeker  L.  Ins.  Co.,  63  N.  Y.  27  (187.5);  Phoenix  Ins.  Co.  v. 
Doster,  106  U.  S.  30  (1882) ;  Manhattan  L.  Ins.  Co.  v.  Smith,  44  Ohio  St.  156  (1886). 

Compare  Insurance  Co.  v.  Mowry,  96  U.  S.  544  (1877) ;  Thompson  v.  Ins.  Co.,  104 
U   S.  254  (1881). 

Ace,  as  to  the  effect  of  habitually  receiving  premiums  when  overdue :  Dilleber  v. 
Knickerbocker  L.  Ins.  Co.,  76  N.  Y.  567  (1879). 

See  Howell  v.  Knickerbocker  L.  Ins.  Co.,  44  N.  Y.  276  (1871);  Eury  v.  Ins.  Co. 
89  Tenn.  427  (1890). 

Compare  Marston  i-.  Massachusetts  L.  Ins.  Co.,  59  N.  H.  92  (1879) ;  French  v.  Hart- 
ford L.  &  Annuity  Ins.  Co.,  169  Mass.  510  (1897);  Union  Central  L.  Ins.  Co.  v. 
Hook,  62  Oliio  St.  256  (1900) ;  Union  Central  L.  Ins.  Co.  v.  Buxer,  62  Ohio  St.  385 
(1900).— Ed. 


SF.CT.  III.]  CLEMENT    V.    INSUEAXCE    CO.  1107 

miums  as  the}-  should  accrue,  as  well  as  the  premiums  upon  a  'policy  of 
$2,000  issued  simultaneously  by  the  assured  upon  his  life  for  the  bene- 
fit of  his  wife,  and  the  further  consideration  of  §25  paid  to  the  assured 
himself.  The  assured  died  December  27,  1894,  or  one  year  two 
months  and  sixteen  days  after  the  polic}' issued,  he  being  about  twenty- 
six  years  of  age.  After  his  death,  W.  B.  Kerr  assigned  82,228.10  of 
his  part  and  interest  in  the  policy  to  the  Jerome  Hill  Cotton  Company, 
to  satisfy  an  attachment  whicli  had  been  levied  upon  it,  and  afterwards, 
but  before  this  suit  was  instituted,  assigned  the  remainder  of  his 
interest  under  the  policy  to  his  two  sons,  the  complainants,  W.  A.  and 
E.  B.  Kerr. 

Upon  the  hearing  of  the  cause  in  the  court  below,  upon  a  voluminous 
record  and  a  vast  volume  of  proof,  the  Cliancellor  was  of  opinion  that 
complainants  were  not  entitled  to  recover  upon  the  policy,  nor  to  any 
relief,  and  he  dismissed  the  bill  at  their  cost,  and  they  have  appealed 
and  assigned  errors. 

The  learned  Chancellor,  in  his  decree,  set  out  in  full  his  finding  of 
facts  and  conclusions  of  law  thereon.  We  are  satisfied,  from  an  ex- 
amination of  the  entire  record  as  it  is  presented,  tliat  the  Chancellor 
was,  in  the  main,  correct  in  finding  the  facts  as  follows  :  — 

When  the  policy  was  issued,  the  insured  was  not  a  fit  and  suitable 
subject  for  insurance,  because  of  ill  health  and  bodil}'  infirmities  of  a 
serious  character,  which  was  well  known  to  him  and  concealed  by  him 
in  making  his  application,  and  he  procured  the  policy  by  fraudulent 
misrepresentations  as  to  his  ph3sical  condition.  It  also  appears  that 
prior  to  the  delivery  of  the  policy,  and  doubtless  prior  to  the  applica- 
tion, the  said  K.  H.  Clement  and  W.  B.  Kerr  had  agreed  with  the  in- 
sured, that,  for  the  consideration  heretofore  stated,  he  would  transfer 
the  polic\'  for  88,000  to  them,  and  the  policy  was  procured  in  con- 
formity to,  and  in  pursuance  of,  such  agreement,  said  Clement  and 
Kerr  paying  the  cash  premium  to  tlie  agent,  but  not  until  after  the 
transfer  was  made  and  policy  delivered  to  them.  The  terms  of  the 
transfer  recite  that  Clement  and  Kerr  were  creditors  of  the  insured, 
but  such  does  not  appear  to  be  the  fact  from  the  record,  except  so  far 
as  that  relation  may  be  said  to  have  arisen  out  of  the  agreement  re- 
ferred to,  nor  were  the}'  in  any  way  related  to  him,  nor  did  they  have 
any  insurable  interest  in  the  life  of  the  deceased,  but  had  knowledge 
of  his  physical  condition.  The  Chancellor  was  therefore  of  opinion 
that  the  transaction  was  a  gambling  or  wagering  contract  upon  the  life 
of  the  insured,  that  to  recognize  or  enforce  it  would  be  contrar}-  to 
some  public  policy,  and  that  the  subassiguees  or  transferees  of  W.  B. 
Kerr  could  stand  upon  no  other  or  higher  ground  than  he  could. 

Unquestionably  the  findings  of  the  Chancellor  are  correct,  and  his 
conclusions  correct,  upon  the  record  as  presented  to  us,  unless  they  are 
controlled  and  neutralized  b}'  the  provisions  of  the  polic}'  in  regard  to 
the  right  of  the  company  to  contest  its  liability  in  case  of  death.  The 
provision  referred  to  is  as  follows  :  — 


1108  CLEMENT  V.   INSURANCE  CO.  [CHA?.  XI. 

^'■Incontestability. — After  this  polic}-  shall  have  been  in  force  one 
full  year,  if  it  shall  become  a  claim  b}-  deatli,  the  company  will  not 
contest  its  payment,  provided  the  conditions  of  the  policy  as  to  pay- 
ment of  premiums  have  been  observed."  ^  .  .  .  The  provision  in  this 
case  is  ver^'  broad  in  its  terms.  There  is  only  one  condition  npon 
which  the  validity  of  the  policy  can  be  questioned,  after  the  lapse  of  a 
year,  and  that  is  the  nonpayment  of  premiums.  The  meaning  of  the 
provision  is  that  if  the  premiums  are  paid,  the  liability  shall  be  absolute 
under  the  policy,  and  that  no  question  shall  be  made  of  its  original 
validity.  No  reasonable  construction  can  be  placed  upon  such  pro- 
vision other  than  that  the  company  reserves  to  itself  the  right  to  ascer- 
tain all  the  facts  and  matters  material  to  its  risk,  and  the  validity  of 
their  contract  for  one  year,  and  if,  within  that  time,  it  does  not  ascer- 
tain all  the  facts,  and  does  not  cancel  and  rescind  the  contract,  it  may 
not  do  so  afterward  upon  any  ground  then  in  existence. 

The  practical  and  intended  effect  of  the  stipulation  is  to  create  a 
short  statute  of  limitation  in  favor  of  the  insured,  within  which  limited 
period  the  insurer  must,  if  ever,  test  the  validity  of  the  policy. 

It  has  been  held  that  an  agreement  limiting  the  time  within  which  an 
action  may  be  brought  upon  a  policy  of  insurance  by  the  beneficiary 
is  not  against  public  policy,  and  may  be  enforced,  though  less  than  the 
usual  time  imposed  by  law  has  been  fixed.  If  this  be  so,  it  is  difficult 
to  see  why  a  similar  limitation  upon  the  right  of  the  insurer  to  contest 
should  be  against  public  polic}',  and  why  it  should  not  be  enforced  by 
tlie  courts. 

It  is  said,  however,  that  fraud  appearing  in  the  origin  of  the  contract 
must,  as  in  any  other  case,  render  it  null  and  void  from  the  beginning. 
It  is  true  that  fraud  vitiates  all  agreements  and  undertakings  based 
upon  it,  and  they  may  be  set  aside  at  the  instance  of  the  party  de- 
frauded. So,  in  this  case,  fraud  in  obtaining  the  policy  would  vitiate 
it  at  the  option  and  upon  the  motion  of  the  party  defrauded,  but,  under 
the  provision  in  question,  the  party  must  within  the  year  exercise  his 
right  to  repudiate  and  rescind  it.  The  effect  of  this  agreement  not  to 
contest  is  to  put  the  company  in  the  attitude  of  being  unable  to  set  up 
any  fraud  or  false  swearing  in  obtaining  the  polic}',  or  any  other  de- 
fence to  it,  save  the  one  excepted,  so  far  as  its  original  validity  is  con- 
cerned. Unless  the  language  be  thus  construed,  it  is  impracticable  to 
put  any  reasonable  interpretation  on  it.  Unless  it  is  the  object  and 
purpose  of  the  pi'ovision  to  cut  off  all  defences  arising  out  of  the  false 
statements  of  the  applicant  to  obtain  it,  it  is  difficult  to  see  what  practi- 
cal benefit  the  insured  is  to  derive  from  it.  .  .  . 

Objection  was  made  by  the  complainant  to  any  testimony  relating  to 
the  truth  or  falsity  of  the  representations  made  or  fraud  practised  by 
the  assured  or  the  transferees  in  obtaining  this  policy,  but  such  objec- 
tions were  overruled,  and  much  testimony  ^:)?'o  and  C07i  was  taken  on  this 
point,   and  this   is    now   assigned    as    error.  .   .  .  "When  the  suit   is 

^  The  greater  part  of  the  opinion  has  been  omitted.  —  Ed. 


SECT.  III.]  CLEMENT   V.   INSURANCE   CO.  1109 

brought  by  a  transferee,  and  the  Chancellor  was  of  opinion  that  such 
transferee  did  not  hold  in  good  faith,  and  that  the  transfer  was  but  a 
mere  evasion  of  the  rule  against  wagering  policies,  then  the  evidence 
was  admissible  on  the  question  of  fraud  or  good  faith  on  the  part  of  the 
transferee.  .  .   . 

While  the  court  is  disposed  to  give  to  the  assured,  and  parties  taking 
under  him  in  good  faith,  the  full  benefit  and  advantage  of  the  noncon- 
testable clause,  by  shutting  off  inquiries  into  the  truth  or  falsity  of  the 
statements  made  in  the  application,  and  this  because  of  the  contract 
between  the  parties,  it  can  see  no  reason  why  the  Uke  advantage  and 
benefit  should  be  extended  to  one  who  has  no  insurable  interest  in  the 
assured,  who  does  not  take  or  claim  in  good  faith,  and  whose  entire 
connection  with  the  matter  is  shown  to  have  been  for  a  speculative  and 
fraudulent  purpose,  and  no  sound  public  policy  can  be  subserved  by  so 
holding,  but  on  the  contrary,  such  holding  would  sanction  wagering  in- 
surance contracts,  to  the  great  detriment  of  the  public  morals  and 
public  good.  We  are  therefore  of  opinion  the  decree  of  the  Chancellor 
is  correct  in  its  results,  and  it  is  aflSrmed,  and  the  bill  dismissed  at 
complainant's  cost.^ 

1  Ace. :  Manufacturers'  L.  Ins.  Co.  v.  Anctil,  28  Can.  S.  C.  103  (1897),  s.  c. 
affirmed,  sub  mm.  Anctil  v.  Manufacturers'  L.  Ins.  Co.,  [1899]  A.  C.  604  (P.  C). 

On  incontestability,  ?ee  also  Wood  v.  Dwarris,  11  Exch.  49.3  (IS-'iG)  ;  Holland  r. 
Chosen  Friends,  .54  N.  J.  L.  (25  Vrooni)  490  (1892) ;  Welch  v.  Union  Central  L.  Ins. 
Co.,  108  Iowa,  224  (1899)  ;  Murray  v.  State  Mut.  L.  Ins.  Co.,  22  R.  I.  524  (1901). 

On  waiver  of  formal  proof  of  death,  see  Greenfield  v.  Massacliusetts  Mut.  L. 
Assur.  Co.,  47  N.  Y.  4.30  (1872) ;  McComas  o.  Covenant  Mut.  L.  Ins.  Co.,  56  Mo.  573 
(1874)  ;  O'Reilly  v.  Guardian  Mut  L.  Ins.  Co.,  60  N.  Y.  169  (1875)  ;  Goodwin  v.  Mas- 
sachusetts Mut.  L.  Ins.  Co,  73  N.  Y.  480,  492-496  (1878);  Prentice  v.  Knickerbocker 
L.  Ins.  Co.,  77  N.  Y.  483  (1879). 

On  waiver  of  eash  for  first  premium,  see  White  v.  Connecticut  F.  Ins.  Co.,  ante, 
p.  1078  (1876).  Ace.  are  these  life  insurance  cases  :  Sheldon  v.  Connecticut  Mut.  L.  Ins. 
Co.,  25  Conn.  207  (1856)  ;  Miller  v.  Life  Ins.  Co.,  12  Wall.  285  (1870) ;  Jones  r.  New 
York  L.  Ins.  Co.,  168  Mass.  245  (1897)  ;  Stewart  v.  Union  Mut.  L.  Ins.  Co.,  155  N.  Y. 
257  (1898)  ;  Berliner  y.  Travelers'  Ins.  Co.,  121  Cal.  451  (1898).  And  see  Bouton  v. 
American  Mnt,  L.  Ins.  Co.,  25  Conn.  542  (1857).  Compare  Hoffman  v.  John  Hancock 
Mut.  L.  Ins.  Co.,  92  U.  S.  161  (1875).  > 

On  the  topic  of  this  section,  see  also  :  — 

Phcenix  L.  Ins.  Co.  v.  Raddin,  120  U.  S.  183  (1887) ; 
Brown  v.  Metropolitan  L.  Ins.  Co.,  65  Mich.  306  (1887)  ; 
Fidelity  and  Casualty  Co.  v.  Teter,  136  Ind.  672  (1894).  — Ed. 


1110  WAKEFIELD    V.    MARTIN.  [CHAP.  XII. 


CHAPTER  XII. 
ASSIGNEES   AND   BENEFICIARIES. 


SECTION    I. 

Marine  Insurance. 

WAKEFIELD  v.  MARTIN  and  Trustees. 
Supreme  Judicial  Court  of  Massachusetts,   1799.^     3  Mass.  558. 

William  C.  Martin,  being  indebted  to  James  Scott  in  the  sum  of 

$5,000,  and  having  shipped  a  parcel  of  goods  on  board  the  ship , 

upon  which  he  had  effected  a  policy  of  insurance,  in  order  to  secure 
Scott,  assigned  the  bills  of  lading  and  the  policy  to  him  by  a  blank 
indorsement.  A  total  loss  happened.  The  plaintiff,  a  creditor  of 
Martin,  summoned  Welles,  one  of  the  underwriters,  as  trustee  of 
Martin,  Welles  having  no  knowledge  of  the  assignment  to  Scott. 

The  question  was,  whether  this  assignment  to  a  creditor,  without 
hotice  to  the  underwriters,  was  good  so  far  as  to  vest  a  property  in 
the  assignee,  and  thus  preclude  an  attachment. 

Mr.  Parsons,  for  Scott,  contended  that  the  assignment  was  good 
and  perfect  as  I)etween  tlie  assignor  and  assignee,  and  vested  an  equi- 
table right  in  the  latter ;  and  although,  if  the  underwriters  had  actualh' 
paid  the  loss  to  Martin  without  notice  of  the  assignment,  they  would 
have  been  discharged,  j-et  that  an  attaching  creditor  was  in  no  better 
condition  than  the  assignor  himself. 

Mr.  Ames,  for  the  plaintiff,  contended  that  a  policy  of  insurance  was 
not  assignable  ;  that  it  was  a  mere  chose  in  action,  and  b}^  law  no 
property  vested  in  the  assignee  ;  that  the  assignor  might  revoke  the 
authorit}',  or  might  release  and  discharge  the  underwriters ;  that 
the  attaching  creditor  stepped  in  with  the  authoritj'  of  the  law,  and 
effected  this  revocation  ;  and  that  a  contrary  doctrine  would  introduce 
great  frauds. 

The  Court,  after  taking  time,  pronounced  their  opinion  unani- 
mousl^^  that  the  assignment,  though  without  the  knowledge  or  assent 
of  the  underwriter,  vested  an  equitable  right  in  the  assignee  ;  and, 
therefore,  they  discharged  the  trustees. 

^  The  date  is  somewhat  uncertain.  —  Ed. 


SECT.  I.]  POWLES    V.    INNES.  1111 

POWLES  AND  Others  v.  INNES. 
Exchequer,   1843.     11  M.  &  W.  10. 

This  was  an  action  of  assninpsit  on  a  policy  of  insurance  on  sliip. 
The  declaration  stated  that  the  policy  was  made  bj-  the  plaintiffs  as 
agents  for  Robert  Page  and  Robert  Chamberlain ;  that  Page  and 
Chamberlain,  and  one  Sarah  Banks,  were,  during  the  risk  and  until 
and  at  the  time  of  the  loss,  interested  in  the  ship  to  the  amount  of  the 
mone}-  insured  ;  and  that  the  ship  was  totallj-  lost.  The  defendant 
pleaded,  first,  paj-raent  of  £75  ;  secondly,  as  to  the  residue,  non-as- 
sumpsit ;  thirdl}',  except  as  to  £75,  that  although  Chamberlain  was 
interested  in  the  ship  during  the  risk  and  at  the  time  of  the  loss  to  the 
amount  of  £400,  in  respect  of  which  tiie  plaintiffs  were  entitled  to  re- 
cover the  said  sum  of  £75,  3'et  that,  save  as  aforesaid,  Chamberlain 
and  Page  were  not  interested  in  the  ship  during  the  risk,  and  that  the 
policy  was  not  made  by  the  plaintiffs  as  agents  for  Sarah  Banks  or  for 
her  benefit,  nor  did  she  give  an\'  order  for  effecting  the  same  ;  and 
fourthly,  except  as  to  £75,  that  although  Chamberlain  was  interested 
during  the  risk  to  the  amount  of  £400,  etc.,  3-et,  save  as  aforesaid. 
Chamberlain,  Page,  and  Banks  were  not  interested  in  the  ship  during 
the  risk,  inodo  et  forma.     On  these  pleas  issues  were  joined. 

The  cause  was  tried  before  Lord  Abixger,  C.  B.,  at  the  Middlesex 
Sittings  after  Trinit}'  Term,  1840,  when  a  verdict  was  found  for  the 
plaintiff,  subject  to  the  opinion  of  the  court,  upon  the  following  case  : 

On  the  22d  of  Januar}-,  1838,  the  plaintiffs,  who  are  insurance 
agents,  by  directions  from,  and  on  account  and  for  the  benefit  of, 
Robert  Page  and  Robert  Chamberlain,  in  respect  of  their  two-thirds  of 
the  vessel,  effected  a  policj'  of  insurance  on  the  ship  "  Commerce." 
The  premiums  were  charged  to  and  paid  l)y  Page  and  Chamberlain. 
The  polic}'  was  subscribed  by  the  defendant  for  £150.  At  the  time  of 
the  insurance  and  at  the  time  of  the  loss,  the  vessel  was  of  the  value  of 
£1,200.  At  the  time  of  effecting  the  insurance,  Chambeilain,  Page, 
and  Sarah  Banks  were  each  interested  in  one-third  of  the  vessel.  The 
vessel  was  lost  in  Januar}-,  1839,  within  the  time  mentioned  in  the 
policy.  Before  the  loss,  Page,  bj-  bill  of  sale,  conveyed  his  share  to 
Sarah  Banks.  From  the  time  of  the  said  bill  of  sale  down  to  the 
time  of  the  loss.  Chamberlain  and  Sarah  Banks  were  owners  of  the 
"Commerce,"  the  former  of  one-third  and  the  latter  of  two-thirds  of 
that  ship.  On  the  day  after  the  sale,  Sarah  Banks  ordered  a  policy  for 
£600  to  be  effected  in  respect  of  her  two-thiixls  for  twelve  months, 
which  was  accordingly  effected  in  the  Alliance  Office,  and  upon  whieli 
she  received  as  for  a  total  loss. 

The  question  for  the  opinion  of  the  court  is,  whether  the  verdict 
should  be  entered  for  the  plaintiffs  or  for  the  defendant,  and  for  what 
amount,  if  any,  and  upon  which  of  the  several  issues  joined  between 
the  parties.     The  pleadings  are  to  form  a  part  of  the  case,  and  the 


1112  POWLES    V.    INNES.  [cilAP.  XII. 

court  are  to  be  at  libert}'  to  draw  such  conclusions  as  the}-  shall  think 
the  jury  ought  to  have  drawn. 

W.  H.  ^Vatson,  for  the  plaintiffs.  The  question  in  this  case  is  one 
which,  although  often  considered,  has  never  been  expressly-  determined  ; 
namel}',  whether,  where  a  person,  being  the  owner  of  a  vessel,  after 
effecting  a  polic}*  of  insurance  upon  it,  sells  his  interest  in  the  vessel, 
by  such  transfer  of  his  interest  the  policy  is  at  an  end.  The  [)lainti{fs 
contend  that  it  is  not,  but  that  it  continues  in  force,  and  the  party  who 
recovers  upon  it  is  a  trustee  for  the  purchaser.  [Lord  Abinger,  C.  B. 
The  form  of  declaration  is,  that  the  plaintiff  was  interested  "  during 
the  risk  and  until  and  at  the  time  of  the  loss."  Unless  the  policy  be 
expressly  assigned  to  the  purchaser,  why  should  it  pass  an}-  more  than 
any  other  wager  on  the  vessel  ?]  The  policy  is  rnereh*  an  accessor}- 
to  the  principal,  the  ship.  [Parke,  B.  If  the  policy  were  handed 
over  at  the  time  of  executing  the  bill  of  sale,  that  would  be  evidence 
of  the  intention  of  the  parties  that  the  seller  should  be  a  trustee  for  the 
purchaser.  Tlie  question  really  is,  is  it  an  incident  to  the  vessel?]  In 
Sparkes  v.  Marshall,  2  Bing.  N.  C.  761,  3  Scott,  172,  Tindal,  C.  J., 
says  :  "  If  the  plaintiff  have  an  insurable  interest  at  the  time  the  policy 
was  effected,  whatever  change  may  have  taken  place  in  the  property 
since  can  have  no  effect  in  relieving  the  underwriters  from  their  lialdH- 
ties,  as  tlie  plaintiff  may  sue  on  the  policy  for  the  benefit  of  tlie  party 
to  whom  such  property  has  passed."  [Parke,  B.  In  that  case  the 
plaintiff  was  interested  both  at  the  time  of  the  insurance  and  of  the 
loss.  Lord  Abinger,  C.  B.  That  judgment  must  be  taken  to  nicnn 
that  the  assignment  of  the  goods  makes  no  difference,  provided  the 
parties  keep  the  contract  of  insurance  alive  for  the  benefit  of  tlie  as- 
signee. Parke,  B.  The  contract  of  insurance  is  a  contract  of  indem- 
nit}'.]  Yes,  but  it  is  a  contract  to  indemnify  anybody  who  may  be 
interested  in  the  subject-matter  ;  it  is  an  indemnity  in  respect,  not  of  the 
underwriter,  but  of  the  subject-matter  of  insurance  ;  and  though  it  is 
necessary  to  allege  an  interest  in  the  declaration,  it  is  not  necessary  to 
allege  it  to  have  existed  down  to  the  time  of  the  loss.  [Lord  Abinger, 
C.  B.  I  never  saw  it  otherwise.]  In  Perchard  v.  Whitmore,  2  Bos. 
&  P.  155  w.,  which  was  an  action  on  a  policy  of  insurance  on  goods, 
the  declaration  averred  that  P.  M.  and  N.  INL,  until  and  at  the  time  of 
the  loss,  were  interested  in  the  goods,  and  that  the  insurance  was  made 
for  them  and  on  their  account.  It  appeared  on  the  evidence  upon  the 
voir  dire  of  a  witness  called  for  the  plaintiffs,  that  since  the  policy  was 
effected  he  had  become  a  partner  with  P.  M.  and  N.  M.,  and  had  taken 
a  share  of  the  goods  insured  ;  and  upon  objection  that  this  evidence 
disproved  the  allegation  of  interest  in  the  declaration,  Buller,  J., 
ruled  that  the  plaintiff  ought  not  to  be  nonsuited,  for  that  the  witness 
was  not  interested  at  the  time  of  making  the  policy,  "to  which  tiie 
averment  of  interest  related,  and  the  plaintiff  brought  the  action  for 
those  who  were  interested  at  the  time. 

Greemoood^  contra^  was  stopped  by  the  court. 


SECT.  I.]  POWLES    V.    INXES.  1113 

Lord  Abinger,  C.  B.  I  am  clearly  of  opinion  that  tlie  defendant  i^ 
entitled  to  our  judgment.  The  last  authority  that  has  been  cited  is  a 
mere  note  of  a  nisi  j^rius  case,  the  correctness  of  which  I  greatly 
doubt.  The  contract  of  insurance  was  originally  only  a  contract  of 
wager,  that  the  vessel  should  arrive  at  her  destination  ;  since  the  Leg- 
islature has  adopted  it,  it  is  a  contract  of  indemnity  only,  and  nobody 
can  recover  in  respect  of  the  loss  who  is  not  really  interested.  The 
policy  is  but  a  chose  in  action,  and  cannot  pass  merely  by  the  assign- 
ment of  the  ship. 

Parke,  B.  I  am  of  the  same  opinion.  The  plaintiff  can  only  re- 
cover an  indemnity.  Then  what  has  this  part}-  lost,  if  he  has  sold  his 
interest  in  the  ship,  irrespective  of  the  policy  ?  Banks's  interest  is  not 
protected,  because  she  gave  no  authority  to  effect  the  insurance.  Un- 
less, therefore,  there  was  some  understanding  that  the  policy  should  be 
kept  alive  for  her  benefit,  the  plaintiffs,  suing  on  behalf  of  Page,  have 
lost  nothing.  If  the  policy  had  been  handed  over  with  the  bill  of  sale, 
or  there  had  been  an  order  to  the  brokers  to  hand  it  over,  the  case 
would  be  different ;  then  the  parties  might  sue  as  trustees  for  the  pur- 
chaser ;  but  we  cannot  infer  that,  no  facts  being  stated  in  the  case  to 
warrant  such  an  inference. 

GuRNEY,  B.,  concurred.  Judgment  for  the  defendant} 

1  In  North  of  England  Oil-Cake  Co.  i'.  Archangel  Maritime  Ins.  Co.,  L.  R.  10  Q.  B. 
249  (187.5),  Vagliano  Brotliers,  the  owners  of  a  cargo,  procured  insurance  on  a  cargo 
on  the  brig  "  Fanny,"  then  at  Constantinople,  for  a  voyage  from  Constantinople  to  a 
port  of  discharge  in  the  United  Kingdom,  including  all  risks  of  lighters  to  and  from 
the  brig,  tlie  policy  being  expressed  to  be  with  Vagliano  Brothers  and  their  assigns. 
While  tlie  brig  was  on  the  voyage,  Vagliano  Brothers  sold  the  cargo  to  the  plaintiff 
company,  agreeing  to  deliver  it  at  any  designated  port  in  the  United  Kingdom.  Pav- 
ment  was  to  be  made  fourteen  days  after  the  cargo  was  ready  for  delivery ;  and  in  case 
of  damage  by  sea  or  otherwise  the  price  was  to  be  adjusted  by  arbitration.  Vagliano 
Brothers  indorsed  bills  of  lading,  but  no  agreement  was  made  as  to  insurance.  The 
plaintiff  company  designated  a  port,  and  the  brig  arrived.  The  cargo  was  landed  by 
means  of  public  lighters  employed  by  the  plaintiff  company.  One  of  the  lighters,  filled 
with  part  of  the  cargo,  arrived  at  the  plaintiff  company's  wharf  and  was  there  sunk. 
Thus  part  of  the  cargo  was  lost,  and  part  damaged.  Vagliano  Brothers  made  a  claim 
upon  the  underwriters,  and  later  assigned  the  policy  to  the  plaintiff  company.  The 
cargo  was  eventually  paid  for  in  accordance  with  the  terms  of  sale,  but  the  time  of  the 
payment  did  not  appear.  The  case  having  been  stated  by  consent  and  submitted  to 
the  court  with  power  to  draw  inferences,  judgment  was  given  unanimously  for  the 
defendants ;  and  Cockbcrn,  C.  J.,  said  :  "  We  are  agreed  upon  one  point,  which  enti- 
tles the  defendants  to  judgment,  viz.,  that  the  policy  not  having  been  assigned  until 
after  the  interest  of  the  assignors  had  ceased,  an  effective  assignment  was  impossible. 
If  there  had  been  a  stipulation  in  the  contract  of  sale  that  the  policy  should  be  assigned 
for  the  benefit  of  the  plaintiffs,  the  vendees,  it  might  have  been  otherwise ;  but  not 
only  is  there  no  express  stipulation  to  that  effect,  but  the  implication  from  the  nature 
of  the  contract  is  the  other  way.  This  is  not  like  the  common  case  of  the  sale  of  a 
floating  cargo,  where  the  seller  parts  with  and  the  buyer  takes  at  once  the  property 
and  all  risks.  In  such  a  case,  the  policy,  according  to  the  established  practice,  passes 
as  part  of  the  shipping  documents,  and  on  assignment  the  vendee  can  sue  upon  it  in 
ca.se  of  loss.  And  there  is  no  hardship  in  this  on  the  insurers,  because  they  insured  the 
safety  of  the  cargo  to  the  end  of  the  voyage,  and  it  is  immaterial  to  them  in  whom  the 
interest  vests  at  the  time  of  tlie  loss;  and  there  is  great  couveuieace  in  the  practice,  as 


1114  POWLES   V.   INNES.  [CHAP.  XII. 

it  obviates  the  necessity  of  the  vendee  getting  a  fresh  policy  and  facilitates  the  sale  of 
caro-oes  at  sea.  But  this  is  not  an  out-and-out  sale  ;  on  the  contrary,  although  the  sale 
might  at  once  transfer  the  property  to  the  vendees,  yet  an  essential  term  of  the  agree- 
ment was  that  payment  was  only  to  take  place  on  the  right  delivery  of  the  cargo,  so 
that  tiie  interest,  a  substantial  real  interest,  remained  in  the  sellers.  If  the  cai-go  had 
perislied  at  sea,  the  sellers  would  not  have  got  one  shilling  ;  therefore,  until  delivery  to 
the  plaintiffs,  the  buyers,  the  interest  in  the  policy  remained  in  the  sellers.  But  on 
the  delivery  to  the  plaintiffs  the  sellers  became  entitled  to  payment  and  their  interest 
in  the  policy  ceased  ;  and  the  policy  was  at  an  end.  Consequently,  although  an  actual 
assignment  may  be  good  after  the  loss,  in  the  present  case  the  assignment  was  not  in 
consequence  of  a  previous  agreement  before  the  policy  dropped,  and  therefore  tlie  sel- 
lers had  no  interest  in  the  policy,  and  nothing  to  assign." 

As  to  policies  "on  account  of  whom  it  may  concern,"  see  Newson  v.  Douglass, 
7  H.  &  J.  417,  4.50-452  (1826) ;  Watson  v.  Swann,  11  C.  B.  n.  8.  756  (1862) ;  Hooper 
V.  Robinson,  98  U.  S.  528  (1878). 

On  the  topic  of  this  section,  see  also  :  — 

Earl  V.  Shaw,  1  Johns.  Cas.  313,  317  (1800) ; 

Rousset  V.  Ins.  Co.  of  North  America,  1  Biiin.  317  (1800); 

Cleveland  v.  Clap,  5  Mass.  201  (1809) ; 

Carroll  v.  Boston  M.  Ins.  Co.,  8  Mass.  515,  517  (1812) ; 

Spring  V.  South  Carolina  Ins.  Co.,  8  Wheat.  268,  282  (1823) ; 

Buffalo  Steam  Engine  Worics  v.  Snn  Mut.  Ins.  Co.,  17  N.  Y.  401  (1858)  j 

Ralli  V.  Universal  M.  Ins.  Co.,  4  De  G.,  F.  &  J.  1  (1862) ; 

Hitchcock  V.  Northwestern  Ins.  Co.,  26  N.  Y.  68  (1862); 

Lloyd  V.  Flemiijg,  L.  R.  7  Q.  B.  299  (1872).  — Ed. 


Si:CT.  II.]  LYNCH    V.    DALZELL.  1115 

SECTION   II. 

Fire  Insurance. 
(A)    Assignees. 

LYNCH  AND  Another,  Appellants,  v.  DALZELL  and  Others, 

Respondents. 

House  of  Lords,  1729.     2  Park  on  Ins.  8tli  ed.  978.^ 

On  the  28th  of  Jul}',  1721,  one  Richard  Ireland  took  out  from  the 
vSun  Fire  Office  a  policy  of  insurance,  whereby  it  was  witnessed  that 
whereas  the  said  Ireland  had  agreed  to  pa}-,  or  cause  to  be  paid  to  the 
said  office,  the  sum  of  five  shillings  within  fifteen  da3's  after  every 
quarter-day,  for  the  insurance  of  his  house,  being  the  Angel  Inn  at 
Gravesend,  with  Jiis  goods  and  merchandise  as  thereinafter  expressed 
onh',  and  not  elsewhere,  viz.  :  the  dwelling-house,  not  exceeding  £400 
and  for  the  goods  in  the  same  only,  not  exceeding  £500  ;  and  for  the 
stable  only,  not  exceeding  £100  all  then  occupied  by  James  Peck,  from 
loss  and  damage  by  fire  ;  and  so  long  as  the  said  Richard  Ireland  should 
duly  pay  or  cause  to  be  paid  five  shillings  a  quarter,  as  therein  men- 
tioned, the  said  society  did  bind  themselves,  their  heirs,  executors, 
administrators,  and  assigns,  to  pay  and  satisfy  the  said  Ireland,  his 
executors,  administrators,  and  assigns,  within  fifteen  days  after  everv 
quarter-day,  in  which  he  should  suffer  by  fire,  his  loss  not  exceeding 
£1,000  according  to  the  exact  tenor  of  their  printed  proposals.  The 
policy  was  subscribed  the  28th  of  July,  1721,  by  three  of  the  trus- 
tees of  the  society.  Some  considerable  time  afterwards,  Richard 
Ireland  died,  having  made  his  will,  and  Anthony,  his  son,  sole  exec- 
utor ;  who  brought  the  policy  to  the  office,  and  had  an  endorsement 
made  thereon,  that  the  same  then  belonged  to  him  :  and  afterwards, 
namely,  at  or  about  Christmas,  1726,  he  the  said  Anthony  paid  the 
office  a  premium  of  twenty'  shillings  for  one  3-ear's  insurance,  from 
Christmas,  1726,  to  Christmas,  1727,  as  by  an  article  in  the  proposals 
he  was  at  liberty  to  do.  On  the  24th  of  August,  1727,  a  fire  happened 
at  Gravesend,  which,  among  others,  destroj-ed  the  house  mentioned  in 
the  polic}' ;  and  some  time  afterwards  the  appellants  applied  to  the 
office,  and  alleged  that  they  had  purchased  the  house  and  goods  of 
Anthon}-  Ireland  ;  that  the  same  were  their  property  at  the  time  of  the 
fire,  and  that  they  had  an  assignment  of  the  policy  made  to  them,  at 
the  same  time  that  the  house  and  goods  were  assigned  ;  and  they  pro- 
duced an  affidavit  made  by  the  appellant  Roger  Lynch,  in  which  he 
swore  that  his  loss  and  damage  by  burning  the   said  house  amounted 

1  s.  c.  4  Bro.  P.  C.  (Toml.  ed.}  431.  —  Ed. 


1116  LYNCH    V.    DALZELL.  [CIIAP.  XII. 

at  a  moderate  computation  to  £500  and  upwards ;  and  upon  this  affi- 
davit was  indorsed  a  certificate  of  the  minister,  churchwardens,  and 
other  inhabitants  of  Gravesend,  tliat  the}-  verily  believed,  according  to 
the  best  of  their  information,  the  appellants  had  sustained  a  loss  of 
£500  and  upwards.  But  neither  in  the  affidavit  or  certificate  was  any 
mention  made  of  any  loss  being  sustained  by  the  appellants  by  the 
burning  of  an}'  goods  in  the  said  house  ;  nor  was  any  affidavit  made  by 
Anthony  Ireland,  in  whom  the  property  of  the  policy  was,  that  he  had 
suffered  any  loss.  The  appellants,  however,  insisted  that  the  office 
should  pay  them  £1,000  for  their  loss  sustained  by  the  burning  of  the 
house  and  goods  ;  and  they  accordiugly  filed  a  bill  in  Chancery,  setting 
forth  that  Anthony  Ireland  agreed  to  sell  and  assign  to  the  appellants 
the  house,  stables,  and  goods,  and  also  at  the  same  time  agreed  to 
assign  the  policy ;  and  that  by  indenture  of  the  24th  of  June,  1727,  for 
£250.  Ireland  did  assign  to  the  appellants  a  lease  he  had  of  the  house 
and  stables  for  the  residue  of  a  term  of  seventy  years,  which  com- 
menced at  Midsummer,  16  Car.  2  ;  but  the  goods,  for  which  the  appel- 
lants, as  they  alleged,  were  to  pay  £500,  being  intended  for  one  Thomas 
Church,  who  was  to  hold  the  inn  under  the  appellants,  Ireland,  by  deed 
poll  of  the  same  date,  sold  the  same  to  Church  for  his  own  use.  The 
bill  also  stated,  that  by  another  writing  of  equal  date,  Ireland  assigned 
the  policy,  and  all  money  and  benefit  thereof,  to  the  appellants.  That 
although  the  bill  of  sale  of  the  household  goods  was  made  to  Church, 
yet  as  the  appellants  paid  the  purchase-money  for  the  same,  Churcli 
assigned  his  bill  of  sale  to  them,  for  securing  the  money  thoy  had 
paid  for  the  goods;  and  afterwards,  by  another  writing,  released  to 
the  appellants  his  benefit  and  interest  in  the  polic}-.  The  bill  prayed 
satisfaction. 

The  respondents  put  in  their  answer,  in  which  they  set  forth  the 
nature  and  method  of  the  insurances  made  by  the  office,  and  admitted 
the  policy  in  question,  and  the  appellants' application  for  £100  loss: 
but  said  that  the  affidavit  produced  was  not  agreeable  to  the  proposals  ; 
and  that  they  had  been  informed  and  believed,  that  no  assignment  of 
the  policy  was  made  to  the  appellants,  nor  any  assignment  of  goods 
made  to  them  by  Church,  till  after  the  fire.  They  insisted,  that  the 
policies  issued  by  the  office  were  not,  in  their  nature,  assignable,  the 
same  being  only  contracts  to  make  good  the  loss  which  the  contracting 
party  himself  should  sustain :  and  the  policy  in  question  was  first  made 
to  Richard  Ireland,  to  pay  his  loss,  and  was  afterwaids  declared  by 
indorsement  to  belong  to  Anthony  Ireland  ;  and  that  no  other  person 
was  entitled  to  the  benefit  of  it.  The  cause  proceeded  to  issue,  and 
witnesses  were  examined  on  both  sides ;  and  upon  the  appellants'  own 
evidence  it  appeared,  that  the  first  discourse  between  the  appellants  and 
Mr.  Ireland  about  the  policy  was  after  the  execution  of  the  assignment 
of  the  house,  and  that  the  agreement  (if  there  was  any)  about  the  policy 
was  not  at  the  time  when  the  appellants  agreed  to  purchase  Ireland's 
terra  in  the   house.     It  appeared  further,  that  the  assignment  of  the 


SECT.  IT.]  LYNCH    V.   DALZELL.  1117 

policy,  though  bearing  date  before,  was  not  made  and  executed  till 
some  time  after  the  fire  ;  so  tliat  the  agreement  for  assigning  the  policy 
was  a  voluntary  concession  of  Ireland  without  any  consideration,  and 
independent  of  the  bargain  for  the  house,  and  never  made  till  after 
Ireland's  interest  in  the  policy,  as  to  the  house,  was  determined,  by  his 
selling  his  interest  in  the  thing  insured,  and  not  carried  into  execution 
lill  tlie  thing  was  lost.  As  to  the  appellants'  property  in  the  goods, 
they  proved  an  assignment  from  Churcli  to  tliem,  as  a  security  for  £300, 
but  omitted,  in  tlieir  interrogatories,  the  material  question,  when  this 
assignment  was  made  :  though  the  respondents,  by  their  answer,  put 
the  time  plainly  in  issue,  by  insisting  that  it  was  after  the  fire  ;  and  it 
did  not  appear  that  the  appellants  ever  had  any  property  in  goods. 
The  respondents  on  their  part  proved  that  the  office  did  not  insure  any 
persons  longer  than  they  continued  their  property  in  the  thing  insured  ; 
and  that  persons  dealing  with  them  might  not  be  mistaken,  such  notice 
was  usually  given. 

Lord  Chanceller  King.  These  policies  are  not  insurances  of  the 
specific  things  mentioned  to  be  insured;  nor  do  such  insurances  attach 
on  the  realty,  or  in  any  manner  go  with  the  same  as  incident  thereto, 
by  any  conveyance  or  assignment :  but  they  are  only  special  agreements 
with  the  persons  insurijigjigainst  such  loss  or  damage  as  they  may  sus- 
tain. ~Thel)aFtyTs"siung  must  have  a  property  at  the  time  of  the  loss, 
qi^he  can  sustain  n^lossT  ai2d_conse£uentlv  C'ah  be  entitled  to  no  salTs^ 
faction.  There  was  no  contract  ever  made  between  the  oflfice,  and  the 
appellants  for  any  insurance  on  the  premises  in  question.  Not  only 
tlie  express  words,  but  the  end  and  design  of  the  contract  with  Ireland 
do,  in  case  of  any  loss,  limit  and  restrain  the  satisfaction  to  such  loss 
as  should  be  sustained  by  Richard  Ireland  only;  and  the  indorsement 
on  the  i)olicy  declared  that  right  to  his  executor,  Anthony  Ireland,  only. 
These  policies  are  not  in  their  nature  assignable;  nor  is  the  interest  in 
them  ever  intended  to  be  transferable  from  one  to  another,  without  the 
exi)ress  consent  of  the  office.  The  transactionsjnjlie  present  case^  by 
changing  their  property  backwards  and  forwards^and  j;endering  it  un- 
ceTtaTir^who£e  thelTrgpErty  is,  raised  suspicTonTand  fully  justify  the 
caution  of  jthe  offlceMn_j)reyentmg_the  assignment  without  consent  of 
tliclnanagers,  which  method  Js^  pursued  b3-  all  the  insurance  offices. 
BesIdesTthe  appellants'  claim  is  at  best  founded  only  on  an  assighraent 
never  agreed  for  till  the  person  insured  had  determined  his  interest  in 
the  policy,  by  parting  with  his  whole  property,  and  never  executed  till 
the  loss  had  actually  happened. 

Jlis  Jjordship  therefore  dismissed  the  bill. 

Upon  this  decree  there  was  an  appeal  to  the  House  of  Lords;  and 
after  hearing  counsel  on  both  sides,  it  was  ordered  and  adjudged  that 
the  case  should  be  dismissed,  and  the  decree  therein  complained  of 
affirmed. 


1118  SADLEUS'    COMPANY    V.    BADCOCK.  [CHAP.  XII. 


SADLERS'   COMPANY   v.    BADCOCK,    Trustee   of   the   Hand- 
in-Hand  Fiue  Office. 

Chancery,   1743.     1  Wils.  10.^ 

Mrs.  Strode,  lessee  of  a  house,  insured  the  same  for  seven  years 
from  fire,  to  the  value  of  £400  ;  her  term  therein  expired  (before  the 
policy),  viz.,  at  Midsummer,  1740  ;  on  the  6th  of  January  following  the 
house  was  burned  down;  on  the  23d  of  February  following  Mrs.  Strode 
assigned  the  policy  to  the  plaintiffs,  who  are  the  ground  landlords,  and 
now  a  bill  is  brought  against  the  insurance  office  for  the  £400. 

Lord  Chancellor."^  The  question  is,  whether  by  the  assignment  the 
plaintiffs  are  entitled  to  recover  the  £400.  And  I  am  of  opinion  that 
the  partv  insured  ought  to  have  a  property  in  the  thing  insured  at  the 
timrw^Tt^ift  ipsiii-anee  mad'eTand  at  the  time  of  the  Joss  by  fire,  or  he 
f;annot_be  relieved.  Mrs^trode  had  no  property  at  the  time  of  the 
firT;  consequently  no  loss  to  her ;  and  if  she  had  no  interest,  uothinof 
could  pass  to  the  plaintiffs^bv  the  assignment. 

Interest  oi-  ncTiiiterest  must  be  inserted^in  policies  of  insurance  of 
ships,  or  the  insured  must  prove  he  had  interest  on  board. 

If  the  insured  was  not  to  iiave  a  property  at  the  time  of  the  insurance 

or  loss,  any  one  might  insure  upon  another's  house,  whieh  might  have 

a  bad  tendency  to  burning  houses.      Insuring  the  thing  from  damage  is 

not  the  meaning  of  the  pcjlicy;  it  must  mean  insuring  Mrs.  Strode  from 

damage,  and  she  has  suffered  none.^ 

Bill  dismissed  loithout  costs.* 

1  s.  c.  2  Atk.  554.  —  Ed. 

2  Lord  Hakuwicke.  —  Ed. 

3  In  2  Atk.  554,  part  of  the  opinion  is  reported  thus :  — 

•'  It  has  been  said  for  tlie  plaintiffs,  that  it  is  in  the  nature  of  a  wager  laid  by  the 
insurance  company,  and  that  it  does  not  signify  to  whom  they  pay,  if  lost.  .  .  . 

"  By  the  first  clause  in  the  deed  of  contribution  in  1696,  the  year  this  society,  called 
the  Hand-in-Hand  office,  incorporated  themselves,  the  society  are  to  make  satisfaction 
in  case  of  any  loss  by  fire. 

"  To  whom,  or  for  what  loss,  are  they  to  make  satisfaction  ? 

"  Why,  to  the  person  insured,  and  for  the  loss  he  may  have  sustained  ;  for  it  cannot 
properlybe  called  insuring  the  thing,  for  there  is  no  possibility  of  doing  it,  and  there- 
fore must  mean  insuring  the  person  from  damage. 

"  By  the  terms  of  the  policy,  the  defendants  might  begin  to  build  and  repair 
within  six  days  after  the  fire  happens. 

"  It  has  been  truly  said,  this  gives  the  society  an  option  to  pay  or  rebuild,  and  shows 
most  manifestly  they  meant  to  insure  upon  tlie  property  of  the  insured,  because  nobody 
else  can  give  them  leave  to  lay  even  a  brick,  for  another  person  might  fancy  a  house 
of  a  different  kind." 

For  the  passages  omitted  near  the  beginning  of  this  quotation,  see  ante,  p.  5,  n.  (.3). 

—  Ed. 

*  In  Wilson  v.  Hill,  3  Met.  66  (1841),  the  owners  of  a  building  and  machinery 
therein  obtained  insurance  payable  in  case  of  loss  to  creditors  who  held  a  mortgage 
on  the  machinery.  The  owners  sold  and  conveyed  the  property,  subject  to  certain 
m<n-tgages,  and  apparently  continued  to  be  liable  to  all  the  creditors  secured  by  tlie 


SECT.  II.]         FOGG   V.   MIDDLESEX   MUTUAL   FIRE    INS.    CO.  1119 

FOGG  AND  Another  v.  MIDDLESEX  MUTUAL  FIRE  INS.  CO. 
SupuEME  Judicial  Court  of  Massachusetts,-  1852.     10  Cush.  337.^ 

Assumpsit  upon  a  polic}'  of  fire  insurance  on  a  stock  of  goods, 
originally  issued  lo  Daniel  Leland  and  James  Luke,  Jr.  Daniel  Leland, 
Jr.,  who  became  the  owner  of  the  goods  and  the  assignee  of  the  polic}', 
sold  the  goods  to  the  plaintiffs,  and  about  a  year  after  this  sale  he 
wrote  on  the  policy:  ''  For  value  received,  pay  the  witliin  in  case  of 
luss  to  Jesse  Fogg  and  Samuel  F.  Hearsey."  The  defendant  company 
assented  thus:  "Received,  recorded,  and  assented  to.  Attest,  N. 
Brooks,  Secretary."  Afterwards,  and  within  the  term  of  the  policy, 
there  was  a  loss  by  fire. 

By  the  charter  of  the  company  it  was  provided  that  when  property 
insured  should  be  alienated  the  policy  should  thereupon  be  void,  but 
that  the  grantee,  having  the  policy  assigned  to  him,  might  have  the 
policy  confirmed  to  him  for  his  own  benefit  upon  application  to 
the  directors,  within  tiiirty  days  after  the  alienation,  on  giving  se- 
curity for  such  part  of  the  deposit  note  as  might  remain  unpaid  ; 
and  by  the  by-laws  it  was  provided  that  an  assignment  of  the  policy  in 
consequence  of  alienation  should  not  be  considered  valid  unless  a 
deposit  note  of  the  assignee  be  left  with  the  secretary  or  an  agent  and 
approved  by  the  board  of  directors,  and  that  no  assignment  made 
more  than  thirty  days  after  alienation  should  be  accepted. 

mortgages.  The  property  was  subsequently  destroyed  by  fire,  and  the  insurance  com- 
pany paid  the  full  amount  of  the  insurance  to  the  creditors  lo  whom  its  policy  had 
i  eeu  made  payable.  The  original  owners  afterwards  became  insolvent,  and  their 
assignee  claimed,  and,  after  a  judgment  taken  by  default,  collected  from  tliese  creditors 
the  amount  in  excess  of  tiieir  claims.  For  this  amount  tlie  purchaser  of  the  property 
brought  action  against  the  assignee.  It  was  held  that  he  could  not  recover.  Shaw, 
C.  J.,  for  the  court,  said  :  "  The  claim  of  the  plnintiff  to  recover  in  this  action  is 
founded  upon  an  entire  misapprehension  of  the  nature  and  lej^al  effect  of  a  contract 
of  insurance.  An  insurance  of  buildings  against  loss  by  fire,  although  in  popular 
lauguage  it  may  be  called  au  insurance  of  the  estate,  is  in  effect  a  contract  of  indemnity, 
Avith  an  owner,  or_other  person  having  an  interest  in  the  preservation  of  the  buildings, 
as  mortgagee,  tenant,  or  otherwise,  to  indernnify  him,  against^auy  loss  which  he  ma}' 
s^ustain  in  case  they  are  destroyedloFjan^aged  by  fire.  If,  therefore,  the  assured  has 
wholly  parted  with  his  interest,  before  they  are  burnt,  and  they  are  afterwards  bui'ut, 
the  underwriter  incurs  no  obligation  to  pay  anybody.  The  contract  was  to  indem- 
nify the  assured  ;  if  he  has  sustained  no  damage,  the  contract  is  not  broken.  If,  in- 
deed, on  a  transfer  of  the  estate,  the  vendor  assigns  his  policy  to  the  purchaser,  and 
this  is  made  known  to  the  insurer,  and  is  assented  to  by  him,  it  constitutes  a  new  and 
original  promise  to  the  assignee,  to  indemnify  him  in  like  manner,  whilst  he  retains 
an  interest  in  the  estate;  and  the  exemption  of  the  insurer  from  further  liability  to 
the  vendor,  and  the  premium  already  paid  for  insurance  for  a  term  not  yet  expired, 
are  a  good  consideration  for  such  promise,  and  constitute  a  new  and  valid  contract 
between  the  insurer  and  the  assignee.  But  such  undertaking  will  be  binding,  not  be- 
cause the  policy  is  in  any  way  incident  to  the  estate,  or  runs  with  the  land,  but  in  con- 
sequence of  the  new  contract."  —  Ed. 

^  The  statement  has  been  rewritten.  —  Ed. 


1120  FOGG   V.    MIDDLESEX   MUTUAL   FIRE    INS.    CO.       [CHAP.  XII. 

The  evidence  tended  to  prove  that  the  assignees  delivered  a  deposit 
note  to  Pond,  the  defendant  company's  agent  through  whom  tlie  policy 
was  procured,  but  that  it  never  reached  the  secretary  or  the  j^resident, 
and  that  at  the  time  of  the  assent  to  the  assignment  the  officers  of 
the  company  knew  nothing  of  the  sale  of  the  stock  of  goods. 

At  the  trial,  before  Bigelow,  J.,  there  were  divers  objections  to 
rulings  and  instructions.  After  the  jury  had  retired,  they  returned 
to  the  court-room  and  asked  whether  the  plaintiffs  would  be  entitled  to 
recover  if  the  jury  were  satisfied  that  a  deposit  note  was  given  to  said 
Pond  by  the  plaintiffs,  but  that  the  defendants  never  received  it  or 
knew  such  note  was  given,  and  assented  to  said  indorsement  upon  the 
polic}'  in  ignorance  of  the  existence  of  any  such  note.  To  which  the 
judge  replied  that,  if  the  jury  found  such  to  be  the  facts,  the  plaintiffs 
were  not  entitled  to  recover.  The  verdict  was  for  the  defendants,  and 
the  propriety  of  the  rulings  and  instructions  was  reserved  for  the 
whole  court. 

G.  M.  Broxmie,  for  the  plaintiffs. 

A.  H.  Nelson,  and  J.  P.  Converse^  for  the  defendants. 

Sh.vw,  C.  J.  Fire  insurance  has  become  so  important  in  the  busi- 
ness of  the  community',  that  it  is  much  to  be  regretted  tliat  the  practical 
management  of  the  business  is  not  conducted  with  more  care  and  skill 
in  its  details,  so  as  better  to  secure  the  rights  of  the  parties,  as  the}' 
are  intended  to  be  established  by  the  contract,  when  rightly  made,  and 
rightly  understood.^  .... 

The  plaintiffs  sue  as  assignees,  and  if  they  can  recover  at  all,  it  must 
be  in  that  capacit}',  and  upon  that  title. 

As  a  polic}'  of  Insurance  is  not  a  negotiable  instrument,  it  cannot  be 
legall}'  transferred  so  as  to  enable  the  assignee  to  maintain  a  suit  in 
his  own  name,  v/ithout  the  consent  of  the  other  part}-.  But  in  general, 
at  the  common  law,  where  one  part}'  assigns  all  his  right  and  interest 
in  the  contract,  and  the  assignee  gives  notice  to  the  other  party  to  the 
contract,  and  he  agrees  to  it,  this  constitutes  a  new  contract  between 
one  of  the  original  parties  and  the  assignee  of  the  other,  the  terms  of 
which  are  regulated  and  fixed  by  those  of  the  original  contract.  This 
rule  applies  to  policies  as  well  as  other  contracts,  and  it  is  often  con- 
venient and  desirable  to  apply  it ;  and  there  are  two  cases  where  this 
application  frequently  happens. 

The  first  is,  when  the  insured  property  is  alienated  or  sold  by  the 
assured.  After  such  sale,  if  nothing  more  is  done,  —  no  surrender  or 
change  of  the  policy,  —  and  the  goods  should  be  burnt,  nobody  could 
recover  on  the  policy  ;  not  the  original  assured,  for  he  has  sustained 
no  loss  ;  the  property  was  not  his,  and  the  loss  of  it  was  not  his  loss  ; 
not  the  purchaser,  because  he  has  no  contract  with  the  company. 
And  although  in  popular  language,  the  goods  are  said  to  be  insured 
against  loss  by  fire,  yet,  in  legal  effect,  the  original  assured  obtains  a 

^  In  reprinting  the  opinion,  passages  stating  the  case  and  discussing  the  evidence 
havebeen  omitted.  —  Ed. 


SECT.  II.J  FOGG    V.    MIDDLESEX   MUTUAL    FIRE    INS.    CO.  1121 

guarantj-  by  the  contract  that  he  shall  sustain  no  damage  by  their 
destruction  by  fire.  But  in  case  of  such  sale  or  alienation  of  the 
insured  property,  tlie  original  assured  having  no  longer  any  interest  in 
the  policy,  except  to  claim  a  return  of  premium,  if  he  will  assign  his 
policy,  or  his  contract  of  insurance  to  such  purchaser,  and  the  com- 
pany assent  to  it,  here  is  a  new  and  original  contract,  embracing  all 
the  elements  of  a  contract  of  insurance  between  the  assig,nee  and  the 
insurers.  The  property  having  become  the  purchaser's,  is  at  his  risk, 
and  if  burnt,  it  is  his  loss,  and  he  has  a  good  original  contract,  upon 
a  valid  consideration,  to  guarantee  him  against  such  loss.  Accordinglv, 
provision  is  made  in  the  charter  and  by-laws,  and  also  by  the  terms  of 
the  policy,  for  an  assignment  of  the  contract ;  the  company  returns  no 
part  of  the  premium,  but  the  assignee  has  the  benefit  of  it,  upon  such 
terms  as  he  and  his  assignor  may  determine ;  the  assignment  is 
indorsed  on  the  policy,  and  presented  to  the  president  of  the  icompany, 
who  ordinarily  is  authorized  to  gi\'«  the  assent  of  the  company  to  the 
assignment;  the  old  deposit  note  is  surrendered,  and  a  new  deposit 
note  given  by  the  assignee.  In  the  regulations  of  this  company  in  a 
circular  -of  instruction  to  agents,  a  form  is  given  for  such  transfer, 
notifying  the  sale  of  the  property,  naming  the  purchaser,  and  assigning 
to  such  purchaser,  his  executors,  etc.,  the  policy  of  insurance,  and  in 
ease  of  loss,  directing  the  amount  to  be  paid  to  the  said  purchaser,  his 
heirs,  etc.  Upon  each  assignment  perfected,  there  is  an  entire  change 
in  the  contract,  in  the  party  contracted  with,  in  the  insurable  interest 
in  the  property  at  risk,  and  it  becomes  an  insurance  on  the  property 
of  the  assignee,  and  ceases  to  be  a  contract  of  insurance  of  the 
property  of  the  assignor. 

But  there  is  another  species  of  assignment,  or  transfer  it  may  be 
called,  in  the  nature  of  an  assignment  of  a  cliose  in  action  ;  it  is  this  : 
"  In  case  of  loss,  pay  the  amount  to  A.  B."  It  is  a  contingent  order 
or  assignment  of  the  money,  should  the  event  happen  upon  which 
money  will  become  due  on  the  contract.  If  the  insurer  assents  to  it, 
and  the  event  happens,  such  assignee  mayliiaintain  an  action  in  his 
own  name,  because,  upon^notice  of  the  assign ment.  the  insurer  has 
agi-eed  to  yjay  the  assignee  instead  of  the  assignor.  jNIowry  v.  Todd, 
12  Mass.  281.  But  the  original  contract  remains  ;  the  assignment  and 
assent  to  it  form  a  new  and  derivative  contract  out  of  the  original. 
But  the  contract  remains  as  a  contract  of  guaranty  to  the  original  as- 
sured ;  he  must  have  an  insurable  interest  in  the  property,  and  the 
property  must  be  his  at  the  time  of  the  loss.  The  assignee  has  no 
insurable  interest,  prima  facie,  in  the  property  burnt,  and  does  not 
recover  as  the  party  insured,  but  as  the  assignee  of  a  party  who  has  an 
insurable  interest  and  a  right  to  recover,  which  right  he  has  transferred 
to  the  assignee,  with  the  consent  of  the  insurers. 

The  plaintiffs,  to  recover  in  the  present  case,  must  \yi-ove  themselves 
assignees  of  the  contract,  because  they  prove  an  alienation  of  the 
propevty,   and  a  sale  to  themselves,  long  before  the  fire,  so  that  all 

71 


1122  FOGG    V.    MIDDLESEX    MUTUAL    FIRE    INS.    CO.       [CHAP.  XII. 

-insurable  interest  in  the  original  assured  had  ceased,  and  no  loss  was 
sustained  by  them  b}'  the  fire,  payabl^  to  anybody.  The  plaintiffs 
having  acquired  the  property,  so  tiiat  it  was  at  their  risk,  tlie  question 
is,  whether  they  have  proved  such  an  assignment  of  the  contract  as  to 
bring  themselves  within  the  provisions  of  the  cluuter  and  by-laws,  as 
assignees,  holding  in  all  respects  tlie  rights  of  tlie  original  assured. 

In  order  to  prove  their  title  as  assignees,  the  plaintiffs  offered  the 
original  policj',  made  in  1845,  to  Lelantl  and  Luke,  Jr.,  the  subsequent 
transfer  of  Daniel  Leland,  Jr.,  who  had  become  the  assignee  of  the 
policy,  and  the  sole  owner  of  the  stock  ;  and  a  sale  in  March,  1847,  of 
tlie  whole  stock  to  the  plaintiffs.  There  are  several  indorsements  on 
the  policy,  but  none  affecting  the  present  case,  until  the  one  said  to 
have  been  made  and  indorsed  April  1,  1848,  in  the  words  following: 
"  For  value  received,  pay  the  within,  in  caso  of  loss,  to  Fogg  and 
Hearsey."  By  the  twelfth  section  of  the  act  of  incorporation,  the 
''  grantee  or  alienee  of  the  property  insured,  having  •  the  polic}^ 
assigned,"  may  have  the  same  ratified,  etc.,  to  his  own  proper  benefit, 
on  ap[)lication  to  the  directors,  and  with  their  consent,  within  thirty 
days  next  after  such  alienation,  on  giving  proper  secuiity,  etc.  Here, 
it  is  manifest  that  no  assignment  to  the  plaintiffs  of  any  kind  was 
made  till  more  than  a  year  after  the  time  of  the  sale  of  the  stock. 
But  if  the  directois  had  been  notified  of  such  sale  and  alienation  of 
the  stock  insured,  and  had  been  informed  that  a  full  and  complete 
transfer  of  the  contract,  and  all  interest  in  it,  had  been  made,  although 
at  a  time  more  than  thirty  days  after  the  sale,  and  had  then  expressed 
their  full  assent  to  it,  it  might  be  a  waiver  of  the  mere  point  of  time. 
Waiving  that  point,  therefore,  the  question  is,  whether  the  indorsement 
in  question  was  an  assignment  of  the  policy,  and  was  so  understood 
and  assented  to  by  the  company.  It  is  in  few  and  brief  terms,  and 
pHimi  facie,  we  should  be  inclined  to  think  that  it  was  not  an  assign- 
ment of  the  contract,  but  onl}'  of  a  right  to  the  money  in  case  of  loss. 
But  it  was  strongly  urged  by  the  plaintiffs  that  it  was  intended  b}-  one 
party  as  a  transfer  and  assignment  of  the  entire  polic}-,  and  was  so 
understood  by  the  other,  and  that  the  circumstances  which  preceded, 
attended,  and  followed  it,  would  be  sufficient  to  show  tiiat  it  was  so 
intended  and  understood.  When  w^ords  are  doubtfid,  it  is  competent 
for  parties  to  go  into  proof  of  the  relation  in  which  the  parties  stood 
to  each  other,  the  acts  mutually  done  b}-  them,  and  generall}-,  the  sur- 
rounding circumstances,  in  order  the  better  to  understand  the  mean- 
ing of  the  language  used  by  them,  and  thus  ascertain  their  intent ; 
and  under  this  rule,  the  evidence  was  admitted.  But  we  think  the 
ruling  was  sufficiently  Jayorable  to  tho  [)laintiffs,  in  permitting  them 
thusJ^Q-gointa-evidence  riZitmcZ£^tQ_£xplalnJJifi- terms  of  thejransferl 

The  plaintiffs,  in  order  to  satisfy  the  court  and  jury  that  their  circum- 
stances were  such  as  usually  attend  a  full  assignment  of  the  contract, 
wore  permitted  to  prove,  if  they  could  :  1.  That  there  was  an  actual 
alienation  of  property  by  the  assignee  of  the  original  assured  to  the 


SECT.  II.]         FOGG   V.   MIDDLESEX    MUTUAL    FIRE    INS.    CO.  1123 

plaintiffs ;  2.  That  this  fact  was  known  to  the  president  when  he  gave 
the  assent  of  the  directors  to  the  transfer  as  it  was  actually  made  and 
presented  to  the  compan}- ;  3.  That  the  plaintiffs,  as  assignees,  filed 
their  own  deposit  note,  in  place  of  the  deposit  note  originally  given  by 
the  assured  ;  4.  That  this  fact  was  known  to  the  president  and  secre- 
tary of  the  company,  when  the}-  gave  the  assent  of  the  company  in 
behalf  of  the  directors.  There  was  some  evidence  tending  to  show 
that  a  new  deposit  note  was  made  by  the  assignees,  and  placed  in  the 
hands  of  Pond,  now  deceased,  who  had  been  the  agent  of  the  company 
for  receiving  proposals,  through  which  this  polic}*  was  originally  made  ; 
but  the  evidence  failed  to  show  that  he  had  any  authority  to  receive 
deposit  notes,  on  the  assignment  of  a  policy,  and  the  evidence  was  ver}' 
strong  that  no  such  note  was  deposited  with  the  then  treasurer,  or  any 
resident  agent  of  the  compan}-,  by  Pond  or  otherwise.  We  think, 
therefore,  that  the  jur}-  were  rightly  instructed  that  if  such  a  note  had 
been  left  with  Pond,  but  he  never  transmitted  it  to  the  company,  or 
notified  the  proper  officers  of  the  company'  of  his  having  it,  it  couUl 
not  be  considered  proof  that  the  plaintiffs  had  complied  with  that 
requisition  of  the  law  which  requires  a  new  deposit  note  before  t'ae 
assignment  is  complete. 

Again;  as  to  the  knowledge  of  the  president  at  the  time  he  assented 
to  the  assignment  as  made,  to  pay  to  the  assignees  in  case  of  loss. 
The  extent  of  a  simple  assent  to  a  statement  or  proposition  must 
depend  on  the  terms  of  such  proposition.  If  the  most  natural  con- 
struction of  the  terms  of  this  assignment  was,  that  it  was  the  assign- 
ment of  a  right  to  the  assignees  to  recover  the  money  in  case  of  loss, 
which,  but  for  such  assignment,  would  be  due  to  the  original  assured, 
then  the  conclusion  would  I)e,  that  the}*  assented  to  that  proposal. 
But  if  the  plaintiffs  would  show  that  tlie  assured  had  at  the  time  sold 
their  propert}'  to  the  assignees,  and  that  the  assignees  had  dul}'  given 
a  new  deposit  note,  in  order  to  draw  the  conclusion  that  the  officers  of 
the  company  knew  and  understood  that  this  was  an  assignment  of  the 
contract,  and  assented  to  it  with  that  understanding,  the  burden  of 
proof  was  upon  them  to  show  that  these  officers  had  that  knowledge.  .  .  . 
Judgment  on  the  verdict  for  the  defendants} 

1  See  Foster  v.  Equitable  Mut.  F.  Ins.  Co.,  2  Gray,  216  (1854) ;  Smith  v.  Union  Ins. 
Co.,  120  Mass.  90(1876).  — Ed. 


1124  CUMMINGS    V.    CHESHIRE   CO.    MUT.    F.    INS.    CO.       [CHAP.  XII. 

CUMMINGS   V.   CHESHIRE   COUNTY   MUT.    F.    INS.    Co. 

ScPEKiOR  Court  of  New  Hampshire,   1875.     55  N.  H.  457. 

Assumpsit,  on  a  policy  of  insurance  issued  by  the  defendant  to 
Stephen  Pettigrew,  dated  May  11,  1868,  for  the  terra  of  five  years 
ending  May  11^  1873,  insuring  said  '•  Pettigrew,  his  heirs,  executors, 
administrators,  and  assigns,"  in  tlie  sum  of  $1,425,  "  on  his  buildings 
and  other  property  situated  in  Clarernont,  owned  and  occupied  by  him- 
self; that  is  to  say,  —  on  dwelling-house,  woodshed,  and  carriage- 
house,  8500  ;  on  furniture  and  clothing  therein,  S200  ;  on  provisions  in 
said  house,  $100;  on  the  east  barn,  $175;  on  hay  and  grain  therein, 
$150;  on  south  barn,  $200;  on  hay  and  grain  therein,  $100." 

The  property'  insured  was  burned  June  13  ,  1872.  The  land  and 
buildings  were  sold  by  Pettigrew  to  Paul  Curamings,  the  plaintiff, 
March  12,  1870.  On  the  same  day  Pettigrew  executed  the  following 
assignment,  using  a  printed  blank  upon  said  policy  for  that  purpose : 

"  Having  sold  and  conveyed  the  buildings  within  insured,  and  the 
land  whereon  they  stand,  to  Paul  Cummings,  I  hereby  assign  to  him 
the  policy  of  insurance  within  written  ;  to  hold  the  same,  subject  to  all 
the  liabilities  and  entitled  to  all  the  rights  and  privileges  to  which  I  am 
liable  or  entitled  by  virtue  thereof. 

' '  Stephen  Pettigrew. 

"The  directors  consent  to  the  above  assignment 

"  Albro  Blodgett,  Agent. 

"  May  12,  1870." 

Pettigrew  did  not  sell  his  furniture  and  clothing  to  Cummings,  but 
removed  them  ;  and  Cummings  moved  his  furniture  and  clothing  into 
the  house  ;  and  it  was  Cumraings's  furniture  and  clothing  that  were 
burned. 

The  action  was  brought  to  recover  for  loss  of  the  furniture  and  cloth- 
ing that  Cummings  brought  to  the  house.  Pettigrew  never  owned  it, 
nor  did  Cummings  ever  own  the  furniture  originally  insured.  The 
plaintiff  claimed  that  this  was  an  insurance  on  the  furniture  and  cloth- 
ing that  might  be  in  the  house  at  any  time  during  the  existence  of  the 
policy.  The  defendant  claimed  that  a  naked  assignment  of  the  policy, 
without  also  assigning  or  conveying  the  proi:>erty  insured,  or  some 
interest  therein,  is  not  a  valid  assignment. 

The  loss  upon  the  buildings  has  been  paid. 

The  action  was  tried  b}'  the  court ;  and  it  was  agreed  that,  if  upon 
the  foregoing  statement  of  fact  the  superior  court  should  be  of  the 
opinion  that  this  action  can  be  maintained,  judgment  shall  be  rendered 
for  the  plaintiff  for  $157,  and  interest  from  the  time  the  same  became 
payable,  and  costs ;  otherwise,  judgment  to  be  rendered  for  the 
defendant  for  his  costs. 


SECT.  II.]       CUMMINGS    V.    CHESHIRE    CO.    ML'T.    F.    INS.    CO.  1125 

Wait  aud  Parker,  for  the  plaintiff. 

Allen  and  Wheeler,  for  the  defendants. 

FcsTEE,  C.  J.,  C.  C.^  What  is  the  nature  of  the  contract  of  insur- 
ance ?  In  Lucena  v.  Craufurd,  2  Bos.  &  Pul.  (N.  R.)  300,  Mr.  Justice 
Lawrence  gives  precedence  to  the  definition  of  Grotius  in  his  "  Intro- 
duction to  the  Jurisprudence  of  Holland,"  published  in  1631,  the  Eng- 
lish translation  of  which  definition  is,  —  "Insurance  is  a  contract  by 
which  the  one  party,  in  consideration  of  a  price  paid  to  him  adequate 
to  the  risk,  becomes  securit}'  to  the  other  that  he  shall  not  suffer  loss, 
prejudice,  or  damage  by  the  happening  of  the  perils  specified  to  certain 
things  which  may  be  exposed  to  them." 

This  definition  commends  itself  to  the  judgment  of  Mr.  Ma}',  "  alike 
by  its  brevity,  its  logic,  and  its  comprehensiveness."  May  on  Insur- 
ance, §  1.  These  commendable  qualities,  however,  seem  to  me  even 
more  conspicuous  in  the  language  of  Sir  Wm.  Blackstone  :  "  A  policy 
of  insurance  is  a  contract  between  A.  and  B.,  that,  upon  A.'s  paying  a 
premium  equivalent  to  the  hazard  run,  B.  will  indemnify  or  insure  him 
against  a  particular  event.''     2  Bl.  Com.  458. 

Insurance,  then,  is  a  contract  of  indemnity,  and  it  a[)pertains  to  the 
person  or  party  to  the  contract,  and  not  to  the  thing  which  is  subjected 
to  the  risk  against  which  its  owner  is  protected.  It  is  not  a  contract 
running  with  the  land,  in  the  case  of  real  estate,  nor  running  with  the 
personalt}',  so  to  speak,  in  the  case  of  a  chattel  interest  of  the  insured. 
Carpenter  v.  Ins.  Co.,  16  Pet.  -495.  "The  principle  of  indemnity," 
says  Mr.  Angell,  "  is  the  general  principle  whicli  runs  through  the 
whole  contract  of  insurance.  A  contract  of  indemnity  is  given  to  a 
person  against  his  sustaining  loss  or  damage,  and  cannot  properly  be 
called  one  that  insures  the  thing,  it  not  being  possible  so  to  do  ;  and, 
therefore,  as  Lord  Hardwicke  has  said,  it  must  mean  insuring  the 
person  from  damage  ;  that  is,  damage  to  the  thing  or  to  his  propert}'." 
Angell  on  Insurance,  §  1  ;  Ma}'  on  Insurance,  §§2,  6  ;  2  Bl.  Com. 
459  ;  Lucena  v.  Craufurd,  2  Bos.  &  Pal.  (N.  R.)  300;  Sadlers  Co.  v. 
Badcock,  2  Atk.  554 ;  ^Yilson  v.  Hill,  3  Met.  66  ;  Ellis  on  Insurance,  1  ; 
Williams  on  Pers.  Prop.  *179;  1  Phillips  on  Insurance,  1  ;  Lane  u. 
Maine  M.  Fire  Ins.  Co.,  12  Me.  (3  Fairf.)  44,  49. 

The  original  contract  in  this  case  was,  that,  in  consideration  of  a 
sum  of  mone}'  advanced  by  Pettigrew,  and  his  agreement  to  be  assessed 
at  a  certain  rate  upon  another  sum,  the  defendants  would  indemnif}' 
him  and  his  assigns  against  loss  by  fire,  to  the  amount  of  §1,425,  for 
the  term  of  five  3'ears,  —  to  wit,  on  his  dwelling-house  §500,  on  furni- 
ture and  clothing  therein  8200,  aud  on  other  propert}'  the  remainder 
of  the  gross  sum  of  §1,425.  The  defendants  were  paid  for  insuring 
the  whole  property  during  the  entire  period  of  five  years  ;  and  they 
agreed,  upon  this  consideration,  to  keep  the  whole  property  insured, 
whoever  might  during  that  time  be  its  legal  owner,  by  force  of  their 
expressed  obligation  to  indemnify  Pettigrew  and  his  assigns. 

1  Gushing,  C.  J.,  ha'ving  been  of  counsel,  did  not  sit.  —  Rep. 


1126  CUMMINGS   V.    CHESHIRE   CO.    MUT.  F.    INS.   CO.      [CHAP.  XII. 

An  alienation  of  the  property,  with  tlie  consent  of  the  defendants 
was  therefore  contemplated  and  provided  for  by  the  parties  to  the 
original  contract.  Pettigrew  sold  his  house,  removed  his  furniture,  and 
assigned  the  policy  to  Cunimings  (the  defendants  assenting  thereto), 
who  bought  the  house  and  placed  therein  other  furniture  of  equal  char- 
acter and  value.  If  he  had  sold  his  own  furniture,  or  left  it  some- 
where else,  and  bought  the  furniture  of  Pettigrew  and  retained  it  in 
the  house,  the  defendants  would  unquestionably  be  liable  for  its  loss. 
It  makes  no  difference,  in  reason,  equity,  or  common  sense,  whetlierthe 
furniture  which  they  were  paid  for  insuring  was  bought  of  Stephen 
Pettigrew  or  anybody  else ;  and  I  apprehend  it  makes  no  difference  in 
law. 

The  contract  of  insurance,  we  have  seen,  does  not,  unless  by  extraor- 
dinary and  express  stipulation  of  the  parties,  run  with  the  subject- 
matter  of  insurance.  Satisfaction  is  to  be  made  to  the  person  insured 
for  the  loss  he  may  have  sustained.  In  fulfilment  of  the  defendants' 
agreement  with  Pettigrew  that  tliey  would  insure  his  assigns,  on  the 
12th  of  May,  1870,  the  defendants,  in  writing,  signified  their  consent 
to  the  assignment  by  Pettigrew  to  the  plaintiff  of"  tlie  policy  of  in- 
surance within  written ;  to  hold  the  same  subject  to  all  the  liabilities 
and  entitled  to  all  the  rights  and  privileges  to  which  I  am  liable  or 
entitled  by  virtue  thereof."  Tiie  liabilities  referred  to  were,  the  obli- 
gation of  the  plaintiff  to  pay  assessments  ;  the  rights  referred  to  were, 
the  rights  of  suit  and  recovery  against  the  defendants,  in  case  of  a  loss 
of  the  property  covered  by  the  policy  during  the  period  of  its  existence. 
The  assignment  was  of  the  whole  policy.  The  obligation  of  the 
assignee  was,  to  pay  assessments  upon  the  whole  valuation  of  all  the 
property  described  in  the  policy. 

The  intention  and  contract  of  tlic  defendants,  in  consenting  to  the 
assignment  of  the  policy,  were,  to  indemnify  the  owner  for  the  time 
being,  —  tliat  is,  at  the  time  of  its  destruction,  —  not  for  any  specific 
furniture,  but  for  any  furniture  which  might  be  in  the  house  during  the 
time  specified.  As  the  plaintiff's  counsel  suggest,  —  "  There  can  be 
no  question  but  that  Pettigrew  might  have  brought  in  furniture  and 
clothing  not  there  when  the  policy  was  underwritten,  and  it  would  be 
covereil  by  it.  He  might  iiave  replaced  what  he  then  had  by  this  very 
furniture  which  was  burned,  and  no  question  would  have  been  made 
but  that  it  was  insured  to  him.  After  the  premises  were  sold  to  the 
plaintiff  and  the  policy  assigned  to  him,  why  may  he  not  have  done 
the  same  thing  and  been  entitled  to  the  same  benefit  ?  The  insurers 
are  [)ut  in  no  worse  condition  ;  their  risk  was  not  made  greater  nor 
different." 

There  is,  however,  another  aspect  of  this  case  in  which  the  defend- 
ants' liability  is  very  clearly  apparent.  The  consent  to  Pettigrew's 
assignment  may  well  be  regarded  as  a  new  and  independent  contract 
made  directly  with  the  plaintiff,  —  an  agreement  to  indemnify  the 
plaintiff  against  loss  ui)on  his  house  and  his  furniture  and  clothing 
therein. 


SECT.  11.]       CUMMINGS    V.    CHESHIRE    CO.    MUT.    F.    INS.    CO.  1127 

"  If,  on  a  transfer  of  the  estate,  the  vendor  assigns  his  policy  to  the 
purchaser,  and  this  is  made  known  to  the  insurer  and  is  assented  to  by 
him,  it  constitutes  a  7iew  and  original  promise  to  the  assignee  to  in- 
demnify him  in  like  manner  while  he  retains  an  interest  in  tlie  estate ; 
and  the  exemption  of  the  insurer  from  further  hability  to  the  vendor, 
and  the  premium  already  paid  for  insurance  for  a  term  not  yet  expired, 
are  a  good  consideration  for  such  promise,  and  constitute  a  new  and 
valued  contract  between  the  insurer  and  tlie  assignee. 

"■  But  such  undertaking  will  be  binding,  not  because  the  policy  is  in 
any  way  incident  to  the  estate  or  runs  with  the  land,  but  in  consequence 
of  the  new  contract."  Shaw,  C.  J.,  in  AVilson  v.  Hill,  3  Met.  66,  at 
page  69. 

So,  also,  Perley,  J.,  in  Rollins  v.  Ins.  Co.,  25  N.  H.  207  :  "  The 
assignment  and  assent  of  the  corporation  make  a  new  contract,  upon 
which  .  .  .  the  assignee  might  maintain  an  action  in  his  own  name  ; 
and  the  action  in  this  case  would  be  founded  on  this  new  contract 
made  with  him."  And,  said  Eastman,  J.,  in  Folsora  v.  Ins.  Co.,  30 
N.  H.  2-40,  assent  to  the  assignment  is  "  a  new  contract  made  with  the 
assignee." 

We  have  therefore  in  the  case  before  us  a  new  contract,  made  be- 
tween the  parties  to  this  suit,  whereby  the  defendants,  for  a  full  and 
sufficient  consideration,  have  undertaken  to  insure  the  plaintiff  against 
loss  by  fire  on  the  house  which  he  bought  of  Pettigrew,  and  the  furni- 
ture and  clothing  therein  which  he  bought  of —  no  matter  whom. 

The  party  insured,  whether  by  an  original  policy  or  a  supplemental 
contract,  under  the  form  of  an  assignment,  must  of  course  have  an 
insurable  interest  in  the  property  which  is  the  subject  of  the  contract ; 
but  it  can  be  of  no  importance  to  the  insurer  whence  or  how  the  other 
party  acquired  his  title. 

If  these  views  are  correct,  there  must  be  judgment  for  the  plaintiff 
according  to  the  provisions  of  the  case  transferred. 

Ladd,  J.  The  consent  of  the  directors  to  the  assignment  of  the 
policy  by  Pettigrew  to  the  plaintiff  constituted  a  new  and  original  con- 
tract and  promise  to  indemnify  him  according  to  the  terms  of  the 
policy ;  and  this  new  promise  rested  upon  a  sufficient  consideration, 
namely,  the  exemption  of  the  company  from  any  further  liability  to 
Pettigrew,  and  the  premiums  already  paid  and  secured  for  the  unex- 
pired term  which  the  policy  had  to  run.  Wilson  v.  Hill,  3  Met.  %Q.  It 
can  hardly  be  claimed  that,  by  any  fair  construction  of  the  policy,  tlie 
insurance  was  only  on  such  furniture  and  clothing  as  was  in  the  house, 
and  on  such  hay  and  grain  as  was  in  the  barns,  at  the  time  it  was 
executed,  so  that  no  change  therein  could  be  made  by  Pettigrew. 
Common  experience  teaches  that  such  changes  must  of  necessity  be 
constantly  taking  place  ;  and  the  contract  was  made  in  view  of  that 
fact.  The  language  used  shows  plainly  enough  that  such  changes 
were  in  contemplation  of  the  parties.  The  insurance  is  not  "  on  the 
furniture  and  clothing  now  therein,"  but,  in  general  terms,  "  on  furniture 
and  clothing  therein." 


1128  CUMMINGS    V.   CHESHIRE    CO.    MUT.    F.    INS.    CO.       [CHAP.  XII. 

It  is  too  clear  for  argument  that  the  policy  would  cover  other  furni- 
ture and  clothing  with  which  Pettigrew  might  replace  worn-out  clothing 
and  furniture  that  was  in  the  house  at  the  time  it  was  made,  or  any 
furniture  he  might  have  therein  to  the  amount  of  the  insurance  during 

the  term. 

It  follows,  conclusively  as  it  seems  to  me,  that,  when  the  defendants 
entered  into  the  new  contract  with  the  plaintiff,  identical  in  its  terms 
because  evidenced  by  the  same  identical  instrument,  the  rights  of  the 
plaintiff  under  that  contract  must  be  the  same  as  were  those  of  Petti- 
o-rew.  That  being  so,  it  was  as  much  an  insurance  of  his  furniture  and 
clothing  as  it  was  of  the  furniture  and  clothing  of  Pettigrew. 

Smith,  J.  In  general,  at  common  law,  where  one  party  assigns  his 
interest  in  a  contract,  and  the  other  party  agrees  to  the  assignment, 
this  constitutes  a  new  contract  between  the  assignee  and  such  other 
original  party,  the  terms  of  the  original  contract  regulating  those  of 
the  new  contract.     Fogg  v.  Insurance  Company,  10  Cush.  337. 

The  defendants  agreed  to  insure  Pettigrew,  his  heirs  and  assigns, 
"  on  his  buildings,  and  other  property  situated  in  Claremont,"  etc. 
Pettigrew,  during  the  existence  of  the  policy,  sold  the  buildings  to  the 
plaintiff,  and  assigned  to  liim  the  contract  of  insurance,  and  all  the 
rio-hts  and  privileges  to  which  he  was  entitled  by  virtue  thereof,  and 
then  sun-endered  to  the  plaintiff  the  possession  of  the  buildings,  re- 
moving his  clothing  and  furniture.  Cuminings  thereupon  commenced 
to  occupy  the  premises  with  his  own  furniture  and  clothiug.  The 
defendants  assented  to  this  assignment,  and  thereby  entered  into  a 
new  contract  with  the  plaintiff,  the  terras  of  which  were  regulated  and 
fixed  by  those  of  the  original  contract,  —  that  is,  they  agreed  to  insure 
him  "  on  his  buildings  and  other  property  situated  in  Claremont,  etc., 

that  is  to  say,  on   dwelling-house,    woodshed,  and  carriage-house, 

$500  ;  on  furniture  and  clothing  therein,  S200,"  etc.  This  undertaking 
is  not  binding  because  the  policy  is  incident  to  the  property  insured, 
but  because  it  is  a  new  contract.  Wilson  r\  Hill,  3  Met.  6G.  The  de- 
fendants were  paid  for  insuring  the  full  sum  of  SI, 425,  for  five  years,  and 
their  contract  was  to  pay  that  sum  to  Pettigrew's  assigns  as  well  as  to 
him.  When  they  consented  to  the  assignment,  they  agreed  to  insure 
Cummings  the  same  as  tliey  had  Pettigrew ;  they  in  fact  sulistituted 
the  former  for  the  latter,  and  agreed  that  the  policy  should  represent 
to  him  just  what  it  had  to  Pettigrew.  No  specific  furniture  and  cloth- 
ing was  named  in  the  policy  beyond  that  it  was  such  furniture  and 
clothing  of  the  insured  as  lie  might  have  in  the  house  for  the  tin;ie  being. 
If  Pettigrew  had  not  assigned  the  policy,  and  had  remained  in  the 
occupation  of  the  premises,  he  might  have  substituted  other  furniture 
for  that  originally  insured,  and  no  one  would  have  questioned  that  it 
would  have  been  covered  by  the  policy.  Any  other  construction  would 
practically  prevent  the  insurance  of  provisions,  clotliing,  and  family 
stores,  as  well  as  stocks  of  goods,  and  such  property  as  is  worn  out, 
consumed,  or  otherwise  changed  several  times  during  the  term  of  a 


SECT.  II.]  CONTINENTAL   INS.   CO.   V.   MUNNS.  1129 

polic}'.  If  Pettigrew  then  could  have  replaced  the  furniture  and  cloth- 
ing originally  insured,  with  other  property  of  similar  character  and 
value,  without  affecting  his  rights  under  the  policy,  there  does  not 
seem  to  be  any  reason  why  Cummings  might  not  have  done  the  same 
thing. 

The  contract  was  to  insure  him  (Cummings)  on  his  furniture  and 
clotliing,  and  it  could  make  no  difference  with  the  defendants  whether 
he  procured  his  furniture  of  Pettigrew  or  of  some  one  else.  The  risk 
was  not  increased,  nor  was  it  in  any  respect  different ;  and,  besides, 
there  was  a  good  consideration  for  this  new  undertaking.  Cummings 
purchased  the  real  estate  and  became  the  assignee  of  the  whole  policy ; 
and  having  become  assignee  of  the  whole  policy,  and  having  become 
substituted,  with  the  consent  of  the  defendants,  for  Pettigrew,  I  think 
he  is  entitled  to  all  the  benefits  that  his  assignor  could  claim  under  the 
policy,  and  could  do  whatever  he  could  do.  It  must  follow,  then,  that 
by  the  new  contract  between  these  parties  the  defendants  insured  tlie 
plaintiff's  furniture  and  clothing,  and  consequently 

The  jjlaintiff  is  entitled  to  Judgment  according  to  the  finding 
of  the  court  below} 


CONTINENTAL  INS.    CO.    v.    MUNNS. 

Supreme  Court  of  Indiana,  1889.     120  Ind.  30. 

From  the  Montgomery  Circuit  Court. 

B.  Crane  and  A.  B.  Anderson,  for  appellant. 

H.  H.  Dochterman,  for  appellee. 

Mitchell,  J.  This  is  an  appeal  from  a  judgment  rendered  by  the 
Montgomery  Circuit  Court  in  favor  of  William  Munns  against  the  Con- 
tinental Insurance  Company.  The  questions  for  decision  arise  upon 
the  following  facts:  On  January  17,  1883,  the  insurance  company 
above  named  delivered  to  John  Bittle  a  policy  of  insai'ance,  by  which 
it  insured  his  dwelling-house  and  its  contents,  consisting  of  household 
furniture,  etc.,  his  barn,  shed,  and  granary,  and  their  contents,  sever- 
ally, consisting  of  farming  utensils,  wagons,  carriages,  grain,  horses, 
etc.,  for  a  period  of  five  years  for  a  gross  premium  of  637. 

At  the  time  the  policy  was  issued  Bittle  owned  the  farm  upon  which 
the  several  buildings  insured  were  situate,  and  the  personal  property 
covered  by  the  policy  was  in  the  buildings  therein  described,  the  insur- 
ance being  apportioned  in  specified  sums  upon  the  several  buildings  and 
the  property  therein  situate. 

The  policy  contained  a  stipulation  of  the  following  purport :  "  If  the 
applicant  shall  mortgage,  or  otherwise  encumber  the  property  hereby 

1  See  Walton  v.  Louisiana  State  M.  &  F.  Ins.  Co.,  2  Rob.  La.  363  (18-12).  —  Ed. 


1130  CONTINENTAL    INS.   CO.    V.    MUNNS.  [CHAP.  XII. 

insured,  without  notice  to  and  consent  of  the  company  indorsed  hereon, 
this  policy  shall  become  null  and  void."  On  the  27lh  day  of  June, 
1885,  Bitlle,  without  notice  to  the  company,  and  without  its  Ivnowledge 
or  consent,  mortgaged  the  farm  upon  which  the  house,  barn,  and  other 
buildings  insured  were  situate,  J,o  the  Provident  Life  and  Trust  Com- 
pany of  Philadelphia,  to  secure  a  loan  of  S5,000.  In  the  month  of 
September  following,  lie  sold  and  conveyed  the  land,  with  the  buildings 
thereon,  to  William  Munns,  for  the  consideration  of  $12,000,  and  in  a 
few  da^s  thereafter,  witliout  any  new  consideration,  transferred  tlie 
policy  of  insurance  to  the  purchaser.  The  latter  soon  afterwards  pre- 
sented the  policy  to  tlie  company's  general  superintendent,  who  in- 
dorsed its  consent  thereon  that  the  policy  miglit  be  assigned  to  the 
purchaser,  subject  to  all  the  terms  and  conditions  mentioned  or  re- 
ferred to  therein.  The  company-  had  no  notice  or  knowledge  of  the 
existence  of  the  mortgage  at  the  time  it  gave  its  consent  to  the  transfer 
of  the  policy.  On  July  27,  1886,  the  barn,  shed,  an<l  granary,  and 
their  contents,  were  consumed  by  fire,  entailing  a  loss  amounting  to 
SI,  700.  After  the  destruction  of  the  property,  the  company  learned 
of  the  mortgage  executed  by  Bittle,  when  it  refused  payment  of  the 
loss,  on  the  groiuid  that  placing  the  encumbrance  above  mentioned  on 
the  property  was  a  violation  of  the  condition  of  the  polic}',  which  ren- 
dered it  null  and  void. 

Wliether  the  judgment  shall  be  affirmed  or  reversed  depends  upon 
whether  or  not  the  company  can  avail  itself  of  the  default  of  Bittle  in 
an  action  on  the  policy  by  the  plaintiff.  It  must  be  assumed,  as  a  mat- 
ter of  course,  that  the  latter,  when  he  purchased  the  farm  and  took  an 
assignment  of  the  insurance  polic3',  had  knowledge  of  the  mortgage 
on  the  land,  and  of  the  condition  relating  to  encumbrances  in  the 
policy. 

Imputing  to  him  knowledge  of  these  facts,  the  question  remains,  did 
he  take  tlie  policy  strictly  as  assignee,  subject  to  all  the  infirmities,  de- 
fences, or  an}'  forfeiture  which  the  laches  or  default  of  the  assignor  may 
have  imposed  upon  it?  or  did  the  assignment,  with  the  consent  of  the 
company,  constitute  the  policy  in  effect  a  new  and  original  contract 
between  the  latter  and  the  assignee,  unaffected  by  any  previous  forfei- 
ture that  ma}-  have  occurred?  If  the  transfer  of  the  policy  simpl}- 
substituted  the  assignee  to  the  rights  which  the  assignor  then  had  in 
the  contract,  it  may  well  be  said  that  if  the  latter  had  no  rights  by 
reason  of  the  forfeiture  which  occurred  prior  to  the  assignment,  the 
mere  transfer  conferred  no  new  rights  on  tlie  assignee.  If,  on  the  other 
hand,  the  assignment  of  the  policy,  wiLli  the  assent  of  the  company, 
constitutes  a  new,  original,  and  independent  contract  between  the 
assignee  and  the  insurer,  then  it  is  quite  clear  that  no  act  of  forfeiture 
committed  b}'  the  assignor  before  the  sale,  assignment,  and  consent  is 
available  against  the  policy  in  the  hands  of  the  purchaser  newly 
insured. 

A  contract  of  insurance  is  purely  a  personal  engagement,  by  which 


SECT.  II.]  CONTINENTAL    INS.    CO.    V.    MUNNS.  1131 

the  insurer,  for  a  consideration  paid,  agrees  to  indemnify  the  person 
insured  against  loss  arising  from  damage  to  liis  property  by  fire.  Tlie 
contraet  appertains  to  ttie  person  with  whom  it  is  made,  and  does  not 
run  with  the  property  insured.  Nordyke  &  Marmon  Co.  v.  Gery,  112 
Ind.  535  (5  Am  St.  Rep.  '11}  ;  Cummings  v.  Cheshire,  etc.  Ins.  Co., 
bb  N.  H.  457. 

It  is  abundantly  settled  that  upon  a  sale  and  transfer  of  property 
covered  by  a  i)olicy  of  insurance,  and  an  assignment  of  the  policy  to 
the  purchaser,  duly  assented  to  by  the  company,  a  new  and  original 
contract  of  indemnity  arises  between  the  insurance  compan}'  and  the 
assignee,  which  the  latter  may  enforce  without  regard  to  what  may  have 
occurred  prior  to  the  assignment.  The  policy,  it  is  said,  in  such  a  case, 
expires  with  the  transfer  of  the  estate,  so  far  as  it  relates  to  the  original 
holder,  but  the  assignment  and  assent  of  the  company  thereto  constitute 
nn  independent  contract  with  the  purchaser  and  assignee,  the  same  in 
effect  as  if  the  policy  had  been  reissued  to  him  upon  the  terms  and  con- 
ditions therein  expressed.  Wilson  v.  Hill,  3  Mete.  66  ;  Fogg  r.  Mid- 
dlesex, etc.  Ins.  Co.,  10  Cush.  337;  Fanagan  v.  Camden,  etc.  Ins. 
Co.,  1  Dutch.  (X.  J.)  506;  Cummings  v.  Cheshire,  etc.  Ins.  Co.,  55 
N.  H.  457;  Stcen  v.  Niagara,  etc.  Ins.  Co.,  89  N.  Y.  315;  Shearman 
V.  Niagara,  etc.  Ins.  Co.,  46  N.  Y.  526  ;  Hooper  v.  Hudson  River,  etc. 
Ins.  Co.,  17  N.  Y.  424;  Ellis  v.  Council  Bluffs  Ins.  Co.,  64  Iowa,  507; 
Wood  Insurance,  §§110,  366. 

"Where  an  estate  is  sold  and  the  polic}'  transferred  to  the  purchaser, 
and  upon  notice  to  the  insurer  he  assents  to  it,  a  new  and  original  con- 
tract of  indemnity  arises  to  the  assignee,  which  he  ma^'  enforce  in  his 
own  name.  The  policy  in  such  case  expires  with  the  transfer  of  the 
title  to  the  estate,  but  the  assent  of  the  insurer  to  tiie  assignment  of  the 
policy  constitutes  a  new  contract.  Pratt  v.  New  York,  etc.  Ins.  Co., 
64  Barb.  589;  Flanders'  Fire  Ins.,  412,  484;  Foster  v.  Equitable,  etc. 
Ins.  Co.,  2  Gray,  216. 

Aside  from  the  prohibitory  clause,  policies  of  insurance,  prior  to 
any  loss,  are  not,  in  their  nature,  assignable  from  one  person  to  another 
without  the  express  consent  of  the  insurance  company'  issuing  them. 
They  are  therefore  subject  to  the  common-law  rule,  the  effect  of  which 
is,  that  where  the  assignee  of  a  contract  gives  notice  of  the  assignment 
to  the  other  part}-  to  the  instrument,  and  the  latter  assents  to  it,  the 
transaction  constitutes  a  new  engagement  between  one  of  the  parties 
to  the  contract  and  the  assignee  of  the  other,  the  t^rms  of  which  are 
regulated  and  fixed  by  the  original  contract.  Fogg  v.  Middlesex,  etc. 
Ins.  Co.,  supra;  Wilson  v.  Hill,  supra;  Hooper  v.  Hudson  River,  etc. 
Ins.  Co.,  supra ;  Flanders'  Insurance,  484. 

In  order  that  a  policy  of  insurance  ma}'  be  effectual,  the  insured 
must  have  an  interest  in  the  property-  covered  by  the  contract  of  insui'- 
ance,  not  onlv  when  the  contract  is  entered  into,  but  when  the  loss  oc- 
curs. If  the  interest  in  the  property  and  the  interest  in  the  policy 
become  separated,  the  operation  of  the  policy  becomes  suspended,  and 


1132  CONTINENTAL    INS.    CO.    V.    MUNNS.  [CHAP.  XII. 

if  a  loss  occurs  while  the  policy  is  thus  suspended,  no  recovery  can 
be  had.  An  assignment  of  an  insurance  i^olicy  without  a  transfer  of 
the  property  insured,  would  be  an  idle  ceremony  so  far  as  transferring 
to  the  assignee  any  beneficial  interest  in  the  contract.  On  the  other 
hand,  the  transfer  of  the  property  insured  suspends  the  operation  of 
the  policy,  which  becomes  inoperative  for  w^ant  of  a  subject-matter  to 
act  upon,  until  by  the  assignment  and  assent  of  the  company  a  new 
contract  of  insurance,  embodying  the  same  terms  and  conditions  as  the 
old,  arises  between  the  latter  and  the  purchaser.  The  contract  of  in- 
surance thus  consummated  arises  directly  between  the  purchaser  and 
the  insurance  company,  to  all  intents  and  purposes  the  same  as  if.  a 
new  policy  had  been  issued  embracing  the  terms  of  the  old.  In  such 
a  case  no  defence  predicated  on  supposed  violations  of  the  conditions 
of  the  policy  by  the  assignor  will  be  available  against  the  assignee. 
Until  the  latter  himself  does  some  act,  or  permits  a  condition  of  things 
to  exist  in  violation  of  the  terms  of  the  policy,  he  is  not  in  default. 
Ellis  V.  State  Ins.  Co.,  68  Iowa,  578  (56  Am.  R.  865),  and  Insurance 
Co.  V.  Garland,  108  111.  220,  are  not  opposed  to  the  conclusions  above 
stated . 

The  case  first  cited  involved  a  policy  which  contained  a  provision 
that  ''if  the  title  of  the  property  is  .  .  .  encumbered  .  .  .  this  policy 
shall  be  void."  At  the  time  the  policy  was  assigned  there  was  a  mort- 
gage on  the  property  which  remained  upon  it  until  after  the  loss.  This 
condition,  as  the  court  well  says,  pertained  to  the  character  of  the  risk 
as  it  then  was  or  should  thereafter  be,  and  when  the  assignee  became  a 
party  to  the  condition  he  virtually  agreed  that  if  there  was  then  or 
should  thereafter  be  an  encumbrance  on  the  property,  he  should  not  in 
case  of  loss  be  entitled  to  recover. 

The  contract  provided  against  subsisting  encumbrances  as  fully  as 
it  did  against  those  which  might  be  made  thereafter,  and  the  gist  of  the 
defence  which  the  court  sustained  was  that  the  encumbrance  was  al- 
lowed to  remain.  The  court  fully  ]-ecognized  the  doctrine  of  its  former 
decisions,  which  hold  that  an  assignment  of  a  policy  wnth  the  assent 
of  the  insurance  company  creates  a  new  contract,  and  that  the  assignee 
is  not  aflfected  by  the  acts  of  the  assignor. 

The  other  case  relied  upon  was  predicated  upon  a  policy  which  con- 
tained a  stipulation  to  the  effect  that  if  "  the  assured  shall  allow  the 
buildings  herein  insured  to  become  vacant  or  unoccupied,  and  so  re- 
main, .  .  .  this  policy  shall  become  void."  It  was  properly  held  that 
this  provision  was  imported  into  the  new  contract,  and  became  a  pres- 
ent agreement  with  the  assignee,  and  that  as  he  permitted  the  premises 
to  remain  unoccupied  the  company  had  the  right  to  avoid  the  policy 
because  he  had  violated  his  agreement.  The  distinction  between  the 
cases  relied  on  and  the  present  case  is  obvious.  In  those  cases  the 
defences  were  not  predicated  upon  acts  or  defaults  of  the  vendor,  but 
upon  violations  of  the  terms  of  the  policy  by  the  vendee  himself.  The 
policy  involved  in  the  present  case  contained  no  provision  against  sub- 


SECT.  II.]  CONTINENTAL   IN'S.   CO.   V.   MUNNS.  1133 

sisting  encumbrances.  Future  encumbrances  alone  were  referred  to, 
and  the  established  rul©  is  that  conditions  which  create  forfeitures  will 
not  be  extended  by  construction.  Northwestern,  etc.  Ins.  Co.  v.  Haze- 
lett,  105  Ind.  212;  Symonds  u.  Northwestern,  etc.  Ins.  Co.,  23  Minn. 
491. 

There  is  no  pretence  that  the  assignee  made  an}'  misrepresentation 
concerning  the  condition  of  the  risk  at  the  time  the  company  gave  its 
assent  to  the  assignment.  The  rule  api)licable  is  that  a  failure  or  neglect 
on  the  part  of  the  insured  to  make  known  facts  which  the  insurer  may 
regard  as  material  to  the  risk,  is  not  a  breacli  of  a  condition  in  the 
policy,  avoiding  it  in  case  of  any  omission  to  make  known  every  fact 
material  thereto,  because  the  insured  has  a  right  to  suppose  that  the 
insurer  will  make  proper  inquiries  concerning  all  facts  except  such  as 
are  supposed  to  be  known,  or  are  regarded  as  immaterial.  Short  v. 
Home  Ins.  Co.,  90  N.  Y.  16;  Burritt  v.  Saratoga,  etc.  Ins.  Co.,  5  Hill, 
188;  Clark  v.  Manufacturers'  Ins.  Co.,  8  How.  235. 

In  the  case  last  cited  the  court  said  :  ''  As  to  the  ordinary  risks  con- 
nected with  the  property  insured,  if  no  representations  whatever  are 
asked  or  given,  the  insurer  must,  as  before  remarked.  Be  supposed  to 
assume  them;  and,  if  he  acts  without  inquiry  anywhere  concerning 
them,  seems  quite  as  negligent  as  the  insured,  who  is  silent  when  not  re- 
quested to  speak.'"' 

An  applicant  for  insurance  is  not  bound,  unless  inquired  of,  to  dis- 
close whether  or  not  the  property  insured  is  encumbered.  As  the  pub- 
lic records  usually  give  information  in  reference  to  such  matters,  he 
may  assume  that  the  insurer  knew  of  any  existing  encumbrances,  or 
deemed  it  immaterial  whetlier  or  not  the  property  was  encumbered. 

These  conclusions  lead  to  an  affirmance  of  the  judgment. 

Judgment  affirmed^  icith  costs.^ 

1  Ace.  :  Ellis  v.  Ins.  Co.  of  North  America,  32  Fed.  R  646  {C.  C,  S.  D.  Iowa,  1887) ; 
Hall  V.  Niagara  F.  Ins.  Co.,  93  Mich.  184  (1892). 

Cqrapare  McCluskey  v.  Providence  Washington  Ine.  Co.,  126  Mass.  306   (1879); 
Fire  Assn.  v.  Flouruoy.  84  Tex.  632  (1892). 
On  assignees,  see  also  :  — 

Brichta  v.  New  York  Lafayette  Ins.  Co.,  2  Hall,  372  (1829) ; 

Birdsey  v.  Citv  F.  Ins.  Co.,  26  Conn.  165  (18.57)  ; 

Mellen  i-.  Hamilton  F.  Ins.  Co.,  17  N.  Y.  609  (1858)  ; 

Ellis  V.  Kreutzinger,  27  Mo.  311  (1858) ; 

Minturn  v.  Manufacturers'  Ins.  Co ,  10  Gray,  501,  505  (1859) ; 

Bergson  v.  Builders'  Ins.  Co.,  38  Cai.  541  (1869) ; 

Bates  V.  Equitable  Ins.  Go  ,  10  Wall  33  (1869)  ; 

Hall  V.  Dorchester  Mut.  F.  Ins.  Co.,  Ill  Mass.  53  (1872)  ; 

Griswold  i'.   American  Central  Ins.  Co.,  1   Mo.  App.  97  (1876),  s.  c  affirmed, 

70  Mo.  654  (1879); 
Davis  V.  German  American  Ins.  Co.,  135  Mass.  251  (1883)  ; 
Biddeford  Saving's  Bank  v.  Dwelling  House  Ins. Co.,  81  Me.  566  (1889) ; 
Bullmau  i\  North  British  and  Mercantile  Ins.  Co.,   159   Mass.   118,  122-123 
(1893).  — Ed, 


1134  GROSVENOR    V.    ATLANTIC   FIRE    INS.    CO.  [CHAP.  XII. 


SECTION   II.    (contimieci). 
(B)   Beneficiaries. 

GROSVENOR   v.  ATLANTIC   FIRE   INS.    CO. 

Court  of  Appeals  of  New  York,  1858.     17  N.  Y.  391. 

Appeal  from  the  Superior  Court  of  New  York  City.  The  action 
was  upon  a  policy  whereby  the  defendant  did  "  insure  Eugene  W. 
McCarty  against  loss  or  damage  by  fire,  to  the  amount  of  $7,000  on 
his  brick  dwelling-house,  etc.,  until  November  14,  1854.  Loss^jf_anv, 
payable  to  Seth  Grosvenor,  mortgagee/'  The  policy  contained  a  con- 
dition  that  in  case  of  any  transfer,  or  termination  of  the  interest  of  the 
assurecrTn  tlie_pro[3erty  insured  or  in  the  policy,  eitherJivi-sale  or  other- 
wise, without  the  consent  of  the  company  manifested  in  writing,  the 
policy  should  from  thenceforth  be  void.  At  the  trial  before  Mr.  Justice 
Slosson  and  a  jury,  the  plaintiff  proved  the  policy,  the  loss,  and  the 
service  of  preliminary  proofs  thereof.  He  then  proved  a  mortgage  of 
the  insured  property  made  by  Eugene  McCarty  to  Edward  Kellogg, 
and  its  assignment  by  the  latter  to  the  plaintiff  before  the  date  of  the 
policy.  The  defendant's  counsel  offered  to  prove,  and  the  plaintiff's 
counsel  admitted  it  to  be  true,  that  in  January.  1854^  onp.  month  be- 
Yore  the"fire,McCarty,  the  person  named  in  the  policy  as  the  assurcji, 
soidjind^  conve}^  the  pro[)erty  tlierein  describpd  to  one  Rostwi(;k. 
The"judgedecided  that  the  evidence  was  inadmissible,  and  the  defend- 
ant's counsel  excepted.  A  verdict  was  rendered  for  the  plaintiff,  sub- 
ject to  the  opinion  of  the  court  at  general  term,  and  judgment  having 
been  ordered  for  the  plaintiff,  the  defendant  appealed  to  this  court. 

William  C.  Noyes,  for  the  appellant. 

Daniel  Lord,  for  the  respondent. 

Harris,  J.  The  contract  of  insurance  is  a  contract  of  indemnit}-. 
To  sustain  an  action  upon  such  a  contract,  it  must  appear  that  the 
party  insured  has  sustained  a  loss.  This  involves  the  necessity  of  an 
insurable  interest  at  the  time  of  the  alleged  loss.  Without  such  in- 
terest, the  party  insured  cannot  be  damnified. 

In  this  case,  the  contract  was  between  the  defendants  and  McCarty. 
The  agreement  was  to  insure  Eugene  W.  McCarty  against  loss  or  dam- 
age by  fire,  to  the  amount  of  $7,000,  on  his  three-story  brick  dwelling- 
house.  But  after  the  contract  was  made,  and  before  the  alleged  loss, 
McCarty  had  sold  and  convej'ed  the  property  insured.  At  the  time  of 
the  fire  he  had  no  insurable  interest;  of  course,  he  has  no  claim  for 
indemnity.  No  action,  therefore,  could  be  maintained  upon  the  policy 
by  McCarty. 


SECT.  II.]  GROSVENOR   V.    ATLANTIC    FIRE   IN'S.    CO.  1135 

But  at  the  time  the  insurance  was  effected,  the  plaintiff  in  this  ac- 
tion, Grosvenof,  was  the  holder  of  a  mortgage  upon  the  premises 
insured.  As  such  mortgagee,  he,  too,  had  an  insurable  interest.  The 
extent  of  that  interest  was  the  amount  of  his  debt.  To  that  extent  he 
might  have  contracted  with  the  defendants  to  indemnify  him  against 
loss  bv  fire.  The  payment  of  his  debt  would  as  completely  lerminate 
the  contract  to  insure  as  would  the  alienation  of  the  pn^perty.  wlien  the 
contract  is  made  with  the  owner. 

The  important  inquiry  in  this  case  is,  to  which  of  these  classes  does 
the  contract  in  question  belong?  The  action  was  brought  by  the  plaiji- 
tiff  as  mortgagee.  The  contract  was  made  with  McCart}-,  the  mortga- 
gor. But  the  policy  provides  that  in  case  of  loss,  such  loss  should  be 
payable  to  the  plaintiff.  What  is  the  legal  effect  of  this  provision? 
Witliout  it  the  plaintiff  could  have  had  no  claim  against  the  defendants 
for  indemnity.  Is  this  provision  to  be  regarded  as  an  appointment  of 
the  plaintiff  to  receive  any  moncy~wTiTcTr  might  become  due  from  tlie 
insurers  by  reason  of  any  loss  sustained  bv  the  mortgagor,  or  has  it 
the  effect  to  render  the  policy,  which  would  otherwise  be  a  contract  to 
indemnify  tlie  mortgagor  against  a  loss,  a  contract  to  indemnify  the 
mortgagee?  A  determination  of  tliis  question  will  also  determine  tlie 
rights  of  the  parties  to  this  action. 

Were  it  not  for  one  or  two  decisions  in  this  State  bearing  upon  the 
question,  I  should  have  little  difficulty  in  pronouncing  in  favor  of  the 
former  of  these  propositions.  It  seems  to  me  to  be  very  clear  that  it 
was  the  intention  of  all  the  parties  that  the  interest  of  the  mortgagor, 
and  not  that  of  the  mortgagee,  should  be  insured.  It  is  stated  in  the 
policy  that  the  property  insured  is  the  property  of  McCarty,  and  that 
he  is  the  person  insured.  McCarty  paid  the  premium.  He  made  the 
contract.  His  interest  as  owner,  and  not  that  of  the  plaintiff  as  mort- 
gagee, was  the  subject  of  the  insurance.  The  plaintiff  was  merely  the 
appointee  nf_the  party  insured  to  receive  the  money  which  might  be- 
come  due  him  from  the  insurers  upon  the  contract.  The  provision  in 
tlie  policy  in  this  respect  had  no  more  effect  upon  the  contract  itself 
than  it  would  if  it  had  been  provided  that  the  loss  for  which  the  insur- 
ers should  become  liable  should  be  deposited  in  a  specified  bank  to  the 
credit  of  the  party  insured. 

Supposed  that  the  plaintiff,  although  described  in  the  policy  as  a 
mortgagee,  had,  in  fact,  held  no  mortgage,  could  it  be  pretended  that 
the  defendants  might  have  avoided  tlie  policy  on  the  ground  tliat  the 
plaintiff  had  no  insurable  interest?  Or,  sui)pose  again,  that  after  the 
contract  had  been  made,  the  mortgage  had  been  paid,  could  it  be 
claimed  that  the  contract  to  insure  had  also  ceased?  I- presume  none 
will  deny  that,  in  eitlier  case,  the  contract  would  have  continued  in 
force  for  the  benefit  of  the  owner  of  the  property  insured.  If  so,  it 
must  have  been  because  the  interest  of  the  mortgagor,  and  not  that  of 
the  mortgagee,  was  the  tiling  insured.  I  agree  with  the  court  below 
that  "  there  is  nothing  in  the  language  of  the  policy  on  which  the  court 


1136  GROSVENOR   V.    ATLANTIC   FIRE   INS.   CO.  [CHAP.  XII. 

can  adjudge  that  in  legal  effect  it  is  a  contract  insuring  the  interest 
of  the  mortgagee  as  such,  except  hi  the  provision  which  declares  that 
the  loss,  if  any,  which  occurs  under  the  contract  insuring  the  mortga- 
gor's interest,  shall  be  payable  to  the  mortgagee,  That  provision  merely 
designates  a  person  to  whom  such  loss  is  to  be  paid,  and  shows  that  he 
is  a  person  who  may  have  an  interest  in  its  being  so  paid." 

The  undertaking  to  pay  the  plaintiff  was  an  undertaking  collateral  to 
and  dependent  upon  the  principal  undertaking  to  insure  the  mortgagor. 
The  effect  of  it  was,  that  the  defendants  agreed  that  whenever  any 
money  should  become  due  to  the  mortgagor  upon  the  contract  of  insur- 
ance, they  would,  instead  of  paying  it  to  the  mortgagor  himself,  pay  it 
to  the  plaintiff.  Tiie  mortgagor  must  sustain  a  loss  for  which  the  in- 
surers were  liable,  before  the  party  appointed  to  receive  the  money 
would  have  a  right  to  claim  it.  It  is  the  damage  sustained  by  the  party 
insured,  and  not  by  the  party  appointed  to  receive  payment,  that  is 
recoverable  from  the  insurers.  Macomber  v.  The  Cambridge  Mutual 
Fire  Ins.  Co.,  8  Cush.  133.  The  insurance  Jbeing  upon  the  interest  of 
the  mortgagor,  and  he  having  parted  with  that  interest  before  the  fire, 
no  loss  was  sustained  by  him,  and,  of  course,  none  was  recoverable  by 
his  assignee  or  appointee.  The  right  of  such  a  party  being  wholly 
derivative,  cannot  exceed  the  right  of  the  party  under  whom  he  claims. 
Carpenter  v.  The  Providence  Washington  Ins.  Co.,  16  Pet.  495 ; 
Foster  v.  The  Equitable  Fire  Ins.  Co.,  2  Gray,  216. 

I  agree  with  the  learned  judges  who  delivered  opinions  upon  the 
decision  of  this  case  in  the  court  below,  that  there  is  no  just  ground  for 
discrimination  between  this  case  and  that  of  an  assignment  of  the 
policy  to  a  mortgagee  to  be  held  by  him  as  collateral  security  for  his 
debt,  with  the  consent  of  the  insurer.  In  either  case  the  insurance  is 
upon  the  interest  of  the  mortgagor.  The  terms  and  conditions  upon 
which  indemnity  may  be  claimed  are  agreed  upon,  and  then  the  origi- 
nal parties  further  agree  that  when,  by  the  terms  and  conditions  of  the 
contract,  the  insurers  shall  become  liable  by  reason  of  a  loss  sustained 
by  the  party  insured,  the  money  shall  be  paid,  not  to  the  parfey  who 
has  sustained  the  loss,  but  to  his  appointee  or  assignee  for  his  benefit. 
Such  an  appointment  or  assignment  ought  not  to  be  construed  so  as  to 
vary,  in  any  respect,  the  liabilities  of  the  insurers  upon  their  original 
contract.  It  is  certainly  true,  as  was  said  by  Mr.  Justice  Woodruff, 
that,  "when  applied  to  other  agreements  for  the  payment  of  money, 
an  assignment  does  no  more  than  direct  to  whom  it  shall  be  paid  when 
it  shall  become  due." 

The  case  of  The  Traders'  Ins.  Co.  v.  Robert,  9  Wend.  404,  was,  in 
my  judgment,  erroneously  decided.^  .  .  . 

Upon  the  merits  of  the  question  I  have  already  sufficiently  expressed 
the  convictions  of  my  own  judgment.  The  defendants  contracted  with 
McCarty,  and  not  the  plaintiff.  They  agreed,  upon  the  performance  of 
certain  conditions,  to  pay  for  him  to  the  plaintiff  certain  money.    Some 

1  The  discussion  of  the  authorities  has  been  omitted.  —  Ed. 


SECT.  II.]  HATHAWAY    V.    ORIENT    INS.    CO.  1137 

of  these  conditions  were  positive  in  tlieir  character;  others  negative. 
Certain  things  were  to  be  done  by  the  assured,  and  otlier  things  were 
not  to  be  done.  If  all  these  conditions  were  performed,  then,  if  a  loss 
occurred,  the  defendants  agreed  to  indemnify  him  against  that  loss,  to 
the  extent  specified  in  the  policy,  and  he  appointed  the  plaintiff,  his 
creditor,  to  receive  from  the  defendants  the  amount  for  which  they 
were  thus  contingently  liable.  The  terms  of  this  contract  have  never 
been  waived,  relaxed,  or  modified.  The  defendants  have  shown  an  ex- 
press  violation  of  one  or  more  of  the  conditions  upon  which  their  liabil- 
ity was  to  depend.  And  yet  it  has  been  adjudged,  although  it  is  evident 
that  it  has  been  done  with  reluctance  and  against  the  better  judgment 
of  tlie  court  making  the  decision,  that  the  proof  of  these  violations 
constituted  no  defence  to  the  action. 

The  judgment  should  be  reversed,  and  a  new  trial  granted,  with 
costs  to  abide  the  event. 

Roosevelt,  J.,  dissented  ;  Selden  and  Strong,  JJ.,  concurred  in  the 
reversal,  distinguishing  this  from  the  case  where  a  policj'  is  assigned 
with  the  assent  of  the  insurers  to  a  mortgagee  ;  they  were  of  opinion 
that  in  such  case  a  privit}'  of  contract  exists  between  the  mortgagee 
and  insurers,  and  the  doctrine  of  The  Traders'  Insurance  Compan}-  v. 
Robert  should  be  maintained. 

Judgment  reversed.,  and  new  trial  ordered.^ 


HATHAWAY,    Respondent,    v.    ORIENT   INS.    CO., 
Appellant. 

Court  of  Appeals  of  New  York,  Second  Division,  1892. 
134  N.  Y.  409. 

Appeal  from  judgment  of  the  general  term  of  the  Supreme  Court  in 
the  fifth  judicial  department,  entered  upon  an  order  made  October  23, 
1890,  which  afl3rmed  a  judgment  in  favor  of  plaintiff  entered  upon  the 
report  of  a  referee. 

This  action  was  brought  by  plaintiff,    as  assignee  of  a  mortgage, 

1  Ace:  Franklin  Savings  Institution  v.  Central  Mut.  F.  Ins.  Co.,  119  Mass.  2W 
(1876) ;  Moore  v.  Hanover  F.  Ins.  Co.,  141  N.  Y.  219  (1894). 

See  Illinois  Mut.  F.  Ins.  Co.  v.  Fix,  53  111.  151  (1870)  ;  Gillett  i-.  Liverpool  and 
London  and  Globe  Ins.  Co.,  73  Wis.  203  (1888) ;  Union  Bldg.  As.'^n  v.  Rockford  Ins. 
Co.,  83  Iowa,  647  (1891)  ;  Hocking  v.  Insurance  Co.,  93  Tenn.  729  (1897). 

On  the  special  agreement  commonly  called  the  "  mortgagee  clause,"  see  Hastings  v. 
Westchester  F.  Ins.  Cc,  73  N.  Y.  141  (1878)  ;  Maxcy  v.  New  Hampshire  F.  Ins.  Co., 
54  Minn.  272  (1893)  ;  Eddy  v.  London  Assur.  Corp.,  143  N.  Y.  311,321-324  (1894); 
Syndicate  Ins.  Co.  v.  Bohn,  27  U.  S.  App.  564,  575-583  (C.  C.  A.,  Eight  Circuit, 
1894),  s.  c.  65  Fed.  R.  165,  172-178.  Kase  ;-.  Hartford  F.  Ins.  Co.,  58  N  J  L.  (29 
Vroom)  34  (1895);  Palmer  Savings  Bk.  c  Ins.  Co.  of  North  America.  166  Mass.  189 
(1896)  ;  Planters'  Mut.  Ins.  Assn.  v.  Southern  Savings  Fund  &  Loan  Co.,  68  Ark.  8 
(1900).  — Ed. 

72 


1138  HATHAWAY    V.   ORIENT    INS.    CO.  [CHAP.  XII. 

which  contained  a  covenant  that  the  biiiklings  upon  the  mortgaged 
Ijropert}-  should  be  kept  insured  against  damage  by  tire  for  the  benefit 
of  the  holder  of  the  mortgage,  to  recover  his  interest  in  a  policy  for 
$1,900  issued  thereon  b}-  defendant,  $1,200  of  uiiich  was  on  the  build- 
ings destroyed  and  their  contents,  and  $700  on  maciiinei-y  in  the  build- 
ing, which  plaintiff  claimed  was  attached  to  and  formed  part  of  the 
realty.  In  said  policy  the  loss,  if  any,  was  made  payable  to  i)laintiff_ 
"  as  his  mortgage  interest  vany  ap|  eai'.''  The  properly  insured  was 
destroyed  by  fire,  and  subsequently  the  owner  and  defendant,  without 
plaintiff's  knowledge  or  consent,  estimated  the  loss  upon  the  buildings, 
including  machinery  and  personal  property,  at  Si. 200,  $700  of  wlncli 
was  paid  to  the  owner  and  $500  sent  to  plaintiff,  wIto  refused  to  accept 
il,  and_brouglit  this  action  to  recover  the  amount  of  his  interest  in  the 
property  destroyed,  which  he  alleged  to  be  $1,574.70. 

Further  facts  are  stated  in  the  opinion. 

Hichard  Croiclei/,  for  appellant. 

jS.  E.  Filkins,  for  respondent. 

FoLLETT,  C.  J.  The  mortgage  held  by  the  plaintiff  contained  a 
covenant  that  the  buildings  should  be  kept  insured  against  damage  by 
fire  for  the  benefit  of  its  holder.  Pursuant  to  this  covenant  Breckon, 
the  owner  of  the  fee,  procured  tlie  policy  on  whi(;h  the  action  was 
brought,  by  the  terms  of  which  the  defendant  "  does  insure  T.  W. 
Breckon."  ..."  Loss,  if  any,  payable  to  A.  B.  Hathaway,  as  his 
mortgage  interest  ma}'  appear."  The  owner  of  the  fee  and  the  mort- 
gagee each  had  an  insurable  interest  in  the  property  which  could  have 
been  protected  by  separate  policies,  or  by  a  single  one  as  they  and  the 
insurer  might  agree.  The  policy  describes  Breckon  as  the  owner  and 
Hathaway  as  mortgagee,  and  provides  that  in  case  of  loss  the  damages 
shall  be    "payable  to  Hathawa}-  as  his  mortgage  interest  may  appear." 

It  is  said  that  Hathaway*  is  the  appointee  of  Breckon.  He  is,  but  he 
is  not  a  mere  appointee  of  Breckon,  and  without  a  vested  interest  in 
the  policy.  He  acquired  his  right  to  recover  the  damages,  not  solely 
by  the  appointment  of  Breckon,  but  b}'  the  polic}',  a  contract  entered 
into  between  the  insurer,  the  owner  of  the  fee,  and  the  mortgagee. 
Had  this  policy  provided  that  in  case  of  loss  the  damage  should  be 
paid  to  a  person  having  no  interest  in  the  insured  propert}',  such  per- 
son would  have  been  a  naked  appointee,  the  same  as  though  the 
damages  had  been  directed  to  be  paid  to  a  bank  or  to  any  collecting 
agent,  and  the  owner  could  have  settled  the  loss  and  released  the  in- 
surer on  his  own  terms.  It  may  be  that  the  same  rule  would  have  been 
applicable,  as  between  the  insurer  and  the  appointee,  had  the  loss  been 
payable  "to  A.  B.  Hathaway,"  having  an  insurable  interest,  which  wns 
neither  known  to  nor  described  by  the  insurer  in  its  polic}'.  The 
rights  of  an  appointee,  an  agent,  or  the  trustee  of  an  express  trust, 
wiio  has  no  interest  in  a  contract  which  he  may  enforce,  are  quite  dif- 
ferent from  those  of  a  person  having  a  vested  legal  interest  in  a  con- 
tract created  b}'  the  concurrent  action  of  all  the  parties  to  it. 


SECT.  II.]  HATHAWAY    V.    ORIENT    INS.    CO.  1139 

The  questions  decided  in  Traders'  Ins.  Co.  v.  Roberts,  9  Wend. 
404;  Tillou  v.  Kingston  Mutual  Ins.  Co.,  5  N.  Y.  405  ;  Grosvenor 
V.  AtUuitic  Fire  Ins.  Co.,  17  N.  Y.  391  ;  and  Buffalo  Steam  Engine 
Works  V.  Sun  Mutual  Ins.  Co.,  id.  401,  are  not  involved  in  tlie 
case  at  bar,  and  it  is  unnecessary  to  attempt  to  harmonize  those  and 
kindred  decisions.  In  the  cases  cited  the  owners  of  property  insured 
it  in  tlieir  own  names,  the  loss,  if  any,  payable  to  mortgagees,  or  the 
insurance  was  assigned,  with  the  assent  of  tlie  insurerto  the  mortgagees 
for  their  security,  and  before  a  loss  occurred,  and  while  the  contract  of 
insurance  was  in  part  executory,  the  owner  increased  the  risk  or  did  a 
prohibited  act,  or  omitted  to  perform  some  act  required  by  the  policy. 
The  question  in  these  cases  was  whether  the  violation  of  the  contract 
bv  the  owner  was  a  defence  to  an  action  by  or  for  the  benefit  of  the 
mortgagee.  No  such  question  is  involved  in  the  case  at  bar.  The 
lial)ility  of  the  insurer  is  admitted,  and  the  question  here  is  whether 
the  owner  of  the  property  and  tlie  insurer  may,  without  the  concurrence 
of  the  mortgagee,  effect  an  accord  and  satisfaction  without  the  assent 
of  the  latter.  It  is  a  general  rule  that  where  a  demand  is  owned  by 
several  by  such  an  unity  of  interest  that  all  must  be  joined  as  parties  in 
a  strictly  personal  action  for  its  recovery,  that  a  release  of  the  claim  by 
one  of  the  owners  is  as  effectual  as  the  release  of  all.  Austin  v.  Hall, 
13  Johns.  286;  Decker  v.  Livingston,  15  Johns.  478;  Osborn  v. 
:^Iartha's  Vineyard,  etc.,  140  Mass.  549.  But  this  rule  has  its  excep- 
tions. Gock  V.  Keneda,  29  Barb.  120 ;  Upjohn  v.  Ewing,  2  Ohio  State 
13;  1  A.  &  E.  Encyc.  106. 

Breekon  the  owner  was  not  a  necessary  party  plaintiff  to  an  action 
for  the  recovery  of  the  amount  due  from  the  defendant,  for  the  whole 
amount  was  recoverable  by  an  action  brought  by  the  mortgagee  indi- 
vidually. Dakin  v.  Liverpool,  London,  &  Globe  Ins.  Co.,  77  N.  Y. 
600,  though  a  joint  action  by  the  owner  and  the  mortgagee  could  have 
been  maintained.     Winne  v.  Niagara  Fire  Ins.  Co.,  91  N.  Y.  185. 

In  case  a  claim  arises  in  favor  of  A.  and  B.,  against  C,  out  of  a 
contract  entered  into  by  the  three,  to  which  claim  by  the  contract  A. 
has  the  prior  and  B.  the  subsequent  right,  C.  &  B.  cannot  without  the 
consent  of  A.,  effect  an  accord  and  satisfaction  which  will  cut  off  the 
riglit  of  A.  Ennis  v.  Harmony  Fire  Ins.  Co.,  3  Bosw.  516  ;  Cromwell 
V.  Brooklyn  Fire  Ins.  Co.,  44  N.  Y.  42;  Reid  v.  McCrum,  91  N.  Y. 
412  ;  Baltis  v.  Dobin,  67  Barb.  507. 

In  Cromwell's  case  a  house  and  lot  had  been  sold  under  an  execu- 
tory contract  by  which  tlic  vendee  covenanted  to  insure  the  house  for 
the  vendor's  benefit.  The  vendee  went  into  possession  and  insured 
the  house  under  a  policy  payable  to  the  vendor  in  case  of  loss.  On  the 
expiration  of  this  policy  the  vendee  took  out  a  new  one  payable  to  him- 
self, and  during  its  life  the  house  was  burned.  The  vendor  liad  as- 
signed his  interest  in  the  contract,  and  the  assignee,  Cromwell,  the 
plaintiff  in  the  action,  notified  the  insurer  of  his  rights  under  the  con- 
tract,  demanded  payment  of  the  loss  and  forbade  its  payment  to  the 


1140  HATHAWAY   V.    ORIENT   INS.    CO.  [CHAP.  XII. 

vendee.  The  insurer,  disregarding  the  demand  and  notice,  paid  the 
amount  due  under  the  polic}-  to  the  vendee.  In  an  action  brought  by 
Cromwell,  the  assignee  of  the  vendor,  it  was  held  that  he  was  entitled 
to  recover,  notwithstanding  the  accord  and  satisfaction  between  the  in- 
sured and  the  vendee.  The  principle  upon  which  this  decision  rests  is 
that  the  vendee  and  insurer  could  not  effect  an  accord  and  satisfaction 
which  would  bar  an  action  by  one  having  a  prior  equitable  right  to  the 
money  due  under  the  contract.  Reid  v.  McCrum,  supra^  is,  in  its 
facts,  a  stronger  authority  in  support  of  the  judgment  in  the  case  at 
bar.  In  that  case  the  owner  of  realt}-  mortgaged  it  covenanting  to 
keep  the  buildings  insured  and  the  policy  assigned  to  the  mortgagee. 
Afterwards  Hugh  McCrum  acquired  the  title  to  the  property  subject  to 
the  mortgage,  and  obtained  policies  of  insurance  on  the  buildings, 
which  were  indorsed  by  the  insurers  :  "  Loss,  if  any,  payable  to  John 
Reid,  mortgagee."  Subsequently  McCrum  procured  the  insurers  to 
cancel  the  indorsement  and  to  write  on  the  policies  :  "  The  mortgagee's 
interest  having  ceased,  the  loss,  if  any,  is  now  payable  to  Hugh 
McCrum  as  owner." 

The  mortgagee's  interest  had  not  terminated  and  he  had  no  knowl- 
edge of  the  change.  After  this  the  buildings  were  destroyed  by  fire, 
and  the  mortgagee  began  an  action  to  foreclose  his  security,  making 
McCrum  and  the  insurers  parties  defendant,  asking  that  McCrum  be 
compelled  to  assign  the  insurance  and  the  insurers  required  to  pay  the 
loss  to  the  plaintiff.  It  was  held  that  the  policies  could  not  be  legally 
changed  without  the  assent  of  the  mortgagee,  and  that  he  was  entitled 
to  recover  the  loss  from  the  insurers. 

Upon  principle  and  authority  it  seems  to  be  clear  that  the  defendant 
in  this  case  had  no  authority  to  agree  with  the  owner  as  to  the  amount 
of  the  damages,  and  determine  as  between  him  and  the  mortgagee  what 
sum  was  payable  to  each,  and  the  accord  and  satisfaction  entered  into 
between  the  insurer  and  the  owner  is  not  a  bar  to  a  recovery  by  the 
mortgagee  of  his  damages. 

The  judgment  should  be  affirmed  with  costs. 

All  concur.  Judgment  affirmed} 

1  See  Grange  Mill  Co.  v.  Western  Assur.  Co.,  118  111.396  (1886);  Edwards  v. 
Agricultural  Ins.  Co.,  88  Wis.  450  (1894);  Security  Co.  v.  Panhandle  Nat.  Bk.,  93 
Tex.  .575  (1900). 

Wlien  a  policy  insures  a  mortgagor,  but  is  payable,  in  case  of  loss,  to  a  mortgagee, 
the  authorities  do  not  agree  as  to  the  person  who  may  maintain  an  action.  To  the 
effect  that  the  action  may  be  brought  by  the  mortgagee,  see  :  Cone  v.  Niagara  F.  Ins. 
Co.,  60  N.  Y.  619  (1875) ;  Chamberlain  v.  N.  H.  F.  lus.  Co.,  55  N.  H.  249,  258  (1875)  ; 
State  Ins.  Co.  v.  Maackens,  38  N.  J.  L.  (9  Vroom)  564  (1876);  Donaldson  i-.  Ins.  Co., 
95  Tenn.  280  (1895)  ;  Palmer  Savings  Bank  v.  Ins.  Co.  of  North  America,  166  Mass. 
189  (1896).  To  the  effect  that  the  action  may  be  brought  by  the  mortgagor,  see: 
Martin  v.  Franklin  F.  Ins.  Co.,  38  N.  J.  L.  (9  Vroom)  140  (1875),  (where  the  policy  was 
under  seal) ;  Hartford  F.  Ins.  Co.  v.  Davenport,  37  Mich.  609  (1877);  Friemausdorf 
V.  Watertown  Ins.  Co.,  9  Biss.-  167  (1879)  ;  Fire  Ins.  Companies  r.  Felrath,  77  Ala. 
194,  198-199  (1884);  Williamson  v.  Michigan  F.  &  M.  Ins.  Co.,  86  Wi.s.  393  (1893). 
To  the  effect  that  the  action  may  be  brought  by  mortgagor  and  mortgagee  jointly. 


SECT.  II.]  HATHAWAY   V.    ORIENT   INS.    CO.  1141 

see:  Home  Ins.  Co.   v.  Gilman,   112  Ind.  7  (1887)  ;  Williamson  v.  Michigan  F.  &  M. 
Ins.  Co.,  supra  (1893). 

On  policies  worded  "  loss,  if  any,  payable  to  "  some  beneficiary,  see  also  :  — 

Minturn  v.  Manufacturers"  Ins.  Co.,  10  Gray,  501,  505  (1859) ; 

Frink  v.  Hampden  Ins.  Co.,  45  Barb.  384  (1865) ; 

Bates  V.  Equitable  Ins.  Co.,  10  Wall.  33  (1869)  ; 

Griswold  v.  American  Central  Ins.  Co.,  1  Mo.  App.  97  (1876),  s.c.  affirmed   70 
Mo.  654  (1879); 

Davis  V.  German  American  Ins.  Co.,  135  Mass.  251  (1883); 

Parks  V.  Connecticut  F.  Ins.  Co.,  26  Mo.  App.  511  (1887).  — Ed. 


1142  ASHLEY  V.   ASHLEY.  [CHAP.  XIL 

SECTION    III. 

Life  Insurance. 
(A)  Assignees. 

ASHLEY   V.   ASHLEY. 
Chakcery,  1829.     3  Sim.  149. 

Ix  1802  William  Heath  insured  bis  life,  in  the  Equitable  Insurance 
Office,  for  £1,000.  By  a  deed  poll,  dated  the  10th  of  March,  1810, 
Heath,  in  consideration  of  os,  and  for  divers  other  considerations  him 
thereunto  moving,  assigned  the  policy  to  James  Hodsoll.  In  October, 
1810,  Hodsoll  died.  In  February,  181.5,  a  decree  was  made  in  a  suit 
instituted  by  Heath  and  others,  against  HodsoU's  executors,  under 
which  the  policy  was  sold  to  General  Ashley,  for  £.320  ;  and  in  Aug- 
ust of  the  same  year,  the  executors  assigned  the  policy  to  General 
Ashley.  In  August,  1817,  General  Ashley  died.  In  1829  the  policy 
was  sold  to  Charles  Farebrother,  under  the  decree  in  a  cause  instituted 
by  General  Ashley's  widow,  against  his  executors.  An  order  was 
afterwards  made,  on  the  application  of  Farebrother,  for  a  reference  to 
the  master  to  inquire  and  state  whetlier  a  good  title  could  be  made  to 
tlie  policy.  The  master  reported  in  favor  of  the  title.  Farebrother 
excepted  to  the  report ;  and  General  Ashley's  executors  presented  a 
petition  praying  that  the  report  might  be  confirmed  ;  and  that  Fare- 
brother  might  be  ordered  to  pay  his  purchase  money  into  court,  in 
trust  in  the  cause.  The  exceptions  and  petition  were  heard  at  the 
same  time. 

The  /Solicitor- General^  and  Mr.  Duckworth,  for  C  Farebrother. 

Assurances  are  annual  contracts  between  the  assurers  and  the  as- 
sured. Heath  had  an  interest  in  insuring  his  own  life  ;  but  when  it 
became  a  contract  between  Hodsoll  and  the  office,  Hodsoll  had  no  in- 
terest, and  therefore  it  was  void;  or,  at  all  events,  he  had  no  interest 
beyond  the  5^  paid  by  him  as  the  consideration  for  the  assignment. 
Godsall  V.  Boldero,  9  East,  72.  If  a  person  having  an  interest  in  a 
life,  insures  it,  and  then  sells  the  policy,  and  afterwards  his  interest 
in  the  life  ceases,  the  assignee  would  not  be  able  to  recover  a  single 
sliilliug  upon  the  policy.  Next,  it  is  not  disputed  that  the  assignment 
by  Heath  to  Hodsoll  was  voluntary  ;  and,  therefore,  Heath's  creditors 
would  be  entitled  to  set  it  aside  at  any  time. 

Mr.  Pepys  and  Mr.  Parker,  for  the  petitioners. 

The  Vice-Chancellor.^  Unless  this  transaction  is  affected  by  the 
act  of  Parliament,  no  objection  can  be  made  to  it.     By  the  14th  Geo. 

1  Sir  E.  B.  SuGUEN.  — Ed. 

2  Sir  Lancelot  Shadwei-l.  —  Ed. 


SECT.  III.]  WARNOCK   V.    DAVIS.  1143 

ITT.  c.  48,  it  is  enacted,  etc.  [His  Honor  here  read  the  three  first  sec- 
tions of  14  Geo.  III.  e.  48.]  Now  there  is  not  a  word  said  here  as  to 
the  assignment  of  policies.  This  policy  was  good  at  the  time  it  was 
effected.  B}-  an  instrument  of  the  10th  of  March,  1810,  an  assign- 
ment of  it  was  made ;  and,  subsequently,  the  parties  who  had  become 
entitled  to  the  policy,  sold  it  for  a  valuable  consideration,  under  a 
decree  of  the  court ;  so  that  some  person  became  entitled  to  bring  an 
action  on  the  policy,  in  the  name  of  the  assured;  and  if  such  an  action 
had  been  brought,  there  is  not  a  word  in  the  act  of  Parliament  to  de- 
feat it.  The  question  is  whethei-  the  dealing  with  the  policy  lias  been 
such  as  that  a  court  of  equity  would  compel  the  assured  to  permit  the 
assignee  to  use  his  name  in  bringing  an  action  on  the  polic}-.  It  ap- 
pears to  me  that  a  purchaser  for  valuable  consideration  is  entitled  to 
stand  in  the  place  of  the  original  assignor,  so  as  to  bring  an  action  in 
his  name  for  the  sum  insured.^ 

The  case  cited  is  not  applicable ;  for  there  the  action  was  brought 
by  the  assured ;  and,  at  the  time  of  the  action  brought,  his  interest 
bad  ceased ;  and  therefore  it  came  within  the  third  section  of  the  act 
of  Parliament. 


WARNOCK  V.   DAVIS. 
Supreme  Court  of  the  United  States,    1881.     104  U.  S.  775.^ 

Error  to  the  Circuit  Court  of  the  United  States  for  the  Southern 
District  of  Ohio. 

This  was  an  action  b}-  Warnock,  administrator  of  the  estate  of 
Grosser,  deceased,  against  Davis  and  others,  partners,  doing  business 
under  the  name  of  the  Scioto  Trust  Association,  for  part  of  the  pro- 
ceeds of  a  policy  in  the  Protection  Life  Insurance  Company,  issued  to 
Grosser  on  his  own  life,  and  by  Grosser  assigned  to  the  defendants. 

Grosser  applied  for  this  polic}'  on  Februarj-  27,  1872  ;  and  on  the 
same  day  he  entered  into  a  written  agreement  with  the  Scioto  Tiust 
Association,  to  the  following  effect :  — 

"  This  agreement,  V)y  and  between  Henry  L.  Grosser,  of  the  first 
part,  27  years  old,  tanner  b}-  occupation,  residing  at  town  of  Spring- 
ville,  count}'  of  Greenup,  State  of  Kentucky,  and  the  Scioto  Trust 
Association,  of  Portsmouth.  Ohio,  of  the  second  part,  witnesses  :  Said 
party  of  the  first  part  having  this  day  made  application  to  the  Protec- 
tion Life  Insurance  Company,  of  Chicago,  Illinois,  for  policy  on  his 
life,  limited  to  tlie  amount  of  $5,000.00,  hereby  agrees  to  and  with 
the  Scioto  Trust  Association  that  nine-tenths  of  the  amount  due  and 
payable  on  said  policy  at  the  time  of  the  death  of  the  party  of  the  first 

1  Brown  v.  Carter,  5  Ves.  862;  Prodgers  v.  Langham,  1  Sid.  13.3.  —  Rep. 

2  The  statement  has  been  rewritten.  —  Ed. 


1144  WARNOCK    V.    DAVIS.  [CHAP.  XII. 

part  shall  be  the  absolute  property  of,  and  be  paid  b}-,  said  Protection 
Life  Insurance  Company  to  said  Scioto  Trust  Association,  and  shall 
by  said  party  of  the  first  part  be  assigned  and  transferred  to  said 
Scioto  Trust  Association,  and  the  remaining  one-tenth  part  thereof 
shall  be  subject  to  whatever  disposition  said  party  of  the  first  part 
shall  make  thereof  in  his  said  transfer  and  assignment  of  said  policy  ; 
that  the  polic}'  to  be  issued  on  said  application  shall  be  delivered  to 
and  forever  held  by  said  Scioto  Trust  Association,  said  part}'  of  the 
first  part  hereb}-  waiving  and  releasing  and  transferring  and  assigning 
to  said  Scioto  Trust  Association  all  liis  right,  title,  and  interest  what- 
ever in  and  to  said  policy,  and  the  moneys  due  and  payable  tliereon  at 
the  time  of  his  death,  save  and  except  the  one-tenth  part  of  such 
moneys  being  subject  to  his  disposition  as  aforesaid  ;  also,  to  keep  tlie 
Scioto  Trust  Association  constant!}'  informed  concerning  his  residence, 
post-oflSce  address,  and  removals  ;  and  further,  that  said  party  of  the 
first  part  shall  pay  to  the  said  Scioto  Trust  Association  a  fee  of  $6.00 
in  hand  on  the  execution  and  deliver}'  of  this  agreement,  and  annual 
dues  of  82.50,  to  be  paid  on  the  first  of  July  of  every  year  hereafter, 
and  that  in  default  of  such  payments  the  amounts  due  by  him  for  fees 
or  dues  shall  be  a  lien  on  and  be  deducted  from  his  said  one-tenth 
part. 

"In  consideration  whereof  the  said  Scioto  Trust  Association,  of  the 
second  part,  agrees  to  and  with  said  party  of  the  first  part  to  keep  up 
and  maintain  said  life  insurance  at  their  exclusive  expense,  to  pay  all 
dues,  fees,  and  assessments  due  and  payable  on  said  policy,  and  to 
keep  said  party  of  the  first  part  harmless  from  the  payment  of  such 
fees,  dues,  and  assessments,  and  to  procure  the  payment  of  one-tenth 
part  of  the  moneys  due  and  payable  on  said  policy  after  the  death  of 
said  party  of  the  first  part,  when  obtained  from  and  paid  by  said  Pro- 
tection Life  Insurance  Company,  to  the  party  or  parties  entitled  thereto, 
according  to  the  disposition  made  thereof  by  said  party  of  the  first  part 
in  his  said  transfer  and  assignment  of  said  policy,  subject  to  the  afore- 
said lien  and  deduction. 

"It  is  hereby  expressly  understood  and  agreed  by  and  between  the 
parties  hereto,  that  said  Scioto  Trust  Association  do  not  in  any  manner 
obligate  themselves  to  said  party  of  the  first  part  for  the  performance 
by  said  Protection  Life  Insurance  Company  of  its  promises  or  obliga- 
tions contained  in  the  policy  issued  on  the  application  of  said  party  of 
the  first  part  and  herein  referred  to. 

"Witness  our  hands,  this  27th  day  of  February,  A.  D.  1872. 

"  Henry  L.  Grosser. 
"  The  Scioto  Trust  Association, 
"  By  A.  McFarland,  President, 
"George  DavIs,  Treasurer" 

The  policy  was  issued  to  Grosser  on  the  same  day,  and  on  the  next 
day  he  executed  a  written  assignment  to  the  Scioto  Trust  Association, 
in  accordance  with  the  terms  of  the  agreement. 


SECT.  III.]  WARNOCK   V.    DAVIS.  1145 

Grosser  died  on  September  11,  1873.  The  Scioto  Trust  Association 
collected  the  amount  of  the  policy,  and  paid  one-tenth,  less  certain 
charges  provided  for  in  the  agreement,  to  Crosser's  widow,  in  ac- 
cordance with  the  disposition  made  by  Grosser  in  the  instrument  of 
assignment. 

Tins  action  was  brought  for  the  remainder  of  the  amount  of  the 
policy.  The  answer  was  composed  of  three  defences.  The  first  de- 
fence was  a  general  allegation  of  assignment  for  valuable  considera- 
tion ;  and  the  other  defences  contained  the  agreement  and  the 
assignment.  The  case  was  tried  without  the  intervention  of  a  jury ; 
and  the  evidence  consisted  of  the  policy,  the  agreement  and  assign- 
ment, the  proofs  of  death,  and  the  Scioto  Trust  Association's  receipt 
for  the  amount  of  the  policy.  The  court  found  for  the  defendants  ; 
whereupon  the  plaintiff  excepted,  and,  after  entry  of  judgment  for  the 
defendants,  brought  the  case  to  this  court  for  review. 

Mr.  J'.  B.  Foraker^  for  the  plaintiff  in  error. 

Mr.  A.  C.  Thompson^  for  the  defendants  in  error. 

Mr.  Justice  Field,  after  stating  the  facts,  delivered  the  opinion  of 
the  court,  as  follows  :  — 

As  seen  from  the  statement  of  the  case,  the  evidence  before  the 
court  was  not  conflicting,  and  it  was  only  necessary  to  meet  the  gen- 
eral allegations  of  the  first  defence.  All  the  facts  established  by  it 
are  admitted  in  the  other  defences.  The  court  could  not  have  ruled 
in  favor  of  the  defendants  without  holding  that  the  agreement  between 
the  deceased  and  the  Scioto  Trust  Association  was  valid,  and  that  the 
assignment  transferred  to  it  the  right  to  nine-tenths  of  the  money  col- 
lected on  the  policy.  For  alleged  error  in  these  particulars  the  plaintiff 
asks  a  reversal  of  the  judgment. 

The  policy  executed  on  the  life  of  the  deceased  was  a  valid  contract, 
and  as  such  was  assignable  by  the  assured  to  the  association  as  security 
for  any  sums  lent  to  him,  or  advanced  for  the  premiums  and  assess- 
ments upon  it.  But  it  was  not  assignable  to  the  association  for  any 
other  purpose.  The  association  had  no  insurable  interest  in  the  life  of 
the  deceased,  and  could  not  have  taken  out  a  policy  in  its  own  name. 
Such  a  policy  would  constitute  what  is  termed  a  wager  policy,  or  a 
mere  speculative  contract  upon  the  life  of  the  assured,  with  a  direct 
interest  in  its  early  termination.^  .  .  . 

The_assignment  of  a  policy  to  a  party  not  having;  an  insurable  inter- 
est is  as  objectionable  as  the  takijTg  out  of  a  policy  in  his  name.  Nor 
is  its  character  changed  becauseit  is  for  a  portion  merely  of  the  in- 
surance money.  To  the  extent  in  which  the  assignee  stipulates  for  the 
proceeds  of  the  policy  beyond  the  sums  advanced  by  him,  he  stands  in 
the  position  of  one  holding  a  wager  policj*.  The  law  might  be  rcadil}' 
evaded,  if  the  policy,  or  an  interest  in  it,  could,  in  consideration  of 
paying  the  premiums  anrl  assessments  upon  it,  and  the  promise  to  paj- 
upon  the  death  of  the  assured  a  portion  of  its  proceeds  to  his  represen- 

1  The  passage  here  omitted  will  be  fouad  ante,  p.  118,  n,  — Ed. 


1146  WARNOCK    V.    DAVIS.  [CIIAP.  XII. 

tatives,  be  transferred  so  as  to  entitle  the  assignee  to  retain  the  whole 
insurance  money. 

Tlie  question  here  presented  has  arisen,  un'.icr  somewhat  different 
circumstances,  in  several  of  the  State  courts  ;  and  there  is  a  conflict  in 
their  decisions.^  .  .  . 

Altliougli  tlie  agreement  between  the  Trust  Association  and  the 
assured  was  invaUd  as  far  as  it  provided  for  an  absolute  transfer  of 
nine-tenths  of  tlie  proceeds  of  the  polic}'  upon  tlie  conditions  named,  it 
was  not  of  that  fraudulent  kind  with  respect  to  which  the  courts  regard 
the  parties  as  alike  culpable  and  refuse  to  interfere  with  the  results  of 
their  action.  No  fraud  or  deception  upon  any  one  was  designed  by 
the  agreement,  nor  did  its  execution  involve  any  moral  turpitude.  It 
is  one  which  must  be  treated  as  creating  no  legal  riglit  to  the  proceeds 
of  the  policy  beyond  the  sums  advanced  ujion  its  security  ;  and  the 
courts  will,  therefore,  hold  the  recipient  of  the  moneys  beyond  those 
sums  to  account  to  the  representatives  of  the  deceased.  It  was  lawful 
for  the  association  to  advance  to  the  assured  the  sums  payable  to  the 
insurance  company  on  the  polic}'  as  they  became  due.  It  was,  also, 
lawful  for  the  assured  to  assign  the  polic}'  as  security-  for  their  pay- 
ment. The  assiarnraent  was  oiilv  invalid  as  a  transfer  of  the  i^rocoods 
of  the  polic}'  beyond  what  was  required  to  refund  those  sums,  with  in- 
terest. 'So  holoTit  valid  for  the  whole  proceeds  would  be  to  sanction 
speculative  risks  on  human  life,  and  encourage  the  evils  for  which 
wager  policies  are  condemned. 

The  decisions  of  the  New  York  Court  of  Appeals  are,  we  are  aware, 
opposed  to  this  view.  They  hold  that  a  valid  polic}'  of  insurance 
effected  by  a  person  upon  his  own  life,  is  assignable  like  an  ordinary 
chose  in  action,  and  that  the  assignee  is  entitled,  upon  the  death  of  the 
assured,  to  the  full  sum  payable  without  regard  to  the  consideration 
given  b}-  him  for  the  assignment,  or  to  his  possession  of  an}'  insurable 
interest  in  the  life  of  the  assured.  St.  John  v.  American  Mutual  Life 
Insurance  Compan}-,  13  N.  Y.  31  ;  Valton  v.  National  Loan  Fund  Life 
Assurance  Company,  20  N.  Y.  32.  In  the  opinion  in  the  first  case  the 
court  cite  Ashlc}'  v.  Ashle}',  3  Sim.  149,  in  support  of  its  conclusions; 
and  it  must  be  admitted  that  they  are  sustained  by  many  other  adjudi- 
cations. But  if  there  be  any  sound  reason  for  holding  a  polic}-  invalid 
when  taken  out  by  a  party  who  has  no  interest  in  the  life  of  the  as- 
sured, it  is  difficult  to  see  wh}'  that  reason  is  not  as  cogent  and  opera- 
tive against  a  part}'  taking  an  assignment  of  a  policy  upon  the  life  of 
a  person  in  which  he  has  no  interest.  The  same  ground  which  invali- 
dates the  one  should  invalidate  the  other  —  so  far,  at  least,  as  to  restrict 
the  right  of  the  assignee  to  the  sums  actually  advanced  by  him.  In  the 
conflict  of  decisions  on  this  subject  we  are  free  to  follow  those  which 
seem  more  fully  in  accord  with  the  general  policy  of  the  law  against 
speculative  contracts  upon  human  life. 

1  Here  were  stated  Franklin  L.  Ins.  Co.  v.  Hazzard,  41  Ind.  116  (1872),  and  Stevens 
r.  Warren,  101  Mass.  564  (1869).— Ed. 


SECT.  III.]  MUTUAL   LIFE    INS.    CO.   V.    ALLEN.  1147 

In  this  conclusion  we  are  supported  bj'  the  decision  in  Cammack  v. 
Lewis,  15  Wall.  643.  There  a  policy  of  life  insurance  for  $3,000,  pro- 
cured b}'  a  debtor  at  the  suggestion  of  a  creditor  to  whom  he  owed  $70, 
was  assigned  to  the  latter  to  secure  the  debt,  upon  his  promise  to  pay 
the  premiums,  and,  in  case  of  tlie  death  of  the  assured,  one-third  of 
the  proceeds  to  his  widow.  Ou  the  death  of  the  assured,  the  assignee 
collected  the  money  from  the  insurance  company  and  paid  to  the  widow 
S950  as  her  proportion  after  deducting  certain  payments  made.  The 
widow,  as  administratrix  of  the  deceased's  estate,  subsequently  sued 
for  the  balance  of  the  money  collected,  and  recovered  judgment.  The 
case  being  brought  to  this  court,  it  was  held  that  the  transaction,  so 
far  as  the  creditor  was  concerned,  for  the  excess  beyond  the  debt  owing 
to  him,  was  a  wagering  policy,  and  that  the  creditor,  in  equity  and 
good  conscience,. should  hold  it  only  as  security  for  what  the  debtor 
owed  him  when  it  was  assigned,  and  for  such  advances  as  he  might 
have  afterwards  made  on  account  of  it ;  and  tliat  the  assignment  was 
valid  only  to  that  extent.  This  decision  is  in  harmony  witli  the  views 
expressed  in  tliis  opinion. 

The  judgment  of  the  court  below  will,  therefore,  be  reversed,  and 

the  cause  remanded  with  direction  to  enter  a  judgment  for  the  plaintiff 

for  the  amount  collected  from   the  insurance  company,  with  interest, 

after  deducting   the  sum   already  paid  to  the  widow,  and  the  several 

sums  advanced  by  the  defendants  ;  and  it  is 

So  ordered} 


MUTUAL  LIFE  INS.  CO.  v.  ALLEN  and  Another. 
Supreme  Judicial  Court  of  Massachusetts,  1884.     138  Mass.  24. 

Bill  of  interpleader,  filed  October  22,  1881,  by  a  corporation  organ- 
ized under  tlie  laws  of  the  State  of  New  York,  against  George  Allen  and 
Catherine  Fellows,  to  determine  which  of  the  defendants  was  entitled 
to  the  proceeds  of  a  policy  of  insurance,  issued  by  tlie  plaintiff  on  July 
25,  1855,  upon  the  life  of  Israel  Fellows,  in  the  sum  of  $12,000.  The 
bill  alleged  the  following  facts  :  — 

By  the  terms  of  tlie  policy  it  was  issued  "  for  the  sole  use  of  Cath- 
erine Fellows,"  and  the  plaintiff  promised  and  agreed  ''to  and  with  tlie 
said  assured,  her  executors,  administrators,  and  assigns,  well  and  truly 
to  pay,  or  cause  to  be  paid,  the  said  sum  insured  to  the  said  assured, 
her  executors,  administrators,  or  assigns,  for  her  sole  use,  within  sixty 
days  after  due  notice  and  proof  of  the  death  of  the  said  Israel  Fellows. 
And,  in  case  of  the  death  of  the  said  Catherine  Fellows  before  the  de- 

1  See  Helraetag  ;;  Miller,  76  Ala,  183  (1881) ;  Roller  v.  Moore,  86  Va.  512  (1889)  ; 
Cawthon  v.  Perry,  76  Tex.  383  (1890)  ;  Hays  v.  Lepeyre,  48  La.  Ann.  749  (1896).— 
Ed. 


114S  MUTUAL   LIFE    INS.    CO.    V.    ALLEN.  [CIIAP.  XII. 

cease  of  the  said  I.  Fellows,  the  amount  of  the  said  insurance  shall 
be  payable  after  her  death  to  her  children,  for  their  use,  or  to  their 
guardian,  if  under  age,  within  sixty  days  after  due  notice  and  proof  of 
the  death  of  the  said  I.  Fellows,  as  aforesaid."  The  policy  also  con- 
tained this  clause:  "  N.  B.  If  assigned,  notice  to  be  given  to  this 
company."  ^ 

On  January  1,  1881,  Israel  Fellows,  Catherine  Fellows,  and  their 
two  children,  who  were  then  of  age,  by  two  instruments  in  writing 
under  their  hands  and  seals,  duly  executed  and  delivered  in  this  Com- 
monwealth, assigned  and  transferred  the  policy  of  insurance  to  the 
defendant  Allen,  together  with  all  their  respective  claims  and  demands 
under  the  same.^ 

On  March  7,  1881,  Israel  Fellows  died,  leaving  his  widow,  Catherine 
Fellows,  surviving  him.  Proof  of  his  death  was  duly  made.  His 
widow  made  a  demand  upon  the  plaintiff  for  the  payment  of  the  policy, 
and  brought  an  action  upon  the  policy  in  the  Supreme  Court  in  New 
York. 

In  August,  1881,  Allen  also  brought  an  action  on  the  policy  in  this 
Commonwealth,  in  the  name  of  Catherine  Fellows,  for  his  own  benefit. 

The  answer  of  Allen  admitted  the  allegations  of  the  bill ;  and  averred 
that  Allen  bought  the  policy  for  a  good  and  valuable  consideration. 

The  answer  of  Mrs.  Fellows  admitted  the  allegations  of  the  bill ;  and 
averred  that  the  assignment  was  invalid  under  the  laws  of  the  State  of 
New  York,  and  that  Allen  had  no  insurable  interest  in  the  life  of  Israel 
Fellows. 

The  case  was  heard  by  Holmes,  J.,  who  reported  it  for  the  consid- 
eration of  the  full  court,  in  substance  as  follows :  — 

The  plaintiff  paid  the  money  into  court.  The  policy  was  delivered 
by  the  plaintiff  in  this  Commonwealth.  At  that  time,  and  when  the 
assignment  was  made,  the  law  of  New  York  was  as  set  forth  in  the 
Laws  of  1840,  c.  80,'  and  in  the  cases  of  Eadie  v.  Slimmon,  26  N.  Y.  1, 
and  Barry  v.  Equitable  Assur.  Society,  59  N.  Y.  587. 

"  The  amount  of  premium  annually  paid  upon  the  policy  did  not 
exceed  $300.     There  was  some  evidence  that  the  defendant  Fellows 

1  The  policy  was  signed  by  the  president  and  secretary,  but  the  place  of  signing 
was  not  stated  in  the  policy,  in  the  pleadings,  or  in  the  report  o£  the  case ;  nor  did  the 
policy  state  where  the  sum  insured  was  to  be  paid.  —  Rep. 

2  The  substance  of  these  assignments  is  stated  in  the  opinion.  —  Rep. 

8  "  Section  1.  It  shall  be  lawful  for  any  married  woman,  by  herself,  and  in  her 
name,  or  in  the  name  of  any  third  person,  with  his  assent,  as  her  trustee,  to  cause  to 
be  insured,  for  her  sole  use,  the  life  of  her  husband  for  any  definite  period,  or  for  the 
term  of  his  natural  life  ;  and  in  case  of  her  surviving  her  husband,  the  sum  or  net 
amount  of  the  insurance  becoming  due  and  payable  by  the  terms  of  the  insurance, 
shall  be  payable  to  her,  to  and  for  her  own  use,  free  from  the  claims  of  the  represen- 
tatives of  her  husband,  or  of  any  of  his  creditors ;  but  such  exemption  shall  not  apply 
where  the  amount  of  premium  annually  paid  shall  exceed  -$300. 

"  Section  2.  In  case  of  the  death  of  the  wife,  before  the  decease  of  her  husband, 
the  amount  of  the  assurance  may  be  made  payable  after  her  death  to  her  children  for 
their  use,  and  to  their  guardian,  if  under  age."  —  Rep. 


SECT.  III.]  MUTUAL   LIFE    INS.    CO.    V.   ALLEN.  1149 

did  not  expect  that  her  assignment,  although  absolute  in  form,  was  to 
be  used,  except  as  security  for  a  loan  of  81,000  to  her  husband  ;  but 
there  was  no  evidence  which  satisfied  me  that  there  was  any  restriction 
upon  his  power  to  deliver  it  as  an  absolute  transfer ;  and  I  found  that 
the  polic}'  was  assigned  in  Massachusetts  to  the  defendant  Allen  by 
the  defendant  Fellows  (both  being  then  residents  of  Massaclmsetts),  in 
consideration  of  $1,000  paid  to  her  husband  by  said  Allen,  and  the 
discharge  of  certain  notes  held  by  said  Allen  amounting  to  8470.79. 
If  the  transfer  was  valid  in  manner  and  form  as  agreed,  Allen  ceased 
from  that  moment  to  have  an  insurable  interest  in  the  life  of  said  Fel- 
lows as  a  creditor,  and  he  had  no  other." 

The  judge  ruled  that,  so  far  as  the  present  question  was  concerned, 
the  transfer  was  governed  b}-  the  law  of  Massachusetts,  and  that,  b}- 
the  law  of  Massachusetts,  it  was  not  void  for  want  of  an  insurable  in- 
terest in  the  transferee  ;  and  found  for  Allen. 

Such  decree  was  to  be  entered  as  justice  and  equity  required. 

J.  F.  Colby,  for  Allen. 

W.  S.  Slocum,  ( TF.  F.  Slocum  with  him,)  for  Mrs.  Fellows. 

W.  Allen,  J.  The  contract  of  insurance  was  made  and  was  to  be 
performed  in  this  State,  and  the  money  due  upon  it  has  been  paid  into 
court  here  ;  and  the  contract  of  assignment  was  made  in  this  State 
between  parties  domiciled  here.  The  validity  and  effect  of  the  assign- 
ment, and  the  capacity  of  the  parties  to  it,  must  be  governed  by  the 
laws  of  this  State.  The  onl}'  question  which  requires  discussion  is, 
whether,  by  that  law,  the  assignment  is  void  for  want  of  interest  of  the 
assignee  in  the  life  insured. 

The  policy,  in  consideration  of  an  annual  premium  to  be  paid  b}' 
Mrs.  Fellows,  assured  the  life  of  her  husband  for  her  sole  use,  and  for 
her  children  if  she  should  not  survive  her  husband.  The  promise  was 
to  the  assured,  her  executors,  administrators,  and  assigns.  The  policy 
contained  no  reference  to  an  assignment  except  the  following :  "  N.  B. 
If  assigned,  notice  to  be  given  to  tliis  company."  The  poUcy  was  is- 
sued in  1855.  In  1881,  an  assignment  in  the  words  following,  signed 
by  Mrs.  Fellows,  her  husband  and  children  (who  were  all  of  age),  was 
indorsed  upon  the  policy:  "I  hereby  assign,  transfer,  and  set  over 
unto  George  Allen,  of  Boston,  all  my  I'ight,  title,  and  interest  in  and 
to  the  within  policy  of  life  insurance,  and  all  right  that  may  at  any  time 
be  coming  to  me  thereon." 

A  more  formal  instrument  of  assignment,  with  a  power  of  attorney 
to  receive  "  all  sums  of  money  that  ma}'  at  any  time  hereafter  be  or 
become  due  and  payable  to  us,  or  eitlier  of  us,  by  the  terms  of  said 
policy,"  was  also  executed  by  the  same  parties.  The  policy  and  assign- 
ments were  delivered  to  the  defendant  Allen,  and  notice  thereof  given 
to  the  plaintiff.  The  consideration  of  the  assignment  was  the  payment 
of  a  sum  of  money  by  the  assignee,  and  the  discharge  of  certain  notes 
held  by  him  against  Mr.  Fellows.  It  is  to  be  assumed,  on  the  report, 
that  the  transaction  was  not,  in  the  intention  of  the  parties,  a  wagering 


1150  MUTUAL   LIFE    INS.    CO.    V.    ALLEN.  [CHAP.  XII. 

contract,  but  an  honest  and  bona  fide  sale  of  the  equitable  interest  in 
tlie  polic}'.  The  defendant  Allen  had  no  insurable  interest  in  the  life 
of  Mr.  Fellows  except  as  his  creditor,  and  that  interest  ceased  when  he 
ceased  to  be  a  creditor  by  accepting  the  assignment  in  satisfaction  of 
his  debt,  so  that  he  is  in  the  position  of  a  bona  fide  assignee  of  the  pol- 
ic}'  for  valuable  consideration  without  interest  in  the  life  insured,  and 
the  question  between  him  and  the  assignor  is  which  has  the  equitable 
interest  in  the  policy. 

The  policy  is  a  common  form  of  what  is  called  life  insurance,  and  is 
a  contract  by  which  the  insurer,  in  consideration  of  an  annual  payment 
to  be  made  by  the  assured,  promises  to  pay  to  her  a  certain  sum  upon 
the  death  of  the  person  whose  life  is  insured.  To  prevent  this  from 
being  void,  as  a  mere  wager  upon  the  continuance  of  a  life  in  which 
the  parties  have  no  interest  except  that  created  by  the  wager  itself,  it 
is  necessary  that  the  assured  should  have  some  pecuniary  interest  in 
the  continuance  of  the  life  insured.  It  is  not  a  contract  of  indemnity 
for  actual  loss,  but  a  promise  to  pay  a  certain  sum  on  the  happening 
of  a  future  event  from  which  loss  or  detriment  may  ensue,  and  if  made  in 
o-ood  faith  for  the  purpose  of  providing  against  a  possible  loss,  and  not 
as  a  cloak  for  a  wager,  is  sustained  by  any  interest  existing  at  tlie  time 
the  contract  is  made.  See  Loomis  v.  P2agle  Ins.  Co.,  6  Gray,  396,  and 
Forbes  v.  American  Ins.  Co.,  15  Gray,  249.  Mrs.  Fellows  had  an  in- 
surable interest  in  tlie  life  of  her  husband,  and  the  policy  to  her  was  a 
valid  contract  to  pay  the  sum  insured  to  her  upon  the  event  of  his 
death.  This  contract  was  a  chose  in  action  assignable  by  her.  Palmer 
V.  Merrill,  6  Cush.  282. 

The  policy  was  not  negotiable,  and  her  assignment  could  not,  in  tliis 
State,  pass  the  legal,  but  only  the  equitable,  interest  in  the  contract. 
The  assignment  was  a  contract  between  her  and  her  assignee,  to  which 
the  insurer  was  not  a  party.  It  purported  to  give  to  the  assignee  only 
the  equitat)le  interest  of  the  assignor  in  the  contract,  —  the  right  to 
recover  in  the  name  of  the  assignor  the  sum  which  should  become  duo 
to  her  under  the  contract. 

The  direction  in  the  policy,  that  notice  of  an  assignment  of  it  should 
be  given  to  the  insurer,  had  no  effect  upon  the  character  of  tlie  assign- 
ment, however,  its  operation  might  have  been  limited  had  notice  not 
been  given.  The  assent  of  the  insurer  to  the  assignment  would  not 
make  a  new  contract  of  insurance.  Its  only  effect  would  be  to  enable 
the  assignee  to  enforce  in  his  own  name,  instead  of  the  name  of  the 
assignor,  the  riglit  she  held  under  the  contract.  McCluskey  v.  Provi- 
dence Washington  Ins.  Co.,  126  Mass.  306. 

This  distinction  between  the  assignment  of  the  interest  of  the  insured 
in  a  policy,  which  is  a  contract  between  tlie  assignor  and  the  assignee 
only,  and  the  transfer  or  renewal  to  a  third  person  of  a  policy,  which 
is  a  contract  to  which  the  insurer  is  a  party,  is  illustrated  in  tlie  case 
of  fire  insurance.  That  is  strictly  a  personal  contract  of  indemnity  to 
the  assured,  and   he,  or  his  assigns  in  his  name,  can  recover  only  an 


SECT.  Ill]  MUTUAL   LIFE    INS.    CO.    V.   ALLEN.  1151 

inck'innity  for  actual  loss  to  him.  If  he  has  no  interest  in  the  property 
insured  at  tiie  time  of  the  loss,  he  can  recover  notliing,  and  if  he  parts 
^viLh  his  interest  before  a  loss,  he  bc'comes  incapacitated  to  recover  upon 
the  policy,  and  it  ceases  to  insure  anything  and  becomes  void.  ^Yilson 
V.  Hill,  3  Met.  66.  It  follows  that,  where  a  purchaser  of  insured  prop- 
erty would  have  the  benefit  of  an  unexpired  term  of  insurance,  it  must 
be  by  a  new  contract  with  the  insurer,  and  not  by  assignment  from  the 
insured.  This  is  usually  provided  for  in  the  policy,  so  that  by  its  terms 
an  assignment  by  the  insured  with  the  assent  of  the  insurer  will  con- 
tinue the  policy  to  the  purchaser  ;  but  in  such  a  case  there  is  a  new 
contract  of  insurance  with  the  purchaser  upon  his  newly  acquired  inter- 
est, and  he  becomes  the  assured.  But  the  assured  in  a  fire  policy  can, 
while  his  insurance  continues,  assign  his  rights  under  the  policy  in  the 
same  manner  as  the  insured  in  a  life  policy  can  do.  In  Fogg  v.  Middle- 
sex Ins.  Co.,  10  Cush.  337,  Chief  Justice  Shaw  says,  after  referring  to 
the  kind  of  transfer  just  mentioned:  "  But  there  is  another  species  of 
assignment,  or  transfer  it  may  be  called,  in  the  nature  of  an  assignment 
of  a  chose  in  action  ;  it  is  this  :  '  In  case  of  loss,  pay  the  amount  to 
A.  B.'  It  is  a  contingent  order  or  assignment  of  money,  should  the 
event  happen  upon  which  money  will  become  due  on  the  contract.  If 
the  insurer  assents  to  it,  and  the  event  happens,  such  assignee  may 
maintain  an  action  in  his  own  name,  because,  upon  notice  of  the  assign- 
ment, the  insurer  has  agreed  to  pay  the  assignee  instead  of  the  assignor, 
r.iit  the  original  contract  remains  ;  the  assignment  and  assent  to  it  form 
a  new  and  derivative  contract  out  of  the  original.  But  tlie  contract 
remains  as  a  contract  of  guaranty  to  the  original  assured  ;  he  must 
have  an  insurable  interest  in  the  property,  and  the  property  must  be 
his  at  the  time  of  the  loss.  The  assignee  has  no  insurable  interest, 
prima  facie,  in  the  property  burnt,  and  does  not  recover  as  the  part}' 
insured,  but  as  the  assignee  of  a  party  who  has  an  insurable  interest 
and  a  right  to  recover,  which  right  he  has  transferred  to  the  assignee, 
with  the  consent  of  the  insurers."  See  also  Phillips  v.  Merrimack  Ins. 
Co.,  10  Cush.  350. 

If  Mrs.  Fellows  had  surrendered  or  forfeited  her  policy,  and  the  con- 
tract between  her  and  the  insurer  had  become  null,  a  new  contract,  by 
which  tlie  defendant  Allen  should  have  become  the  assured  instead  of 
Mrs.  Fellows,  might  have  required  an  insurable  interest  in  him,  though 
in  the  form  of  an  assignment  and  a  renewal  or  revival  of  the  oiiginal 
policy.  But  the  original  policy  has  not  been  surrendered  or  forfeited, 
nor  the  contract  in  any  way  changed.  Mrs.  Fellows  is  still  the  assured, 
and  the  policy  is  supported  by  her  interest  in  the  life,  and  is  in  form 
payable  to  her.  If  the  assignment  is  valid,  it  is  payable  to  her  in  trust 
for  the  assignee  ;  if  void,  for  her  own  use.  In  no  respect  can  the  as- 
signment affect  the  validity  of  the  contract  of  insurance,  or  taint  that 
as  a  wagering  policy.  The  only  question  that  can  be  raised  is  as  to 
the  assignment  itself,  —  whether,  as  between  the  parties  to  it,  it  is  void 
as  a  gaming  contract. 


1152  MUTUAL   LIFE   INS.   CO.   V.    ALLEN.  [CHAP.  XIL 

That  a  right  to  receive  money  upon  the  death  of  another  is  assign- 
able at  law  or  in  equity  will  not  be  questioned.  The  right  of  Mrs.  Fel- 
lows, under  our  law,  to  assign  the  equitable  interest  in  the  polic}'  in 
question  is  not  denied  ;  but  it  is  contended  that  she  can  assign  it  only 
to  some  one  who  has  an  insurable  interest  in  the  life  of  Mr.  Fellows. 
We  find  no  reason  for  this  exceptional  limitation  of  the  right  of  assign- 
ment, which  would  allow  Mrs.  Fellows  to  assign  her  policy  to  Mr.  Fel- 
lows, or  his  creditors  or  dependant  relatives,  but  would  forbid  her  to 
pledge  it  for  her  own  debts,  or  sell  it  for  her  own  advantage.  If  there 
is  any  such  reason,  it  must  be  found  in  the  contract  of  assignment  it- 
self, and  irrespective  of  the  rule  that  the  original  contract  must  be  sup- 
ported b}'  an  interest  in  the  life  insured.  That  rule  was  satisfied. 
Whether  a  similar  rule  affects  the  contract  between  the  assignor  and 
assignee  must  depend  upon  considerations  applicable  to  that  contract 
alone. 

One  objection  urged  is,  that  it  gives  to  the  assignee  an  interest  in 
the  death  of  the  person  whose  life  is  insured,  without  a  counterbal- 
ancing interest  in  his  life.  It  is  true  that  ever}'  person  who  is  in  ex- 
pectation of  property  at  the  death  of  another  has  an  interest  in  his 
death,  but  it  does  not  follow,  and  is  not  true,  that  the  law  does  not 
allow  the  possession  and  assignment  of  such  expectations,  nor  that  an 
insurable  interest  is  required  in  a  life  insurance  for  the  purpose  of  pro- 
tecting the  life  insured.  The  objection  applies  with  equal  force  to  the 
assignment  of  a  provision  made  for  one  upon  the  death  of  another  by 
deed  or  will  as  to  the  assignment  of  a  like  provision  in  the  form  of  a 
life  insurance. 

The  other  objection  urged  is,  that  such  transactions  ma}'  lead  to 
gaming  contracts.  This  does  not  meet  the  question,  which  is  whether 
such  an  assignment  is  in  itself  illegal  as  a  wagering  contract.  Most 
contracts  have  an  element  of  gambling  in  them.  There  is  uncertainty 
in  the  value  of  any  contract  to  deliver  property  at  a  future  da}-,  and 
great  uncertainty'  in  the  present  value  of  an  annuit}'  fcH*  a  particular 
life,  or  of  a  sum  payable  in  the  event  of  a  particular  death,  and  such 
contracts  and  rights  are  often  used  for  gambling  purposes.  The  ques- 
tion is  whether  the  right  to  a  sum  of  money,  payable  on  the  death  of  a 
person  under  a  contract  in  the  form  of  an  insurance  policy,  has  any 
special  character  or  quality  which  renders  it  less  assignable  than  the 
right  to  a  sum  payable  at  the  death  of  the  same  person  under  any  other 
contract  or  assurance,  or  than  a  remainder  in  real  estate  expectant  on 
such  death.  We  see  nothing  in  the  contract  of  life  insurance  which 
will  prevent  the  assured  from  selling  his  right  under  the  contract  for 
his  own  advantage,  and  we  are  of  opinion  that  an  assignment  of  a 
policy  made  by  the  assured  in  good  faith  for  the  purpose  of  obtaining 
its  present  value,  and  not  as  a  gaming  risk  between  him  and  the  as- 
signee, or  a  cover  for  a  contract  of  insurance  between  the  insurer  and 
the  assignee,  will  pass  the  equitable  interest  of  the  assignor;  and  that 
the  fact  that  the  assignee  has  no  insurable  interest  in  the  life  insured 


SECT.  III.]  MUTUAL    LIFE    INS.    CO.    V.    ALLEN".  1153 

is  neither  conclusive  nor  2')^-ima  facie  evidence  that  the  transaction  is 
illegal.  1  .  .  . 

The  general  rule  laid  down  in  Stevens  v.  Warren,  101  Mass.  564, 
"  that  no  one  can  have  an  insurance  upon  the  life  of  another,  unless  he 
has  an  interest  iu  the  continuance  of  that  life,"  and  from  which  the 
inference  that  an  assignee  of  a  party  must  have  an  insurable  interest 
seems  to  have  been  drawn,  we  think,  is  not  stricth'  accurate,  or  may 
be  misleading.  An  insurable  interest  in  the  assured  at  the  time  the 
policy  is  taken  out  is  necessary  to  the  validity  of  the  policy,  but  it  is 
not  necessary  to  the  continuance  of  the  insurance  that  the  interest 
should  continue  ;  if  the  interest  should  cease,  the  policy  would  con- 
tinue, and  the  insured  would  tlien  have  an  insurance  without  interest. 
Dalby  v.  India  &  London  Assur.  Co..  15  C.  B.  365,  and  Law  v.  London 
Policy  Co.,  1  Kay  &  Johns.  223,  cited  in  Loomis  v.  Eagle  Ins.  Co., 
6  Gray,  396  ;  Connecticut  Ins.  Co.  v.  Schaefer,  94  U.  S.  457  ;  Rawls  v. 
American  Ins.  Co.,  27  X.  Y.  282  ;  Provident  Ins.  Co.  v.  Baum,  29  Ind. 
236.  The  value  and  permanency  of  the  interest  is  material  onl}-  as 
bearing  on  the  question  whether  the  policy  is  taken  out  in  good  faith, 
and  not  as  a  gambling  transaction.  If  valid  in  its  inception,  it  will 
not  be  avoided  by  the  cessation  of  the  interest.  The  mere  fact  that 
the  assured  himself  has  no  interest  in  the  life  does  not  avoid  or  annul 
the  polic}-. 

We  think  that  the  second  ruling  was  correct,  and  that  the  fact  that 
the  assignee  bad  no  insurable  interest  in  the  life  does  not  avoid  the 
assignment.  It  is  one  circumstance  to  be  regarded  in  determining  the 
character  of  the  transaction,  but  is  not  conclusive  of  its  illegality. 

Decree  for  the  defendant  Allen.^ 

1  Passages  discussing  the  authorities  have  been  omitted.  —  Ed. 

2  Ace:  St.  John  v.  American  Mut.  L.  Ins.  Co.,  2  Uuer,  419  (18.53),  s.  c.  affirmed, 
13  X.  Y.  31  (1855) ;  Chirk  i'.  Allen,  11  R.  I.  439  (1877) ;  Eckel  v.  Renner,  41  Ohio  St. 
232  (1884),  (where  the  assignment  was  without  consideration)  ;  Bursinger  v.  Bank  of 
Watertown,  67  Wis.  7o  (1886);  Murphy  v.  Red,  64  Miss.  614  (1887);  Fitzpatrick  r. 
Hartford  L.  &  Annuity  Ins.  Co.,  56  Conn.  116  (1888);  Souder  v.  Home  Friendly  So- 
ciety, 72  Md.  511  (1890);  Nye  v.  Grand  Lodge,  9  Ind.  App.  131  (1893) ;  Steiuback  i: 
Diepenbrock,  158  N.  Y.  24  (1899)  ;  Chamberlain  i-.  Butler,  86  N.  W.  Rep.  481  (Neb., 
1901). 

Contra  :  Missouri  Valley  Ins.  Co.  v.  Sturges,  18  Kans.  93  (1877)  ;  Basye  v.  Adams, 
81  Ky.  368  (1883) ;  Gilbert"  v.  Moose,  104  Pa.  74  (1883)  ;  Downey  v.  Hoffer,  110  Pa. 
109  (1885)  ;  Alabama  Gold  L.  Ins.  Co.  v.  Mobile  Mut.  Ins.  Co.,  81  Ala.  329  (1886)  ; 
Missouri  Valley  L.  Ins.  Co.  v.  McCrum,  36  Kans.  146  (1887)  ;  Price  v.  Knights  of 
Honor,  68  Tex.' 361  (1887) ;  Cawthon  v.  Perry,  76  Tex.  383  (1890). 

But  see  Cheeves  i-.  Anders,  87  Tex.  287  (1894);  McHale  v.  McDonnell,  175  Pa. 
632,  646  (1896). 

On  what  constitutes  an  assignment,  see  Hamilton  v.  Baldwin,  15  Beav.  232  (1852) ; 
Hewins  v.  Baker,  161  Mass.  320  (1894).  —  Ed. 


73 


1154  LEMON    V.    PHOENIX   MUTUAL   LIFE    INS.    CO.       [CHAP.  XIL 


SECTION    III.    {continued). 
(B)  Beneficiaries. 

LEMON  V.   PHCENIX  MUTUAL  LIFE  INS.  CO.  and  Another. 
Supreme  Court  of  Connecticut,   1871.     38  Conn.  294. 

Bill  in  equity  to  compel  the  Phoenix  Mutual  Life  Insurance  Com- 
pan}-  to  pa}'  to  the  petitioner  the  amount  of  a  polic}-  of  life  insurance  ; 
brought  to  the  Superior  Court,  and  referred  to  a  committee  who  found 
the  following  facts  :  — 

On  the  1st  of  Januars',  1868,  the  respondents,  the  Phoenix  Mutual 
Life  Insurance  Compan}-,  a  corporation  established  by  this  State,  were 
doing  business  by  their  agent  in  this  State  and  in  Canada,  and  have  so 
continued  to  do  business  ever  since.  On  the  9th  of  January,  1868, 
George  C.  Peterson,  of  Canada,  made  application  to  the  compan}-, 
through  their  agents  at  Montreal,  for  a  policy  of  insurance  on  his  life, 
termed  an  endowment  policy,  payable  at  fifty  years  of  age,  or  at  his 
death  if  earlier.  On  the  13th  of  January,  1868,  in  pursuance  of  this 
application,  the  company  issued  a  policy  upon  Peterson's  life  for  $3,000, 
payable  to  himself,  which  was  sent  to  the  company's  agent  at  Montreal 
for  his  counter-signature  and  delivery  to  the  assured.  In  November, 
1868,  Peterson  ap])lied  to  the  Montreal  agents  to  have  his  policy  changed 
and  made^ payable  to  the  petitioner,  but  made  no  new  application,  nor 
did  the  com^gjjj'  ever  make  any  new  examination  of  Peterson,  nor  was 
his  l>P!Tlili__snfJ2_iis  in  pnnble  him  to  pass  the  neccssarv  medical  examj- 
nation  for  ajiew  policy  in  November,  1868,  or  afterwards. 

The^agents  wrote  to  the  company  on  the  24:th  of  November,  and  im- 
mediateh"  as  is  supposed  after  Peterson's  request,  returning  the  policy, 
saying  that  Peterson  "  wants  a  policy  payable  to  Miss  Elizabeth  Lemon, 
Stamford,  Ontario."  The  company  on  the  27th  of  November  wrote  a 
new  policy  payable  to  the  petitioner,  bearing  the  same  date  and  number 
and  for  the  same  amount  as  the  original  policy,  which  they  cancelled. 
This  polic}'  was  duly  sent  to  the  company's  agents  at  Montreal,  where 
it  remained  until  the  15th  of  Deceml)er,  1868.  Peterson  requested  the 
agents  to  forward  the  policy'  to  Charles  Lemon,  the  brother  of  the  peti- 
tioner. He  also  wrote  to  Lemon  that  he  had  done  so  ;  and  the  agents 
forwarded  the  policy  to  Charles  Lemon  on  the  loth  of  December,  1868. 
Peterson  also  informed  Miss  Lemon  of  what  he  had  done.  Peterson 
went  south  for  his  health,  which  was  failing,  starting  November  30, 
1868,  nor  was  he  able  to  do  business  after  tliat  time  until  his  death. 
Lemon  received  the  policy  in  the  ordinary*  course  of  the  mails,  probably 
on  the  16th  or  17th  of  December.  On  tlie  16tli  of  December,  1868, 
Peterson  wrote  from  Aiken,  South  Carolina,  to  the  agents  at  Montreal, 


SECT.  III.]         LEMON    V.    PHCENIX    MUTUAL   LIFE   INS.   CO.  1155 

asking  them  to  have  his  polic}-  changed  from  the  favor  of  Miss  Eliza- 
beth Lemon  to  that  of  his  brother  Peter  Alexander  Peterson,  Stamford, 
Ontario,  saying,  '-After  the  policy  is  changed  please  return  the  same 
to  Mr.  Geo.  P.  MacPherson,  who  will  hand  you  this  with  the  policy." 
George  Peterson  sent  a  letter  to  Lemon  from  Aiken,  dated  December  14, 
1868,  saying,  ''Please  send  the  policy  I  advised  you  would  be  sent  to 
you  to  George  P.  MacPherson,  Montreal."  Lemon  sent  the  policy  to 
MacPherson  forthwith,  and  MacPherson  took  it  to  the  agents,  who  sent 
it  to  the  home  office. 

The  company  in  January,  18G9,  on  surrender  to  them  of  Lemon's 
policy,  cancelled  it,  and  wrote  another  policy  numbered  and  dated  as 
the  others  had  been,  and  similar  to  the  Lemon  polic}',  excepting  that 
Peter  A.  Peterson's  name  appeared  in  the  place  of  Miss  Lemon's.  Miss 
Lemon  had  no  knowledge  of  the  transfer  to  Peter  A.  Peterson,  and  gave 
no  consent  thereto.  Charles  Lemon  had  no  knowledge  of  the  transfer 
until  after  George  Peterson's  death.  Before  the  first  change  in  the 
policy,  when  Peterson  had  expressed  to  Lemon  his  intention  of  changing 
it  to  her  benefit,  she  suggested  to  him  the  propriety  of  giving  it  to  her 
brother.  George  C.  Peterson  died  October  19,  1869,  and  Peter  A.  Pe- 
terson furnished  due  proofs  of  his  death  to  the  corapan}'.  The  last  pol- 
icy was  found  with  George  C.  Peterson's  effects.  Peter  had  not  seea 
it  until  after  George's  death.  Neither  Charles  nor  Elizabeth  Lemon 
made  any  inquiries  about  the  policy  after  its  change  to  Peter's  favor, 
during  George's  life,  nor  did  either  of  them  pay,  or  take  any  measures 
to  pay,  the  premium  upon  it.  Miss  Lemon  and  George  C.  Peterson 
promised  marriage  to  each  other  in  1867,  which  promise  was  binding  at 
the  time  of  issuing  all  the  policies.  Miss  Lemon  had  no  other  interest 
in  George's  life.  Peter  A.  Peterson  advanced  money  to  George  to  take 
care  of  him  in  his  sickness,  and  went  south  with  him  in  November,  1868  ; 
and  George  was  in  Peter's  debt  in  November,  1868,  and  always  after- 
wards, to  a  considerable  amount,  although  not  to  the  full  amount  of  the 
policy.  George  had  the  policy  changed  from  Miss  Lemon's  benefit  to 
Peter's,  to  secure  him  for  his  existing  and  anticipated  debts,  intending 
to  make  the  policy  solely  beneficial  to  Peter,  who  relied  upon  the  policy 
for  his  securitN'  for  his  advances.  The  company  were  not  aware  that 
cither  of  the  policies  had  ever  gone  out  of  George's  possession  when 
they  wrote  the  one  beneficial  to  Peter.  Had  they  known  it,  the}-  would 
have  required,  in  addition  to  its  surrender,  a  written  assignment  from 
Miss  Lemon.  George  paid  the  two  premiums  upon  the  polic}*,  but 
Peter  furnished  him  the  money  which  he  used  to  pay  the  second  pre- 
mium. George  left  a  small  estate,  outside  of  this  policy,  not  enough 
to  pa}'  his  brother's  advances.^  .  .  . 

Peter  A.  Peterson,  who  resided  in  Canada,  was  made  a  party  to  the 
bill,  and  pursuant  to  an  order  of  court  service  was  made  on  him  by 
mail,  but  he  made  no  appearance.     The  Superior  Court  accepted  the 

^  A  passage  foreign  to  the  rights  of  the  beneficiary  has  been  omitted.  —  Ed. 


1156  LEMON   V.    PHCENIX   MUTUAL   LIFE    INS.    CO.       [CHAP.  XIL 

report  of  the  committee,  and  reserved  the  question  what  decree  should 
be  passed  for  the  advice  of  this  court. 

C.  £J.  Perkins,  for  the  petitioner. 

Goodman^  for  the  Phoenix  Mutual  Life  Insurance  Co. 

Seymour,  J.^  .  .  .  The  leading  question  in  this  case  is  whether  the 
petitioner  became  the  owner  of  this  second  policy. 

It  is  not  claimed  that  the  mere  fact  of  making  the  policy  payable  to 
Miss  Lemon,  witliout  more,  vested  in  her  a  complete  title.  It  is  con- 
ceded that  so  long  as  Mr.  Peterson  retained  it  in  liis  own  possession,  he 
might  control  it  as  his  own.  On  tlie  other  hand,  it  is  not  doubted  that, 
if  Mr.  Peterson  delivered  it  to  ]Miss  Lemon  as  a  gift  to  her,  such  deliv- 
ery would  vest  in  her  a  complete  title.  The  difficulty  in  the  case  is  in 
determining  whether,  on  the  facts  found,  tlie  policy  may  properly  be 
regarded  as  having  been  in  legal  effect  delivered  to  her.  This  is  so 
much  a  mere  matter  of  fact  that  the  committee  should  have  distinctly 
found  it  the  one  way  or  the  other,  but,  instead  of  a  direct  finding,  we 
have  a  special  statement  of  facts  bearing  on  the  question,  and  it  is  left 
to  the  court  to  decide  the  ultimate  facts,  by  inference  from  this  special 
statement.  Neither  the  petitioner  nor  the  respondent  saw  fit  to  remon- 
strate against  the  acceptance  of  the  report  of  the  committee.  On  the 
contrary,  the  report  is  accepted  without  objection  from  either  party; 
and  we  must  dispose  of  the  question  as  best  we  may  with  tlie  light  we 
have. 

First,  the  fact  that  Mr.  Peterson  caused  the  policy  to  be  made  pa}'- 
able  to  Miss  Lemon,  indicates  a  settled  purpose  in  his  mind  that  she 
should  have  the  benefit  of  it ;  and  his  acts  immediately  after  will  natu- 
rally be  construed  as  intended  to  carry  out  such  purpose.  Second,  when 
therefore  the  policy  is  by  Mr.  Peterson's  order  sent  to  Miss  Lemon's 
brother,  we  naturally  regard  it  as  sent  to  him  for  her,  as  depositary  for 
her,  and  for  her  benefit,  rather  than  as  depositary  for  Mr.  Peterson 
himself.  Third,  it  appears  from  the  committee's  report  that  the  in- 
tended change  in  the  policy  for  her  benefit  was  communicated  to  her 
before  it  was  made,  and  that  it  was  upon  her  suggestion  that  the 
policy  was  placed  in  the  hands  of  her  brother.  Fourth,  after  the  policy 
was  changed  and  made  payable  to  Miss  Lemon,  and  sent  to  her  brother, 
she  was  informed  by  Mr.  Peterson  of  what  he  had  done.  Upon  these 
considerations,  in  view  of  all  the  facts  in  the  case,  we  think  we  must 
find  that  there  was  an  executed  gift  of  the  policy  to  Miss  Lemon,  and 
that  the  delivery  to  her  brother  was  as  depositary-  for  her.  .  .  . 

It  is  clear  that  the  consideration  for  polic}'  number  three  was  the 
surrender  of  policy  number  two.  Mr.  Peterson's  health  was  such  that 
number  three  would  not  have  been  issued,  if  the  corapan}-  had  not  been 
bound  b}'  number  two.  And  inasmuch  as  policy  number  two  belonged 
to  the  petit.onor,  it  was  l\cr^propert3'  that,  wKliout  her  consent,  was  used 

^  In  reprinting  the  opinion,  passages  stating  the  facts  have  been  omitted,  as  well  as 
jKissages  on  insurable  interest  and  procedure.  —  Ed. 


SECT.  III.]  LEMON    V.    PHCENIX   MUTUAL   LIFE   INS.   CO.  1157 

to  procure  numjifi?-  tln-PP — s;hp  ig  H^erefore  egniti-'^^^ly  pntitled  to  the 
benefit  of  this  policy. 

Mr.  Peterson's  inone^-,  however,  to  the  extent  of  the  premium  paid 
in  January,  1869,  is  represented  in_jK>Iicy  number  three  ;  and  to  tliat 
extent  Miss  Lemon  has  no  interest;  and  from  the  $3,000  due  on  the 
policy  the  amount  of  that'pTemium  and  interest  on  it  sliould  be  de- 
ducted, and  the^  balance  paid  to  the  petitioner.  .  .  .  ~- 

We  advise  the  Superior  Uourt  to  pass  a  "decree  in  favor  of  the  peti- 
tioner, to  the  extent  and  in  the  manner  above  specified.  We  ought, 
however,  to  say  that  it  has  not  escaped  our  attention  tliat  the  bill  is  not 
in  its  allegations  precisely  adapted  to  the  facts  as  found  by  the  com- 
mittee, nor  precisely  to  the  grounds  upon  which  relief  is  granted.  But 
no  point  was  made  by  the  respondent  on  this  account,  and  if  any  ques- 
tion had  been  made,  we  probably  should  have  advised,  as  has  been  done 
in  similar  cases,  that  the  bill  be  amended  to  correspond  with  the  case 
as  shown  by  the  report  of  the  committee.^ 

In  this  opinion  the  other  judges  concurred;  except  Carpenter,  J., 
who  dissented. 

1  Ace:  Gosling  y.  Caldwell,  1  Lea  (Tenn),  454  (1878);  Fowler  y.  Butterly,  78  F.  Y. 
68  (1879);  Robinson  r.  Duvall,  79  Ky.  83  (1880);  Allis  v.  Ware,  28  Minn.  166(1881); 
Weisert  v.  Muehl,  81  Ky.  336  (1883) ;  Wilmaser  v.  Continental  L.  lus.  Co.,  66  Iowa, 
417  (1885) ;  Connecticut  Mut.  L.  Ins.  Co.  v.  Baldwin,  15  li.  I.  106  (1885) ;  City  Savings 
Bank.  u.  Whittle,  63  N.  H.  .')87  (1885). 

Cojitra:  Estate  of  Breitung,  78  Wis.  33  (1890). 

See  Eadie  v.  Slimmon,  26  N.  Y.  9  (1862) ;  Gould  v.  Emerson,  99  Mass.  154  (1868) 
Knickerbocker  L.  Ins.  Co.  v.  Weitz,  99  Mass.  157  (1868) ;  Chapin  v.  Fellowes,  36  Conn 
132  (1869) ;  Landrum  v.  Kuowles,  22  N.  J.  Eq.  (7  C.  E.  Green),  594  (1871) ;  Potter  v 
Spilman,  117  Mass.  322  (1875) ;  Ricker  v.  Charter  Oak  L.  Ins.  Co.,  27  Minn.  193  (1880) 
"Wilburu  y.  Wilburn,  83  Ind.  55(1882);  /n  ;e  Richardson,  47  L.  T.  Rep.N.  s.  514  (1882) 
Manhattan  L.  Ins.  Co.  t-.  Smith,  44  Ohio  St.  156  (1886) ;  National  L.  Ins.  Co.  v.  Haley 
78  Me.  268  (1886) ;  Ferdon  v.  Canfield,  104  N.  Y.  143  (1887) ;  Pingrey  v.  National  L 
Ins.  Co.,  144  Mass.  374  (1887) ;  Garner  v.  Germania  L.  Ins.  Co.,  110  N.  Y.  266  (1888) 
Central  Bank  v.  Hume,  128  U.  S.  195,  206  (1888) ;  Millard  v.  Brayton,  177  Mass.  533 
(1901). 

Compare  Miles  v.  Connecticut  Mut.  L.  Ins.  Co.,  147  U.  S.  177  (1893). 

As  to  the  certificates  of  mutual  benefit  societies,  compare  the  following  cases,  to  the 
effect  that  under  the  language  usual  in  such  certificates,  and  under  the  usual  rules  or 
statutes  governing  such  societies,  a  beneficiary  can  be  changed :  Masonic  Mut.  Benefit 
Society  v.  Burkhart,  110  Ind.  189  (1886);  Martin  v.  Stubbings,  126  111.  387  (1888); 
Supreme  Conclave  v.  Cappella,  41  Fed.  R.  1  (C.  C,  E.  D.  Mich.,  1890) ;  Smith  v.  Na- 
tional Benefit  Society,  123  N.  Y.  85  (1890) ;  Thomas  v.  Grand  Lodge,  12  Wash.  500 
(1895) ;  Schoenau  v.  Grand  Lodge,  88  N.  W.  Rep.  999  (Minn.,  1902).— Ed. 


1158  HAULEY   V.   HEIST.  [CHAP.  XII. 

\  HARLEY,    Administrator,   v.   HEIST. 

Supreme  Court  of  Indiana,  1882.     86  Ind.  196. 

From  the  Kosciusko  Circuit  Court. 

W.  Olds,  M.  Sickafoose,  and  H.  S.  Biggs,  for  appellant. 

J.  S.  Frazer  and  W.  IJ.  Frazer,  for  appellee. 

ZoLLARS,  J.  The  record  in  this  case  presents  in  different  forms  the 
following  material  facts  :  — 

On  the  1st  day  of  February,  1867,  in  consideration  of  the  payment 
of  a  premium  of  $70.20  by  David  Snyder,  and  the  same  amount  tliere- 
after  to  be  paid  annually,  the  Connecticut  Mutual  Life  Insurance 
Company  executed  and  delivered  to  said  David  Snyder  a  policy  of 
insurance  upon  his  life,  in  which  it  agreed  to  pay  $2,000  upon  due 
proof  of  his  death. 

That  portion  of  the  policy  which  is  material  to  the  parties  in  this 
controversy  is  as  follows:  "  And  the  said  compau}'  do  hereby  promise 
and  agree  with  the  said  assured,  his  heirs,  executors,  administrators, 
and  assigns,  well  and  truly  to  paj',  or  cause  to  be  paid,  at  the  cit}'  of 
Hartford,  the  said  sum  insured  to  the  said  assured,  his  executors, 
administrators,  or  assigns,  within  ninety  days  after  due  notice  and 
proof  of  the  death  of  the  said  David  Snyder,  for  the  benefit  of  and 
pa^-able  to  Wilhelmina  R.  Snyder,  wife  of  the  said  David  Snyder, 
deducting  therefrom  all  notes  taken  for  premiums  unpaid  at  that  date. 
And  it  is  hereby  conditioned  and  agreed,  that  if  at  any  time  after 
three  premiums  have  been  paid  on  this  polic}',  it  shall  be  surrendered 
while  yet  in  force,  the  company  will  issue  a  paid-up,  non-forfeiture 
policy  therefor,  for  such  an  amount  as  the  then  present  value  of  this 
policy  would  purchase,  as  a  single  premium." 

Tlie  wife,  Wilhelmina,  died  intestate  in  December,  1869,  and  left 
surviving  her,  her  husband,  David,  and  their  two  minor  children. 

On  the  20th  day  of  February,  1871,  said  David  Snyder,  being  in- 
debted to  appellee,   assigned  the  policy  to  him  by  indorsing  upon  it 

the  following :  — 

"Columbia  City,  February  20, 1S71. 

"  For  value  received,  I  herewith  assign  my  interest  to  the  within 
policy  to  Henry  Heist.  David  Snyder." 

In  the  month  of  November,  1874,  David  Snyder  died  intestate.  Up 
to  the  time  of  the  assignment  and  delivery  of  the  policy  to  appellee, 
said  David  Sn3-der  paid  the  premiums  as  stipulated  for  in  the  polic}-. 
After  the  assignment,  appellee  paid  the  premiums,  viz.  :  On  the  24th 
day  of  January,  1872,  $18.70;  on  the  24Lh  day  of  Januar}',  1873, 
$46.20  ;  and  on  the  24th  day  of  January,  1874,  $46.55. 

In  1875,  after  appellant  had  been  appointed  administrator  of  the 
estate  of  said  Wilhelmina,  the  insurance  company  filed  its  complaint  in 


SECT.  III.]  HARLEY   V.   HEIST.  1159 

the  Whitley  Circuit  Court  against  the  parties  to  this  cause,  asking  that 
they  be  required  to  set  up  their  respective  chxims  to  the  policy  and  tlie 
mone}'  due  thereon. 

After  appellee  had  filed  his  answer  and  cross  complaint,  the  insur- 
ance company-,  by  agreeinent  of  the  parties,  and  an  order  of  the  court, 
paid  to  the  clerk  §1,909.73,  being  the  amount  due  on  the  policy,  less 
an  unpaid  premium  note,  and  interest  on  the  same,  amounting  in  all  to 
8127.68.     ^Ye  are  not  informed  by  whom  this  note  was  executed. 

After  this,  the  venue  was  changed  to  the  Kosciusko  Circuit  Court. 
In  that  court  appellant  filed  his  answer  and  cross  complaint,  to  each 
paragraph  of  which,  except  the  general  denial,  a  demurrer  by  appellee 
was  sustained,  and  appellant  excepted.  The  cause  was  then  submitted 
to  the  court,  and  after  the  finding  of  facts,  and  conclusions  of  law  on 
the  same,  a  judgment  was  rendered,  giving  to  appellee  the  full  amount 
of  money  so  paid  over  by  the  insurance  company,  the  same  not 
exceeding  the  amount  of  the  premiums  paid  b}-  him  with  interest,  and 
the  amount  due  him  from  Snyder  for  which  the  policy  was  assigned. 
From  this  judgment  appellant  appeals. 

Was  the  policy  the  personal  property  of  the  wife  Wilhelmina  in  such 
a  sense  that,  upon  her  death,  it  went  to  her  heirs  at  law  as  a  part  of 
her  estate,  or  was  it  ypon  her  death  the  property  of  the  husband,  so 
that  his  assignment  transferred  the  legal  title  to  the  same  to  appellee? 
This  is  the  important  question  presented  by  the  record,  the  determina- 
tion of  which,  counsel  agree,  will  be  decisive  of  this  controvers}-. 

That  the  policy  was  personal  property,  under  our  statute  (2  R.  S. 
1876,  p.  314),  we  think  there  can  be  no  question.  In  consideration  of 
the  payment  of  the  annual  premiums,  it  contained  a  definite  and  fixed 
promise  to  pay  a  definite  and  fixed  amount  of  monev,  upon  the  happen- 
ing of  an  event,  which  was  uncertain  in  nothing  except  the  time  at 
which  it  might  occur.  Such  a  policy  of  insurance  is  a  chose  in  action, 
governed  by  the  same  principles  applicable  to  other  agreements  involv- 
ing pecuniary  obligations.  Bliss  Life  Insurance,  2d  ed.,  p.  540; 
Hutson  V.  Merrifield,  51  Ind.  24  (19  Am.  R.  722). 

The  policy  in  this  case,  by  its  terms,  was  executed  for  the  benefit  of 
the  wife,  and,  upon  a  fair  construction,  was  payable  to  her,  and  not  to 
the  personal  representatives  of  the  husband.  Upon  its  execution,  the 
title  vested  in  the  wife,  and  not  in  the  husband.  By  the  procurement 
of  the  husband,  the  wife  became  the  owner  of  the  policy  and  entitled 
to  collect  the  amount  that  might  become  due  on  the  same  upon  the 
death  of  the  husl)and.  Had  the  wife  procured  the  policy  to  be  issued, 
and  paid  the  premiums,  no  one  could  doubt  as  to  the  ownership  of  the 
policy,  and  the  right  to  collect  the  money  due  thereon.  We  are  unable 
to  see,  in  this  case,  why  there  should  be  any  diflJerence  in  the  owner- 
ship and  title  of  the  policy  by  reason  of  the  application  having  been 
made  and  premiums  paid  by  tlie  husband.  Had  the  policy  been  made 
payable  to  the  husband,  he  doubtless  might  have  given  it  to  the  wife, 
and,  by  proper  indorsements  thereon,  conveyed  to  her  the  legal  title 


1160  HARLEY   V.   HEIST.  [CHAP.  XII. 

to  the  same.  In  such  case  it  would  have  become  her  separate  property', 
by  gift  from  her  husband  ;  and  so,  too,  he  had  the  legal  riglit,  in  the 
first  instance,  to  make  the  application,  pay  the  premiums,  and  have 
the  poUcy  made  payable  to  the  wife  for  her  benefit,  and  thus  vest  in 
her  the  legal  title  and  ownership  of  tlie  policy,  as  her  separate  property. 
The  title  and  ownership  of  the  policy  being  vested  in  the  wife  by  gift 
from  the  husband,  it  was  her  separate  property,  to  be  disposed  of 
under  the  statute,  which  provides  that  the  personal  property  of  the 
wife,  acquired  during  coverture,  by  descent,  devise,  or  gift,  shall 
remain  her  own  separate  property,  to  the  same  extent  and  under  the 
same  rules  as  her  real  estate  so  remains,  and,  on  her  death  before 
the  husband,  shall  be  distributed  in  the  same  manner  as  her  real 
estate  descends,  and  is  apportioned  under  the  same  circumstances. 
1  R.  S.  1876,  p.  412  ;  R.  S.  1881,  §  2488. 

Personal  property  thus  acquired  by  the  wife,  upon  her  death,  de- 
scends to  her  heirs  at  law,  as  does  her  real  estate,  except  for  the 
purpose  of  paying  debts  and  costs  of  administration,  the  title  vests 
in  the  administrator,  if  one  be  appointed.  In  this  case  the  policy  of 
insurance,  upon  the  death  of  the  wife  Wilhelmina,  descended  to  her 
heirs  at  law ;  tlie  undivided  one-third  to  the  husband,  David  Snyder, 
and  the  other  two-thirds  to  the  minor  children,  subject  to  the  rights 
of  the  appellant,  as  the  administrator  of  her  estate,  who,  for  the 
purpose  of  paying  debts  and  costs  of  administration,  has  the  right  to 
collect  the  money  due  upon  the  policy,  to  the  exclusion  of  all  others. 
If  there  had  been  no  need  of  administration,  and  no  administrator  had 
been  appointed,  the  heirs  at  law  of  the  wife  might  have  collected  the 
money.  Subject  to  this  right  of  the  administrator,  the  husband  had 
the  legal  right  to  assign  his  interest  in  the  policy,  as  he  did,  to  the 
appellee.  Upon  such  assignment  appellee  became  the  owner  of,  and 
entitled  on  distribution  to,  one-third  of  the  amount  due  upon  the  policy, 
after  the  payment  of  debts  and  costs  of  administration.^  .  .  . 

It  is  maintained  by  the  learned  counsel  for  appellee,  that  Snyder, 
having  paid  the  premium,  had  the  right,  after  the  death  of  the  wife,  to 
omit  the  payment,  and  thus  let  the  policy  forfeit ;  and  that,  to  avoid 
this  loss,  he  had  the  right  to  change  the  beneficiary,  or  constitute 
himself  such,  by  the  assignment.  If  tlie  policy  was  personal  property, 
and  the  title  thereto  was  vested  in  the  wife,  we  are  unable  to  under- 
stand how  the  husband,  by  any  act  of  his,  without  the  consent  of  the 
beneficiary,  could  change  the  ownership. 

The  property,  under  the  statute,  passed  at  once  upon  the  death  of 
the  wife  to  her  heirs  at  law,  and  the  husband  had  no  more  control 
over  it  than  before  her  death.  True,  he  could  not  have  been  compelled 
to  pay  the  premiums,  or  provide  for  the  payment,  but  having  paid 
them  by  himself  and  his  assignee,  the  policy  did  not  lapse,  and  the 
title  to  and  ownership  of  the  same  did  not  change.   .   .   . 

1  Here  and  elsewhere  in  the  opinion,  passages  discussing  the  authorities  have  not 
been  reprinted.  —  Ed. 


SECT.  III.]  AMICK   V.    BUTLER.  1161 

It  is  said  furlher,  that  to  deny  to  the  husband  who  has  paid  the 
premiums  the  right  to  dispose  of  the  policy  to  his  own  use,  after  the 
death  of  the  wife,  imposes  upon  him  a  hardsliip  and  wrong.  A  suf- 
ficient answer  to  this  is,  that  if  he  wishes  to  retain  to  himself  the 
control  and  ownership  of  the  policy  in  sucli  case,  he  may  so  provide  in 
the  policy.  It  was  to  avoid  this  so-called  wrong,  that  the  Wisconsin 
court  has  held  that  the  person  procuring  the  policy  may  dispose  of  it 
without  the  consent  of  his  nominee.  Such  a  view,  we  think,  is  not 
consistent  with  legal  principles,  is  in  conflict  with  former  rulings  of  this 
court,  and  against  the  weight  of  the  authorities  in  the  other  States. 

The  appellee,  having  in  good  faith  paid  the  premiums  since  the 
assignment  of  the  policy,  is  entitled  to  have  the  amount  so  paid,  with 
interest  at  six  per  cent,  refunded  to  him  out  of  the  money  paid  over 
by  the  insurance  company. 

It  follows  from  the  conclusion  we  have  reached,  that  tlie  court  below 
was  iu  error  in  rendering  judgment  for  appellee,  and  in  its  rulings 
upon  demurrers  to  pleadings.  The  judgment  is  therefore  reversed,  at 
the  costs  of  appellee,  with  instructions  to  the  court  below  to  overrule 
appellee's  demurrers  to  the  first,  second,  fourth,  fifth,  and  sixth  para- 
graphs of  appellant's  answer  and  cross  complaint,  to  sustain  the 
demurrer  to  appellee's  answer  and  cross  complaint,  and  to  proceed  in 
accordance  with  this  opinion.^ 


AMICK  V.  BUTLER,  Administrator. 
Supreme  Court  of  Ixdiana,  1887.     Ill  Ind.  578. 

From  the  Jennings  Circuit  Court. 

«/".  Overmyer,  for  appellant. 

T.  C.  Batchelor,  for  appellee. 

Mitchell,  J.  Suit  by  Butler,  administr^or  of  the  estate  of  Frazee, 
deceased,  against  Amick,  to  recover  part  of  the  amount  which  the 
latter  received  on  a  polic}'  of  life  insurance  which  had  been  effected  ou 
the  life  of  the  plaintiff's  decedent. 

The  facts  most  favorable  to  the  plaintiff's  theory  are  comprised  in 
the  following  statement :    On  the  23d  day  of  March,  1877,  Decatur  M. 

1  Ace:  Brown  i:  Murray,  54  X.  J.  Eq.  (9  Dick.)  594  (1896). 

Contra  :  Ryan  v.  Rothweiler,  50  Ohio  St.  595  (189.3). 

See  Swan  'v.  Snow,  11  Allen,  224  (1865)  ;  Hutson  v.  Merrifield,  51  Ind.  24  (1875)  ; 
Anderson's  Estate,  85  Pa.  202  (1877)  ;  Millard  i:  Brayton,  177  Mass.  533,  542  (1901)  ; 
In  re  Scottish  Equitable  L.  Assur.  Society,  [1902]  1  Ch.  282  (1901). 

Compare  the  following  cases  on  endowment  policies  :  Tennes  v.  Northwestern  Mut. 
L.  In.s.  Co.,  26  Minn.  271  (1879)  ;  Tompkins  v.  Levy,  87  Ala.  263  (1888)  ;  Lamberton 
V.  Bogart,  46  Minn.  409  (1891 ) ;  Bancroft  v.  Russell,  157  Mass.  47  (1892). 

On  benefit  certificates,  see  Haskins  v.  Kendall,  158  Mass.  224  (1893) ;  Thomas  v. 
Cochran,  89  Md.  390  (1899).  —Ed. 


1162  AMICK    V.    BUTLER.  [CHAP.  XII. 

Frazee  was  indelDted  to  Amick  in  the  sum  of  about  six  hundred  dollars. 
By  agreement  with  Amick,  Frazee  made  an  application  to  the  U.  B. 
Mutual  Aid  Society  of  Pennsylvania,  a  mutual  life  insurance  company, 
for  membership  in  tliat  societ}'.  Upon  due  examination  he  was  ad- 
mitted as  a  member,  receiving  a  certificate  in  which  Amick,  his  heirs 
and  assigns,  were  designated  as  the  beneficiaries,  and  were  to  become 
entitled  upon  the  death  of  Frazee  to  two  thousand  dollars,  upon  condi- 
tion that  the  terms  and  conditions  of  the  certificate  of  membership 
should  be  complied  with.  Amick  was  designated  in  the  aj^plication 
and  in  the  certificate  of  membership  as  a  creditor.  The  amount  of  the 
indebtedness  was  erroneously  stated  in  the  application  at  two  hundred 
and  fiifty  dollars.  Tlie  proof  showed  that  it  was  about  six  hundred 
dollars.  All  the  expenses  incident  to  the  issuance  of  the  certificate, 
and  all  the  annual  payments  and  assessments  stipulated  in  the  certifi- 
cate of  membership  to  be  paid  by  Frazee,  were  to  be  and  were  paid  by 
Amick.  At  the  time  the  policy  was  issued  it  was  orally  agreed  that  if 
Frazee  should  at  an}'  time  thereafter  pay  his  indebtedness,  and  reim- 
burse Amick  for  the  cost  of  obtaining  the  policy  and  carrying  the  insur- 
ance, the  latter  would  turn  over  the  policy  to  the  former. 

On  the  16th  day  of  April,  1879,  Frazee  died  without  having  paid  any 
part  of  his  debt,  and  without  having  paid  any  part  of  the  cost  of  pro- 
curing and  continuing  in  force  the  certificate  of  membership. 

The  societ}',  upon  due  proof  of  the  death  of  Frazee,  paid  to  Amick 
about  nineteen  hundred  and  sixty-three  dollars,  in  discharge  of  its 
liabilit}'  upon  the  certificate.  After  deducting  the  amount  of  the  in- 
debtedness and  the  sums  advanced  for  the  insurance,  it  was  found  that 
there  remained  of  the  sum  received  frOm  the  societj'^  twelve  hundred 
and  fifty-nine  dollars  and  fifty-eight  cents,  which  the  administrator  of 
Frazee  had  demanded  from  Amick.  The  latter  having  refused  pay- 
ment, the  court  gave  judgment  in  favor  of  the  administrator  for  the 
amount. 

The  propriety  of  the  conclusion  of  the  learned  court  on  the  foregoing 
facts  involves  all  the  questions  in  the  record. 

In  support  of  the  judgment  so  given,  it  is  contended  that  the  right  of 
a  creditor  in  the  proceeds  of  a  polic}'  of  insurance  upon  the  life  of  his 
debtor,  is  limited  to  the  amount  of  the  debt  and  necessary  expenses  on 
account  of  which  the  insurance  was  taken  out  and  maintained.  When 
the  debt  and  expenses  are  extinguished,  the  argument  is,  the  excess 
belongs  to  the  legal  representative  of  the  deceased  debtor,  and  may  be 
recovered  from  the  creditor,  to  whom  payment  has  been  mad  as 
money  had  and  received  to  the  use  of  the  debtor's  representative. 

This  conclusion  is  predicated  upon  the  rule,  the  effect  of  which  is 
that  one  having  no  insurable  interest  in  the  life  of  another  ma}'  not,  by 
means  of  insurance,  speculate  upon  the  life  of  the  person  insured.  The 
insurable  interest  can  not,  it  is  contended,  exceed  the  amount  of  the 
debt ;  hence,  the  person  obtaining  the  insurance  must  account  for 
the  excess. 


SECT.  III.]  AMICK   V.   BDTLER.  1163 

Upon  considerations  of  public  polic}-,  the  general  rule  has  long  pre- 
vailed that  insurance  taken  out  and  obtained  In-  one  upon  the  life  of 
another,  in  whose  life  the  person  procuring  the  insurance  had  at  the 
time  no  insurable  interest,  is  invalid.  Elkhart,  etc.  Ass'n  v.  Hough- 
ton, 103  Ind.  286,  53  Am.  R.  514;  Continental  Life  Ins.  Co.  i\  Vol- 
ger,  89  Ind.  572,  46  Am.  R.  185. 

A  policy  taken  upon  the  life  of  another,  for  speculative  purposes 
merely,  is  regarded  as  nothing  more  than  a  wager  on  the  life  of  the 
person  insured.  Such  a  transaction  is  assigned  a  place  in  the  catalogue 
of  gambling,  and  is  justly  condemned  by  the  law.  Ruse  v.  Mutual 
Benefit,  etc.  Co.,  23  N.  Y.  516  ;  Brockway  v.  Mutual  Benefit,  etc.  Co., 
9  Fed.  Rep.  249;   Bliss  Life  Ins.,  §  9. 

No  one  can  have  the  benefit  of  an  insurance  effected  by  himself  upon 
the  life  of  another,  unless  he  has  an  insurable  interest  in  tlie  life  insured. 

Where  money  has  been  collected  upon  a  policy  which  had  its  incep- 
tion in  a  scheme  of  mere  speculation  upon  the  life  of  the  person  who 
is  the  subject  of  insurance,  or  where  insurance  is  taken  out  by  a  debtor 
as  a  security  for  tiie  benefit  of  his  creditor,  the  expense  of  procuring 
and  continuing  the  policy  being  borne  by  the  former,  the  authorities 
justify  the  conclusion  in  either  case  that  the  amount  collected,  less  the 
debt  secured  or  the  sums  advanced  in  obtaining  and  keeping  the  policy 
In  force,  may  be  recovered  b}'  the  personal  i-epresentatives  of  the  person 
insured.  Gilbert  f\  Moose,  104  Pa.  St.  74,  49  Am.  R.  570  ;  Cammack 
V.  Lewis,  15  Wall.  643  ;  Page  r.  Burnstine,  102  U.  S.  664  ;  Warnock  v. 
Davis,  104  U.  S.  775;  Dutton  v.  Willner,  52  N.  Y.  312;  Drysdale 
V.  Piggott,  8  DeGex,  M.  &  G.  546  ;  Lea  v.  Hinton,  5  DeGex,  M.  &  G. 
823. 

In  case  the  policy  originates  in  a  transaction  which  the  law  con- 
demns, or  where  the  debtor,  having  taken  insurance  on  his  own  life,  at 
his  own  expense,  merely  pledges  the  policy  as  a  security  for  an  existing 
debt,  the  holder,  whether  by  assignment  or  otherwise,  who  receives  the 
entire  proceeds,  will  be  regarded  as  a  trustee  of  the  representatives 
of  the  insured  for  the  amount  received,  less  the  amount  of  his  debt,  or 
the  sum  advanced  on  the  policy.  American  Life,  etc.  Co.  v.  Robert- 
shaw,  26  Pa.  St.  189  ;  Matthews  v.  Sheehan,  69  N.  Y.  585. 

Thus,  in  Bruce  v.  Garden,  5  Ch.  App.  C.  32,  the  language  of  Lord 
Hatherley  is  :  "The  court  requires  distinct  evidence  of  a  contract  — 
that  the  creditor  has  agreed  to  effect  a  policy,  and  that  the  debtor  has 
agreed  to  pay  the  premiums,  and  in  that  case  the  policy  will  be  held  in 
trust  for  the  debtor." 

Tlie  case  under  consideration  is  not  within  the  facts,  and  hence  is 
not  governed  by  the  principles  which  ruled  the  cases  above  mentioned. 

This  is  a  case  in  which  a  debtor,  presumably  at  the  solicitation  of 
his  creditor,  effected  an  insurance  on  his  own  life  for  the  benefit  of  his 
creditor,  the  latter  being  designated  in  the  policy  as  tlie  beneficiary,  and 
agreeing  to  pay  tlie  expense  of  effecting  the  insurance  and  of  keeping 
the  policy  in  force.     It  was  also  agreed  that  the  debtor  might  at  an}- 


1154  AMICK    V.    BUTLER.  .  [CHAP.  XII. 

time  pay  the  debt,  and  reimburse  tlie  creditor  for  outlays  in  effecting 
and  maintaining  tlie  insurance,  and  thereby  entitle  himself  to  an  assign- 
ment of  the  policy.  It  has  never  been  seriously  questioned  but  that  a 
person  may  insure  his  own  life,  and  by  the  terms  of  the  policy  appoint 
another  to  receive  the  money,  upon  the  event  of  the  death  of  the  person 
whose  life  is  insured  ;  or,  having  taken  a  policy,  valid  in  its  inception, 
that  he  may  in  good  faith  assign  his  interest  in  such  policy,  as  in  any 
other  chose  in  action.  Hutson  v.  Merrifield,  51  Ind.  24  (19  Am.  R.  722)  ; 
Franklin  Life  Ins.  Co.  v.  Sefton,  53  Ind.  380  ;  Ashley  v.  Ashley,  3  Sim. 
149;  Mutual  Life  Ins.  Co.  v.  Allen,  138  Mass.  24;  Claik  y.  Allen,  11 
R.  I.  439,  23  Am.  R.  496.  See  also  note  to  Clark  v.  Allen,  sifpra,  17 
Am.  Law  Reg.  86  ;  New  York  Mut.  Life  Ins.  Co.  v.  Armstrong,  117  U.  S. 
591  ;  Archibald  u.  Mutual  Life  Ins.  Co.,  38  Wis.  542 ;  Eckel  v.  Renner, 
41  Ohio  St.  232. 

In  either  case  the  essential  point  is  that  the  transaction  be  bona  fide, 
and  not  merely  a  cover  for  obtaining  wagering  or  merely  speculative 
insurance,  and  a  device  to  evade  the  law.  Provident,  etc.  Co.  v.  Baum, 
29  Ind.  236  ;  Olmsted  v.  Keyes,  85  N.  Y.  593 ;  Campbell  v.  New  P:ng- 
land  M.  L.  Ins.  Co.,  98  Mass.  381  ;  Connecticut  Mut.  Life  Ins.  Co.  v. 
Schaefer,  94  U.  S.  457  ;  Guardian  M.  L.  Ins.  Co  v.  Hogan,  80  111.  35, 
22  Am.  R.  180  ;  Murphy  v.  Red,  35  Alb.  Law  Jour.  490  ;  Cunningham 
V.  Smith,  70  Pa.  St.  450. 

The  cases  which  hold  invalid  the  taking  or  assignment  of  insurance 
policies  turn  upon  the  fact  that  in  each  case  the  transaction  was  found 
to  be  merely  colorable,  and  a  scheme  to  obtain  speculative  insurance. 
Franklin  Life  Ins.  Co.  v.  Hazzard,  41  Ind.  116,  13  Am.  R.  313; 
Cammack  v.  Lewis,  supra ;  Warnock  v.  Davis,  supra. 

Where  the  person  whose  life  is  insured  is  the  real  contracting  party, 
and  continues  to  pay  the  premiums,  it  is  of  no  consequence  that  the 
beneficiary,  or  appointee  in  the  policy,  has  no  insurable  interest  in  the 
life  of  the  insured.  In  such  a  case  the  policy  is  valid  in  any  event,  and 
if  the  beneficiary  or  assignee  be  a  creditor,  and  holds  the  policy  as  a 
security  merely,  he  will  be  a  trustee  for  the  excess,  as  is  any  other 
creditor  who  holds  securities  for  a  debt.  In  case,  however,  the  party 
insured  is  only  nominally  the  contracting  party,  while  the  beneficiary 
named  in  the  policy,  or  the  assignee,  has  in  reality  procured  the  insur- 
ance, and  paid  the  premiums,  then,  in  order  that  the  transaction  may 
be  taken  out  of  the  category  of  wagering  contracts,  the  beneficiary 
must  have  had  an  insurable  interest  of  a  pecuniary  character,  or  of 
that  nature,  either  present  or  prospective,  at  the  time  the  policy  had  its 
inception.  A  policy  so  taken  is  the  property  of  the  beneficiary,  wlio 
occupies  in  that  event  no  trust  relation  to  the  debtor.  Hine  &  Nichols 
Life  Ins.  75. 

That  a  creditor  has  an  insurable  interest  in  the  life  of  his  debtor  has 
never  been  controverted.  It  is  universally  allowable  that  a  creditor 
may  in  good  faith  take  insurance  upon  the  life  of  his  debtor,  either  by 
procuring  a  policy  in  which  he  is  designated  as  the  beneficiary,  or  by 


SECT.  III.]  AMICK   V.   BUTLER.  1165 

assignment.  We  know  of  no  authority  to  tlie  contrary  of  this.  While 
this  is  true,  the  amount  of  the  insurance  obtained  must  bear  some 
just  proportion  to  the  debt,  or  the  extent  of  the  obligation  assumed  by 
the  beneficiary,  and  the  probable  contingencies  attending  the  future 
maintenance  of  the  policy.  The  circumstances  must  be  such  as  not  to 
raise  the  presumption  that  the  transaction  on  its  face  was  a  mere 
speculation. 

As  was  said  by  the  learned  judge  in  Fox  v.  Penn  M.  L.  Ins.  Co., 
4  Big.  L.  &  A.  Ins.  Rep.  458  :  "  If  a  man  should  owe  me  810,  I  can  not 
go  and  insure  his  life  to  the  extent  of  810,000."  Mowry  v.  Home  Life 
Ins.  Co.,  9  R.  I.  346. 

The  policy  can  not,  however,  be  limited  to  the  amount  of  the  debt. 
If  it  were  otherwise  the  creditor  would  inevitably  be  compelled  to  lose 
whatever  sums  he  might  be  required  to  pay  in  effecting  the  insurance 
and  paying  premiums. 

The  beneficiary  takes  the  chances  of  all  future  contingencies,  includ- 
ing the  continued  solvency  of  the  company ;  or  if  it  be  a  company  in 
which  the  fund  is  to  be  accutoulated  by  assessments  upon  the  members, 
that  a  sufficient  number  will  continue  therein  to  pay  the  debt  and  reim- 
burse him  for  his  advances. 

No  general  rule  applicable  to  all  cases  can  be  laid  down,  except  that 
the  interest  must  be  of  a  substantial  character,  and  such  as,  under  all 
the  circumstances,  to  take  from  the  transaction  the  suspicion  of  mere 
wagering.     Connecticut  Mutual  Life  Ins.  Co.  u.  Luchs,  108  U.  S.  498. 

In  the  case  before  us  the  application  for  membership  shows  that  the 
person  whose  life  was  insured  was  within  a  few  months  of  forty-nine 
years  old,  and  in  good  health.  The  certificate  of  membership  required 
the  payment  of  sixteen  dollars  into  the  treasury  of  the  society  the  first 
year,  ten  dollars  annually  for  the  ensuing  four  years,  and  four  dollars 
annually  thereafter  during  the  lifetime  of  the  member,  besides  paying 
into  the  treasury,  upon  the  death  of  each  member,  his  i^ro  rata  mor- 
tality assessment.  In  consideration  of  the  agreement  to  comply  with 
these,  among  other  conditions,  the  society  agreed  to  pay  the  beneficiary 
named,  absolutely,  upon  the  death  of  the  member,  the  sum  of  two  thou- 
sand dollars.  In  the  language  of  the  court  in  Bevin  v.  Connecticut 
Mutual  Life  Ins.  Co.,  23  Conn.  244:  '-'AH  the  books  hold  this  to  be  a 
sufficient  interest  to  sustain  a  policy  of  insurance.  .  .  .  The  policy 
must,  we  think,  be  held  to  be  a  valued  policy."  See  note  to  Currier  v. 
Continental  Life  Ins.  Co.,  52  Am.  Rep.  134.  The  transaction  being 
thus  relieved  from  any  features  of  a  merely  speculative  character,  the 
policy  vested  an  absolute  right  in  the  beneficiary  named  therein  to 
collect  from  the  society  upon  the  death  of  the  member  the  full  amount 
stipulated  to  be  paid,  and  the  amount  thus  collected  became  the  property 
of  the  beneficiary,  unless  the  parol  agreement  to  turn  the  policy  over  to 
the  debtor  upon  the  conditions  already  stated  affected  the  creditor  with 
an  enforceable  trust  in  favor  of  the  personal  representative.  We  can 
discover  no  principle  upon  which  a  trust  can  be  maintained  in  the 


1166  AMICK   V.   BUTLEK.  [CIIAP.  XII. 

absence  of  any  offer  by  the  debtor  in  his  lifetime  to  paj-  the  debt  and 
reimburse  the  creditor  for  his  advances.  Tiie  right  to  the  insurance 
vested  absolutely  in  the  beneficiary  as  soon  as  the  contract  of  insurance 
was  consummated.  ''The  moment  this  polic}'  was  executed  and  de- 
livered, it  became  property,  and  tlie  title  to  it  vested  in  some  one.  It 
will  not  be  claimed  that  it  vested  in  the  person  whose  life  was  insured. 
It  must  have  vested  then  in  all  or  in  a  part  of  the  payees."  Continental 
Life  Ins.  Co.  v.  Palmer,  42  Conn.  60. 

The  transaction  liad  none  of  the  characteristics  of  a  mortgage.  It 
was  entirely  at  the  option  of  the  debtor  whether  or  not  he  wouUl  reim- 
burse the  creditor  for  the  sums  expended  in  procuring  the  insurance. 
Whatever  the  creditor  might  have  done  in  respect  to  the  collection  of 
his  debt,  it  was  bej'ond  his  power  to  compel  the  insured  to  reimburse 
him  for  his  advances  in  procuring  and  maintaining  tlie  policy.  The 
debtor  had  not  agreed  to  repay  advances  voluntarily  made.  The  ad- 
vances having  been  made  for  the  creditor's  own  benefit,  he  had  no 
remedy  against  the  debtor  or  his  legal  representative  to  recover  them. 
The  rule  in  cases  involving  analogous  princ'iples  is  that  where  the  owner 
of  property  vests  the  title  absolutely  in  another  in  pursuance  of  an 
agreement  which  gives  the  grantor  the  option  to  repurchase  or  not,  at 
his  election,  the  transaction  does  not  create  a  mortgage.  Voss  v.  Eller, 
109  Ind.  260;  Hays  v.  Carr,  83  Ind.  275. 

The  right  to  the  policy  and  to  the  benefits  to  be  derived  therefrom, 
was  absolute  in  the  beneficiary  until  both  the  debt  and  the  advances 
were  paid,  even  conceding  that  the  oral  agreement  referred  to  would 
have  been  enforceable  in  the  lifetime  of  the  insured. 

The  beneficiary  in  a  life  policy,  who  has  an  insurable  interest  in  the 
life  of  the  insured,  at  the  inception  of  the  policy,  may  enforce  payment 
for  the  full  amount,  notwithstanding  the  debtor,  on  whose  life  it  runs, 
may  have  paid  the  debt.  "Any  interest  suflficient  to  justify  the  insur- 
ance, and  relieve  it  of  the  gambling  aspect,  will  render  it  valid,  and  such 
policy  will  continue  valid  in  the  hands  of  a  beneficiary  or  assignee,  re- 
gardless of  the  cessation  of  interest,  provided  the  facts  show  entire  good 
faith  and  a  sufficient  justification."  Hine  &  Nichols  Life  Insurance, 
82;  Olmsted  v.  Keyes,  supra;  Connecticut  Mut.  Life  Ins.  Co.  v. 
Schaefer,  supra. 

Perhaps,  owing  to  the  peculiar  nature  of  contracts  such  as  we  are 
considering,  if  the  debtor,  in  his  lifetime,  had  tendered  the  amount  of 
the  debt  and  the  advances,  the  claim  of  the  legal  representative  might 
be  supported.  But,  in  the  absence  of  an  offer  to  comply  with  his  agree- 
ment, we  can  discover  no  rational  ground  upon  which  the  court  can  now 
compel  the  appellant  to  surrender  money  to  which,  according  to  every 
principle  of  law,  he  has  a  perfect  title,  and  in  which  neither  the  debtor 
nor  his  representatives  ever  had  any  interest,  legal  or  equitable. 

A  distinguishing  element  in  the  determination  of  cases  of  this  char- 
acter is,  whether  the  one  whose  life  is  insured  so  contracts  himself  to 
pay  the  premiums  that  an  action  could  be  maintained  against  him  by 


SECT.  III.]       SCHNEIDER    V.    UNITED    STATES    LIFE   INS.    CO.  1167 

the  creditor  for  that  amount.  If  such  a  contract  is  shown,  then  the 
policy  is  to  be  regarded  as  a  collateral  security,  and  tlic  debtor  is  en- 
titled to  it  upon  the  extinguishment  of  the  principal  debt;  while,  on  the 
other  hand,  if  the  creditor  pays  the  premiums,  and  the  debtor  is  under 
no  obligation  to  repay  them,  the  right  of  the  creditoris  absolute.  Freme 
V.  Brade,  2  De  Gex  &  J.  582;  Knox  c.  Turner,  Law  Rep.,  5  Ch.  App. 
515;  Gottlieb  v.  Cranch,  4  De  G.,  M.  &  G.  440;  Godsal  v.  Webb, 
2  Keen,  100. 

As  has  already  been  seen,  the  debtor  neither  paid  nor  was  he  under 
any  obligation  to  pay  the  premiums. 

"Within  all  the  rules,  therefore,  the  appellant  became  tlie  absolute 
owner  of  the  policy,  without  any  outstanding  equity  in  the  debtor  or  his 
representative,  until  such  payment  was  made  or  tendered  according  to 
the  contract.  Judgment  reversed  icith  costs} 


SCHNEIDER,    Respondents,   v.    UNITED   STATES  LIFE 
INSURANCE   CO.,   Appellant. 

Court  of  Appeals  of  New  York,   1890.     123  N.  Y.  109. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme  Court 
in  the  first  judicial  department,^  entered  upon  an  order  made  March 
29,  1889,  which  affirmed  a  judgment  in  favor  of  plaintiff  entered  upon 
a  decision  of  the  court  on  trial  at  special  term. 

The  action  was  upon  a  policy  of  life  insurance. 

The  facts,  so  far  as  material,  are  stated  in  the  opinion. 

0.  P.  Buel^  for  appellant. 

Lucius  McAdam,  for  resi)ondents. 

O'Brien,  .1.  In  the  year  1861,  upon  the  application  of  the  plaintifTs 
husband,  Henry  Schneider,  the  defendant  issued  its  policy  insuring  his 
life  for  the  benefit  of  the  plaintiff.  The  pohcy  contained  the  usual 
stipulation  that  in  case  the  assured  should  fail  to  pay  any  quarterly 
premium  when  the  same  became  due  the  polic}'  should  lapse  and  be- 
come null  and  void.  The  husband  retained  the  policy  in  his  posses- 
sion and  paid  the  premiums  as  they  became  due  up  to  and  including 
the  premium  payable  January  17,  1886.  On  the  15th  day  of  March, 
1886,  the  defendant  duly  served  the  notice  required  by  the  statute  that 
another  premium  would  fall  due  the  17th  of  April  following.  This 
notice  was  served  upon  the  husband  who  had  the  policy  in  his  posses- 

1  Ace. :  Rittler  v.  Smith,  70  Md.  261  (1889). 
Contra:  Cheeves  i'.  Auders,  87  Tex.  287  (1894). 

See  Grant  v.  Cline,  115  Pa.  618,  62.5  (1887) ;  Ulrich  v.  Reinoehl,  143  Pa.  2.38  (1891 ) ; 
McHale  v.  McDonnell,  175  Pa.  632,  646  (1896);  Exchange  Bank  v.  Loh,  104  Ga.  446, 
4.54-458  (1898).  — Ed. 

2  Reported  in  52  Hun,  130.  —  Ed. 


1168  SCHNEIDER   V.   UNITED   STATES   LIFE   INS.   CO.      [CHAP.  XII 

sion,  and  who  was  the  agent  of  his  wife  for  the  purpose  of  receiving 
the  notice.  Laws  of  1877,  chap.  321.^  This  premium  was  not  paid, 
and  no  notice  was  thereafter  served  b}-  the  defendant.  On  tlie  29tli  of 
March,  1886,  while  the  policy  was  in  force,  the  husband  produced  and 
surrendered  the  polic}'  to  the  defendant  and  received  $525,  the  sur- 
render value,  from  the  defendant,  which  was  paid  by  its  check  to  the 
joint  order  of  the  husband  and  the  wife.  The  check  was  presented, 
indorsed  in  proper  form,  paid  by  the  bank  and  charged  to  defendant. 
At  the  same  time  the  husband  presented  and  delivered  to  the  defendant 
a  paper  under  seal,  purporting  to  be  signed  by  the  wife  and  duly 
acknowledged  before  a  commissioner  of  deeds,  containing  a  request  to 
accept  the  surrender  of  the  policy  and  a  release  discharging  the  de- 
fendant from  all  further  liability  thereon.  The  company,  relying  upon 
this  paper,  paid  the  surrender  value  as  above  stated.  The  husband 
died  in  September,  1886,  and  until  after  that  the  wife  had  no  knowledge 
of  the  existence  of  the  policy  and  her  signature  to  the  paper  containing 
the  surrender  and  release,  and  the  indorsement  of  her  name  upon  the 
check  was  forged.  She  received  no  part  of  the  $525  paid  on  the  sur- 
render of  the  policy.  She  demanded  payment  of  the  policy,  and,  upon 
refusal,  presented  proofs  of  the  death,  and  then  brought  this  action. 
It  was  found  at  the  trial,  as  matter  of  law,  that  the  surrender  was  void, 
and  the  contract  to  pay  in  case  of  death  was  unaffected  thereby.  The 
plaintiff  recovered,  and  the  judgment  was  sustained  by  the  General 
Terra. 

The  conclusion  of  the  trial  court  that  the  surrender  was,  as  against 
the  plaintiff,  null  and  void,  and  which  is  clearly  correct,  renders  it 
necessary  for  the  plaintiff,  in  order  to  sustain  the  recovery,  to  meet 
and  answer  another  objection  that  confronts  her.  The  premium  due 
on  the  17th  of  April,  1886,  was  not  paid.  The  notice  required  by  the 
statute  was  served  on  the  15th  of  March  preceding,  and  the  existence 
of  the  policy  as  a  valid  contract  of  insurance,  and  the  liability  of  the 
defendant  thereon,  depended  upon  the  performance  of  this  condition. 
The  fraudulent  surrender  of  the  policy  by  the  husband  before  the  April 
premium  became  due,  in  no  way  excuses  the  failure  to  pay  the  pre- 
mium, unless  the  defendant  was  in  some  way  connected  with  that 
fraud,  or  guilty  of  some  negligent  act  in  regard  thereto.  There  is  no 
proof  and  no  finding  that  it  was.  On  the  contrary  the  defendant  seems 
to  have  been  the  innocent  victim  of  a  fraud  perpetrated  upon  it  by  the 
husband,  who  was  the  plaintiff's  agent  in  procuring  the  policy,  paying 
the  premiums  and  receiving  the  statutory  notice  as  to  when  they  were 

1  "  No  life  insurance  company  doing  business  in  the  State  of  New  York  shall  have 
power  to  declare  forfeited  or  lapsed  any  policy  hereafter  issued  or  renewed  by  reason 
of  non-payment  of  any  ailnual  premium  or  interest,  or  any  portion  thereof,  except  as 
hereinafter  provided.  ...  A  written  or  printed  notice  .  .  .  shall  be  duly  addressed 
and  mailed  to  the  person  whose  life  is  assured,  or  the  assignee  of  the  policy,  if  notice 
of  the  assignment  has  been  given  to  the  company,  at  his  or  her  last  known  post-office 
address,  postage  paid  by  the  company.  ..."  N.  Y.  Laws  of  1877,  chap.  321,  §  1. — 
Ed. 


SECT.  III.]       SCHNEIDER   V.    UNITED    STATES    LIFE    INS.    CO.  1169 

due.  The  paper  purporting  to  be  signed  by  the  plaintiff  requesting  the 
defendant  to  accept  the  surrender  and  releasing  it  from  further  liabilit}', 
was  in  proper  form.  There  was  attached  to  it  the  certificate  of  an 
officer  authorized  to  take  and  certify  acknowledgments  that  the  plain- 
tiff appeared  before  him  and  duly  acknowledged  the  instrument,  and 
there  was  no  circumstance  that  could  warrant  the  defendant  in  doubt- 
ing its  genuineness.  It  has  been  found  that  the  defendant  relied  upon 
it,  and  neither  in  the  findings  nor  the  evidence  is  there  anything  to  be 
found  to  justify  a  suspicion  of  bad  faith.  It  cannot  be  held  that  the 
transaction  between  the  defendant  and  the  husband,  which  resulted  in 
the  payment  to  him  of  the  surrender  value  of  the  policy  and  upon 
which  the  defendant  relied,  was  void,  and  at  the  same  time  relieve  the 
plaintiff  from  the  effect  of  a  failure  to  perform  the  conditions  upon 
which  the  existence  of  the  contract  depended.  The  plaintiff  cannot 
claim  the  benefit  of  a  contract  made  in  her  behalf  but,  as  it  appears, 
without  her  knowledge,  without  at  the  same  time  assuming  all  the 
responsibilit}'  of  a  failure  to  perform  its  essential  conditions.  In  those 
cases  where  a  recovery  has  been  permitted  by  the  beneficiarv,  notwith- 
standing a  surrender  and  release  such  as  appears  in  this  case,  the  party 
seeking  to  recover,  was  able  in  some  way  to  connect  the  compan}'  with 
the  fraud,  or  to  show  some  fault  or  neghgent  act  on  its  part  that  ex- 
cused the  payment  of  the  premium.  Whitehead  v.  N.  Y.  L.  Ins.  Co., 
102  N.  Y.  143  ;  Frank  v.  M.  L.  Ins.  Co.,  id.  266  ;  Knapp  v.  H.  M. 
L.  Ins.  Co.,  117  U.  S.  411. 

The  husband  had  the  possession  of  the  policy,  and  in  dealing  with 
the  defendant  in  regard  to  it  was  treated  as  plaintiff's  agent,  and 
the  rule  that  when  one  of  two  innocent  parties  must  sustain  a  loss  from 
the  fraud  of  a  third,  such  loss  shall  fall  upon  the  one  whose  act  enabled 
the  fraud  to  be  committed,  applies  to  this  case. 

The  judgment  should  be  reversed  and  a  new  trial  granted,  costs  to 
abide  the  event. 

All  concur.  Judgment  reversed}- 

1  See  Mutual  L.  Ins.  Co.  v.  Hill,  178  U.  S.347  (1900). 

Compare  Manhattan  L.  Ins.  Co.  v.  Smith,  44  Ohio  St.  156  (1886). 

On  the  rights  of  beneficiaries,  see  also  :  — 

Drake  v.  Stone,  58  Ala.  133  (1877)  ; 

Robinson  v.  Duvall,  79  Ky.  83  (1880) ; 

Pullis  V.  Eobisou,  73  Mo.  201  (1880)  ; 

Macanlay  v.  Central  Nat.  Bank.  27  S.  Car.  215  (1887) ; 

Hooker  v.  Sugg,  102  N.  Car.  115  (1889)  ; 

Glenn  v.  Barns,  100  Tenn.  295  (1898)  ; 

Union  Central  L.  Ins.  Co.  v.  Buxer.  62  Ohio  St.  385  (1900).  —Ed. 


74 


APPENDIX. 

SOME  FORMS   USED  IN  THE   UNITED   STATES. 


Sum  Insceed, 


SECTION   I. 
Marine  Insurance} 

(A)   A  Policy  on  Cargo. 


By  the 


Insurance  Company. 


[No. 


] 


on  account  of 

I  In  case  of  loss  to  be  paid  in  funds 

5  current  in  the  United   States,  or 

■^  in  the  city  of  New  York,  to 

s 

c 
a 

I  5  Do         make  Insurance,  and  cause 

£-  to  be  insured,  lost  or  not  lost,  at  and  from 


4 
5 
6 
7 
8 
9 
10 


>^5 


Premium, 


upon  all  kinds  of  lawful  goods  and  merchandises,  ii 

laden  or  to  be  laden  on  board  the  good  12 

called  the  whereof  is  master  for  13 

tills  present  voyage,  or  whoever  else  14 

shall  go  for  master  in  the  said  vessel,  or  by  what-  15 

ever  other  name  or  names  the  said  vessel,  or  the  16 

master  thereof,  is  or  shall  be  named  or  called.  17 

Beginning  the  adventure  upon  the  said  goods  18 

$  I     and  merchandises,  from  and  immediately  following  19 

£     the  loading  thereof  on  board  of  the  said  vessel,  at        20 

•S     as  aforesaid,  and  so  shall  continue  and  endure  until  21 

(i;     the  said  goods  and  merchandises  shall  be  safely  22 

landed  at  as  aforesaid.     And  it  shall  23 

1  In  the  United  States  the  marine  insurance  forms  are  not  statiitorv.  Each  com- 
pany has  forms  of  its  own.  Most  of  the  differences  are  verbal  rather"  than  substan- 
tial.—Ed. 


1172  FORMS.  [APP. 

and  mn,}'  be  lawful  for  the  said  vessel,  in  ner  voyage,  to  proceed  and  i 
sail  to,  touch  and  stay  at,  any  ports  or  places,  if  thereunto  obliged  2 
by  stress  of  weather,  or  other  unavoidable  accident,  without  prejudice  3 
to  this  insurance.  The  said  goods  and  merchandises,  hereby  insured,  4 
are  valued  (premium  included)  at  5 

6 

Touching   the   adventures    and    perils  which  the   said  In-   7 

SURANCE  Company  is  contented  to  bear,  and  takes  upon  itself  in  8 
this  voyage,  they  are  of  the  seas,  inen-of -war,  fires ^  enemies,  'pirates,  9 
rovers,  thieves,  jettisons,  letters  of  mart  and  countermart,  repri-  lo 
sals,  takings  at  sea,  arrests,  restraints  and  detainments  of  all  ii 
kings,  jjrinces  or  people  of  what  nation,  condition  or  quality  soever,  12 
barratry  of  the  master  and  mariners,  and  all  other  perils,  losses  and  13 
misfortunes,  that  have  or  shall  come  to  the  hurt,  detriment  or  dam- 14 
age  of  the  said  goods  and  merchandises,  or  any  part  thereof.  And  15 
in  case  of  any  loss  or  misfortune,  it  shall  be  lawful  and  necessarj-  to  16 
and  for  the  assured,  factors,  servants  and  assigns,  to  sue,  17 

labor  and  travel  for,  in  and  about  the  defence,  safeguard  and  recov- 18 
er}'  of  the  said  goods  and  merchandises  or  any  part  thereof,  without  19 
prejudice  to  this  insurance  ;  nor  shall  the  acts  of  the  insured  or  insur-  20 
ers,  in  recovering,  saving  and  preserving  the  property  insured,  in  21 
case  of  disaster,  be  considered  a  waiver  or  an  acceptance  of  an  aban-  22 
donment ;  to  the  charges  whereof,  the  said  Insurance  Company  will  23 
contribute  according  to  the  rate  and  quantity  of  the  sum  herein  in-  24 
sured,  having  been  paid  the  consideration  for  this  insurance,  by  the  25 
assured  or  assigns,  at  and  after  the  rate  of  26 

27 

And  in  case  of  loss,  such  loss  to  be  paid  in  thirty  days  after  proof  28 
of  loss,  and  proof  of  interest  in  the  said  (the  amount  of  29 

the  Note  given  for  the  premium,  if  unpaid,  being  first  deducted),  but  30 
no  partial  loss  or  particular  average  shall  in  any  case  be  paid,  unless  31 
amounting  to  five  per  cent.  Provided  alvtats,  and  it  is  hereby  32 
further  agreed,  That  if  the  said  assured  shall  have  made  any  other  33 
assurance  upon  the  premises  aforesaid,  prior  in  day  of  date  to  this  34 
policy,  then  the  said  Insurance  Company  shall  be  answerable  35 

only  for  so  much  as  the  amount  of  such  prior  assurance  may  be  36 
deficient  towards  fully  covering  the  premises  hereby  assured ;  and  37 
the  said  Insurance  Company  shall  return  the  premium  upon  38 

so  much  of  the  sum  by  them  assured,  as  they  shall  be  by  such  39 
prior  assurance  exonerated  from.  And  in  case  of  any  insurance  40 
upon  the  said  premises,  subsequent  in  day  of  date  to  this  policy,  41 
the  said  Insurance  Company,  shall   nevertheless    be   answer-  42 

able  for  the  full  extent  of  the  sum  by  them  subscribed  hereto,  43 
without  right  to  claim  contribution  from  such  subsequent  assurers,  44 
and  sliall  accordingly  be  entitled  to  retain  tlie  premium  by  them  45 
received,  in  the  same  manner  as  if  no  such  subsequent  assurance  46 
had  been  made.      Other   insurance  upon  the   premises    aforesaid,  47 


SECT.  I.]  FORMS.  1173 

1  of  date   the   same   day    as   this  polic}',  shall   be   deemed   simulta- 

2  neous  herewith,  and  the   said  Insurance  Company   shall   not 

3  be   liable    for  more  than  a   ratable  contribution   in   the  proportion 

4  of   the   sum   by   them    insured    to  the   aggregate   of  such    simul- 

5  taneous  insurance.     It  is  also  agreed,  that  the  property  be  war- 

6  ranted  by  the  assured  free  from  any  charge,  damage  or  loss,  which 

7  may   arise  in  consequence  of  a  seizure  or  detention,  for  or  on  ac- 

8  count  of  any  illicit  or   prohibited    trade,  or  any  trade   in   articles 

9  contraband  of  war. 

10  Warranted  not  to  abandon  in  case  of  capture,  seizure,  or  detention, 

11  until  after  condemnation  of  the  property  insured ;  nor  until  ninety 

12  days  after  notice  of  said  condemnation  is  given  to  this  Compan}-. 

13  Also  warranted  not  to  abandon  in  case  of  blockade,  and  free  from 

14  any  expense  in  consequence  of  capture,  seizure,  detention  or  block- 

15  ade ;  but  in  the  event  of  blockade,  to  be  at  liberty  to  proceed  to  an 

16  open  port  and  there  end  the  voyage. 

17  In  witness  whereof,  the  President  or  Vice-President  of  the  said 

18  Insurance  Company  hath  hereunto  subscribed  his  name,  and 

19  the   sum   insured,   and    caused  the   same   to  be  attested   by   their 

20  Secretary,    in    New   York,    the  day  of  one 

21  thousand  nine  hundred  and 

22  Memorandum.     It  is  also  agreed,  that  bar,  bundle,  rod,  hoop  and 

23  sheet  iron,  wire  of  all  kinds,  tin  plates,  steel,  madder,  sumac,  wioker- 

24  ware  and  willow  (manufactured  or  otherwise),  salt,  grain  of  all  kinds, 

25  tobacco,  Indian  meal,  fruits  (whether  preserved  or  otherwise),  cheese, 

26  dry  fish,  hay,  vegetables  and  roots,  rags,  hempen  yarn,  bags,  cotton 

27  bagging,  and  other  articles  used  for  bags  or  bagging,  pleasure  car- 

28  riages,  household  furniture,  skins  and  hides,  musical  instruments, 

29  looking  glasses,  and  all  other  articles  that  are  perishable  in  their  own 

30  nature,  are  warranted  by  the  assured  free  from  average,  unless  gen- 

31  eral ;  hemp,  tobacco  stems,  matting  and  cassia,  except  in  boxes,  free 

32  from  average  under  ticenty  per  cent  unless  general ;  and  sugar,  flax, 

33  flax-seed  and  bread,  are  warranted  by  the  assured  free  from  average 

34  under  seven  per  cent  unless  general ;  and  coffee  in   bags  or  bulk, 

35  pepper  in  bags  or  bulk,  and  rice,  free  from  average,  under  ten  per 

36  cent,  unless  general. 

37  Warranted  by  the  insured  free  from  damage  or  injury,  from  damp- 

38  ness,  change  of  flavor,  or  being  spotted,  discolored,  musty  or  mouldy, 

39  except  caused  by  actual  contact  of  sea  water  with  the  articles  dam- 

40  aged,   occasioned  by  sea  perils.      In  case  of  partial  loss  by  sea 

41  damage  to  dry  goods,  cutlery  or  other  hardware,  the  loss  shall  be 

42  ascertained  by  a  separation  and  sale  of  the  portion  only  of  the  con- 

43  tents  of  the  packages  so  damaged,  and  not  otherwise  ;  and  the  same 

44  practice  shall  obtain  as  to  all  other  merchandise  as  far  as  practicable. 

45  Not  liable  for  leakage  on  molasses  or  other  liquids,  unless  occasioned 

46  by  stranding  or  collision  with  another  vessel. 

47  If  the  vovage  aforesaid  shall  have  been  begun  and  shall  have  ter- 


1174  FORMS.  [aPP. 

minated  before  the  date  of  this  polic}',  then  there  shall  be  no  return  l 

of  premium  on  account  of  such  termination  of  the  voyage.  2 

In  all  cases  of  return  of  premium,  in  whole  or  in  part,  one-half  per  3 

cent,  upon  the  sum  insured,  is  to  be  retained  by  the  assurers.  4 

%  6 

Secretary.                                        President.  1 


(B)   Some  Clauses  in  the  Margin  of  Policies  on  Vessels.  g 

3fachinery,  9 

It  is  understood  that  this  Company  is  not  liable  for  any  injuries  10 
to,  or  derangement  of,  or  breakage  of  the  raachineiy,  or  bursting  of  11 
the  boilers,  unless  occasioned  by  stranding ;  but  if  she  takes  fire,  12 
and  an\'  part  of  the  machiner}'  or  boilers  be  damaged  thereby,  this  13 
Corapau}'  is  to  be  liable  therefor.  It  is  also  understood  that  the  14 
Company  is  not  liable  for  fuel,  wages  and  provisions,  nor  for  any  15 
expense  of  an}-  delay  consequent  upon  repairs  of  any  kind.  16 

Collision.  17 

And  it  is  further  agreed,  that  if  the  vessel  hereby  insured  shall  in  18 
consequence  of  collision  with  another  vessel,  become  liable  to  pa}',  19 
and  shall  pa}',  an}'  sum  or  sums  for  damages  resulting  therefrom  to  20 
said  other  vessel,  her  freight  or  her  cargo,  in  such  case  this  Com-  21 
pany  will  contribute  towards  the  payment  of  three-fourths  of  the  22 
total  amount  of  said  damages,  in  the  proportion  that  the  sum  in-  23 
sured  under  this  policy  bears  to  the  total  valuation  of  the  vessel  as  24 
stated  herein,  provided  that  this  Company  shall  not  in  any  event  be  25 
held  liable  under  this  agreement  for  a  greater  sum  than  three-fourths  26 
of  the  amount  insured  under  this  Policy.  27 

A7id  it  is  also  agreed  that  this  Company  will  bear  a  like  propor-  28 
tionate  share  of  the  costs  and  expenses  that  may  be  incurred  in  con-  29 
testing  the  liability  resulting  from  said  collision,  provided  the  30 
written  consent  of  the  Company  to  such  contest  be  first^  obtained.  31 

But  under  no  circumstances  shall  this  Company  be  held  liable  for  32 
any  contribution  in  respect  of  any  sum  that  the  assured  may  be  held  33 
liable  to  pay,  by  reason  of  loss  of  life  or  personal  injury  to  Individ-  34 
uals  in  any  cause  whatsoever.  35 

Repairs.  36 

In  case  of  claim  for  loss  or  damage,  a  deduction  of  one-third  from  37 
the  cost  of  repairing  or  replacing  the  same  shall  be  made,  after  de-  38 
ducting  the  value  of  the  old  materials,  except  in  the  case  of  anchors,  39 
and  of  sheating  of  copper  or  other  metal ;  a  deduction  of  one-fortieth  40 
from  the  expense  of  repairing  or  replacing  the  metal  sheating,  or  41 


SECT.  I.]  FORMS.  1175 

1  an}'  part  thereof,  (after  first  deducting  the  value  of  the  old  metal  and 

2  nails),  shall  be  made  for  every  month  since  the  vessel  was  last 

3  sheathed  until  the  expiration  of  forty  months,  after  whicli  time  the 

4  cost  of  re-mctalling  or  repairing  the  same  shall  be  wholly  borne  by 

5  the  assured.     If  a  technical  total  loss  be  claimed,  similar  deductions 

6  shall  be  made  from  the  estimated  repairs,  and  unless  the  net  cost 

7  thereof  would  exceed  a  moiety  of  the  insured  value  of  the  vessel,  as 

8  expressed  in  this  policy,  after  making  such  deductions^  the  loss  shall 

9  be  deemed  partial  only. 


1176  FORMS.  [aPP. 


SECTION   II. 

Fire   Insurance. 

{A)   The  Massachusetts  Standard  Policy.*  1 

No. —  $ 2 

[Corporate  name  of  the  company  or  association  ;  its  principal  3 
place  or  places  of  business.]  4 

This  company  shall  not  be  liable  beyond  the  actual  value  of  the  5 
insured  property  at  the  time  any  loss  or  damage  happens.  6 

In  consideration  of  dollars  to  it  paid  by  the  insured,  herein-    7 

after  named,  the  receipt  whereof  is  hereby  acknowledged,  does  in-  8 
sure  and  legal  representatives   against  loss  or  damage    9 

b}^  fire,  to  the  amount  of  dollars.  lo 

(Description  of  property  insured.)  ii 

Bills  of  exchange,  notes,  accounts,  evidences  and  securities  of  12 
property  of  every  kind,  books,  wearing  apparel,  plate,  money,  13 
jewels,  medals,  patterns,  models,  scientific  cabinets  and  collections,  14 
paintings,  sculpture  and  curiosities  are  not  included  in  said  insured  15 
propertj',  unless  especially  mentioned.  16 

Said  property  is  insured  for  the  term  of  ,  beginning  on  the  17 

day  of  ,  in  the  3-ear  nineteen  hundred  and  ,  at  18 

noon,  and  continuing  until  the  day  of  ,  in  the  3'ear  nine-  19 

teen  hundred  and  ,  at  noon,  against  all  loss  or  damage  b}-  fire  20 

originating  from  any  cause  except  invasion,  foreign  enemies,  civil  21 
commotions,  riots,  or  any  military  or  usurped  power  whatever ;  the  22 
amount  of  said  loss  or  damage  to  be  estimated  according  to  the  23 
actual  value  of  the  insured  property  at  the  time  when  such  loss  or  24 
damage  happens,  but  not  to  include  loss  or  damage  caused  b}'  ex-  25 
plosions  of  any  kind  unless  fire  ensues,  and  then  to  include  that  26 
caused  by  fire  only.  27 

^This  polic}'  shall  be  void  if  any  material  fact  or  circumstance  28 
stated  in  writing  has  not  been  fairly  represented  by  the  insured,) —  29 
or  if  the  insured  now  has  or  shall  hereafter  make  any  other  insur-  30 
ance  on  the  said  property  without  the  asseut  in  writing  or  in  print  31 
of  the  compan}',  —  or  if,  without  such  assent,  the  said  property  32 
shall  be  removed,  except  tliat,  if  such  removal  shall  be  necessary  for  33 
the  preservation  of  the  property  from  fire,  this  policy  shall  be  valid  34 
without  sucli  assent  for  five  days  thereafter,  —  or  if,  without  such  35 
assent,  the  situation  or  circumstances  affecting  the  risk  shall,  by  or  36 
with  the  knowledge,  advice,  agency  or  consent  of  the  insured,  be  so  37 
altered  as  to  cause  an  increase  of  such  risks,  or  if,  without  such  as-  38 

1  Ab  provided  in  Revised  Laws  of  Massackusetts^  1902,  chap.  118,  sect.  60.  — Ed 


SECT.  II.]  FORMS.  1177 

1  sent,  the  said  propert}-  shall  be  sold,  or  this  policy  assigned,  or  if 

2  the  premises  herebj-  insured  shall  become  vacant  by  the  removal  of 

3  the  owner  or  occupant,  and  so  remain  vacant  for  more  than  thirty 

4  days  without  such  assent,  or  if  it  be  a  manufacturing  establishment, 
6  running,  in  whole  or  in  part,  extra  time,  except  that  such  establish- 

6  ments  may  run,  in  whole  or  in  part,  extra  hours  not  later  than  nine 

7  o'clock  P.M.,  or  if  such  establishments  shall  cease  operation  for  more 

8  than  thirty  days  without  permission  in  writing  indorsed  hereon,  or 
9(if  the   insured  shall   make   anv  attempt  to   defraud   the  companv 

10 'either  before  or  after  the  loss  J— or  if  gunpowdei-  or  other  artic;!^  Cf^^u^ 

11  subject  to  legal  restriction  shall  be  kept  in  quantities  or  manner  dif-  a^^^j^^^ 

12  ferent  from  those  allowed  or  prescribed  by  law,  — ^or  if^mphene,  7 

13  benzniCj  naphtha,  or  other  chemical  oils  or"buniing3uids_jlian~b^  fCLU^-<^ 

14  kept  or  used  by  the  insured  on  the  ].:u:emiaeauDsured,_except  tliat  ^^j/Slu^! 

15  what  is  known  as  refined  petroleum,  kerosene  or  coal  ojljjnay  be 

16  use3"for  lighting,  and  in  dwelling Jbouses  kerosene  qil^oves  may  be 

17  used  for  domestic  purposes,  —  to  be  filled  when  cold,  by^ayllgbt", 

18  and  with  oil  of  lawful  fire  test  onl^. 

19  rriEe  insured  property  shall  be  exposed  to  loss  or  damage  by  fire, 

20  the  insured  shall  make  all  reasonable  exertions  to  save  and  protect 

21  the  same. 

22  { In  case  of  any  loss  or  damage  under  this  policy,  a  statement  in    /%^o-^ 

23  writing,   signed  and  sworn  to  by  the  insured,   shall  be  forthwith  / 

24  rendered  to  the  company,  setting  forth  the  value  of  the  property 

25  insured,  the   interest  of   the   insured    therein,  all  other  insurances 

26  thereon,  in  detail,  the  purposes  for  which  and  the  persons  by  whom 

27  the  building  insured,  or  containing  the  property  insured,  was  used, 

28  and  the  time  at  which  and  manner  in  which  the  fire  originated,  so  far 

29  as  known  to  the  insured.^  The  company  may  also  examine  the  books 

30  of  account  and  vouchers  of  the  insured,  and  make  extracts  from  the 

31  same. 

32  /In  case  of  any  loss  or  damage,  the  company,  within  sixty  days 

33  aVter  the  insured  shall  have  submitted  a  statement,  as  provided  in 

34  the  preceding  clause,  shall  either  pay  the  amount  for  which  it  shall 

35  be  liableJ?c/aVA  amount  if  not  agreed  upon  shall  be  ascertained  by 

36  award  Of  referees  as  hereinafter  provided,  or  replace  the  property 

37  with  other  of  the  same  kind  and  goodness,  — or  it  may,  within 

38  fifteen  days  after  such  statement  is  submitted,  notify  the  insured  of 

39  its  intention  to  rebuild  or  repair  the  premises,  or  any  portion  thereof 

40  separately  insured  by  this  policy,  and  shall  thereupon  enter  upon 

41  said  premises  and  proceed  to  rebuild  or  repair  the  same  with  reason- 

42  able  expedition.     It  is  moreover  understood  that  there  can  be  no 

43  abandonment  of  the  property  insured  to  the  company,  and  that  the 

44  company  shall   not  in  any  case  be  liable  for  more  than  the  sum 

45  insured,  with  interest  thereon  from  the  time  when   the  loss  shall 

46  become  payable,  as  above  provided. 

47  If  there  shall  be  any  other  insurance  on  the  property  insured, 


1178  FORMS.  [aPP. 

whether  prior  or  subsequent,  the  insured  shall  recover  on  this  polic}'   l 

no  o-reater  proportion  of  the  loss  sustained  than  the  sura  hereb}'    2 

insured  bears  to  the  whole  amount  insured  thereon.     And  whenever   3 

the  compan}'  shall  pay  any  loss,  the  insured  shall  assign  to  it,  to  the    4 

extent  of  the  amount  so  paid,  all  rights  to  recover  satisfaction  for   5 

the  loss  or  damage  from   any  person,  town  or  other  corporation,    6 

excepting  other  insurers  ;  or  the  insured,  if  requested,  shall  prose-    7 

cute  therefor  at  the  charge  and  for  the  account  of  the  company.  8 

If  this  policy  shall  be  made  payable  to  a  mortgagee  of  the  insured    9 

real  estate,  no  act  or  default  of  any  person  other  than  such  mortgagee  10 

or  his  agents,  or  those  claiming  under  him,  shall  affect  such  mort- 11 

gagee's  right  to  recover  in  case  of  loss  on  such  real  estate  :  provided,  12 

that  the  mortgagee  shall,  on  demand,  pay  according  to  the  estab-  13 

lished  scale  of  rates  for  any  increase  of  risks  not  paid  for  by  the  in-  14 

sured  ;  and  whenever  this  company  shall  be  liable  to  a  mortgagee  for  15 

any  sum  for  loss  under  this  policy,  for  which  no  liability  exists  as  to  16 

the  mortgagor,  or  owner,  and  this  company  shall  elect  by  itself,  or  17 

with  others,  to  pay  the  mortgagee  the  full  amount  secured  by  such  18 

mortgage,  then  the  mortgagee  shall  assign  and  transfer  to  the  com-  19 

panics  interested,  upon  such  payment,  the  said  mortgage,  together  20 

with  the  note  and  debt  thereby  secured.  21 

This  policy  may  be  cancelled  at  any  time  at  the  request  of  the  22 

insured,  who  shall  thereupon  be  entitled  to  a  return  of  the  portion  23 

of  the  above  premium  remaining,  after  deducting  the  customary  24 

monthly  short  rates  for  the  time  this  policy  shall  have  been  in  force.  25 

The  company  also  reserves  the  right,  after  giving  written  notice  to  26 

the  insured,  and  to  any  mortgagee  to  whom  this  policy  is  made  pay-  27 

able,  and  tendering  to  the  insured  a  ratable  proportion  of  the  pre-  28 

mium,  to  cancel  this  policy  as  to  all  risks  subsequent  to  the  expiration  29 

of  ten  days  from  such  notice,  and  no  mortgagee  shall  then  have  the  so 

right  to  recover  as  to  such  risks.  31 

In  case  of  loss  under  this  policy  and  a  failure  of  the  parties  to  32 

agree  as  to  the  amount  of  loss,  it  is  mutually  agreed  that  the  amount  33 

of  such  loss  shall  be  referred  to  three  disinterested  men,  the  com-  34 

pany  and  the  insured  each  choosing  one  out  of  three  persons  to  be  35 

named  by  the  other,  and  the  third  being  selected  by  the  two  so  36 

chosen  ;  the  award  in  writing  by  a  majority  of  the  referees  shall  be  37 

conclusive  and  final  upon  the  parties  as  to  the  amount  of  loss  or  38 

damage,  and  such  reference  unless  waived  by  the  parties  shall  he  a  39 

condition  precedent  to  any  right  of  action  in  laio  or  equity  to  re-  40 

cover  for  such  loss  ;  but  no  person  shall  be  chosen  or  act  as  a  referee,  41 

against  the  objection  of  either  party,  who  has  acted  in  a  like  capacity  42 

within  four  months.  *3 

[No  suit  or  action  against  this  company  for  the  recovery  of  any  44 

-  claim  by  virtue  of  this  policy  shall  be  sustained  in  any  court  of  law  45 

or  equity  in  this  Commonwealth  unless  commenced  within  two  years  46 

from  the  time  the  loss  occurred.)  *'^ 


SECT.  II.]  FORMS.  1179 

1  In  witness  whereof  the  said  compan}'  has  caused  this  policy 

2  to  be  signed  by  its  president  and  attested  by  its  secretary  [or  by  such 

3  proper  officers  as  may  be  designated],  at  their  office  in 
4 

5      [date] . 


6  (B)   The  Standard  Fire  Insurance  Policy  of  the  State  of  New  York.^ 

7  (a)    Policy. 

8  No.  S 

9  In  consideration  of  the  stipulations  herein  named  and  of 

10  dollars  premium  does  insure  for  the  term  of  from 

11  the  day   of  18      ,  at   noon,    to   the  day   of 

12  18      ,  at  noon,  against  all  direct  loss  or  damage  by  fire, 

13  except  as  hereinafter  provided,  to  an  amount  not  exceeding 

14  dollars,  to  the  following  described  property  while  located 

15  and  contained  as  descx'ibed  herein,  and  not  elsewhere,  to  wit: 


16  This  company  shall  not  be  liable  beyond  the  actual  cash  value  of 

17  the  property  at  the  time  any  loss  or  damage  occurs,  and  the  loss  or 

18  damage  shall  be  ascertained  or  estimated  according  to  such  actual 

19  cash  value,  with  proper  deduction  for  depreciation  however  caused, 

20  and  shall  in  no  event  exceed  what  it  would  then  cost  the  insured 

21  to  repair  or  replace  the  same  with  material  of  like  kind  and  quality  ; 

22  said  ascertainment  or  estimate  shall  be  made  by  the  insured  and 

23  this  company,  or,  if  they  differ,  tlien  by  appraisers,  as  hereinafter 
2i  provided  ;    and,  the  amount  of  loss  or  damage   having  been  thus 

25  determined,  the  sum   for  which  this  company  is  liable  pursuant  to 

26  this  policy  shall  be  payable  sixty  days  after  due  notice,  ascertain- 

27  ment,  estimate,  and  satisfactory  proof  of  the  loss  have  been  received 

28  by  this  company  in  accordance  with  the  terms  of  this  polic}'.     It 

29  shall  be  optional,  however,  with  this  company  to  take  all,  or  an}' 

30  part,  of  the  articles  at  such  ascertained  or  appraised^  value,  and  also 

31  to  repair,   rebuild,  or  replace  the   property  lost  or  damaged  with 

32  other  of  like  kind  and  qualit}'  within  a  reasonable  time  on  giving 

33  notice,  within  thirty  days  after  the  receipt  of  the  proof  herein  re- 

34  quired,  of  its  intention  so  to  do  ;  bijt  there  can  be  no  abandonment 

35  to  this  companj-  of  the  propert}'  described. 

36  f  This  entire  policy  shall  be  void  if  the  insured  has  concealed  or 

37  misrepresented,   in  writing  or  otherwise,  any  material  fact  or  cir- 

38  cumstauce  concerning  this  insurance  or  the  subject  thereof;  or  if 

39  the  interest  of  the  insured  in  the  propert}'  be  not  trul}'  stated  herein  y 

40  or  in  case  of  any  fraud  or  false  swearing  by  the  insured  touching 

1  See  Laws  of  New  York,  124th  Session,  1901,  chap.  5ia  —  Ed. 


1180  FORMS.  [aPP. 

any  matter  relating  to.this  insurance  or  the  subject  thereof,  whether  i 
before  or  after  a  loss.  J  2 

This  entire  polic}',  unless  otherwise  provided  by  agreement  in-  3 
dorsed  hereon  or  added  hereto,  shall  be  void  if  the  insured  now  has  4 
or  shall  hereafter  make  or  procure  any  other  contract  of  insurance,  5 
whether  valid  or  not,  on  property  covered  in  whole  or  in  part  by  this  6 
policy  ;  or  if  the  subject  of  insurance  be  a  manufacturing  establish-  7 
ment  and  it  be  operated  in  whole  or  in  part  at  night  later  than  ten  8 
o'clock,  or  if  it  cease  to  be  operated  for  more  than  ten  consecutive  9 
da^'s  ;  or  if  the  hazard  be  increased  b}'  any  means  within  the  control  10 
or  knowledge  of  the  insured  ;  or  if  mechanics  be  employed  in  build-  ii 
ing,  altering,  or  repairing  the  within  described  premises  for  more  12 
than  fifteen  days  at  any  one  time  ;  or  if  the  jnteyf^s^.  of  the  insured  13 
be  other  than  unconditional  and  sole  ownership;  or  if  the  subject  of  14 
insurance  be  a  building  on  ground  not  owned  bj'  the  insured  in  fee-  15 
simple  ;  or  if  the  subject  of  insurance  be  personal  property  and  be  16 
or  become  incumbered  by  a  chattel  mortgage  ;  or  if,  with  the  knowl-  n 
edge  of  the  insured,  foreclosure  proceedings  be  commenced  or  notice  18 
given  of  sale  of  any  property  co\ered  by  this  polic}'  by  virtue  of  any  19 
mortgage  or  trust  deed  ;  or  if  any  change,  other  than  by  the  death  20 
of  an  insured,  take  place  in  the  interest,  title,  or  possession  of  the  21 
subject  of  insurance  (except  change  of  occupants  without  increase  of  22 
hazard)  whether  b}'  legal  process  or  judgment  or  by  voluntary  act  of  23 
the  insured,  or  otherwise  ;  or  if  this  policy  be  assigned  before  a  loss ;  24 
or  if  illuminating  gas  or  vapor  be  generated  in  the  described  build-  25 
ing  (or  adjacent  thereto)  for  use  therein  ;  or  if /any  usage  or  custom_2r) 
of  trade  or  manufactuiie  to  the  contrary  notwithstanding)  there  be  27 
^ept,  useTlT^r  aj^lowed^on^the  above  described  premises,  benzine^  28 
b^fizoleTdynamite,  ether,  fireworks,  gasolene,  greek  fire^  giinpowder  29 
exceeding^J^cnty^fiya^^Kmiids  in  quantity,  naphtha,  nitro-gl.ycerine  30 
or  other  explosives,  phosphorus,  or  petroleum  or  any  of  its  products  31 
of^reater^  inflanimability  than  kerosene  oil  of  the  United  States  32 
stjindard,  (which  last  may  be  used  for  lights  ajidkejitfor.sale  accord-  33 
ing  to  law  but  in  quantities  not  exceeding  five  barrels,  provided  itbe  34 
drawTrandTampsTTied  by  dayiigTrtjfjra"distaiice  not  less  than  ten  35 
feet  frora_artificial  light) ;  or  if  a  building  herein  described,  whether  36 
Intended  fol^occupanc}'  by  owner  or  tenant,  be  or  become  vacant  or  37 
unoccupied  and  so  remain  for  ten  days.  38 

This  company  shall  not  be  liable  for  loss  caused  directly  or  in-  39 
directly  by  invasion,  insurrection,  riot,  civil  war  or  commotion,  or  40 
military  or  usurped  power,  or  by  order  of  any  civil  authority  ;  or  by  41 
theft ;  or  by  neglect  of  the  insured  to  use  all  reasonable  means  to  42 
save  and  preserve  the  property  at  and  after  a  fire  or  when  the  prop-  43 
erty  is  endangered  by  fire  in  neighboring  premises ;  or  (unless  fire  44 
ensues,  and,  in  that  event,  for  the  damage  by  fire  only)  by  ex-  45 
plosion  of  any  kind,  or  lightning  ;  but  liability  for  direct  damage  by  46 
lightning  may  be  assumed  by  specific  agreement  hereon.  47 


SECT.  II  ]  FORMS.  1181 

1  If  a  building  or  anj-  part  thereof  fall,  except  as  the  result  of  fire, 

2  all  insurance  b}'  this  polic}'  on  such  building  or  its  contents  shall 

3  immediately  cease. 

4  This   company  shall    not   be   liable    for   loss   to  accounts,   bills, 

5  currcnc}',    deeds,   evidences  of  debt,   money,  notes,  or   securities  ; 

6  nor,  unless  liability  is  specifically  assumed  hereon,  for  loss  to  awn- 

7  ings,  bullion,  casts,  curiosities,  drawings,  dies,  implements,  jewels, 

8  manuscripts,  medals,  models,  patterns,   pictures,  scientific  appara- 

9  tus,  signs,  store   or  office  furniture  or  fixture,  sculpture,  tools,  or 

10  properly  held  on  storage   or   for  repairs ;    nor,  beyond   the   actual 

11  value  destroyed  by  fire,  for  loss  occasioned  by  ordinance  or  law  reg- 

12  ulating  construction  or  repair  of  buildings,  or  by  interruption  of  busi- 

13  ness,  manufacturing  processes,  or  otherwise;  nor  for  any  greater 

14  proportion  of  the  value  of  plate  glass,    frescoes,   and  decorations 

15  than  that  which  this  policy  shall  bear  to  the  whole   insurance  on 

16  the  building  described. 

17  If  an  application,  survey,  plan,  or  description  of  property  be  re- 

18  ferred    to  in  this  policy  it  shall  be  a  part  of  this  contract  and  a 

19  warranty  by  the  insured. 

20  In  any  matter  relating  to  this  insurance  no  person,  unless  duly 

21  authorized  in  writing,  shall  be  deemed  the  agent  of  this  company. 

22  This  policy  may  by  a  renewal  be  continued  under  the  original 

23  stipulations,  in  consideration  of  premium  for  the  renewed  term,  pro- 

24  vided  that  any  increase  of  hazard  must  be  made  known  to  this  com- 

25  pany  at  the  time  of  renewal  or  this  policy  shall  be  void. 

26  This  policy  shall  be  cancelled  at  any  time  at  the  request  of  the  in- 

27  sured ;  or  by  the  compan}-  by  giving  five  days'  notice  of  such  cancella- 

28  tion.     If  this  policy  shall  be  cancelled  as  hereinbefore  provided,  or 
20  become  void  or  cease,  the  premium  having  been  actuall}-  paid,  the 

30  unearned  portion  shall  be  returned  on  surrender  of  this  policy  or  last 

31  renewal,  this  company  retaining  the  customary  short  rate;  except 

32  that  when  this  policy  is  cancelled  by  this  company  by  giving  notice 

33  it  shall  retain  only  the 2)>'0  rata  premium. 

34  If,  with  the  consent  of  this  company,  an  interest  under  this  policy 

35  shall  exist  in  favor  of  a  mortgagee  or  of  any  person  or  corporation 

36  having  an  interest  in  the  subject  of  insurance  other  than  the  in- 

37  terest  of  the  insured  as  described  herein,  the  conditions  hereinbefore 

38  contained   shall  apply  in  the  manner  expressed  in  such  provisions 

39  and  conditions  of  insurance   relating  to  such  interest  as  shall  be 

40  written  upon,   attached,  or  appended  hereto. 

41  If  property  covered  by  this  policy  is  so  endangered  by  fire  as  to 

42  require  removal  to  a  place  of  safety,  and  is  so  removed,  that  part  of 

43  this  policy  in  excess  of  its  proportion  of  any  loss  and  of  the  value  of 

44  property  remaining  in  the  original  location,  shall,  for  the  ensuing 

45  five  days  only,  cover  the  property  so  removed  in  the  new  location ; 

46  if  removed  to  more  than  one  location,  such  excess  of  this  policy 

47  shall  cover  therein  for  such  five  days  in  the  proportion  that  the  value 


1182        ^  FORMS.  [aPP. 

in  any  one  such  new  location  bears  to  the  value  in  all  such  new  loca-  i 
tions;  but  this  company  shall  not,  in  any  case  of  removal,  whether  2 
to  one  or  more  locations,  be  liable  beyond  the  proportion  that  the  3 
amount  hereby  insured  shall  bear  to  the  total  insurance  on  the  whole  4 
property  at  the  time  of  fire,  whether  the  same  cover  in  new  location  5 
or  not.  6 

If  fire  occur  the  insured  shall  give  immediate  notice  of  any  loss  7 
thereby  in  writing  to  this  company,  pi'otect  the  property  from  further  8 
damage,  forthwith  separate  the  damaged  and  undamaged  personal  9 
propert}',  put  it  in  the  best  possible  order,  make  a  complete  inven- 10 
tory  of  the  same,  stating  tiie  miantity  and  cost  of  each  article  and  11 
the  amount  claimed  thereon  /and,  within  sixt}'  days  after  the  fire,  12 
/  unless  such  time  is  extended  in  writing  by  this  company,  shall  13 
render  a  statement  to  this  compan}-,  signed  and  sworn  to  by  said  14 
insured,  stating  the  knowledge  and  belief  of  the  insured  as  to  the  15 
time  and  origin  of  the  fire  ;  the  interest  of  the  insured  and  of  all  16 
others  in  the  proi^erty;  the  cash  value  of  each  item  thereof  and  the  17 
amount  of  loss  thereon ;  all  incumbrances  thereon ;  all  other  insur-  18 
ance,  whether  valid  or  not,  covering  any  of  said  property- ;  and  a  19 
copy  of  all  the  descriptions  and  schedules  in  all  policies ;  an}'  20 
changes  in  the  title,  use,  occupation,  location,  possession,  or  ex-  21 
posures  of  said  property  since  the  issuing  of  this  polic}' ;  by  whom  22 
and  for  what  purpose  an}-  building  herein  described  and  the  several  23 
parts  thereof  were  occupied  at  the  time  of  fire;  and  shall  furnish,  if  24 
required,  verified  plans  and  specifications  of  an}'  building,  fixtures,  25 
or  machinery  destro3ed  or  damaged;  and  shall  also,  if  requu-ed^  fur-  26 
nish  a,  certificate  of  the  magistrate  or  notar}'  public  (not  interested  27 
in  the  claim  asa  credi^r  or  otherwise,  nor  related  to  the  insured)  28 
living  nearest  the  place  of  fire,  stating  that  he  has  examined  the  29 
circumstances  and  believes  the  insured  has  honestl}'  sustained  loss  30 
to  the  amount  that  such  magistrate  or  notar}'  public  shall  certify^      31 

The  insured,  as  often  as  required,  shall  exhibit  to  an}'  person  32 
designated  by  this  company  all  that  remains  of  any  property  herein  33 
described,  and  submit  to  examinations  under  oath  by  any  person  34 
named  by  this  company,  and  subscribe  the  same  ;  and,  as  often  as  35 
required,  shall  produce  for  examination  all  books  of  account,  bills,  36 
invoices,  and  other  vouchers,  or  certified  copies  thereof  if  originals  be  37 
lost,  at  such  reasonable  place  as  may  be  designated  by  this  com-  38 
pany  or  its  representative,  and  shall  permit  extracts  and  copies  39 
thereof  to  be  made.  40 

In  the  event  of  disagreement  as  to  the  amount  of  loss  the  same  41 
shall,  as  above  provided,  be  ascertained  by  two  competent  and  dis-  42 
interested  appraisers,  the  insured  and  this  company  each  selecting  43 
one,  and  the  two  so  chosen  shall  first  select  a  competent  and  dis-  44 
interested  umpire;  the  appraisers  together  shall  then  estimate  and  45 
appraise  the  loss,  stating  separately  sound  value  and  damage,  and,  46 
failing  to  agree,  shall  submit  their  differences  to  the  umpire  ;  and  the  47 


SECT.  II.]  FORMS.  1183 

1  award  in  writing  of  auy  two  shall  determine  the  amount  of  such  loss ; 

2  the  parties  thereto  shall  pay  the  appraiser  respectively  selected  by 

3  them  and   shall   bear  equally  the   expenses  of  the   appraisal  and 

4  umpire. 

5  This  company  shall  not  be  held  to  have  waived  an}'  provision  or 

6  condition  of  this  polic}"  or  any  forfeiture  thereof  by  any  require- 

7  ment,  act,  or  proceeding  on  its  part  relating  to  the  appraisal  or  to 

8  any  examination  herein  provided  for ;  and  the  loss  shall  not  become 

9  payable  until  sixty  days  after  the  notice,  ascertainment,  estimate, 

10  and  satisfactory  proof  of  the  loss  herein  required  have  been  received 

11  by  this  company,  including  an  award  b}'  appraisers  when  appraisal 

12  has  been  required. 

13  This  company  shall  not  be  liable  under  this  polic}-  for  a  greater 

14  proportion  of  any  loss  on  the  described  property,  or  for  loss  by  and 

15  expense  of  removal  from    premises  endangered   by  fire,   than  the 

16  amount  hereby  insured  shall  bear  to  the  whole  insurance,  whether 

17  valid  or  not,  or  by  solvent  or  insolvent  insurers,  covering  such  prop- 

18  erty,  and  the  extent  of  the  application  of  the  insurance  under  this 

19  policy  or  of  the  contribution  to  be  made  by  this  company  in  case  of 

20  loss,  may  be  provided  for  by  agreement  or  condition  written  hereon 

21  or  attached  or  appended  hereto.     Liability  for  re-insurance  shall  be 

22  as  specifically  agreed  hereon. 

23  If  this  company  shall  claim  that  the  fire  was  caused  by  the  act  or 

24  neglect  of  any  person  or   corporation,   private  or    municipal,    this 

25  company  shall,  on  payment  of  the  loss,  be  subrogated  to  the  extent 
2G  of  such  paAment  to  all  right  of  recovery  by  the  insured  for  the  loss 

27  resulting  therefrom,  and  such  right  shall  be  assigned  to  this  company  : 

28  bv  the  insured  on  receiving  such  pajment. 

29  ^No  suit  or  action  on  this  polic\-,  for  the  recovery  of  any  claim, 

20  shall  be  sustainable  in  any  court  of  law  or  equity  until  after  full  com-     P-  ^  ^^ 

31  pliance  by  the  insured  with  all  the  foregoing  requirements,  nor  unless   y>    /^// 

32  commenced  within  twelve  months  next  after  the  fire.   )  / 

33  Wherever  in  this  policy  the  word  "  insured  "  occurs,  it  shall  be 

34  held  to  include  the  legal  representative  of  the  insured,  and  wherever 

35  the  word  "  loss  "  occurs,  it  shall  be  deemed  the  equivalent  of  "  loss 

36  or  damage." 

37  If  this  polic}'  be  made  by  a  mutual  or  other  company  having  spe- 

38  cial  regulations  lawfully  applicable  to  its  organization,  membership, 

39  policies  or  contracts  of  insurance,  such  regulations  shall  apply  to  and 

40  form  a  part  of  this  policy  as  the  same  may  be  written  or  printed 

41  upon,  attached,  or  appended  hereto. 

42  This  policy  is  made  and  accepted  subject  to  the  foregoing  stipula- 

43  tions  and  conditions,  together  with  such  other  provisions,  agreements, 

44  or  conditions  as  may  be  indorsed  hereon  or  added  hereto,  and  no 

45  officer,  agent,   or  other  representative  of  this  company  shall  have 

46  power  to   waive  any    provision   or  condition  of  this  policy  except 

47  such  as  by  the  terms  of  this   policy  may  be  the  subject  of  agree- 


1184  FORMS.  [aPP. 

ment  indorsed  hereon  or  added  hereto,  and  as  to  such  provisions  l 

and  conditions  no  officer,  agent,  or  representative  shall  have  such  2 

power  or  be    deemed  or  held  to  have  waived  such   provisions   or  3 

conditions  unless  such  waiver,  if  any,  shall  be  written  upon  or  at-  4 

tached  hereto,  nor  shall  any  privilege  or  permission  affecting  the  in-  5 

surance  under  this  policy  exist  or  be  claimed  by  the  insured  unless  6 

so  written  or  attached.  ^ 

In  witness  whereof,  this    company  has  executed  and  attested  8 

these  presents  this                     day  of                                ,18  9 


(b)  Forms  on  the  Back  of  the  Policy.  10 

ASSIGNMENT    OF    INTEREST    BY    INSURED.  11 

The  interest  of  as  owner  of  property  covered  by  this  12 

Policy  is  hereby  assigned  to  subject  to  the  consent  13 

of  1* 

[Signature  of  the  Insured]  15 
Dated  16 

[Note.  —To  secure  Mortgagees,  if  desired,  the  Policy  should  17 
be  made  payable  on  its  face  to  such  Mortgagee  as  follows :  Loss,  18 
if  any,   payable  to  John  Doe,  Mortgagee.]  .  19 

CONSENT   BY   COMPANY  TO    ASSIGNMENT   OF   INTEREST.  20 

hereby  consents  that  the  interest  of  as  21 

owner  of  the  property  covered  by  this  Policy  be  assigned  to  22 

[Signature  for  Company.]  23 
Dated  24 

(c)   Some  Permissible  Clauses  or  Eiders.^  25 

AVERAGE    CLAUSE.  26 

This  Company  shall  not  be  liable  for  a  greater  proportion  of  any  27 
loss  or  damage  to  the  property  described  herein  than  the  sum  hereby  28 
insured  bears  to  per  centum  (  %)  of  the  actual  29 

cash  value  of  said  property  at  the  time  such  loss  shall  happen.  30 

If  the  insurance  under  this  policy  be  divided  into  two  or  more  31 
items  this  Average  Clause  shall  apply  to  each  item  separately.  32 

1  From  New  York  Insurance  Report,  1902,  Part  I.,  pp.  xxiv.-xxx.  —  Ed. 


SECT.  II.]  FORMS.  118i 


1  APPLICATION    AND    SURVEY    CLAUSE. 

2  This  policy  is  based  upon  an  application  and  survey  of  the  prop- 

3  erty  on  file  which  is  hereby  referred  to  as  forming  part  of  tliis  policy. 

4  Date  of  Application 

5  Where  filed 

6  Attached  to  and  forming  part  of  Polic}'  No. 

7  [Signature  for  Company.] 

8  PERCENTAGE    VALUE    CLAUSE. 

9  If  at  the  time  of  tire  the  whole  amount  of  insurance  on  the  propertv 

10  covered  by  this  polic}  shall  exceed  per  cent  of  the  actual  cash 

11  value  thereof,  this  Company  in  case  of  loss  or  damage  shall  not  be 

12  liable  to  pa}'  more  than  its  pro  rata  share  of  said  per  cent 

13  of  the  actual  cash  value  of  such  property  ;  and  should  the  whole  in- 

14  surance  at  the  time  of  tlie  fire  exceed  the  said  per  cent,  a/>ro  rata- 

15  return  of  premium  on  such  excess  of  insurance  from  the  time  of  the 

16  fire  to  the  expiration  of  this  policy  shall  be  made  on  surrender  of  the 

17  policy. 

18  Attached  to  and  forming  part  of  Policy  No. 

19  [Signature  for  Company.] 

20  CO-INSURANCE    CLAUSE. 

21  If  at   the   time    of  fire  the  whole  amount    of   insurance  on  the 

22  property  covered  by  this  policy  shall  be  less  than  the  actual  cash 

23  value  thereof,  this  Company  shall,  in  case  of  loss  or  damage,  be 

24  liable  for  such  portion  only  of  the  loss  or  damage  as  the  amount  in- 

25  sured  by  this  policy  shall  bear  to  the  actual  cash  value  of  such  prop- 

26  ertj-. 

27  Attached  to  and  forming  part  of  Polic}'  No. 

28  [Signature  for  Company.] 

29  PERCENTAGE    CO-INSURANCE    CLAUSE. 

30  If  at  the  time  of  fire  the  whole  amount  of  insurance  on  the  prop- 

31  erty  covered  b}-  this  policy  shall  be  less  than  per  cent  of 

32  the  actual  cash  value  thereof,  this  Company  shall,  in  case  of  loss  or 

33  damage,  be  liable  for  only  such  portion  of  such  loss  or  damage  as 

34  the  amount  insured  by  this  policy  shall  bear  to  the  said 

35  per  cent  of  the  actual  cash  value  of  such  property. 

36  Attached  to  and  forming  part  of  Policy  No. 

37  [Signature  for  Companv.] 

75 


1186  FORMS.  [aPP. 


MORTGAGEE    CLAUSE.  1 

Loss  or  damage,  if  anj',  under  this  polic}',  sliall  be  pa3'able  to  2 
as  mortgagee  [or  trustee],  as  interest  ma}-    3 

appear,  and  this  insurance,  as  to  the  interest  of  the  mortgagee  [or  4 
trustee]  only  therein,  shall  not  be  invalidated  by  any  act  or  neglect  5 
of  the  mortgagor  or  owiier  of  the  withirr~described  prq[jerty.  noii_bv  6 
forgdosrrre  or  other  tTroceegTngs]or_notice_of  sale  relating  to  the  7 
property,  nor  by  any^change  in  the  title  or  OYOiershlp^f  the  pro|>  8 
ert^^^nor  by~Th^  occupation  of^ie_premises  for  purposes  more  9 
hazardous  tharfare  permitted  b}-  this  policy  ;  provided^iat  in  case  10 
the^inoTTgagjf  or^^rnW"sTjairT^  to  pay  any  prciinum  due  under  ii 

this  policy,  themoi^agce  [or  trustee]  shall,  on  demand,  pay  the  12 
same.  13 

Provided,  also,  that  the  mortgagee  [or  trustee]  shall  notify  this  14 
Company  of  any  change  of  ownership  or  occupancy  oi-  increase  of  15 
hazard  which  shall  come  to  the  knowledge  of  said  mortgagee  [or  16 
trustee],  and,  unless  permitted  by  this  policy,  it  shall  be  noted  17 
thereon  and  the  mortgagee  [or  trustee]  shall,  on  demand,  pay  the  18 
premium  for  such  increased  hazard  for  the  term  of  the  use  thereof ;  19 
otherwise  this  policy  shall  be  null  and  void.  20 

This  Compan}'  reserves  the  right  to  cancel  this  polic}'  at  any  time  21 
as  provided  by  its  terms,  but  in  such  case  this  policy  shall  continue  22 
in  force  for  the  benefit  only  of  the  mortgagee  [or  trustee]  for  ten  23 
days  after  notice  to  the  mortgagee  [or  trustee]  of  such  cancellation  24 
and  shall  then  cease,  and  this  Company  shall  have  the  right,  on  like  25 
notice,  to  cancel  this  agreement.  26 

Whenever  this  Company  shall  pay  the  mortgagee  [or  trustee]  any  27 
sum  for  loss  or  damage  under  this  policy  and  shall  claim  that,  as  to  28 
the  mortgagor  or  owner,  no  liability  therefor  existed,  this  Comi)an3'  29 
shall,  to  the  extent  of  such  payment,  be  thereupon  legally  subrogated  so 
to  all  the  rights  of  the  party  to  whom  such  payment  shall  be  made,  31 
under  all  securities  held  as  collateral  to  the  mortgage  debt,  or  ma}'  32 
at  its  option,  pay  to  the  mortgagee  [or  trustee]  the  whole  principal  33 
due  or  to  grow  due  on  the  mortgage  with  interest,  and  shall  there-  34 
upon  receive  a  full  assignment  and  transfer  of  the  mortgage  and  of  35 
all  such  other  securities  ;  but  no  subrogation  shall  impair  the  right  of  ."6 
the  mortgagee  [or  trustee]  to  recover  the  full  amount  of  37 

claim.  36 

Dated,  39 

Attached  to  and  forming  part  of  Policj'  No.  40 

[Signature  for  Company.]    4i 


SECT.  III.] 


rORMS. 


1187 


SECTION  III. 

Life  Insurance} 


A  Policy,  with  the  accompanying  Provisions,  Application,  and 
Medical  Examiner's  Report. 


The 


Life  Insurance  Company  of  Neio  Yorm 


NUMBER 

4 

5 

AMOUNT 

6 

7 

a 

8 
9 

10 

AGE 

11 

12 

YEARS 

13 

14 

ANNUAL 

15 

FREIIIUM 

16 

FOR   LIFE, 

17 
18 

19 

S 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

In  Consideration  of  the  application  for  this  Polic}-,  which  is 
hereb\-  made  a  part  of  this  contract,  promises  to  pay  at  its  Head 
Office  in  the  City  of  New  York,  unto 


of 


in  the  County  of 


State  of 


executors,  administrators  or  assigns, 

Dollars, 
upon  acceptance  of  satisfactoi-y  proofs  at  its  Head  Office  of  the 
death  of 

during  the  continuance  of  this  Policy,  upon  the  following  condition  ; 
and  subject  to  the  provisions,  requirements  and  benefits  stated  on 
the  back  of  this  Polic3',  which  are  hereby  referred  to  and  made  part 
hereof : 

The  annual  premium  of  Dollars 

and  Cents  shall  be  paid  in  advance  on  the 

delivery  of  this  Policy,  and  thereafter  to  the  Company  at  its  Head 
Office  in  the  Cit}-  of  New  York,  on  the 

day         of  in  every  year  during  the  con- 

tinuance of  this  contract. 

The  receipt  of  the  first  payment  of  premium  hereon  is  acknowl- 
edged. 
In  Witness  Whereof,  the  said  The  Life  Insurance  Company 

of  New  York  has  caused  this  Policy  to  be  signed  by  its  President 

and  Secretary  at^  its  office  in  the  City  of  New  York,  the 

day  of  A.  D. 

one  thousand  eight  hundred  and  ninet3'-uine. 


32 


Secretary.  President. 

1  There  are  no  statutory  forms  for  life  insurance  policies.    The  differences  between 
the  policies  of  various  companies  are  both  verbal  and  substantial.  —  Ed. 


1188  FORMS.  [app. 

Provisions,  Requirements,  and  Benefits.  1 

Premiums.  —  PLach  premium  is  due  and  payable  at  tlie  Head  Office  2 
of  the  Company  in  the  City  of  New  York,  but  will  be  accepted  else-  3 
where  when  duly  paid  in  exchange  for  the  Company's  receipt  signed  4 
by  the  President  or  Secretary.  That  part  of  the  year's  premium,  if  5 
any,  not  due  and  unpaid  at  maturity  of  this  policy  shall  be  deducted  6 
from  the  amount  of  the  claim.  7 

Grace  in  Payment  of  Premiums.  — After  this  policy  has  been  in  8 
force  one  year,  thirty  days  of  grace  will  be  allowed  in  payment  of  pre-  9 
miums,  with  interest  for  the  time  taken  at  the  rate  of  5%  per  annum,  10 
during  which  time  this  policy  shall  remain  in  force  for  the  full  amount.  11 

Automatic  Paid-up  Insurance.  —  After  three  full  years'  premiums  12 
have  been  paid,  this  policy,  upon  the  non-payment  of  any  subsequent  13 
premium,  will  become  a  non-participating  policy  for  paid-up  iiisur-  14 
ance,  for  the  amount  stated  in  the  table  below,  for  the  end  of  the  last  15 
year  for  which  complete  annual  premiums  have  been  paid  ;  provided  16 
there  be  no  unpaid  loan  hereon.  17 

Extended  Insurance.  —  After  three  full  years'  premiums  have  18 
been  paid,  upon  the  non-payment  of  any  subsequent  premium,  within  19 
the  thirty  days  of  grace,  or  on  satisfactory  medical  examination  witlun  20 
twelve  months  from  the  due  date  of  premium,  if  this  policy  be  sur-  21 
rendered,  the  Company  will  issue  in  lieu  thereof  a  non-participating  22 
policy  for  paid-up  insurance  for  the  full  amount,  to  cease  after  the  23 
number  of  years  and  months  stated  in  the  table  below  for  the  end  of  24 
the  last  year  for  which  complete  annual  premiums  have  been  paid  ;  25 
provided  there  be  no  unpaid  loan  hereon.  26 

Cash  Surrender  Value.  —  After  three  full  years'  premiums  have  27 
been  paid,  upon  the  non-payment  of  any  subsequent  premium  on  the  28 
date  called  for  in  the  policy  and  within  sixty  days  thereafter,  this  29 
policy  may  be  surrendered  and  the  Company  will  pay  therefor,  within  30 
sixty  days  from  the  date  of  such  surrender,  the  amount  stated  in  the  31 
table  below  for  the  end  of  the  last  year  for  which  complete  annual  32 
premiums  have  been  paid,  deducting  any  unpaid  loan  hereon.  33 

Loans.  —  After  this  policy  shall  have  been  in  force  three  full  years,  34 
the  Company,  within  sixty  days  after  written  application,  and  upon  35 
the  assignment  of  this  policy  as  security,  will,  in  conformity  with  its  36 
rules  then  in  force,  loan  amounts  within  the  limits  of  the  cash  sur-  37 
render  value,  with  interest  in  advance,  at  the  rate  of  five  per  cent  38 
per  annum,  provided  :  (1)  that  premiums  be  fully  paid  to  the  end  of  39 
the  policy  year  in  which  the  loan  falls  due ;  (2)  that  in  any  settle-  40 
ment  of  this  policy  all  outstanding  indebtedness  must  be  paid.  41 

Surplus.  — At  the  expiration  of  each  period  of  five  years  from  42 
date,  a  distributive  share  of  surplus  shall  be  apportioned  to  this  43 
policy,  if  in  force,  in  additional  paidup  insurance  for  the  amount  44 
purchasable  by  such  share,  or  the  surplus  may  be  drawn  in  cash  at  45 
the  end  of  each  period,  or  may  at  any  time  be  used  in  payment  of  46 
premiums  on  this  polic\'.  47 


SECT.  III.] 


FORMS. 


1189 


1  Residence,  Tracd  and  Occupation.  —  This  policy  is  free  from  re- 

2  strictions  as  to  residence,  travel  and  occupation,  after  two  years  from 

3  date,  except  military  or  naval  service  in  time  of  war,  for  whicli  per- 

4  mission  must  be  obtained,  at  the  Company's  regular  rates. 

5  Admission  if  A(j<-.  —  The  Company  will  admit  the  age  of  the  in- 

6  sured  upon  satisfactory  proof;  failing   such  proof,  if  the  age  shall 

7  have  been  understated,  the  amount  of  insurance  or  other  benefit  will 

8  be  equitably  adjusted. 

9  Incontestability.  —  After  two  years  from  the  date  of  issue,  this 
10  policy  shall  be  incontestable  if  the  premiums  have  been  duly  paid. 


11  N'otice.  —  No  person,  except  an  Executive  Officer  of  the  Company 

12  or  its  Secretary  at  its  Head  Office  in  New  York,  has  power  on  be- 

13  half  of  the  Company  to  make,  modify  or  alter  this  contract  to  extend 

14  the  time  for  paying  a  premium,  to  bind  the  Company  by  making  any 

15  promise  or  by  accepting  any  representation  or  information  not°coi^- 

16  taiued  in  the  application  for  this  contract.     Any  interlineations,  ad- 

17  ditions  or  erasures  must  be  attested  by  the  signature  of  one  of  the 

18  above  named  officers.     Proofs  of  death  will  be  required  on  the  forms 

19  prescribed  by  the  Company  which  will  be  furnished  on  request. 

20  Assir/nments. — The  Company  declines  to  notice  any  assignment 

21  of  this  policy  until  the  original  assignment,  or  a  duplicate  or  certified 

22  copy  thereof,  shall  be  filed  in  the  Company's  Plead  Office.     The  Com- 

23  pany  will  not  assume  any  responsibility  for  the  validity  of  an  assign- 
2i  ment. 

25  Table. 


FOR 

END   OF 
TEAR 

1 

1        AUTOMATIC 
i            PAID-UP 
INSURANCE 

Extended  Insurance  form 

date  of  nos-payment  of 

Premium 

CASH 
SURRENDER 

Tears 

Months 

VALUE 

3d 

4th 

5th 

Cth 

7th 

8th 

9th 

10th 

nth 

12th 

13th 

14th 

... 

1.3th 

16th 

17th 

ISth 

19th 

20th 

21st 

....       j 

22<i 

23d 

1 

24th 

25th 

2Cth    . 

27th 

28th 

29th 

j 

30th 

'     ■      '1 

1190  '  FORMS.  [aPP. 

(  Copy  of  the  Application  for  this  Policy.)  1 

This  Application  2 

Made  to  The  Life  Insurance  Company  of  New  York   3 

is  the  basis  and  a  part  of  a  proposed  Contract  for  Insurance,  subject  4 
to  the  Cliarter  of  the  Company  and  the  laws  of  the  State  of  New  5 
York.  1  hereby  agree  that  all  the  following  statements  and  answers,  6 
and  all  those  that  I  make  to  the  Company's  Medical  Examiner,  in  7 
continuation  of  this  application,  are  by  me  wananted  to  be  true,  and  8 
are  offered  to  the  Company  as  a  consideration  of  the  contract,  which  9 
I  hereby  agree  to  accept,  and  which  shall  not  take  effect  until  the  10 
first  premium  shall  have  been  paid,  during  my  continuance  in  good  ii 
health,  and  the  policy  shall  have  been  signed  by  the  Secretary  of  the  12 
Company  and  issued.  I  further  agree  that  in  any  distribution  of  13 
surplus,  the  principles  and  methods  which  may  then  be  in  use  by  the  14 
Company  for  such  distiilnition,  and  its  determination  of  the  amount  15 
apportioned  to  such  policy  siiall  be  and  are  hereby  ratified  and  ac-  16 
cepted  by  and  for  every  person  who  shall  have  or  claim  any  interest  17 
in  the  contract.  18 

1.  My  full  name  is  19 

2.  I  reside  at  20 
In  the  City  of  21 
County  of                                        State  of  22 

3.  My  former  residences  were  23 

4.  M}'  place  of  business  is  24 

5.  My  P.  O.  address  is  25 

6.  My  present  occupation  is  ,  in  the  26 

following  branch  of  business  or  trade  •      27 

7.  M}-  other  occupations  are  28 

8.  My  former  occupations  have  been  29 

9.  The   full  name  of  the  person  to  wliom  the  insurance  is   pay-  SO 

able  is  ^i 

10.  Residing  in  ^2 

11.  The  relationship  of  said  Beneficiary  to  me  is  33 
(The  Children  or  p:xecutors,  if  any  are  named,  are  the  Children  34 
or  Executors  of                                                                                 )  ^^ 

12.  The  insurable  interest  of  the  said  Beneficiary  in  the  life  pro-  36 

posed  for  insurance,  other  than   that  of  family    relation-  37 
ship,  is  ^8 

13.  I  hereby  apply  for  insurance  on  my  life  on  the  39 

plan  Years'  Payments  Year  Distribution.  40 

14.  Amount,  S  ^1 
Contingent  Additions  "^                                                                        ^2 

or  >- $  Deferred  Annuity,  $  43 

Mortuary  Allotment.  3  ** 

15.  The  Premiums  are  to  be  paid  annually  for  45 

46 


SECT.  HI.]  FORMS.  1191 

1  IG.   1  was  bora  on  the  day  of  18 

2  in 

3  17.   I  am  a  citizen  or  subject  of 

4  18.   I  have  been  accepted  for  insurance  under  the  following  policies 

5  in  this  Company  : 

G  19.    I   am   insured  in  other  Companies   and  Associations,    as   fol- 

7  lows : 

g  and  in  no  others. 

9  20.    No  application  has  ever  been  made  to  any  Company  or  Asso- 

10  elation  for  insurance  upon  my  life  on  which  a  policy  has 

11  NOT  been  issued  on  the  plan  and  premium  rate  originally 

12  applied  for,  except  to  the  following  Companies  or  Asso- 

13  ciations : 

14  and  no  such  application  is  now  pending  or  awaiting  decis- 
is ion  in  any  corporation. 

16  I  HEREiiY  WARUANT  AND  AGREE  that  duriug  the  uext  two  years  fol- 

17  lowing  the  date  of  issue  of  the  Contract  of  Insurance  for  which  appli- 

18  cation  is  hereby  made,  I  will  not  travel  or  reside  in  any  part  of  the 

19  Torrid  Zone,  or  North  of  the  parallel  of  60°  North  Latitude,  and  will 

20  not  engage  in  any  of  the  following  extra  hazardous  occupations  or 

21  emplo3'ments  ;  retailing  intoxicating  liquors,  handling  electric  wires 

22  and  dynamos,  blasting,  mining,  sub-marine  labor,  aeronautic  ascen- 

23  sions,  the  manufacture  of  highly  explosive  substances,  service  upon 

24  any  railroad  train  or  track  or  in  switching  or  in  coupling  cars,  or  on 

25  any  steam  or  other  vessel,  unless  written  permission  is  expressly 
2^  granted  by  the  Company. 

27  I  FURTHER  WARRANT  AND  AGREE  that  I  will  uot  engage  iu  any  mili- 

28  tary  or  naval  service  in  time  of  war,  during  the  continuance  of  the 

29  said  contract,  without  first  obtaining  written  permission   from  the 

30  Company. 

31  I  ALSO  WARRANT  AND  AGREE  that  I  wiU  uot  die  by  my  own  act, 

32  whether  sane  or  insane,  during  the  period  of  one  year  next  following 

33  said  date  of  issue. 

34  I  have  paid  S  to  the  subscribing  Soliciting 

35  Agent,  who  has  furnished  me  with  a  binding  receipt  therefor,  signed 
3G  b/the  Secretary  of  the  Company,  making  the  insurance  in  force  from 

37  this  date,  provided  this  application  shall  be  approved,  and  the  policy 

38  duly  signed  by  the  Secretary  at  the  Head  Office  of  the  Company  and 

39  issued. 


40 


Dated  at  1899. 


41      Signature  of  person  whose  Life  is  proposed  for  insurance, 

43  {Signed) 

44  I  have  known  the  applicant  for  and  saw 

45  him  sign  this  application 

46  {Signed)  Soliciting  Agent. 


1192  FORMS.  [aPP. 


Medical  Examiner'' s  Report.  l 

1.  What  is  your  full  name ?  Age  jears.  2 

2.  Are  jou  married  or  single?  3 

3.  Have  you  ever  bad  any  of  the  following  diseases?  (Yes  or  No.)  4 
(Of  each  illness  state  date,   number  of  attacks,  duration,  severity,  5 

complications  and  result.)  0 

A.  Dizziness,    unconsciousness,    epileps}'  or    convulsions    of   any    7 
sort?     Paral3'sis?      Apoplexy?  or  any  diseases  of  the  nervous    8 

system  ?  y 

B.  Headaches,  — severe,  protracted,  or  frequent?  10 

C.  Sunstroke?  11 

D.  Discharges  from  ear  or  an}-  other  chronic  discharges?  12 

E.  Chronic  or  persistent  cough  or  hoarseness,  or  spitting  or  cough-  13 

ing  of  blood,  asthma  or  shortness  of  breath,  or  any  chest   or  14 
lung  disease  ?  15 

F.  Disease  or  an}- functional  disturbance  of  the  heart?  16 

G.  Dyspepsia  or  Indigestion?  17 
II.  Chronic  or  habitual  Diarrhoea  ?  ,  18 
1..  Severe,  protracted  or  repeated  intestinal  colic?  19 
L.  Colic,  due  to  renal  or  hepatic  stone,  or  other  derangement  of  the  20 

liver?  21 

M.  Hemorrhoids,  fistula  or  other  diseases  of  the  rcctihu?  22 

N.    Gravel,  bladder  or  kidney  disease  ?  23 

O.    Syphilis  or  other  venereal  disease?  24 

P.    Stricture?  25 

Q.    Malarial  or  other  fever?  26 

R.    Rheumatism  or  gout?  27 

S.    Any  chronic  disease  of  the  skin  ?  *                           28 

T.    Cancer  or  tumors  or  ulcers  of  any  kind  ?  29 

4.  What  are  the  full  particulars  of  any  other  illness,  constitutional  30 

diseases  or  injury  you  have  had,  giving  date,  duration  and  re-  31 
maining  effects,  if  an}'  ?  32 

5.  Has  3'our  weight  recently  increased  or  diminished,  and  from  33 
what  cause?  34 

6.  Are  you  on  the  U.  S.  invalid  pension  roll  —  if  so,  for  what  dis-  35 

ability  ?  36 

7.  Give  name  and  address  of  physician  last  consulted  37 

When  and  for  what  complaint?  38 

8a.  "What  were  your  past  and  what  are  your  present  habits  in  the  use  39 

of  alcoholic  or  other  stimulants  ?  40 

b.  In  the  use  of  chloral,  morphine  and  other  narcotics?  41 

9.     Have  you    ever  been    under  treatment  at  any  asylum,  cure  or  42 

sanitarium  ?         If  so,  when,  how  long  and  for  what?  43 


SECT.  III.]  FORMS. 

1  10.  Are  you  now  in  good  health  so  far  as  you  know  or  believe? 

2  11.  Family  record  of  the  Applicant. 


1193 


3  Dated  at 

4  the 

5  Witness  : 

6  (Signed), 


Slate  of 


dav  of 


LrviNO. 

Dead. 

Age. 

Health 

,          Specific  cause 

^8«-         of  death? 

How  long 
sick? 

Health 
previous 
to  last 
illness? 

Name  and  P.  0. 

address  of  each 

living  member 

of  family. 

FATHER, 

FATHER'S  FATHER, 

FATHER'S   MOTHER, 

MOTHER, 

MOTHER'S  FATHER, 
MOTHER'S  MOTHER, 

1'.   §           living. 

t  ~   (^        Number 

g_^  »            dead. 



°  o 

g  ■-      .         Number 

=  t   g           living. 

1 



!2  S    H 
0-03 

i^       Jo         Number 

dead, 

1899 


M.D. 


7  I  certify  that  my  answers  to  tlie  foregoing  questions  are  correctly 

8  recorded  by  the  Medical  Examiner. 


9 
10 


(Signed), 


Signature  of  the  person  e.\amined. 


INDEX. 


Abaxdonmext,  829-857,  999,  n. 
Accident,  783-797. 
Admiralty,  941-944,  956-959. 
Afjents  of"  underwriters,  1046-1059,  1091-1090. 
"Alienated,"  599-002. 
"Allowed,"  543-545. 
Amount  of  recovery, 
in  marine  insurance, 

general    principles,   especiall}'  as  to 

partial  losses,  798-814. 
valued  policies,  815-828. 
total  losses,  actual  and  constructive, 
829-857. 
in  fire  insurance, 

general  principles,  858  883. 
limited  niterests,  884-926. 
in  life  insurance,  927-936. 
Application  for  life  insurance,  1190-1193. 
Apportionment  among  insurers,  803,  810-814, 

823-828,  879-881. 
Apportionment  clause,  810-814,  879-881. 
Arbitration,  ]()G1-1063. 
Arson,  721-725. 

"As  interest  may  appear,"  585-588. 
Assignees  and  beneficiaries 

in  marine  insurance,  1110-1114. 
in  fire  insurance, 

assignees,  1115-1133. 
beneficiaries,  1134-1141. 
in  life  insurance, 

assignees,  1142-1153. 
beneHciaries,  114-115,  779-782,  1154. 
1169. 
And  see  Fokms. 
Auction,  809-871. 


Barkatky,  671-676. 
Beiieticiaries.     See  Assigxee.s. 
Benefit  societies,  1157,  n.,  1161,  n. 
Buildings,  loss  on,  881-883. 


Capture,  829-833,  8-36-840. 

Casaregis,  quoted,  4. 

Cause  of  loss.    See  Peril  and   Pro.ximate 

Cause. 
"  Cliange  in  interest,"  625-639. 
"Change  of  title,"  610-625. 
Change  of  vovage.  432-434,  442-443. 
Co-insurance,' 803-804.  861-865,  1185. 
Collision,  665,  697-703,  707-714,  1174. 
Commissioners,  Court  of  the,  1. 
Concealment, 

general  theory  of,  125-135. 
application  of  the  theory 

in  marine  insurance.  136-168. 
in  tire  insurance,  169-190. 
in  life  insurance,  191-211. 
And  see  Waiver. 


Conditions  applicable  afler  loss, 
in  marine  insurance,  996-1000. 
in  tire  insurance,  1001-1022. 
in  life  insurance,  1023-1026. 
And  see  Waiver. 
Conditions  in  fire  insurance  applicable  before 
loss, 
prohibiting  the  keeping  of  certain  things, 

523-545. 
prohibiting  increase  of  hazard,  546-560. 
prohibiting  vacancy  and  the  like,  561-578. 
as  to  ownership  at  the  inception  of  the  con- 
tract, 579-598. 
prohibitnig  aleniation, 

"aleniation;  sale;  conveyance;  trans- 
fer," 599-610. 
"sale,  transfer,  or  change  in  title  or 

possession,"  610-625. 
"change  in  interest,  title,  or  posses- 
sion," 62.5-639 
And  see  Waiver. 
Conditions  in  life  insurance  applicable  before 

lOfS 

becan-^e  of  misstatements,  391-424. 
because  of  going  to  forbidden  place,  640- 

641. 
because  of  non-payment  of  premiums,  041- 
658 

And  see  Waiver. 
Consignee,  25-26,  59-60. 
Constructive   total   losses.     See  Amouxt  cf 

Recovery. 
Court  of  the  Commissioners,  1-3. 
Creditor,  25-26,54-56,101,107-108,  927-929, 
932-936,  1161-llGT. 


Death   of  assured,  as  affecting  fire  policy, 

635,  n. 
Death  of  beneficiary,  as  affecting  life  policy, 

1158-1167. 
Delay,  as  deviation,  434-436,  443-444. 
Delay,  as  a  peril  of  the  sea,  690-693. 
Detached,  373-376. 
Deviation,  430-468,  1028-1031. 
"  Die  by  his  own  hand."     See  Suicide. 
Double  "Insurance,  803,  810-814. 


Estoppel.     See  Waiver. 
Execution  as  cause  of  death,  760-761. 
Execution,  lew  and  sale  on,  579,  625-629, 

632-634. 
Explosion,  671-676,  680-681,  729-733. 


"  False  swearing,"  1015-1018. 
Father's  interest  in  life  of  son,  104-106,  111- 
113. 


1196 


INDEX. 


"Fee  simple,"  594-596. 

Fiftv  per  cent  rule,  8.34-836,  847-853. 

Foreclosure,  611,  614,  889-890. 

Forms, 

in  marine  insurance,  1171-1175. 
in  fire  insurance,  1176-1186. 
in  life  insurance,  1187-1193. 
Fraud,   178-185,   205-211,   242-244,   267-274, 
280-292,    391-398,   417-424,   721-725,   822- 
823,  1015-1018,  1106-1109. 


Guidon  de  la  Mek,  quoted,  1. 


Health,  389-390,  424-428. 
Home^-tead  niterest,  916-918. 
Husband's  interest  in  life  of  wife,  122. 
Husband's  interest  in  wife's  propertv,  91-92, 
916-920. 


I  Misrepresentation.     See  Rkpresentation. 
Mortj,'ai;ee,  76-77,  911-916,  920-924,  965-970. 
Mort^'a^'te  clause,  1137,  n.,  1186. 
Mortgagor,    41,    264-265,    .589-591,    611-614, 
618-620,  634-638,  889-890. 


Nkgwgence,  665,  671-675,  707-714,  719  72! 

784-786,  941-946.  959-960. 
Non-disclosure.     See  CONCEALMENT. 
Notice  of  (leiith,  1026,  n. 
Notice  of  tire,  1010-1015. 


ONK-third  off  new  for  old.  807-810,  847-853 
1174-1175. 


Illegality  of  business  in  case  of  fire  insur- 
ance. 512-522. 
lllegalitv  of  vovafre,  498-511. 
Incontestability,  1106-1109,  1189. 
Increase  of  hazard,  546-560. 
Insanity.     See  Suicidk. 
Insurable  Interest.     See  Intekest. 
Insurance,  defined,  1. 

Interest,  insurable,  as  affecting  the  validity  of 
the  policy, 
why  requisite,  4-23. 
satisfying  the  requirement. 

in  marine  insurance,  24-66,  137-139, 
in  fire  insurance,  67-100. 
in  life  insurance,  101-124,  1106-1109. 
Interest,  limited,  as  connected  with  amount 

of  recovery,  857,  n.,  881-936. 
Interest,  limited,  as  connected  with  conceal- 
ment and  representation,  137-139,  170-172, 
264-265,  274-276. 
And  see  Intekest. 
Interest,  limited,  as  connected  with  express 
conditions,  579-639. 


"Kept,"  523-524,  528-530,  540-543. 


Laws  and  ordinances  as  related  to  cause  and 
amount  of  loss,  697-703,  707-714,  747-750, 
760-761. 

Leasehold,  58.3-58-.,  884-888. 

Lienholder,  81-87,920-924. 

Life  tenant,  596-597,  916-920. 

Lightning,  717-719. 

Limitation  of  action,  1018-1021. 

Limited  interest.     See  Interest. 

Loss.     See  Peril  and  Amount. 

"  l^oss,  if  any,  payable,"  1134-1141. 

"  Lost  or  not  lost,"  42-47. 


Machinery,  874-877,  1174. 

Magistrate's  certificate,  1001-1004,  1007-1010. 

Manufacturer,  measure  of  recovery  by,  877- 

H79. 
Materiality,  125-137,  148-156,  176-178,  181- 

18.-.,    188-192,    199-204,   227-229,    237-239, 

247-251,  292-294,  300-303. 


Partial  loss,  803-804. 
Piirlition-sale,  610-611. 
Partner,  711-71,929-931. 
I'annersliip.  615-017,  621-622. 
Part  owner,  592-694,  959-960. 
Patented  articles,  874-877. 
Purii  insured  against 

in  marine  insurance. 

the  kind  of  [leril  msured  against,  659- 

696. 
the  connection  between  peril  and  loss, 
697-714. 
in  fire  insurance, 

the  kind  of  peril  insured  against,  715- 

728. 
the  connection  between  peril  and  loss 
72J-759. 
in  life  insurance, 
death,  760-782. 
accident,  783-797. 
Piivsician's  cerriticate,  1023-1025. 
Pleading,  47,  n.,  1140,  n. 
Piilicy  forms 

in  marine  insurance,  1171-1175. 
in  fire  insurance,  1176-1186. 
in  life  insurance,  1187-1193. 
Premum,    614-658,     1068-1071,     1078-1080 

1109,  n. 
Profits,  nisurauce  on,  26-30,  48-51,  867-868. 
Proofs  of  loss 

in  marine  insurance,  996-1000. 
in  fire  insurance,  1001-1022,1037-1042. 
in  life  insurance,  1(123-1026. 
And  see  Waiver. 
Proper  vice.  690-696. 
Proximate  cause,  697-714,  729-759. 


Ratification  of  unauthorized  procuring  of 

insurance,  38-41. 
Rebuilding,  865-867.  871-873. 
Reinsurance,  31-35, 108-111,172-175.  196-198, 

294-299,  896-898.  908-910. 
Removal,  loss  b3',  751-754. 
Replace,  or  reinstate,  election  to,  8J5-867,  871- 

873. 
Representation 

in  marine  insurance.  212-248. 
in  fire  insurance,  247-283. 
in  life  insurance,  284-303. 
And  see  Waiver. 
Roccus,  quoted,  430. 


INDEX. 


119: 


Santerna,  quoted,  1. 

Seaworthiness.     S' e  I'N.sKAwornin.vKss, 

Sister's  interest  in  life  uf  bniiht-r,  mi-  lo:;. 

"Sold,"  602-610. 

Son-in-law's  interest  in  life  of  niother-m-law, 

119-121. 
Son's  interest  in  life  of  father,  117-118. 
Spontaneous  combustion,  6'J'5-6'J0. 
Standard  policies.     iStt-  Fokms 
Statutes. 

43  Eliz.  c.  12  (1601).  1-3. 

19  Geo.  II.  c.  .37,  §§  1-.3  (1746),  6  8,  -33,  n 

14  Geo.  III.  c.  48  (1774).  8-!i. 

8  &  9  Vict.  c.  109,  §  18  (184.5),  9.  n. 

27  &  28  Vict.  c.  .56.  §  1  (1864),  33   n. 

29  &  30  Vict.  c.  42  (1866),  9,  n. 

Valued  policy  law-.  866,  n. 

Massachusetts  standard  p(jlicylaw,  1176,  n. 

New  York  standard  policy  law,  1179,  n. 
Stockholder.  72-75. 
Straccha,  quoted,  1,  793. 
Subrogation 

in  marine  insurance.  937-960. 

in  fire  insurance,  188-190,  961-991. 

in  life  insurance,  992-995. 
Suicide,  762-782,  786-788. 
Sundav,  641-644. 
Sunstroke,  783-784. 


ThRft,  697,  739-747,  938-941. 
Time  policy,  475-487,  491-497. 
Total  loss,  actual.  829-833,  840-846. 
Total  loss,  constructive,  829-857. 


"UNOCCUPiEn,"  5G2-57S. 
Unseaworthniess,469-497,  676-679,  1031-10.36. 
"  Used,"  524-.527,  530-537,  540-543. 


"Vacant,"  561,  564-578. 

Valued   policies,   81.5-828,   847-853,    858-8G1, 

865-866.  946-9.55. 
Valued  [xdicv  laws,  866,  n. 
Vendee,  60-61,  67-68,78-80,  594-596,890-895, 

911-916,  974-991,111.5-1117,  1124-113.3. 
Vendor,  580-583,   629-632,  899-905,  974-991, 

1115-1117,  1124-1133. 


\V.\r.KK  policies.     See  Intehest. 
Waiver  and  estoppel 

in  marine  insurance,  125-135,  1027-1036. 
in  fire  insurance, 

as  to  conditions  applicable  after  loss, 

1037-1042. 
as  to  defences  ai  ising  before  loss, 

the  insurer's  conduct  after  the  is- 
suing   of    the  polic}'   and    be- 
fore the  arising  of  tlie  defence, 
1043-1063. 
the  insurer's  conduct  after  the  is- 
suing of  the  policy  and  at  or  be- 
fore the  arising  of  the  defence, 
1064-1070. 
the  insurer's  conduct  at  or  before 
the  issuing  of  the  policy,  and 
at  or  before  the  arising  of  the 
defence,  1071-1078. 
in  life  insurance,  198-199,  1089-1109 
War,  644-653,  661-66-3,  1021,  n. 
■Warehouseman,  905-908. 
Warranty 

in  marine    insurance,    212-216,    304-324, 

1027-1028. 
in  tire  insurance,  .325—388. 
m  life  insi. ranee,  389-429. 
And  see  VV^aiver. 
Wear  and  tear,  659-661,  68-5-690. 
"  Whom  it  may  concern,"  38-41,  1114,  n. 


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